1933 Act File No. 33-50635
1940 Act File No. 811-7101
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
Pre-Effective Amendment No.
Post-Effective Amendment No. 2 X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 5 X
PEACHTREE 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 November 30, 1994 pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a) (i)
on pursuant to paragraph (a) (i).
75 days after filing pursuant to paragraph (a)(ii)
on _________________ pursuant to paragraph (a)(ii) of
Rule 485.
If appropriate, check the following box:
This post-effective amendment designates a new effective
date for a previously filed post-effective amendment.
Registrant has filed with the Securities and Exchange
Commission a declaration pursuant to Rule 24f-2 under the
Investment Company Act of 1940, and:
X filed the Notice required by that Rule on November 15,
1994; 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:
Thomas J. Donnelly, Esquire Charles H. Morin, Esquire
Houston, Houston & Donnelly Dickstein, Shapiro & Morin,
L.L.P. 2510 Centre City Tower 2101 L Street, N.W.
650 Smithfield Street Washington, D.C. 20037
Pittsburgh, Pennsylvania 15222
CROSS-REFERENCE SHEET
This Amendment to the Registration Statement of PEACHTREE
FUNDS, which consists of five portfolios, (1) Peachtree Bond
Fund; (2) Peachtree Equity Fund; (3) Peachtree Georgia Tax-
Free Income Fund; (4) Peachtree Government Money Market
Fund; and (5) Peachtree Prime Money Market Fund relates to
all of the Funds except Peachtree Georgia Tax-Free Income
Fund and is comprised of the following:
Note: Although this filing does not relate to Peachtree
Georgia Tax-Free Income Fund, the Cross-Reference Sheet
contains information pertaining to all five portfolios. This
will facilitate the cross reference process to the other
portfolios.
PART A. INFORMATION REQUIRED IN A PROSPECTUS.
Prospectus Heading
(Rule 404(c) Cross Reference)
Item 1. Cover Page (1-5) Cover Page
Item 2. Synopsis (1-5) Summary of Fund
Expenses.
Item 3. Condensed Financial
Information (1-2,4-5) Financial
Highlights
(1-5) Performance
Information.
Item 4. General Description of
Registrant (1-5) General Information; (1-
5) Investment Information; (1-
5) Investment Objective; (1-
5) Investment Policies; (3,5)
Investment Risks; (1-2)
Foreign Securities; (1-5)
Investment Limitations.
Item 5. Management of the Fund (1-5) Peachtree Funds
Information; (1-5) Management
of the Trust; (1-5)
Administration of the Trust;
(1-5) Distribution Plan; (1-
5); Administrative Services;
(1-2, 4-5); (1-5) Shareholder
Services Plan; Brokerage
Transactions; (1-3) Expenses
of the Fund.
Item 6. Capital Stock and Other
Securities (1-3) Dividends and
Distributions; (4-5)
Dividends; (1-5) Shareholder
Information; (1-5) Voting
Rights; (1-5) Massachusetts
Partnership Law; (1-5) Effect
of Banking Laws; (1-5) Tax
Information; (1-5) Federal
Income Tax; (1-2, 4-5) State
and Local Taxes; (3) State of
Georgia Income and Intangible
Taxes; (3) Other State and
Local Taxes.
Item 7. Purchase of Securities Being
Offered (1-5) Net Asset Value; (1-5)
Investing in the Fund; (1-5)
Share Purchases; (1-5)
Minimum Investment Required;
(1-5) What Shares Cost; (1-3)
Reducing the Sales Load; (1-
5) Systematic Investment
Program;
(1-5) Distribution of Shares;
(1-5) Exchanging Securities
for Fund Shares; (1-5)
Certificates and
Confirmations; (1-5) Exchange
Privilege.
Item 8. Redemption or Repurchase (1-5) Redeeming Shares; (1-5)
Systematic Withdrawal
Program; (1-5) Accounts with
Low Balances.
Item 9. Pending Legal Proceedings None.
PART B. INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL
INFORMATION.
Item 10. Cover Page (1-5) Cover Page.
Item 11. Table of Contents (1-5) Table of Contents.
Item 12. General Information and
History (1-5) General Information
About the Fund.
Item 13. Investment Objectives and
Policies (1-5) Investment Objective
and Policies.
Item 14. Management of the Fund (1-5) Peachtree Funds
Management.
Item 15. Control Persons and Principal
Holders of Securities (1-5) Fund Ownership.
Item 16. Investment Advisory and Other
Services (1-5) Investment Advisory
Services; (1-5)
Administrative Services; (1-
5) Transfer Agent and
Dividend Disbursing Agent.
Item 17. Brokerage Allocation (1-5) Brokerage Transactions.
Item 18. Capital Stock and Other
Securities Not applicable.
Item 19. Purchase, Redemption and
Pricing of Securities
Being Offered (1-5) Purchasing Shares; (1-
5) Determining Net Asset
Value; (1-5) Exchange
Privilege; (1-5) Redeeming
Shares.
Item 20. Tax Status (1-5) Tax Status.
Item 21. Underwriters (1-5) Distribution Plan.
Item 22. Calculation of Performance
Data (1-5) Yield; (1-3) Total
Return; (4-5) Effective
Yield; (3) Tax-Equivalent
Yield; (1-5) Performance
Comparisons.
Item 23. Financial Statements......... (1,2,4,5) Filed in
Part A;
(3) To be filed by
Amendment.
PEACHTREE BOND FUND
(A PORTFOLIO OF PEACHTREE FUNDS)
PROSPECTUS
The shares of the Peachtree Bond Fund (the "Fund") offered by this Prospectus
represent interests in a diversified portfolio of Peachtree Funds (the "Trust"),
an open-end management investment company (a mutual fund). The investment
objective of the Fund is to achieve current income. The Fund pursues this
objective by investing primarily in a portfolio of long-term bonds and other
fixed income securities.
This prospectus contains the information you should read carefully and
understand before you invest in the Fund. Keep this prospectus for future
reference.
The Fund has also filed a Statement of Additional Information dated November 30,
1994, with the Securities and Exchange Commission. 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
contacting the Peachtree Funds Service Center at 1-404-989-6200 or 1-800-621-
8969.
SHARES OF THE FUND ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, AND ARE NOT ISSUED,
ENDORSED OR GUARANTEED BY, BANK SOUTH, N.A. (THE "BANK") OR ANY OF ITS
AFFILIATES. SUCH SHARES ARE NOT ISSUED, INSURED OR GUARANTEED BY THE U.S.
GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD
OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN THE FUND INVOLVES CERTAIN
RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
THE BANK IS THE INVESTMENT ADVISER TO THE FUND. THE FUND IS DISTRIBUTED BY
FEDERATED SECURITIES CORP., WHICH IS NOT AFFILIATED WITH THE BANK.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
November 30, 1994
The Peachtree Funds
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS 2
- ------------------------------------------------------
GENERAL INFORMATION 3
- ------------------------------------------------------
INVESTMENT INFORMATION 3
- ------------------------------------------------------
Investment Objective 3
Investment Policies 3
Acceptable Investments 3
Government Securities 4
Mortgage-Backed Securities 5
ARMs 5
CMOs 6
Asset-Backed Securities 6
Options and Futures 7
Obligations of Foreign Issuers 7
Foreign Government Securities 7
Repurchase Agreements 7
Restricted and Illiquid Securities 7
When-Issued and Delayed Delivery
Transactions 7
Investing in Securities of
Other Investment Companies 8
Lending of Portfolio Securities 8
Average Portfolio Maturity 8
Temporary Investments 8
Foreign Securities Risks 8
Portfolio Turnover 9
Certain Borrowing and Investment Limitations 9
PEACHTREE FUNDS INFORMATION 9
- ------------------------------------------------------
Management of the Trust 9
Board of Trustees 9
Investment Adviser 9
Advisory Fees 10
Adviser's Background 10
Portfolio Manager 10
Distribution of Shares 10
Distribution Plan 10
Administrative Arrangements 11
Administration of the Trust 11
Administrative Services 11
Shareholder Services Plan 12
Custodian 12
Transfer Agent, Dividend Disbursing
Agent, and Portfolio Accounting
Services 12
Legal Counsel 12
Independent Auditors 12
Expenses of the Fund 12
NET ASSET VALUE 13
- ------------------------------------------------------
INVESTING IN THE FUND 13
- ------------------------------------------------------
Share Purchases 13
By Telephone 13
By Mail 13
Payment By Check 13
Payment By Wire 13
Minimum Investment Required 13
Systematic Investment Program 13
What Shares Cost 14
Purchases at Net Asset Value 14
Sales Load Reallowance 14
Reducing the Sales Load 15
Quantity Discounts and Accumulated
Purchases 15
Letter of Intent 15
Reinvestment Privilege 15
Concurrent Purchases 15
Certificates and Confirmations 16
Dividends and Distributions 16
Purchasing Shares of the Fund with Securities 16
EXCHANGE PRIVILEGE 16
- ------------------------------------------------------
Peachtree Funds 16
By Telephone 17
REDEEMING SHARES 18
- ------------------------------------------------------
By Telephone 18
By Mail 18
Signatures 19
Receiving Payment 19
Systematic Withdrawal Program 19
Accounts with Low Balances 19
SHAREHOLDER INFORMATION 20
- ------------------------------------------------------
Voting Rights 20
Massachusetts Partnership Law 20
EFFECT OF BANKING LAWS 20
- ------------------------------------------------------
TAX INFORMATION 21
- ------------------------------------------------------
Federal Income Tax 21
State and Local Taxes 21
PERFORMANCE INFORMATION 21
- ------------------------------------------------------
FINANCIAL STATEMENTS 22
- ------------------------------------------------------
REPORT OF ERNST & YOUNG LLP,
INDEPENDENT AUDITORS 33
- ------------------------------------------------------
ADDRESSES 34
- ------------------------------------------------------
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)................................................................... 2.50%
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)................................................................... None
Contingent Deferred Sales Charge (as a percentage of original purchase price
or redemption proceeds, as applicable)................................................................ None
Exchange Fee............................................................................................ None
ANNUAL FUND OPERATING EXPENSES*
(As a percentage of projected average net assets)
Management Fee (after waiver) (1)....................................................................... 0.59%
12b-1 Fees (2).......................................................................................... 0.00%
Total Other Expenses.................................................................................... ]0.43%
Shareholder Services Fees (3)................................................................. 0.00%
Total Fund Operating Expenses (after waiver) (4)............................................... 1.02%
</TABLE>
- ---------
(1) The estimated management fee has been reduced to reflect the anticipated
voluntary waiver by the investment adviser. The adviser can terminate this
voluntary waiver at any time at its sole discretion. The maximum management
fee is 0.75%.
(2) As of the date of this prospectus, the Fund is not paying or accruing 12b-1
fees. The Fund can pay up to 0.75% as a 12b-1 fee to the distributor.
Certain trust clients of the Bank or its affiliates, including ERISA plans,
will not be affected by the distribution plan because the distribution plan
will not be activated unless and until a second, "Trust," class of shares of
the Fund (which would not have a Rule 12b-1 plan) is created and such trust
clients' investments in the Fund are converted to such Trust class.
(3) As of the date of the prospectus, the Fund is not paying or accruing
shareholder services fees. The Fund can pay up to 0.25% as a shareholder
services fee to certain financial institutions. Certain trust clients of the
Bank or its affiliates, including ERISA plans, will not be affected by the
shareholder services plan because the shareholder services plan will not be
activated unless and until a second, "Trust," class of shares of the Fund
(which would not have a services plan) is created and such clients'
investments in the Fund are converted to such Trust class.
(4) The Total Fund Operating Expenses in the table above are based on expenses
expected during the fiscal year ending September 30, 1995. The Total Fund
Operating Expenses are estimated to be 1.18% absent the voluntary waiver by
the investment adviser. The Total Fund Operating Expenses were 0.97% for the
fiscal year ended September 30, 1994 and were 1.07% absent the voluntary
waiver of a portion of the management and transfer agent fees.
* Expenses are estimated based on average expenses expected to be incurred
during the fiscal year ending September 30, 1995. During the course of this
period, expenses may be more or less than the average amount shown.
The purpose of this table is to assist an investor in understanding the
various costs and expenses that a shareholder of the Fund will bear, either
directly or indirectly. For more complete descriptions of the various costs and
expenses, see "Peachtree Funds Information" and "Investing in the Fund."
Wire-transferred redemptions may be subject to an additional fee.
<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. The
Fund charges no redemption fees.......................................... $35 $57 $80 $147
</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. THIS
EXAMPLE IS BASED ON ESTIMATED DATA FOR THE FUND'S FISCAL YEAR ENDING SEPTEMBER
30, 1995.
PEACHTREE BOND FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
Reference is made to the Report of Ernst & Young LLP, Independent Auditors, on
page 33.
<TABLE>
<CAPTION>
YEAR ENDED
SEPTEMBER 30, 1994*
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
- ----------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------------------------
Net investment income 0.35
- ----------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.66)
- ---------------------------------------------------------------------------------------- -------
Total from investment operations (0.31)
- ----------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
- ----------------------------------------------------------------------------------------
Dividends to shareholders from net investment income (0.35)
- ---------------------------------------------------------------------------------------- -------
NET ASSET VALUE, END OF PERIOD $ 9.34
- ---------------------------------------------------------------------------------------- -------
TOTAL RETURN** (3.08%)
- ----------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------------------------
Expenses 0.97%(b)
- ----------------------------------------------------------------------------------------
Net investment income 5.92%(b)
- ----------------------------------------------------------------------------------------
Expense waiver/reimbursement (a) 0.10%(b)
- ----------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $81,594
- ----------------------------------------------------------------------------------------
Portfolio turnover rate 21%
- ----------------------------------------------------------------------------------------
</TABLE>
* Reflects operations for the period from February 14, 1994 (date of initial
public investment) to September 30, 1994.
** Based on net asset value which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(a) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(b) Computed on an annualized basis.
(See Notes which are an integral part of the Financial Statements)
Further information about the Fund's performance is contained in the Fund's
Annual Report for the fiscal year ended September 30, 1994, which can be
obtained free of charge.
GENERAL INFORMATION
- --------------------------------------------------------------------------------
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated September 22, 1993, as amended and restated dated December 20,
1993. The Declaration of Trust permits the Trust to offer separate series of
shares of beneficial interest representing interests in separate portfolios of
securities. This prospectus relates only to the Trust's Peachtree Bond Fund. The
Fund is designed as a convenient means of accumulating an interest in a
professionally managed, diversified portfolio consisting primarily of
government, mortgage-backed, asset-backed and corporate securities, as well as
collateralized mortgage obligations ("CMOs") and adjustable rate mortgage
securities ("ARMs"). A minimum initial investment of $1,000 is required ($500
for Individual Retirement Accounts ("IRAs")), and subsequent investments must be
in amounts of at least $100. See "Investing in the Fund."
Fund shares are sold at net asset value plus a maximum sales load of 2.50% and
redeemed at net asset value.
INVESTMENT INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The Fund's investment objective is to achieve current income. The investment
objective cannot be changed without the approval of the Fund's shareholders.
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.
INVESTMENT POLICIES
The Fund pursues its investment objective by investing primarily in a portfolio
of U.S. government, mortgage-backed, asset-backed and corporate bonds and other
securities as well as CMOs and ARMs. Under normal market conditions, the Fund
will invest at least 65% of its assets in bonds. The Fund intends to maintain a
dollar-weighted average portfolio maturity of 15 years or less. Unless indicated
otherwise, the investment policies may be changed by the Trustees without the
approval of Fund shareholders. Shareholders will be notified before any material
change in these policies becomes effective.
ACCEPTABLE INVESTMENTS. The securities in which the Fund may invest include, but
are not limited to:
domestic issues of corporate debt obligations, so long as such debt
obligations are rated by one or more nationally recognized statistical
rating organizations ("Rating Agencies") in one of the four highest
rating categories at the time of purchase (e.g., AAA, AA, A or BBB by
Standard & Poor's Ratings Group ("S&P"), Fitch Investors Service, Inc.
("Fitch"), or Duff & Phelps Credit Rating Co. ("Duff & Phelps") or Aaa,
Aa, A or Baa by Moody's Investors Service, Inc. ("Moody's")) or, if
unrated, determined by Bank South, N.A. (the "Adviser") to be of
comparable quality to securities having such ratings;
commercial paper (including asset-backed commercial paper) which matures
in 270 days or less so long as at least two ratings are high quality
ratings by Rating Agencies. Such ratings would include: A-1 or A-2 by
S&P, Prime-1 or Prime-2 by Moody's, F-1 or F-2 by Fitch, or Duff-1 or
Duff-2 by Duff & Phelps;
obligations issued or guaranteed as to payment of principal and interest
by the U.S. government, or its agencies or instrumentalities ("Government
Securities");
asset-backed securities in one of the two highest ratings categories by a
Rating Agency, or if unrated, of comparable quality in the judgment of
the Adviser;
U.S. dollar denominated debt obligations of foreign issuers;
repurchase agreements;
time and savings deposits (including certificates of deposit) in
commercial or savings banks whose accounts are insured by the Bank
Insurance Fund ("BIF") or the Savings Association Insurance Fund
("SAIF"), which are administered by the Federal Deposit Insurance
Corporation ("FDIC"), and certificates of deposit and other time deposits
issued by foreign branches of BIF-insured banks;
bankers' acceptances; and
securities of other investment companies.
Securities rated Baa or BBB, while of investment grade, have speculative
characteristics with respect to the issuer's capacity to pay interest and repay
principal. If an investment grade security loses its rating or has its rating
reduced after the Fund has purchased it, the Fund is not required to sell the
security from its portfolio; however, the Adviser will endeavor to dispose of
the security as soon as practicable thereafter, taking into account existing
market conditions and the cost of such sale, including potential losses. A
credit rating is not a recommendation to buy, sell or hold securities, and is
subject to change and/or withdrawal by the rating agency.
The Adviser attempts to manage the Fund's total performance, which includes both
changes in principal value of the Fund's portfolio and income earned, by
anticipating opportunities in the capital markets and risks of changes in market
interest rates. When the Adviser expects that market interest rates may decline,
which would cause prices of outstanding bonds to rise, it generally extends the
average maturity of the Fund's portfolio. When the Adviser expects that market
interest rates may rise, which would cause prices of outstanding bonds to
decline, it generally shortens the average maturity of the Fund's portfolio.
Further, the Adviser attempts to improve the Fund's total return by weighing the
relative value of alternative bond issues having similar maturities in selecting
portfolio securities. By actively managing the Fund's portfolio in this manner,
the Adviser seeks to provide capital appreciation during periods of falling
interest rates and protection against capital depreciation during periods of
rising rates.
The prices of fixed income securities fluctuate inversely to the direction of
interest rates.
GOVERNMENT SECURITIES. The types of Government Securities in which the Fund may
invest generally include direct obligations of the U.S. Treasury (such as U.S.
Treasury bills, notes, and bonds) and obligations issued or guaranteed by U.S.
government agencies or instrumentalities. These securities are backed by:
the full faith and credit of the U.S. Treasury;
the issuer's right to borrow from the U.S. Treasury;
the discretionary authority of the U.S. government to purchase certain
obligations of agencies or instrumentalities; or
the credit of the agency or instrumentality issuing the obligations.
Examples of agencies and instrumentalities which may not always receive
financial support from the U.S. government are:
Federal Home Loan Banks;
Federal Home Loan Mortgage Corporation;
Federal Farm Credit Banks;
Student Loan Marketing Association; and
Federal National Mortgage Association.
MORTGAGE-BACKED SECURITIES. Some of the U.S. Government Securities in which the
Fund will invest can represent an undivided interest in a pool of residential
mortgages or may be collateralized by a pool of residential mortgages
("Mortgage-backed securities"). Mortgage-backed securities have yield and
maturity characteristics corresponding to the underlying mortgages.
Distributions to holders of Mortgage-backed securities include both interest and
principal payments. Principal payments represent the amortization of the
principal of the underlying mortgages and any prepayments of principal due to
prepayment, refinancing, or foreclosure of the underlying mortgages. Although
maturities of the underlying mortgage loans may range up to 30 years,
amortization and prepayments substantially shorten the effective maturities of
Mortgage-backed securities. Due to these features, Mortgage-backed securities
are less effective as a means of "locking-in" attractive long-term interest
rates than fixed-income securities which pay only a stated amount of interest
until maturity, when the entire principal amount is returned. Prepayments, which
become more likely as mortgage interest rates decline, create a need to reinvest
distribution of principal at then-current lower rates. Since comparatively high
interest rates cannot be effectively "locked in", Mortgage-backed securities may
have less potential for capital appreciation during periods of declining
interest rates than other non-callable fixed-income government securities of
comparable stated maturities. However, Mortgage-backed securities may experience
less pronounced declines in value during periods of rising interest rates.
Mortgage-backed securities utilizing ARMs may fluctuate less in value and suffer
fewer prepayments than Mortgage-backed securities utilizing fixed rate
mortgages.
ARMS. ARMs are Mortgage-backed securities representing interests in adjustable
rather than fixed interest rate mortgages. The Fund invests in ARMs issued by
the Government National Mortgage Association ("GNMA"), the Federal National
Mortgage Association ("FNMA"), the Federal Home Loan Mortgage Corporation
("FHLMC"), and by non-government and private entities and are actively traded.
The underlying mortgages which collateralize ARMs issued by GNMA are fully
guaranteed by the Federal Housing Administration ("FHA") or Veterans
Administration ("VA"), while those collateralizing ARMs issued by FHLMC or FNMA
are typically conventional residential mortgages conforming to strict
underwriting size and maturity constraints.
CMOS. CMOs are debt obligations collateralized by mortgage loans or
Mortgage-backed securities. Typically, CMOs are collateralized by GNMA, FNMA or
FHLMC certificates, but may be collateralized by whole loans or private
mortgage-backed securities.
The Fund will only invest in CMOs which are rated AAA by a Rating Agency, and
which may be: (a) collateralized by pools of mortgages in which each mortgage is
guaranteed as to payment of principal and interest by an agency or
instrumentality of the U.S. government; (b) collateralized by pools of mortgages
in which payment of principal and interest is guaranteed by the issuer and such
guarantee is collateralized by U.S. Government Securities; (c) securities in
which the proceeds of the issuance are invested in mortgage securities and the
payment of the principal and interest is supported by the credit of an agency or
instrumentality of the U.S. government; or (d) collateralized by pools of
mortgages or Mortgage-backed securities not guaranteed by the U.S. government or
any government agency.
ASSET-BACKED SECURITIES. Asset-backed securities are obligations of trusts or
special purpose corporations that directly or indirectly represent a
participation in, or are secured by and payable from various types of assets. At
the present time, automobile and credit card receivables are among the most
common collateral supporting asset-backed securities. In general, the collateral
supporting asset-backed securities is of shorter maturity than mortgage loans
and is less likely to experience substantial prepayments. As with
Mortgage-backed securities, asset-backed securities are often backed by a pool
of assets representing the obligations of a number of different parties and use
similar credit enhancement techniques.
Asset-backed securities present certain risks that are not presented by
Mortgage-backed securities. Credit card receivables are generally unsecured and
the debtors are entitled to the protection of a number of state and federal
consumer credit laws, many of which give such debtors the right to set off
certain amounts owed on the credit cards, thereby reducing the balance due. Most
issuers of asset-backed securities backed by automobile receivables permit the
services of such receivables to retain possession of the underlying obligations.
If the servicer were to sell these obligations to another party, there is a risk
that the purchaser would acquire an interest superior to that of the holders of
the related asset-backed securities. In addition, because of the large number of
vehicles involved in a typical issuance and technical requirements under state
laws, the trustee for the holders of asset-backed securities backed by
automobile receivables may not have a recorded security interest in all of the
obligations backing such receivables. Therefore, there is a possibility that
recoveries on repossessed collateral may not, in some cases, be available to
support payments on these securities.
In general, issues of asset-backed securities are structured to include
additional collateral and/or additional credit support to protect against the
risk that a portion of the collateral supporting the asset-backed securities may
default and/or may suffer from these defects. In evaluating the strength of
particular issues of asset-backed securities, the Adviser considers any rating
given to such securities, the financial strength of the provider of credit
support, the type and extent of credit enhancement provided, as well as the
documentation and structure of the issue itself and the credit support.
OPTIONS AND FUTURES. The Fund may purchase and sell financial futures contracts
and purchase and sell options on financial futures contracts and on its
portfolio securities.
OBLIGATIONS OF FOREIGN ISSUERS. The Fund may invest in debt obligations of
foreign issuers including foreign governments, foreign governmental agencies, or
supranational institutions. In addition, the Fund may invest in high quality
debt securities issued by corporations subject to the credit limitations listed
above.
FOREIGN GOVERNMENT SECURITIES. The foreign government securities in which
the Fund may invest generally consist of obligations supported by national,
state or provincial governments or similar political subdivisions. Foreign
government securities also include debt obligations of supranational
entities, which include international organizations designed or supported
by governmental entities to promote economic reconstruction or development,
international banking institutions and related government agencies.
Examples include the International Bank for Reconstruction and Development
(the World Bank), the European Coal and Steel Community, the Asian
Development Bank and the InterAmerican Development Bank.
Foreign government securities also include debt securities of
"quasi-governmental agencies". Debt securities of quasi-governmental
agencies are either debt securities issued by entities which are owned by a
national, state or equivalent government or are obligations of a political
unit that are not backed by the national government's full faith and credit
and general taxing powers. Further, foreign government securities include
mortgage-related securities issued or guaranteed by national, state or
provincial government instrumentalities, including quasi-governmental
agencies.
REPURCHASE AGREEMENTS. Repurchase agreements are arrangements in which banks,
broker-dealers, and other financial institutions sell securities to the Fund and
agree at the time of sale to repurchase them at a mutually agreed upon time and
price including interest. To the extent that the seller does not repurchase the
securities from the Fund, the Fund could receive less than the repurchase price
on any sale of such securities. Repurchase agreements will be collateralized by
securities having a value equal at all times to at least 100% of the amount of
the securities subject to the repurchase agreement.
RESTRICTED AND ILLIQUID SECURITIES. The Fund intends to 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 on resale under federal securities law. However, the
Fund will limit investments in illiquid securities, including certain restricted
securities not determined by the Trustees to be liquid, non-negotiable time
deposits, and repurchase agreements providing for settlement in more than seven
days after notice, to 15% of its net assets.
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 or 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 in 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.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES. The Fund may invest in
the securities of other investment companies, but will not own more than 3% of
the total outstanding voting stock of any investment company, invest more than
5% of total assets in any one investment company, or invest more than 10% of
total assets in investment companies in the aggregate. The Fund will invest in
other investment companies primarily for the purpose of investing short-term
cash which has not yet been invested in other portfolio instruments. It should
be noted that investment companies incure certain expenses, and therefore, any
investment by the Fund in shares of another investment Company would be subject
to certain duplicate expenses, particularly transfer agent and custodian fees.
The adviser will waive its investment advisory fee on assets invested in
securities of open-end investment companies.
LENDING OF PORTFOLIO SECURITIES. In order to generate additional income, the
Fund may lend its portfolio securities on a short-term or long-term basis, to
broker-dealers, banks, or other institutional borrowers of securities. The Fund
will limit the amount of portfolio securities it may lend to not more than 50%
of the value of its total assets at any time. The Fund will only enter into loan
arrangements with broker-dealers, banks, or other institutions which the Adviser
has determined are creditworthy under guidelines established by the Trustees,
and will receive collateral equal to at least 100% of the value of the
securities loaned at all times.
AVERAGE PORTFOLIO MATURITY. Although the Fund will not maintain a stable net
asset value, the Adviser will seek to limit, to the extent consistent with the
Fund's investment objective of current income, the magnitude of fluctuations in
the Fund's net asset value by limiting the dollar-weighted average maturity of
the Fund's portfolio to 15 years or less. Securities with shorter maturities
generally have less price movement than securities of comparable quality with
longer maturities. In periods of anticipated rising interest rates, a greater
portion of the Fund's assets may be invested in shorter term and variable rate
securities, the value of which are believed to be less sensitive to interest
rate changes.
TEMPORARY INVESTMENTS. From time to time for defensive purposes, the Fund may
invest temporarily in the securities described under "Acceptable Investments"
having short-term maturities.
FOREIGN SECURITIES RISKS. Investments in foreign securities, particularly those
of non-governmental issuers, may involve additional risks not ordinarily
associated with investments in domestic issuers. Specifically, such securities
may be affected by the strength of foreign currencies relative to the U.S.
Dollar, possible expropriation or nationalization, or by political, social,
diplomatic or economic developments and the difficulties of assessing economic
trends in foreign countries. Accounting procedures and government supervision
may be less stringent than those applicable to U.S. companies. Financial
information may be unavailable or less detailed, and interpretation of financial
information prepared under foreign accounting standards more difficult than is
the case of
domestic issuers. Foreign securities and securities markets may be less liquid
or more volatile than U.S. securities markets and may offer less protection to
investors. It may also be more difficult to enforce contractual obligations
abroad than would be the case in the United States because of differences in the
legal systems. Foreign securities may be subject to foreign taxes or tax
withholding, which may reduce yield, and may be less marketable than comparable
U.S. securities. Transaction costs in foreign securities may be higher. The
Adviser will consider these and other factors before investing in foreign
securities and will not make such investments unless, in its opinion, such
investments will meet the Fund's standards and objectives.
PORTFOLIO TURNOVER. Although the Fund does not intend to invest for the purpose
of seeking short-term profits, securities in its portfolio will be sold whenever
the Adviser believes it is appropriate to do so in light of the Fund's
investment objective, without regard to the length of time a particular security
may have been held. The Adviser does not anticipate that the Fund's annual
portfolio turnover rate will exceed 200% under normal market conditions. A high
portfolio turnover rate may lead to increased costs and may also result in
higher taxes paid by the Fund's shareholders.
CERTAIN BORROWING AND 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 33 1/3% of the value of its total assets and secure such
borrowings with up to 15% of the value of those assets at the time of
borrowing; or
with respect to 75% of its total assets, invest more than 5% of the value
of its total assets in securities of any one issuer (other than cash,
cash items, or securities issued or guaranteed by the U.S. government and
its agencies or instrumentalities, and repurchase agreements
collateralized by such securities or acquire more than 10% of the
outstanding voting securities of any one issuer).
The above investment limitations cannot be changed without shareholder approval.
PEACHTREE FUNDS INFORMATION
- --------------------------------------------------------------------------------
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees (the "Board" or
"Trustees"). The Board is responsible for managing the Trust's business affairs
and for exercising all the Trust's powers except those reserved for the
shareholders. The Executive Committee of the Board handles various of the
Board's delegable responsibilities between meetings of the Board.
INVESTMENT ADVISER. Investment decisions for the Fund are made by the Bank, as
the Fund's Adviser, subject to direction by the Board. The Adviser 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 Fund's assets.
ADVISORY FEES. The Adviser receives an annual investment advisory fee
equal to 0.75% of the Fund's average daily net assets. The fee paid by the
Fund, while higher than the advisory fee paid by certain other mutual
funds, is comparable to fees paid by many mutual funds with similar
objectives and policies. The Adviser has undertaken to reimburse the Fund,
up to the amount of the advisory fee, for operating expenses in excess of
limitations established by certain states. The Adviser may voluntarily
choose to waive a portion of its fee or reimburse other expenses of the
Fund, but reserves the right to terminate such waiver or reimbursement at
any time at its sole discretion.
ADVISER'S BACKGROUND. The Adviser, a national bank headquartered in
Atlanta, Georgia, is a wholly-owned subsidiary of Bank South Corporation, a
Georgia corporation which is a registered bank holding company. The Adviser
serves consumers through its network of banking offices with a full range
of deposit and lending products, as well as investment services. The
principal offices of the Adviser are located at 3350 Cumberland Circle,
Atlanta, GA 30339.
The Adviser has managed discretionary assets for its customers since 1931.
As of November 30, 1994, the Adviser managed in excess of $1 billion of
discretionary assets. The Bank has served as an investment adviser to
mutual funds since January 1994.
As part of its regular banking operations, the Bank 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 the Bank. The lending relationship will not be a factor in the selection
of securities.
PORTFOLIO MANAGER. Mr. J.M. Johnston, Jr. is primarily responsible for the
day-to-day management of the Fund's portfolio. He joined the Adviser in
September of 1992. Mr. Johnston directs the investment management of
several large employee benefit plans, fixed income mutual and common trust
funds, money market mutual funds, and personal trust accounts. He is also
responsible for securities analysis for various industries.
Mr. Johnston began his investment career in 1981. Prior to his affiliation
with the Bank, he spent six years with The Citizens & Southern National
Bank, Atlanta, Georgia as a portfolio manager.
Mr. Johnston holds a Bachelor of Science degree from the University of
Alabama and a Master of Business Administration in Finance from Georgia
State University. He is a member of the Atlanta Society of Financial
Analysts.
DISTRIBUTION OF SHARES
Federated Securities Corp. (the "Distributor") is the principal distributor for
shares of the Fund. It is a Pennsylvania corporation organized on November 14,
1969, and is the principal distributor for a number of investment companies. The
Distributor is a subsidiary of Federated Investors.
DISTRIBUTION PLAN. Under a distribution plan (the "Plan") adopted in accordance
with Securities and Exchange Commission ("SEC") Rule 12b-1 under the Investment
Company Act of 1940, as amended, the Fund will pay an amount computed at an
annual rate of up to 0.75% of the average
daily net asset value of the shares to finance any activity which is principally
intended to result in the sale of shares subject to the Plan. Certain trust
clients of the Bank, including ERISA plans, will not be affected by the Plan
because the Plan will not be activated unless and until a second, "Trust" class
of shares of the Fund (which would not have a Rule 12b-1 plan) is created and
such trust clients' investments in the Fund are converted to such Trust class.
The Distributor may select other financial institutions (such as broker-dealers
or banks) to provide sales support services as agents for their clients or
customers who beneficially own shares. These financial institutions (including
the Bank) will receive fees from the Distributor based upon shares subject to
the Plan and owned by their clients or customers. The schedules of such fees and
the basis upon which such fees will be paid will be determined from time to time
by the Distributor.
The Fund's Plan is a compensation type plan. As such, the Fund pays the
Distributor the fee described above as opposed to reimbursing the Distributor
for actual expenses incurred. Therefore, the Fund does not pay for amounts
expended by the Distributor in excess of amounts received by it from the Fund,
which may include interest, carrying or other financing charges in connection
with excess amounts expended, or the Distributor's overhead expenses. However,
the Distributor may be able to recover such amounts or may earn a profit from
future payments made by the Fund under the Plan.
The Glass-Steagall Act prohibits a depository institution (such as a commercial
bank or a savings and loan association) from being an underwriter or distributor
of most securities. In the event the Glass-Steagall Act is deemed to prohibit
depository institutions from acting in the capacities described above or should
Congress relax current restrictions on depository institutions, the Trustees
will consider appropriate changes in the services.
State securities laws on this issue may differ from the interpretations of
federal law expressed herein and banks and financial institutions may be
required to register as dealers pursuant to certain states' laws.
ADMINISTRATIVE ARRANGEMENTS. The Distributor may also pay administrators a fee
based upon the average net asset value of shares of their customers invested in
the Trust for providing administrative services. This fee, if paid, will be
reimbursed by the Adviser and not the Trust.
ADMINISTRATION OF THE TRUST
ADMINISTRATIVE SERVICES. Federated Administrative Services, Pittsburgh,
Pennsylvania, a subsidiary of Federated Investors, provides certain
administrative personnel and services necessary to operate the Fund. Such
services include certain legal and accounting services. Federated Administrative
Services provides these at the annual rates specified below:
<TABLE>
<CAPTION>
MAXIMUM AVERAGE AGGREGATE DAILY
ADMINISTRATIVE FEE NET ASSETS OF THE TRUST
<C> <S>
.150 of 1% on the first $250 million
.125 of 1% on the next $250 million
.100 of 1% on the next $250 million
.075 of 1% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$100,000 per Fund. Federated Administrative Services may voluntarily choose to
waive a portion of its fee.
SHAREHOLDER SERVICES PLAN. The Fund has adopted a Shareholder Services Plan (the
"Services Plan") with respect to the shares. Under the Services Plan, financial
institutions will enter into shareholder service agreements with the Fund to
provide administrative support services to their customers who from time to time
may be owners of record or beneficial owners of the shares. In return for
providing these support services, a financial institution may receive payments
from the Fund at a rate not exceeding 0.25% of the average daily net assets of
the shares beneficially owned by the financial institution's customers for whom
it is holder of record or with whom it has a servicing relationship. These
administrative services may include, but are not limited to, the following
functions: providing office space, equipment, telephone facilities, and various
personnel including clerical, supervisory, and computer, as necessary or
beneficial to establish and maintain shareholder accounts and records;
processing purchase and redemption transactions and automatic investments of
client account cash balances; answering routine client inquiries regarding the
Fund; assisting clients in changing dividend options, account designations, and
addresses; and providing such other services as the Fund reasonably requests.
Certain trust clients of the Bank, including ERISA plans, will not be affected
by the Services Plan because the Services Plan will not be activated unless and
until a second, "Trust" class of shares of the Fund (which would not have a
Services Plan) is created and such trust clients' investments in the Fund are
converted to such Trust class.
CUSTODIAN. The Bank of New York, New York, New York is custodian for the
securities and cash of the Fund.
TRANSFER AGENT, DIVIDEND DISBURSING AGENT, AND PORTFOLIO ACCOUNTING SERVICES.
Federated Services Company, Pittsburgh, Pennsylvania, a subsidiary of Federated
Investors, is transfer agent (the "Transfer Agent") for the shares of, and
dividend disbursing agent for, the Fund. It also provides certain accounting and
recordkeeping services with respect to the Fund's portfolio investments.
LEGAL COUNSEL. Legal counsel is provided by Houston, Houston & Donnelly,
Pittsburgh, Pennsylvania, and Dickstein, Shapiro & Morin, L.L.P., Washington,
D.C.
INDEPENDENT AUDITORS. The independent auditors for the Fund are Ernst & Young
LLP, Pittsburgh, Pennsylvania.
EXPENSES OF THE FUND
The Fund pays all of its own expenses and its allocable share of the Trust's
expenses. The expenses borne by the Fund include, but are not limited to, the
cost of: organizing the Trust and continuing its existence; Trustees' fees;
investment advisory and administrative services; printing prospectuses and other
Fund documents for shareholders; registering the Trust, the Fund, and shares of
the Fund with federal and state securities authorities; taxes and commissions;
issuing, purchasing, repurchasing, and redeeming shares; fees for custodians,
transfer agents, dividend disbursing agents, shareholder servicing agents, and
registrars; printing, mailing, auditing, accounting, and legal expenses; reports
to shareholders and governmental agencies; meetings of Trustees and
shareholders and proxy solicitations therefor; insurance premiums; association
membership dues; and such nonrecurring and extraordinary items as may arise.
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 other assets, less
liabilities, by the number of shares outstanding.
INVESTING IN THE FUND
- --------------------------------------------------------------------------------
SHARE PURCHASES
Fund shares are sold on days on which the New York Stock Exchange and the
Federal Reserve Wire System are open for business. Shares of the Fund may be
purchased through the Bank. In connection with the sale of shares of the Fund,
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.
BY TELEPHONE. To place an order to purchase Fund shares, call the Peachtree
Funds Service Center at 1-404-989-6200 or 1-800-621-8969. Texas residents must
purchase shares of the Fund through Bank South Securities Corporation at
1-404-989-6181 or 1-800-621-8967. Your purchase order will be taken directly
over the telephone. The order must be place by 4:00 p.m. (Eastern time) for
shares to be purchased at that day's price.
BY MAIL. Provide a letter of instruction to the Fund indicating your purchase
order, including the dollar amount of your order, your account title and/or
name, and your account number, and include a check made payable to the Fund.
PAYMENT BY CHECK. Mail to Peachtree Bond Fund, c/o the Peachtree Funds Service
Center, MC 684, P.O. Box 4387, Atlanta, Georgia 30302.
PAYMENT BY WIRE. To purchase shares by Federal Wire, contact your account
officer for wiring instructions. Wire orders will only be accepted on days on
which the Fund, the Bank, and the Federal Reserve Banks are open for business.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in the Fund by an investor is $1,000 ($500 for
IRAs). Subsequent investments must be in amounts of at least $100. The Fund may
choose to waive its minimum investment requirements from time to time and for
accounts which select the Systematic Investment Program.
SYSTEMATIC INVESTMENT PROGRAM
Once an account has been opened, shareholders may add to their investment on a
regular basis in a minimum amounts of $100, unless waived. Under this program,
funds may be automatically withdrawn periodically from the shareholder's
checking or other transaction deposit account and invested in Fund shares at the
net asset value next determined after an order is received by the
Bank, plus an applicable sales load. A shareholder may apply for participation
in this program through the Bank.
WHAT SHARES COST
Shares of the Fund are sold at their net asset value next determined after an
order is received plus a sales load as follows:
<TABLE>
<CAPTION>
SALES LOAD AS SALES LOAD AS
A PERCENTAGE A PERCENTAGE
OF PUBLIC OF NET AMOUNT
AMOUNT OF TRANSACTION OFFERING PRICE INVESTED
<S> <C> <C>
Less than $100,000 2.50% 2.56%
$100,000 but less than $250,000 2.00% 2.04%
$250,000 but less than $500,000 1.50% 1.52%
$500,000 but less than $750,000 1.00% 1.01%
$750,000 but less than $1,000,000 0.50% 0.50%
$1,000,000 and more 0.00% 0.00%
</TABLE>
The net asset value is determined at 4:00 p.m. (Eastern time), Monday through
Friday, except on: (i) days on which changes (if any) in the value of the Fund's
portfolio securities do not materially affect its net asset value; (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 load, by certain trust customers of the Bank and current
and retired directors, advisory committee members and employees of the Bank and
its affiliates and their spouses and children under 21. In addition, no sales
load is imposed for Fund shares purchased through Bank South Investment
Services, Inc.'s wrap fee program. Shareholders who wish to obtain more
information about the wrap fee program may contact Bank South Investment
Services, Inc. Investors who purchase shares through the wrap fee program may be
charged an additional fee by Bank South Investment Services, Inc.
SALES LOAD REALLOWANCE. The Bank and any authorized dealer or bank will normally
receive up to 85% of the applicable sales load as a transaction fee from its
customers, and for sales and/or administrative services performed on behalf of
its customers in connection with the initiation of customer accounts and
purchases of Fund shares. Any portion of the sales load which is not paid to the
Bank or a dealer will be retained by the Distributor. However, the Distributor
will, periodically, uniformly offer to pay additional amounts in the form of
cash or promotional incentives consisting of trips to sales seminars at luxury
resorts, tickets or other items, to all dealers selling shares of the Fund. Such
payments, all or a portion of which may be paid from the sales load the
Distributor normally retains or any other source available to it, will be
predicated upon the amount of shares of the Fund that are sold by the dealer.
REDUCING THE SALES LOAD
The sales load can be reduced on the purchase of shares of the Fund through:
quantity discounts and accumulated purchases;
signing a 13-month letter of intent;
using the reinvestment privilege; or
concurrent purchases.
QUANTITY DISCOUNTS AND ACCUMULATED PURCHASES. As shown in the table on the
previous page, larger purchases reduce the sales load 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 load.
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 $90,000 and
purchases $10,000 more at the current public offering price, the sales load on
the additional purchase according to the schedule now in effect would be 2.00%,
not 2.50%.
To receive the sales load reduction, the Bank must be notified by the
shareholder in writing at the time the purchase is made that shares are already
owned or that purchases are being combined. The Fund will reduce the sales load
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 load may be reduced by
signing a letter of intent to that effect. This letter of intent includes a
provision for a sales load adjustment depending on the amount actually purchased
within the 13-month period and a provision for the custodian to hold up to 2.50%
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 load.
This letter of intent will not obligate the shareholder to purchase shares, but
if the shareholder does, each purchase during the period will be at the sales
load 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.
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 load. The Bank
must be notified by the shareholder in writing or by the shareholder's financial
institution of the reinvestment in order to eliminate a sales load. If the
shareholder redeems his shares in the Fund, there may be tax consequences.
CONCURRENT PURCHASES. For purposes of qualifying for a sales load reduction, a
shareholder has the privilege of combining concurrent purchases of two or more
funds in the Trust, the purchase price
of which includes a sales load. For example, if a shareholder concurrently
invested $30,000 in one of the other funds in the Trust with a sales load and
$70,000 in this Fund, the sales load would be reduced.
To receive this sales load reduction, the Distributor must be notified by the
shareholder in writing or by the Bank at the time the concurrent purchases are
made. The Fund will reduce the sales load after it confirms the purchases. See
"What Shares Cost" and "Addresses".
CERTIFICATES AND CONFIRMATIONS
The Transfer Agent for the Fund maintains a share account for each shareholder
of record. Share certificates are not issued unless requested in writing from
the Fund or the Transfer Agent.
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 daily and paid monthly to all shareholders invested in
the Fund on the record date.
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 load, unless a shareholder
makes written request for cash payments to the Fund or the Bank.
PURCHASING SHARES OF THE FUND WITH SECURITIES
The Fund in its sole discretion, may sell Fund shares to investors that desire
to purchase Fund shares with certain securities or a combination of certain
securities and cash. The Fund reserves the right to determine the acceptability
of securities used to effect such purchases. On the day securities are accepted
by the Fund, they are valued based upon independent bid and in the same manner
as the Fund values its assets. Investors wishing to use securities to purchase
Fund shares should first contact the Bank. Any such transfer of securities is
treated as a sale of the securities and will result in the recognition of any
gain or loss for federal income tax purposes by the seller of such securities,
except to the extent the seller is an ERISA plan or similar entity not subject
to tax.
EXCHANGE PRIVILEGE
- --------------------------------------------------------------------------------
PEACHTREE FUNDS
All shareholders of the Fund are shareholders of Peachtree Funds. Peachtree
Funds currently include the Fund, Peachtree Equity Fund, Peachtree Georgia
Tax-Free Income Fund, Peachtree Prime Money Market Fund, and Peachtree
Government Money Market Fund. Shareholders have easy access to each of the
portfolios of Peachtree Funds through a telephone exchange program. All
Peachtree Funds are advised by the Bank and distributed by the Distributor.
Shareholders may exchange shares of the Fund for shares of the other Peachtree
Funds. In addition, shares of the Fund may also be exchanged for certain other
funds designated by the Bank which are
distributed by the Distributor, but are not advised by the Bank ("Federated
Funds"). For further information on the availability of Federated Funds for
exchanges, please call the Peachtree Funds Service Center at 1-404-989-6200 or
1-800-621-8969. Shares of funds with a sales load may be exchanged at net asset
value for shares of other funds with an equal sales load or no sales load.
Shares of funds with a sales load may be exchanged for shares of funds with a
higher sales load at net asset value, plus the additional sales load. Shares of
funds with no sales load, acquired by direct purchase, may be exchanged for
shares of funds with a sales load at net asset value, plus the applicable sales
load.
When an exchange is made from a fund with a sales load to a fund with no sales
load, the shares exchanged and additional shares which have been purchased by
reinvesting dividends or capital gains on such shares retain the character of
the exchanged shares for purposes of exercising further exchange privileges;
thus, an exchange of such shares for shares of a fund with a sales load would be
at net asset value.
Shareholders who exercise this exchange privilege must exchange shares having a
net asset value of at least $1,000. Prior to any exchange, the shareholder must
receive a copy of the current prospectus of the fund into which an exchange is
to be effected.
The exchange privilege is available to shareholders residing in any state in
which the fund shares being acquired may legally be sold. Upon receipt of proper
instructions and all necessary supporting documents, shares submitted for
exchange will be redeemed at the next-determined net asset value for the
applicable fund. Written exchange instructions may require a signature
guarantee. Exercise of this privilege is treated as a sale for federal income
tax purposes and, depending on the circumstances, a short or long-term capital
gain or loss may be realized.
The Fund reserves the right to terminate the exchange privilege at any time on
60 days' notice. Shareholders will be notified if this privilege is terminated.
A shareholder may obtain further information on the exchange privilege by
calling the Peachtree Funds Service Center at 1-404-989-6200 or 1-800-621-8969.
BY TELEPHONE. Instructions for exchanges between funds which are part of the
Trust may be
given by telephone to the Peachtree Funds Service Center at 1-404-989-6200 or
1-800-621-8969; or to the Distributor. Shares may be exchanged by telephone only
between fund accounts having identical shareholder registrations.
Any shares held in certificate form cannot be exchanged by telephone but must be
forwarded to the Fund's Transfer Agent by the Bank and deposited to the
shareholder's mutual fund account before being exchanged. See "Addresses".
An authorization form permitting the Fund to accept telephone exchanges must
first be completed. It is recommended that investors request this privilege at
the time of their initial application. If not completed at the time of initial
application, authorization forms and information regarding this service are
available from the Bank. Telephone exchange 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.
Telephone exchange instructions must be received before 4:00 p.m. (Eastern time)
for shares to be exchanged the same day. The telephone exchange privilege may be
modified or terminated at any time. Shareholders will be notified of such
modification or termination. Shareholders may have difficulty in making
exchanges by telephone through the Bank during times of drastic economic or
market changes. If a shareholder cannot contact the Bank by telephone, it is
recommended that an exchange request be made in writing and sent by overnight
mail to Peachtree Funds, 3350 Cumberland Circle, 10th Floor, Atlanta, Georgia
30339.
REDEEMING SHARES
- --------------------------------------------------------------------------------
The Fund redeems shares at their net asset value next determined after the Bank
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 and can be made through the Bank or directly to
the Fund.
BY TELEPHONE. A shareholder may redeem shares of the Fund by contacting his
account officer or by calling the Peachtree Funds Service Center to request the
redemption. (Call 1-404-989-6200 or
1-800-621-8969.) Shares will be redeemed at the net asset value next determined
after the Fund receives the redemption request from the Bank. Redemption
requests to the Bank must be received before 4:00 p.m. (Eastern time) in order
for shares to be redeemed at that day's net asset value, and the Bank will
promptly submit such redemption requests and provide written redemption
instructions to the Fund. If, at any time, the Fund should determine it
necessary to terminate or modify this method of redemption, shareholders would
be promptly notified.
An authorization form permitting the Fund to accept telephone redemption
requests must first be completed. It is recommended that investors request this
privilege at the time of their initial application. If not completed at the time
of initial application, authorization forms and information on this service are
available from the Bank. 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.
A shareholder may have the redemption proceeds directly deposited by electronic
funds transfer or wired directly to a domestic commercial bank previously
designated by the shareholder. Wire redemption orders will only be accepted on
days on which the Fund, the Bank and the Federal Reserve Wire System are open
for business. Wire-transferred redemptions may be subject to an additional fee.
In the event of extraordinary 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 your account officer at the Bank.
BY MAIL. Shareholders may redeem shares by sending a written request to the
Bank. 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 to the Bank.
Shareholders should call the Peachtree Funds Service Center at 1-404-989-6200 or
1-800-621-8969 for assistance in redeeming shares by mail.
SIGNATURES. Shareholders requesting a redemption of $50,000 or more, a
redemption requesting payment to an address other than that on record with the
Fund, or other than to the shareholder of record must make written redemption
requests with signatures guaranteed by:
a trust company or commercial bank whose deposits are insured by the
FDIC's BIF;
a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchange;
a savings bank or savings and loan association whose deposits are insured
by the FDIC's SAIF; or
any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934, as amended.
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.
RECEIVING PAYMENT. Normally, a check for the proceeds is mailed to the
shareholder within one business day, but in no event more than seven calendar
days, after receipt of a proper written redemption request, provided that the
Transfer Agent has received payment for shares from the shareholder.
SYSTEMATIC WITHDRAWAL PROGRAM
Shareholders who desire to receive payments of a predetermined amount may take
advantage of the Systematic Withdrawal Program. Under this program, Fund shares
are redeemed to provide for periodic withdrawal payments in an amount directed
by the shareholder. Depending upon the amount of the withdrawal payments and the
amount of dividends paid with respect to Fund shares, redemptions may reduce,
and eventually deplete, the shareholder's investment in the Fund. For this
reason, payments under this program should not be considered as yield or income
on the shareholder's investment in the Fund. To be eligible to participate in
this program, a shareholder must have an account value of at least $10,000. A
shareholder may apply for participation in this program through the Bank.
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, due to
shareholder redemptions, the account balance falls below the required minimum of
$1,000.
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 entitles shareholders to one vote in Trustee elections
and other matters submitted to shareholders of the Trust for vote. All shares of
each portfolio in the Trust have equal voting rights except that, in matters
affecting only a particular Fund, only shareholders of that Fund are entitled to
vote. 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. As of November 4, 1994, Bank South N.A.,
Atlanta, Georgia, acting in various capacities for numerous accounts, was the
owner of record of approximately 8,117,069 shares (88.82%) 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.
Any Trustee may be removed by the Board of Trustees or by the shareholders at a
special meeting. A special meeting of the shareholders shall be called by the
Trustees upon the written request of shareholders owning at least 10% of the
Trust's outstanding shares.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for acts or obligations of the Trust. To
protect shareholders, 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 the Trust or its
Trustees enter into or sign on behalf of the Fund.
In the unlikely event a shareholder is held personally liable for the Trust's
obligations, the Trust is required by the Declaration of Trust to use its
property to indemnify, protect or compensate the shareholder. On request, the
Trust will defend any claim made and pay any judgment against a shareholder for
any act or obligation of the Trust. Therefore, financial loss resulting from
liability as a shareholder will occur only if the Trust cannot meet its
obligations to indemnify shareholders and pay judgments against them from assets
of the Fund.
EFFECT OF BANKING LAWS
- --------------------------------------------------------------------------------
Banking laws and regulations presently prohibit a bank holding company
registered under the federal Bank Holding Company Act of 1956, as amended or any
affiliate thereof from sponsoring, organizing, controlling, or distributing the
shares of a registered, open-end investment company continuously engaged in the
issuance of its shares, and prohibit banks generally from underwriting or
distributing securities. However, such banking laws and regulations do not
prohibit such a holding company affiliate or bank generally from acting as
investment adviser, transfer agent, or custodian to such an investment company
or from acting as agent for their customers in purchasing securities. The
Adviser is subject to such banking laws and regulations.
The Bank believes, based on the advice of its counsel, that it may perform the
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 affiliates, as well as
further judicial or administrative decisions or interpretations of present or
future statutes and regulations, could prevent the Bank from continuing to
perform all or a part of the above services for its customers and/or the Fund.
If it were prohibited from engaging in these customer-related activities, the
Trustees would consider alternative advisers and means of continuing available
investment services. In such event, changes in the operation of the Fund may
occur, including possible termination of any automatic or other Fund share
investment and redemption services then being provided by the Bank. It is not
expected that existing shareholders would suffer any adverse financial
consequences (if another adviser with equivalent abilities to the Bank 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 intends to meet
requirements of the Internal Revenue Code applicable to regulated investment
companies and to receive the special tax treatment afforded to such companies.
The Fund will be treated as a single, separate entity for federal income tax
purposes so that income (including capital gains) and losses realized by the
Trust's other portfolios will not be combined for tax purposes with those
realized by the Fund.
Unless otherwise exempt, shareholders are required to pay federal income tax on
any dividends and other distributions received. This applies whether dividends
and distributions are received in cash or as additional shares.
STATE AND LOCAL TAXES
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 may advertise its total return and yield.
Total return represents the change, over a specified period of time, in the
value of an investment in the Fund 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 30-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 yield does not
necessarily reflect income actually earned by the Fund and, therefore, may not
correlate to the dividends or other distributions paid to shareholders.
From time to time, the Fund may advertise its performance using certain
financial publications and/ or compare its performance to certain indices.
PEACHTREE BOND FUND
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------ ------------------------------------------------------------------------------------- -------------
LONG-TERM INVESTMENTS--84.8%
- ---------------------------------------------------------------------------------------------------
CORPORATE BONDS--39.7%
- ---------------------------------------------------------------------------------------------------
AEROSPACE--3.5%
-------------------------------------------------------------------------------------
$ 1,000,000 Boeing Co., 6.35%, 6/15/2003 $ 903,240
-------------------------------------------------------------------------------------
1,000,000 Rockwell International Corp., 8.375%, 2/15/2001 1,026,570
-------------------------------------------------------------------------------------
1,000,000 Rockwell International Corp., 6.75%, 9/15/2002 934,810
------------------------------------------------------------------------------------- -------------
Total 2,864,620
------------------------------------------------------------------------------------- -------------
BANKING--3.8%
-------------------------------------------------------------------------------------
1,000,000 Fleet Norstar Financial Group, 7.25%, 9/1/99 978,910
-------------------------------------------------------------------------------------
1,000,000 Security Pacific Corp., 6.875%, 2/15/95 1,001,210
-------------------------------------------------------------------------------------
500,000 Suntrust Banks, Inc., 8.875%, 2/1/98 517,635
-------------------------------------------------------------------------------------
650,000 Wachovia Bank Medium Term Notes, 4.25%, 9/20/96 620,042
------------------------------------------------------------------------------------- -------------
Total 3,117,797
------------------------------------------------------------------------------------- -------------
BEVERAGES--0.6%
-------------------------------------------------------------------------------------
500,000 PepsiCo, Inc., 7.75%, 10/1/98 505,815
------------------------------------------------------------------------------------- -------------
CHEMICALS--0.6%
-------------------------------------------------------------------------------------
500,000 du Pont (E.I.) de Nemours & Co., 8.45%, 10/15/96 512,280
------------------------------------------------------------------------------------- -------------
DATA PROCESSING--1.1%
-------------------------------------------------------------------------------------
1,000,000 International Business Machine, 6.375%, 6/15/2000 934,910
------------------------------------------------------------------------------------- -------------
ENERGY--0.7%
-------------------------------------------------------------------------------------
500,000 BP America, Inc., 9.375%, 11/1/2000 531,805
------------------------------------------------------------------------------------- -------------
FINANCE--11.8%
-------------------------------------------------------------------------------------
500,000 American Express Co., 8.75%, 6/15/96 511,140
-------------------------------------------------------------------------------------
1,100,000 Caterpillar Financial Services, Inc., 9.10%, 10/3/94 1,099,714
-------------------------------------------------------------------------------------
1,000,000 Exxon Capital Corp., 7.875%, 8/15/97 1,015,600
-------------------------------------------------------------------------------------
1,500,000 Ford Motor Credit Co., 6.25%, 2/26/98 1,447,110
-------------------------------------------------------------------------------------
500,000 General Electric Capital Corp., 8.75%, 11/26/96 517,410
-------------------------------------------------------------------------------------
</TABLE>
PEACHTREE BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------ ------------------------------------------------------------------------------------- -------------
LONG-TERM INVESTMENTS--CONTINUED
- ---------------------------------------------------------------------------------------------------
CORPORATE BONDS--CONTINUED
- ---------------------------------------------------------------------------------------------------
FINANCE--CONTINUED
-------------------------------------------------------------------------------------
$ 1,000,000 General Electric Capital Corp., 8.00%, 2/1/97 $ 1,019,410
-------------------------------------------------------------------------------------
1,500,000 International Lease Finance Co., 5.75%, 1/15/96 1,481,325
-------------------------------------------------------------------------------------
1,000,000 Potomac Capital Medium Term Notes, 8.65%, 10/3/98 1,031,690
-------------------------------------------------------------------------------------
1,000,000 Transamerica Finance Corp., 8.125%, 10/15/96 1,012,600
-------------------------------------------------------------------------------------
500,000 U.S. West Capital Funding, Inc., 8.00%, 10/15/96 506,185
------------------------------------------------------------------------------------- -------------
Total 9,642,184
------------------------------------------------------------------------------------- -------------
FOOD--1.2%
-------------------------------------------------------------------------------------
1,000,000 Heinz (H.J.) Co., 6.75%, 10/15/99 958,880
------------------------------------------------------------------------------------- -------------
HEALTH CARE--1.2%
-------------------------------------------------------------------------------------
1,000,000 Lilly (Eli) & Co., 6.75%, 11/15/99 961,220
------------------------------------------------------------------------------------- -------------
POLLUTION CONTROL--2.4%
-------------------------------------------------------------------------------------
1,000,000 WMX Technologies, Inc. , 6.25%, 12/15/95 991,980
-------------------------------------------------------------------------------------
1,000,000 WMX Technologies, Inc. , 6.375%, 7/1/97 981,620
------------------------------------------------------------------------------------- -------------
Total 1,973,600
------------------------------------------------------------------------------------- -------------
PRINTING--0.7%
-------------------------------------------------------------------------------------
500,000 Donnelley R.R. & Sons, 9.125%, 12/1/2000 534,305
------------------------------------------------------------------------------------- -------------
RETAIL--1.3%
-------------------------------------------------------------------------------------
500,000 Wal-Mart Stores, Inc., 9.10%, 7/15/2000 528,915
-------------------------------------------------------------------------------------
500,000 Wal-Mart Stores, Inc., 8.625%, 4/1/2001 520,810
------------------------------------------------------------------------------------- -------------
Total 1,049,725
------------------------------------------------------------------------------------- -------------
SECURITIES--4.8%
-------------------------------------------------------------------------------------
500,000 Lehman Brothers Holdings, Inc., 7.00%, 5/15/97 491,905
-------------------------------------------------------------------------------------
2,000,000 Lehman Brothers Holdings, Inc., 8.875%, 11/1/98 2,063,020
-------------------------------------------------------------------------------------
1,500,000 Salomon, Inc., 5.40%, 10/15/98 1,366,680
------------------------------------------------------------------------------------- -------------
Total 3,921,605
------------------------------------------------------------------------------------- -------------
</TABLE>
PEACHTREE BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------ ------------------------------------------------------------------------------------- -------------
LONG-TERM INVESTMENTS--CONTINUED
- ---------------------------------------------------------------------------------------------------
CORPORATE BONDS--CONTINUED
- ---------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS--1.2%
-------------------------------------------------------------------------------------
$ 1,000,000 AT&T Corp., 6.4%, 6/2/99 $ 988,750
------------------------------------------------------------------------------------- -------------
UTILITIES--4.8%
-------------------------------------------------------------------------------------
1,000,000 Hydro Quebec, 7.375%, 2/1/2003 947,980
-------------------------------------------------------------------------------------
500,000 Tennessee Valley Authority, 4.60%, 12/15/96 477,245
-------------------------------------------------------------------------------------
1,000,000 Tennessee Valley Authority, 7.318%, 5/31/99 987,560
-------------------------------------------------------------------------------------
1,000,000 Tennessee Valley Authority, 6.25%, 8/1/99 950,380
-------------------------------------------------------------------------------------
500,000 Tennessee Valley Authority, 8.375%, 10/1/99 518,565
------------------------------------------------------------------------------------- -------------
Total 3,881,730
------------------------------------------------------------------------------------- -------------
TOTAL CORPORATE BONDS (IDENTIFIED COST $34,462,647) 32,379,226
------------------------------------------------------------------------------------- -------------
U.S. GOVERNMENT AGENCY OBLIGATIONS--22.1%
- ---------------------------------------------------------------------------------------------------
FEDERAL FARM CREDIT BANK--0.6%
-------------------------------------------------------------------------------------
500,000 8.25%, 5/1/2007 480,895
------------------------------------------------------------------------------------- -------------
FEDERAL HOME LOAN BANK--6.0%
-------------------------------------------------------------------------------------
500,000 5.30%, 6/21/96 496,145
-------------------------------------------------------------------------------------
500,000 6.00%, 6/30/97 488,555
-------------------------------------------------------------------------------------
2,000,000 5.66%, 3/24/99 1,945,180
-------------------------------------------------------------------------------------
1,000,000 5.15%, 3/29/99 976,880
-------------------------------------------------------------------------------------
1,000,000 7.20%, 4/29/2004 995,810
------------------------------------------------------------------------------------- -------------
Total 4,902,570
------------------------------------------------------------------------------------- -------------
FEDERAL HOME LOAN MORTGAGE CORP.--1.8%
-------------------------------------------------------------------------------------
1,000,000 6.47%, 4/28/99 994,700
-------------------------------------------------------------------------------------
500,000 5.11%, 3/10/2000 468,220
------------------------------------------------------------------------------------- -------------
Total 1,462,920
------------------------------------------------------------------------------------- -------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--11.1%
-------------------------------------------------------------------------------------
500,000 5.12%, 2/25/98 478,594
-------------------------------------------------------------------------------------
1,000,000 5.30%, 3/11/98 951,490
-------------------------------------------------------------------------------------
</TABLE>
PEACHTREE BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------ ------------------------------------------------------------------------------------- -------------
LONG-TERM INVESTMENTS--CONTINUED
- ---------------------------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS--CONTINUED
- ---------------------------------------------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--CONTINUED
-------------------------------------------------------------------------------------
$ 1,000,000 5.77%, 8/25/98 $ 970,730
-------------------------------------------------------------------------------------
1,000,000 4.38%, 10/23/98 962,440
-------------------------------------------------------------------------------------
1,000,000 9.05%, 4/10/2000 1,066,250
-------------------------------------------------------------------------------------
1,000,000 7.30%, 10/28/2002 945,650
-------------------------------------------------------------------------------------
1,000,000 6.40%, 1/13/2004 885,760
-------------------------------------------------------------------------------------
2,000,000 7.65%, 4/29/2004 1,905,940
-------------------------------------------------------------------------------------
948,601 7.50%, 11/25/2023 901,171
------------------------------------------------------------------------------------- -------------
Total 9,068,025
------------------------------------------------------------------------------------- -------------
STUDENT LOAN MARKETING ASSOCIATION--2.6%
-------------------------------------------------------------------------------------
1,500,000 4.625%, 3/2/99 1,416,810
-------------------------------------------------------------------------------------
700,000 5.18%, 3/7/2001 700,833
------------------------------------------------------------------------------------- -------------
Total 2,117,643
------------------------------------------------------------------------------------- -------------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS (IDENTIFIED COST $18,738,897) 18,032,053
------------------------------------------------------------------------------------- -------------
U.S. TREASURY OBLIGATIONS--23.0%
- ---------------------------------------------------------------------------------------------------
U.S. TREASURY NOTES--23.0%
-------------------------------------------------------------------------------------
1,000,000 9.375%, 4/15/96 1,043,440
-------------------------------------------------------------------------------------
1,000,000 8.00%, 10/15/96 1,025,850
-------------------------------------------------------------------------------------
1,000,000 7.25%, 11/15/96 1,011,430
-------------------------------------------------------------------------------------
3,000,000 8.50%, 5/15/97 3,120,000
-------------------------------------------------------------------------------------
2,000,000 7.875%, 4/15/98 2,049,680
-------------------------------------------------------------------------------------
3,000,000 9.00%, 5/15/98 3,181,110
-------------------------------------------------------------------------------------
100,000 5.00%, 1/31/99 91,949
-------------------------------------------------------------------------------------
3,000,000 8.00%, 8/15/99 3,092,160
-------------------------------------------------------------------------------------
1,000,000 8.50%, 2/15/2000 1,051,930
-------------------------------------------------------------------------------------
2,000,000 8.50%, 11/15/2000 2,109,860
-------------------------------------------------------------------------------------
</TABLE>
PEACHTREE BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------ ------------------------------------------------------------------------------------- -------------
LONG-TERM INVESTMENTS--CONTINUED
- ---------------------------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS--CONTINUED
- ---------------------------------------------------------------------------------------------------
U.S. TREASURY NOTES--CONTINUED
-------------------------------------------------------------------------------------
$ 1,000,000 7.75%, 2/15/2001 $ 1,017,720
------------------------------------------------------------------------------------- -------------
TOTAL U.S. TREASURY OBLIGATIONS (IDENTIFIED COST $20,257,634) 18,795,129
------------------------------------------------------------------------------------- -------------
TOTAL LONG-TERM INVESTMENTS (IDENTIFIED COST $73,459,178) 69,206,408
------------------------------------------------------------------------------------- -------------
SHORT-TERM INVESTMENTS--7.4%
- ---------------------------------------------------------------------------------------------------
CASH EQUIVALENT--0.0%
- ---------------------------------------------------------------------------------------------------
44,252 Bank of New York Cash Reserve, 4.25% 44,252
------------------------------------------------------------------------------------- -------------
U.S. TREASURY OBLIGATION--7.4%
- ---------------------------------------------------------------------------------------------------
U.S. TREASURY BILL--7.4%
-------------------------------------------------------------------------------------
6,000,000 10/20/94 5,987,015
------------------------------------------------------------------------------------- -------------
TOTAL SHORT-TERM INVESTMENTS (AT AMORTIZED COST) 6,031,267
------------------------------------------------------------------------------------- -------------
*REPURCHASE AGREEMENT--5.7%
- ---------------------------------------------------------------------------------------------------
4,636,000 Cantor Fitzgerald Securities Corp., 4.80%, dated 9/30/94, due 10/3/94
(at amortized cost) 4,636,000
------------------------------------------------------------------------------------- -------------
TOTAL INVESTMENTS (IDENTIFIED COST $84,126,445) $ 79,873,675+
------------------------------------------------------------------------------------- -------------
</TABLE>
+ The cost of investments for federal tax purposes amounts to $84,126,445. The
net unrealized depreciation of investments on a federal tax basis amounts to
$4,252,770, which is comprised of $3,751 appreciation and $4,256,521
depreciation at September 30, 1994.
* Repurchase agreement is fully collateralized by U.S. government and/or agency
obligations based on market prices at the date of the portfolio.
Note: The categories of investments are shown as a percentage of net assets
($81,594,268) at September 30, 1994.
(See Notes which are an integral part of the Financial Statements)
PEACHTREE BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------------------------
Investments in securities, at amortized cost and value
(identified and tax cost, $84,126,445) $ 79,873,675
- ---------------------------------------------------------------------------------------------------
Interest receivable 1,440,253
- ---------------------------------------------------------------------------------------------------
Receivable for Fund shares sold 341,292
- ---------------------------------------------------------------------------------------------------
Deferred expenses 27,740
- --------------------------------------------------------------------------------------------------- -------------
Total assets 81,682,960
- ---------------------------------------------------------------------------------------------------
LIABILITIES:
- ---------------------------------------------------------------------------------------------------
Dividends payable $ 18,599
- ----------------------------------------------------------------------------------------
Payable for Fund shares redeemed 9,000
- ----------------------------------------------------------------------------------------
Accrued expenses 61,093
- ---------------------------------------------------------------------------------------- ---------
Total liabilities 88,692
- --------------------------------------------------------------------------------------------------- -------------
NET ASSETS for 8,735,236 shares of beneficial interest outstanding $ 81,594,268
- --------------------------------------------------------------------------------------------------- -------------
NET ASSETS CONSIST OF:
- ---------------------------------------------------------------------------------------------------
Paid-in capital $ 86,801,195
- ---------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments (4,252,770)
- ---------------------------------------------------------------------------------------------------
Accumulated net realized gain (loss) on investments (954,157)
- --------------------------------------------------------------------------------------------------- -------------
Total Net Assets $ 81,594,268
- --------------------------------------------------------------------------------------------------- -------------
NET ASSET VALUE, and Redemption Proceeds Per Share
($81,594,268 / 8,735,236 shares of beneficial interest outstanding) $9.34
- --------------------------------------------------------------------------------------------------- -------------
Computation of Offering Price:
Offering Price Per Share (100/97.5 of $9.34)* $9.58
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
*See "What Shares Cost" in the prospectus.
(See Notes which are an integral part of the Financial Statements)
PEACHTREE BOND FUND
STATEMENT OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1994*
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------------------------
Interest income $3,239,288
- ---------------------------------------------------------------------------------------------------
EXPENSES:
- ---------------------------------------------------------------------------------------------------
Investment advisory fee $ 352,666
- ---------------------------------------------------------------------------------------
Administrative personnel and services fees 69,613
- ---------------------------------------------------------------------------------------
Custodian fees 9,480
- ---------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 20,187
- ---------------------------------------------------------------------------------------
Legal fees 1,050
- ---------------------------------------------------------------------------------------
Printing and postage 3,996
- ---------------------------------------------------------------------------------------
Portfolio accounting fees 38,640
- ---------------------------------------------------------------------------------------
Insurance premiums 3,550
- ---------------------------------------------------------------------------------------
Miscellaneous 4,444
- --------------------------------------------------------------------------------------- ----------
Total expenses 503,626
- ---------------------------------------------------------------------------------------
Deduct--
- ----------------------------------------------------------------------------
Waiver of investment advisory fee $ 33,571
- ----------------------------------------------------------------------------
Waiver of transfer and dividend disbursing agent fees and expenses 12,000 45,571
- ---------------------------------------------------------------------------- --------- ----------
Net expenses 458,055
- --------------------------------------------------------------------------------------------------- -------------
Net investment income 2,781,233
- --------------------------------------------------------------------------------------------------- -------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- ---------------------------------------------------------------------------------------------------
Net realized gain (loss) on investment transactions (identified cost basis) (954,157)
- ---------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) of investments (4,252,770)
- --------------------------------------------------------------------------------------------------- -------------
Net realized and unrealized gain (loss) on investments (5,206,927)
- --------------------------------------------------------------------------------------------------- -------------
Change in net assets resulting from operations ($2,425,694)
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
*For the period from February 14, 1994 (date of initial public investment) to
September 30, 1994.
(See Notes which are an integral part of the Financial Statements)
PEACHTREE BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED
SEPTEMBER 30, 1994*
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------------------------------------------------------
OPERATIONS--
- ----------------------------------------------------------------------------------------
Net investment income $ 2,781,233
- ----------------------------------------------------------------------------------------
Net realized gain (loss) on investment transactions
($0 as computed for federal tax purposes) (954,157)
- ----------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on investments (4,252,770)
- ---------------------------------------------------------------------------------------- ------------------------
Change in net assets resulting from operations (2,425,694)
- ---------------------------------------------------------------------------------------- ------------------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ----------------------------------------------------------------------------------------
Dividends to shareholders from net investment income (2,781,233)
- ---------------------------------------------------------------------------------------- ------------------------
FUND SHARE (PRINCIPAL) TRANSACTIONS--
- ----------------------------------------------------------------------------------------
Proceeds from sale of shares 100,463,066
- ----------------------------------------------------------------------------------------
Net asset value of shares issued to shareholders
in payment of dividends declared 2,745,421
- ----------------------------------------------------------------------------------------
Cost of shares redeemed (16,407,292)
- ---------------------------------------------------------------------------------------- ------------------------
Change in net assets from Fund share transactions 86,801,195
- ---------------------------------------------------------------------------------------- ------------------------
Change in net assets 81,594,268
- ----------------------------------------------------------------------------------------
NET ASSETS:
- ----------------------------------------------------------------------------------------
Beginning of period --
- ---------------------------------------------------------------------------------------- ------------------------
End of period $ 81,594,268
- ---------------------------------------------------------------------------------------- ------------------------
</TABLE>
*For the period from February 14, 1994 (date of initial public investment) to
September 30, 1994.
(See Notes which are an integral part of the Financial Statements)
PEACHTREE BOND FUND
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1994
- --------------------------------------------------------------------------------
(1) ORGANIZATION
The Peachtree Funds (the "Trust") is registered under the Investment Company Act
of 1940, as amended (the "Act"), as an open-end, management investment company.
The Trust consists of four diversified portfolios and one non-diversified
portfolio. The financial statements included herein present only those of
Peachtree Bond Fund (the "Fund"). The financial statements of the other
portfolios are presented separately. The assets of each portfolio are segregated
and a shareholder's interest is limited to the portfolio in which shares are
held. As of September 30, 1994, Peachtree Georgia Tax-Free Income Fund was
effective but did not have public investment.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
A. INVESTMENT VALUATIONS--U.S. government obligations are generally valued at
the mean between the over-the-counter bid and asked prices as furnished by
an independent pricing service. Corporate bonds (and other fixed income
securities and asset backed securities) are valued at the last sale price
reported on national securities exchanges on that day, if available.
Otherwise, corporate bonds (and other fixed income securities and asset
backed securities) and short-term obligations are valued at the prices
provided by an independent pricing service. Short-term securities with
remaining maturities of sixty days or less at the time of purchase may be
stated at amortized cost, which approximates value.
B. REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral in support of
repurchase agreement investments. Additionally, procedures have been
established by the Fund to monitor, on a daily basis, the market value of
each repurchase agreement's underlying collateral to ensure the value at
least equals the principal amount of the repurchase agreement, including
accrued interest.
The Funds will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to guidelines established
by the Board of Trustees (the "Trustees"). Risks may arise from the
potential inability of counterparties to honor the terms of the repurchase
agreement. Accordingly, the Fund could receive less than the repurchase
price on the sale of collateral securities.
C. 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.
D. 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 taxable income.
Accordingly, no provisions for federal tax are necessary.
Additionally, net capital losses of $954,157 attributable to security
transactions incurred during the fiscal year are treated as arising on the
first day of the Fund's next taxable year.
E. 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 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.
F. 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 using the straight-line method not to exceed a period of five
years from the Fund's commencement date.
G. OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of benefical interest (without par value).
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED
SEPTEMBER 30, 1994*
<S> <C>
Shares sold 10,178,415
- ----------------------------------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared 288,542
- ----------------------------------------------------------------------------------------
Shares redeemed (1,731,721)
- ---------------------------------------------------------------------------------------- -------------
Net change resulting from Fund share transactions 8,735,236
- ---------------------------------------------------------------------------------------- -------------
</TABLE>
*For the period from February 14, 1994 (date of initial public investment) to
September 30, 1994.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Bank South, N.A., the Fund's investment adviser (the
"Adviser"), receives for its services an annual investment advisory fee equal to
.75 of 1% of the Fund's average
daily net assets. The Adviser may voluntarily choose to waive a portion of its
fee. The Adviser can modify or terminate this voluntary waiver at any time at
its sole discretion.
ADMINISTRATION FEE--Federated Administrative Services ("FAS") provides the Fund
with certain administrative personnel and services. The FAS fee is based on the
level of average aggregate net assets of the Trust for the period. FAS may
voluntarily choose to waive a portion of its fee.
TRANSFER AND DIVIDEND DISBURSING AGENT AND ACCOUNTING FEES--Federated Services
Company ("FServ") serves as transfer and dividend disbursing agent for the Fund.
The FServ fee is based on the size, type, and number of accounts and
transactions made by shareholders. FServ may voluntarily choose to waive a
portion of its fee.
FServ also maintains the Fund's accounting records. The FServ fee is based on
the level of the Fund's average net assets for the period, plus out-of-pocket
expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses ($44,639) were borne initially
by FAS. The Fund has agreed to reimburse FAS for the organizational expenses
during the five year period following January 7, 1994 (date the Fund first
became effective). For the period ended September 30, 1994, the Fund paid $1,792
pursuant to this agreement.
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 September 30, 1994, were as follows:
<TABLE>
<S> <C>
- ---------------------------------------------------------------------------------------------------
PURCHASES $ 89,330,764
- --------------------------------------------------------------------------------------------------- -------------
SALES $ 14,917,485
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
REPORT OF ERNST & YOUNG LLP,
INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
To the Trustees and Shareholders of
PEACHTREE FUNDS:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Peachtree Bond Fund (one of the portfolios
comprising Peachtree Funds) as of September 30, 1994, and the related statement
of operations, the statement of changes in net assets, and the financial
highlights for the period then ended. These financial statements and financial
highlights are the responsibility of the Trust's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of September 30, 1994,
by correspondence with the custodian and brokers. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Peachtree Bond Fund at September 30, 1994, the results of its operations, the
changes in its net assets, and the financial highlights for the period then
ended, in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Pittsburgh, Pennsylvania
November 2, 1994
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Peachtree Bond Fund Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Investment Adviser
Bank South, N.A. 3350 Cumberland Circle
Atlanta, Georgia 30339
- ---------------------------------------------------------------------------------------------------------------------
Custodian
The Bank of New York 48 Wall Street
New York, New York 10286
- ---------------------------------------------------------------------------------------------------------------------
Transfer Agent, Dividend Disbursing Agent,
and Portfolio Accounting Services
Federated Services Company Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Legal Counsel
Houston, Houston & Donnelly 2510 Centre City Tower
Pittsburgh, Pennsylvania 15222
- ---------------------------------------------------------------------------------------------------------------------
Legal Counsel
Dickstein, Shapiro & Morin, L.L.P. 2101 L Street, N.W.
Washington,
- ---------------------------------------------------------------------------------------------------------------------
Independent Auditors
Ernst & Young LLP One Oxford Centre
Pittsburgh, Pennsylvania 15219
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
[LOGO] BANK SOUTH, N.A.
I N V E S T M E N T A D V I S E R
3350 Cumberland Circle
Atlanta,GA 30339
[LOGO] FEDERATED SECURITIES CORP.
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
70467H200
3092205A (11/94)
the Peachtree Funds
BOND
FUND
Prospectus
A Diversified Portfolio of
Peachtree Funds
an Open-End Management
Investment Company
(a Mutual Fund)
November 30, 1994
PEACHTREE BOND FUND
(A PORTFOLIO OF PEACHTREE FUNDS)
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information should be read with the
prospectus of Peachtree Bond Fund (the "Fund") dated November 30,
1994. This Statement is not a prospectus itself. To
receive a copy of the prospectus, call the Peachtree Funds Service
Center at 1-404-989-6200 or
1-800-621-8969.
SHARES OF THE FUND ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, AND ARE
NOT ISSUED, ENDORSED OR GUARANTEED BY, BANK SOUTH, N.A. (THE "BANK")
OR ANY OF ITS AFFILIATES. SUCH SHARES ARE NOT ISSUED, INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENT
AGENCY. AN INVESTMENT IN THE FUND INVOLVES CERTAIN RISKS, INCLUDING
POSSIBLE LOSS OF PRINCIPAL.
THE BANK IS INVESTMENT ADVISER TO THE FUND. THE FUND IS DISTRIBUTED
BY FEDERATED SECURITIES CORP., WHICH IS NOT AFFILIATED WITH THE
BANK.
Statement dated November 30, 1994
FEDERATED SECURITIES CORP.
--------------------------------------------
Distributor
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
GENERAL INFORMATION ABOUT THE FUND 1
- ---------------------------------------------------------------
INVESTMENT OBJECTIVE AND POLICIES 1
- ---------------------------------------------------------------
Types of Investments 1
Repurchase Agreements 1
Reverse Repurchase Agreements 1
When-Issued and Delayed Delivery
Transactions 1
Futures and Options Transactions 1
Financial Futures Contracts 2
Put Options on Financial Futures Contracts 2
Call Options on Financial Futures Contracts 2
"Margin" in Futures Transactions 3
Purchasing Put Options on Portfolio Securities 3
Writing Covered Call Options on
Portfolio Securities 3
Risks 3
Restricted and Illiquid Securities 3
Lending of Portfolio Securities 4
Weighted Average Portfolio Maturity 4
Portfolio Turnover 4
Investment Limitations 4
PEACHTREE FUNDS MANAGEMENT 6
- ---------------------------------------------------------------
The Funds 9
Fund Ownership 9
Trustee Liability 9
INVESTMENT ADVISORY SERVICES 10
- ---------------------------------------------------------------
Adviser to the Fund 10
Advisory Fees 10
ADMINISTRATIVE SERVICES 10
- ---------------------------------------------------------------
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT 10
- ---------------------------------------------------------------
BROKERAGE TRANSACTIONS 10
- ---------------------------------------------------------------
PURCHASING SHARES 11
- ---------------------------------------------------------------
Administrative Arrangements 11
Distribution Plan 11
Puchasing Fund Shares with Securities 11
DETERMINING NET ASSET VALUE 11
- ---------------------------------------------------------------
Determining Market Value of Securities 12
EXCHANGE PRIVILEGE 12
- ---------------------------------------------------------------
REDEEMING SHARES 12
- ---------------------------------------------------------------
Redemption in Kind 12
TAX STATUS 12
- ---------------------------------------------------------------
The Fund's Tax Status 12
Shareholders' Tax Status 13
TOTAL RETURN 13
- ---------------------------------------------------------------
YIELD 13
- ---------------------------------------------------------------
PERFORMANCE COMPARISONS 13
- ---------------------------------------------------------------
APPENDIX 15
- ---------------------------------------------------------------
GENERAL INFORMATION ABOUT THE FUND
- --------------------------------------------------------------------------------
Peachtree Bond Fund (the "Fund") is a portfolio in Peachtree Funds (the
"Trust"), which was established as a Massachusetts business trust under a
Declaration of Trust dated as of September 22, 1993, as amended and restated
dated December 20, 1993.
INVESTMENT OBJECTIVE AND POLICIES
- --------------------------------------------------------------------------------
The Fund's investment objective is to achieve current income. The investment
objective cannot be changed without approval of shareholders.
TYPES OF INVESTMENTS
The Fund invests primarily in investment grade bonds and other fixed income
securities which include:
.domestic issues of corporate debt obligations (rated Baa or better by Moody's
Investors Service, Inc., or BBB or better by Standard & Poor's Ratings Group,
Fitch Investors Service, Inc. or Duff & Phelps Credit Rating Co.);
.obligations issued or guaranteed by the U.S. government, its agencies or
instrumentalities;
.mortgage-backed securities, which represent an undivided interest in a pool of
residential or other mortgages or may be collateralized by a pool of
residential mortgages;
.asset-backed securities, which are obligations of trusts or special purpose
corporations that directly or indirectly represent a participation in, or are
secured by and payable from various types of assets, principally loans, leases
and other receivables and may include asset-backed commercial paper; and
.CMOs, which are issued by single-purpose stand-alone finance subsidiaries or
trusts, government agencies, investment banks, or companies related to the
construction industry.
REPURCHASE AGREEMENTS
As collateral for the obligation of the seller to repurchase the securities from
the Fund, the Fund requires its custodian to take possession of the securities
subject to repurchase agreements and these securities are marked to market
daily. 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 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 will
only enter into repurchase agreements with banks and other financial
institutions, such as securities broker-dealers, which are deemed by the Fund's
adviser to be creditworthy pursuant to guidelines established by the Board of
Trustees ("Trustees").
REVERSE REPURCHASE AGREEMENTS
The Fund may also enter into reverse repurchase agreements. These transactions
are similar to borrowing cash and pledging securities as collateral. In a
reverse repurchase agreement, the Fund transfers possession of a portfolio
instrument to another person, such as a financial institution or broker-dealer,
in return for a percentage of the instrument's market value in cash, and agrees
that on a stipulated date in the future the Fund will repurchase the portfolio
instrument by remitting the original consideration, plus interest at an agreed
upon rate. The use of reverse repurchase agreements may enable the Fund to avoid
selling portfolio instruments at a time when a sale may be deemed to be
disadvantageous, but the ability to enter into reverse repurchase agreements
does not ensure that the Fund will be able to avoid selling portfolio
instruments at a disadvantageous time.
When effecting reverse repurchase agreements, liquid assets of the Fund, in a
dollar amount sufficient to make payment for the obligations to be purchased,
are segregated at the trade date. These securities are marked to market daily
and are maintained until the transaction is settled.
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. 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.
FUTURES AND OPTIONS TRANSACTIONS
As a means of reducing fluctuations in the net asset value of shares of the
Fund, the Fund may attempt to hedge all or a portion of its portfolio by buying
and selling financial futures contracts, buying put options on
portfolio securities and listed put options on futures contracts, and writing
call options on futures contracts. The Fund may also write covered call options
on portfolio securities to attempt to increase its current income. The Fund will
maintain its positions in securities, option rights, and segregated cash subject
to puts and calls until the options are exercised, closed, or have expired. An
option position on financial futures contracts may be closed out only on an
exchange which provides a secondary market for options of the same series.
FINANCIAL FUTURES CONTRACTS
A futures contract is a firm commitment by two parties: the seller who agrees to
make delivery of the specific type of security called for in the contract
("going short") and the buyer who agrees to take delivery of the security
("going long") at a certain time in the future.
In the fixed income securities market, price moves inversely to interest rates.
A rise in rates means a drop in price. Conversely, a drop in rates means a rise
in price. In order to hedge its holdings of fixed income securities against a
rise in market interest rates, the Fund could enter into contracts to deliver
securities at a predetermined price (i.e., "go short") to protect itself against
the possibility that the prices of its fixed income securities may decline
during the Fund's anticipated holding period. The Fund could "go long" (agree to
purchase securities in the future at a predetermined price) to hedge against a
decline in market interest rates.
PUT OPTIONS ON FINANCIAL FUTURES CONTRACTS
The Fund may purchase exchange listed put options on financial futures
contracts. Unlike entering directly into a futures contract, which requires the
purchaser to buy a financial instrument on a set date at a specified price, the
purchase of a put option on a futures contract entitles (but does not obligate)
its purchaser to decide on or before a future date whether to assume a short
position at the specified price.
Generally, if the hedged portfolio securities decrease in value during the term
of an option, the related futures contracts will also decrease in value and the
option will increase in value. In such an event, the Fund will normally close
out its option by selling an identical option. If the hedge is successful, the
proceeds received by the Fund upon the sale of the second option will be large
enough to offset both the premium paid by the Fund for the original option plus
the decrease in value of the hedged securities.
Alternatively, the Fund may exercise its put option to close out the position.
To do so, it would simultaneously enter into a futures contract of the type
underlying the option (for a price less than the strike price of the option) and
exercise the option. The Fund would then deliver the futures contract in return
for payment of the strike price. If the Fund neither closes out nor exercises an
option, the option will expire on the date provided in the option contract, and
only the premium paid for the contract will be lost.
CALL OPTIONS ON FINANCIAL FUTURES CONTRACTS
In addition to purchasing put options on futures, the Fund may write exchange
listed call options on futures contracts to hedge its portfolio. When the Fund
writes a call option on a futures contract, it is undertaking the obligation of
assuming a short futures position (selling a futures contract) at the fixed
strike price at any time during the life of the option if the option is
exercised. As market interest rates rise, causing the prices of futures to go
down, the Fund's obligation under a call option on a future (to sell a futures
contract) costs less to fulfill, causing the value of the Fund's call option
position to increase.
In other words, as the underlying futures price goes down below the strike
price, the buyer of the option has no reason to exercise the call, so that the
Fund keeps the premium received for the option. This premium can substantially
offset the drop in value of the Fund's fixed income or indexed portfolio which
is occurring as interest rates rise.
Prior to the expiration of a call written by the Fund, or exercise of it by the
buyer, the Fund may close out the option by buying an identical option. If the
hedge is successful, the cost of the second option will be less than the premium
received by the Fund for the initial option. The net premium income of the Fund
will then substantially offset the decrease in value of the hedged securities.
The Fund will not maintain open positions in futures contracts it has sold or
call options it has written on futures contracts if, in the aggregate, the value
of the open positions (marked to market) exceeds the current market value of its
securities portfolio plus or minus the unrealized gain or loss on those open
positions, adjusted for the correlation of volatility between the hedged
securities and the futures contracts. If this limitation is exceeded at any
time, the Fund will take prompt action to close out a sufficient number of open
contracts to bring its open futures and options positions within this
limitation.
"MARGIN" IN FUTURES TRANSACTIONS
Unlike the purchase or sale of a security, the Fund does not pay or receive
money upon the purchase or sale of a futures contract. Rather, the Fund is
required to deposit an amount of "initial margin" in cash or U.S. Treasury bills
with its custodian (or the broker, if legally permitted). The nature of initial
margin in futures transactions is different from that of margin in securities
transactions in that initial margin in futures transactions does not involve the
borrowing of funds by the Fund to finance the transactions. Initial margin is in
the nature of a performance bond or good faith deposit on the contract which is
returned to the Fund upon termination of the futures contract, assuming all
contractual obligations have been satisfied.
A futures contract held by the Fund is valued daily at the official settlement
price of the exchange on which it is traded. Each day the Fund pays or receives
cash, called "variation margin," equal to the daily change in value of the
futures contract. This process is known as "marking to market." Variation margin
does not represent a borrowing or loan by the Fund but is instead settlement
between the Fund and the broker of the amount one would owe the other if the
futures contract expired. In computing its daily net asset value, the Fund will
mark to market its open futures positions.
The Fund is also required to deposit and maintain margin when it writes call
options on futures contracts.
PURCHASING PUT OPTIONS ON PORTFOLIO SECURITIES
The Fund may purchase put options on portfolio securities to protect against
price movements in particular securities in its portfolio. A put option gives
the Fund, in return for a premium, the right to sell the underlying security to
the writer (seller) at a specified price during the term of the option.
WRITING COVERED CALL OPTIONS ON PORTFOLIO SECURITIES
The Fund may also write covered call options to generate income. As writer of a
call option, the Fund has the obligation upon exercise of the option during the
option period to deliver the underlying security upon payment of the exercise
price. The Fund may only sell call options either on securities held in its
portfolio or on securities which it has the right to obtain without payment of
further consideration (or has segregated cash in the amount of any additional
consideration).
RISKS
When the Fund uses financial futures and options on financial futures as hedging
devices, there is a risk that the prices of the securities subject to the
futures contracts may not correlate perfectly with the prices of the securities
in the Fund's portfolio. This may cause the futures contract and any related
options to react differently than the portfolio securities to market changes. In
addition, the Fund's investment adviser could be incorrect in its expectations
about the direction or extent of market factors, such as interest rate
movements. In these events, the Fund may lose money on the futures contract or
option.
It is not certain that a secondary market for positions in futures contracts or
for options will exist at all times. Although the investment adviser will
consider liquidity before entering into options transactions, there is no
assurance that a liquid secondary market on an exchange or otherwise will exist
for any particular futures contract or option at any particular time. The Fund's
ability to establish and close out futures and options positions depends on this
secondary market.
RESTRICTED AND ILLIQUID SECURITIES
The ability of the Trustees to determine the liquidity of certain restricted
securities is permitted under a Securities and Exchange Commission ("SEC") Staff
position set forth in the adopting release for SEC Rule 144A ("Rule 144A") under
the Securities Act of 1933, as amended (the "1933 Act"). Rule 144A is a
nonexclusive safe-harbor for certain secondary market transactions that provides
an exemption from registration for resales of otherwise restricted securities to
qualified institutional buyers. Rule 144A was expected to further enhance the
liquidity of the secondary market for securities eligible for resale under Rule
144A. The Fund believes that the Staff of the SEC has left the question of
determining the liquidity of all restricted securities to the Trustees. The
Trustees consider the following criteria in determining the liquidity of certain
restricted securities:
the frequency of trades and quotes for the security;
the number of dealers willing to purchase or sell the security and the
number of other potential buyers;
dealer undertakings to make a market in the security; and
the nature of the security and the nature of the marketplace trades.
LENDING OF PORTFOLIO SECURITIES
The collateral received when the Fund lends portfolio securities must be valued
daily and, should the market value of the loaned securities increase, the
borrower must furnish additional collateral to the Fund. During the time
portfolio securities are on loan, the borrower pays the Fund any dividends or
interest paid on such securities. Loans are subject to termination at the option
of the Fund or the borrower. The Fund may pay reasonable administrative and
custodial fees in connection with a loan and may pay a negotiated portion of the
interest earned on the cash or equivalent collateral to the borrower or placing
broker.
The Fund would not have the right to vote securities on loan, but would
terminate the loan and regain the right to vote if that were considered
important with respect to the investment.
WEIGHTED AVERAGE PORTFOLIO MATURITY
The Fund will determine its dollar-weighted average portfolio maturity by
assigning a "weight" to each portfolio security based upon the pro rata market
value of such portfolio security in comparison to the market value of the entire
portfolio. The remaining maturity of each portfolio security is then multiplied
by its weight, and the results are added together to determine the weighted
average maturity of the portfolio. For purposes of calculating its
dollar-weighted average portfolio maturity, the Fund will treat variable and
floating rate instruments as having a remaining maturity commensurate with the
period remaining until the next scheduled adjustment to the instrument's
interest rate. The Fund limits its dollar-weighted average maturity to 15 years
or less.
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, under normal market conditions, will result in its
annual rate of portfolio turnover exceeding 200%. For the period from February
14, 1994 (date of initial public investment) to September 30, 1994, the Fund's
portfolio turnover rate was 21%.
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 are necessary for the
clearance of purchases and sales of securities. The deposit or payment by
the Fund of initial or variation margin in connection with financial
futures contracts or related options transactions is not considered the
purchase of a security on margin.
ISSUING SENIOR SECURITIES AND BORROWING MONEY
The Fund will not issue senior securities except that the Fund may borrow
money directly or through reverse repurchase agreements in amounts up to
one-third of the value of its total assets, including the amounts
borrowed, and except to the extent that the Fund may enter into futures
contracts. The Fund will not borrow money or engage in reverse repurchase
agreements for investment leverage, but rather as a temporary,
extraordinary, or emergency measure to facilitate management of the
portfolio by enabling the Fund to meet redemption requests when the
liquidation of portfolio securities is deemed to be inconvenient or
disadvantageous. The Fund will not purchase any securities while
borrowings in excess of 5% of its total assets are outstanding.
PLEDGING ASSETS
The Fund will not mortgage, pledge, or hypothecate any assets except to
secure permissible borrowings. In those cases, it may pledge assets
having a market value not exceeding the lesser of the dollar amounts
borrowed or 15% of the value of total assets at the time of the pledge.
For purposes of this limitation, the following are not deemed to be
pledges: margin deposits for the purchase and sale of financial futures
contracts and related options, and segregation or collateral arrangements
made in connection with options activities or the purchase of securities
on a when-issued basis.
DIVERSIFICATION OF INVESTMENTS
With respect to securities comprising 75% of the value of its total
assets, the Fund will not purchase securities of any one issuer (other
than cash, cash items or securities issued or guaranteed by the
government of the United States or its agencies or instrumentalities and
repurchase agreements collateralized by such securities) if, as a result,
more than 5% of the value of its total assets would be invested in the
securities of that issuer. Also, the Fund will not acquire more than 10%
of the outstanding voting securities of any one issuer.
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. However, the Fund may at times invest 25% or more of the value
of its total assets in securities issued or guaranteed by the U.S.
government and its agencies or instrumentalities.
INVESTING IN COMMODITIES
The Fund will not purchase or sell commodities, commodity contracts, or
commodity futures contracts except that the Fund may purchase put options
on portfolio securities and on financial futures contracts and related
options as a hedging strategy and not for speculative purposes. In
addition, the Fund reserves the right to hedge the portfolio by entering
into financial futures contracts and to sell calls on financial futures
contracts. The Fund will notify shareholders before such a change in its
operating policies is implemented.
UNDERWRITING
The Fund will not underwrite any issue of securities, except as it may be
deemed to be an underwriter under the Securities Act of 1933 in
connection with the sale of securities which the Fund may purchase
pursuant to its investment objective, policies, and limitations.
INVESTING IN REAL ESTATE
The Fund will not purchase or sell real estate, including limited
partnership interests, although it may invest in the securities of
companies whose business involves the purchase or sale of real estate or
in securities which are secured by real estate or which represent
interests in real estate.
LENDING CASH OR SECURITIES
The Fund will not lend any of its assets except portfolio securities up
to 50% of the value of its total assets. This shall not prevent the Fund
from purchasing or holding U.S. government obligations, money market
instruments, variable rate demand notes, bonds, debentures, notes,
certificates of indebtedness, or other debt securities, entering into
repurchase agreements, or engaging in other transactions where permitted
by the Fund's investment objective, policies, and limitations or the
Trust's Declaration of Trust.
Except as noted, the above investment limitations cannot be changed without
shareholder approval. The following limitations, however, may be changed by the
Trustees without shareholder approval. Except as noted, shareholders will be
notified before any material change in the following limitations becomes
effective.
INVESTING IN NEW ISSUERS
The Fund will not invest more than 5% of the value of its total assets in
securities of issuers which have records of less than three years of
continuous operations, including the operations of any predecessor.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
The Fund will limit its investment in other investment companies to no
more than 3% of the total outstanding voting stock of any investment
company, will not 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 the aggregate. However, these limitations are not
applicable if the securities are acquired in a merger, consolidation, or
acquisition of assets.
INVESTING IN RESTRICTED SECURITIES
The Fund will not purchase restricted securities if immediately
thereafter more than 10% of the total assets of the Fund, taken at market
value, would be invested in such securities (except for commercial paper
issued under Section 4(2) of the 1933 Act). See "Restricted and Illiquid
Securities".
INVESTING IN ILLIQUID SECURITIES
The Fund will not invest more than 15% of the value of its net assets in
illiquid securities, including repurchase agreements providing for
settlement more than seven days after notice, over-the-counter options,
and certain restricted securities not determined by the Trustees to be
liquid. See "Restricted and Illiquid Securities".
INVESTING IN MINERALS
The Fund will not invest in interests in oil, gas, or other mineral
exploration or development programs or leases, except it may purchase the
securities of issuers which invest in or sponsor such programs.
PURCHASING SECURITIES TO EXERCISE CONTROL
The Fund will not purchase securities of a company for the purpose of
exercising control or management.
INVESTING IN ISSUERS WHOSE SECURITIES ARE OWNED BY OFFICERS AND TRUSTEES OF
THE TRUST
The Fund will not purchase or retain the securities of any issuer if the
officers and Trustees of the Trust or its investment adviser owning
individually more than 0.50% of the issuer's securities together own more
than 5% of the issuer's securities.
WRITING COVERED CALL OPTIONS
The Fund will not write call options on securities unless the securities
are held in the Fund's portfolio or unless the Fund is entitled to them
in deliverable form without further payment or after segregating cash in
the amount of any further payment.
INVESTING IN PUT OPTIONS
The Fund will not purchase put options on securities unless the
securities are held in the Fund's portfolio and not more than 5% of the
value of the Fund's net assets would be invested in premiums on open put
option positions.
The Fund does not expect to borrow money in excess of 5% of the total value of
its net assets during the next fiscal year. The Fund has no present intention of
investing more than 5% of its net assets in foreign securities or options and
fixtures.
Except with respect to borrowing money, if a percentage limitation is adhered to
at the time of investment, a later increase or decrease in percentage resulting
from any change in value or net assets will not result in a violation of such
restriction.
Each fund of the Trust has the ability to issue more than one class of shares.
The Fund does not consider the issuance of separate classes of shares to
constitute an issue of "senior securities" within the meaning of the investment
limitations set forth above.
To comply with registration requirements in certain states, the Fund (1) will
limit the aggregate value of the assets underlying covered call options or put
options written by the Fund to not more than 25% of its net assets, (2) will
limit the premiums paid for options purchased by the Fund to 20% of its net
assets, and (3) will limit the margin deposits on futures contracts entered into
by the Fund to 5% of its net assets. (If state requirements change, these
restrictions may be revised without shareholder notification.)
For purposes of its policies and limitations, the Fund considers certificates of
deposit and demand and time deposits issued by a U.S. branch of a domestic bank
or savings and loan having capital, surplus, and undivided profits in excess of
$100,000,000 at the time of investment to be "cash items."
PEACHTREE FUNDS MANAGEMENT
- --------------------------------------------------------------------------------
Officers and Trustees are listed with their addresses, present positions with
Peachtree Funds, and principal occupations.
- --------------------------------------------------------------------------------
John F. Donahue+*
Federated Investors Tower
Pittsburgh, PA
Chairman and Trustee
Chairman and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; Chairman and Director, Federated Research
Corp.; Chairman, Passport Research, Ltd.; Director, AEtna Life and Casualty
Company; Chief Executive Officer and Director, Trustee, or Managing General
Partner of the Funds. Mr. Donahue is the father of J. Christopher Donahue.
- --------------------------------------------------------------------------------
John T. Conroy, Jr.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, FL
Trustee
President, Investment Properties Corporation; Senior Vice-President, John R.
Wood and Associates, Inc., Realtors; President, Northgate Village Development
Corporation; Partner or Trustee in private real estate ventures in Southwest
Florida; Director, Trustee, or Managing General Partner of the Funds; formerly,
President, Naples Property Management, Inc.
- --------------------------------------------------------------------------------
William J. Copeland
One PNC Plaza-23rd Floor
Pittsburgh, PA
Trustee
Director and Member of the Executive Committee, Michael Baker, Inc.; Director,
Trustee, or Managing General Partner of the Funds; formerly, Vice Chairman and
Director, PNC Bank, N.A., and PNC Bank Corp. and Director, Ryan Homes, Inc.
- --------------------------------------------------------------------------------
James E. Dowd
571 Hayward Mill Road
Concord, MA
Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director, Trustee,
or Managing General Partner of the Funds; formerly, Director, Blue Cross of
Massachusetts, Inc.
- --------------------------------------------------------------------------------
Lawrence D. Ellis, M.D.
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA
Trustee
Hematologist, Oncologist, and Internist, Presbyterian and Montefiore Hospitals;
Professor of Medicine and Trustee, University of Pittsburgh; Director of
Corporate Health, University of Pittsburgh Medical Center; Director, Trustee, or
Managing General Partner of the Funds.
- --------------------------------------------------------------------------------
Edward L. Flaherty, Jr.+
Two Gateway Center-Suite 674
Pittsburgh, PA
Trustee
Attorney-at-law; Partner, Henny, Koehuba, Meyer & Flaherty; Director, Eat'N Park
Restaurants, Inc., and Statewide Settlement Agency, Inc.; Director, Trustee, or
Managing General Partner of the Funds; formerly, Counsel, Horizon Financial,
F.A., Western Region.
- --------------------------------------------------------------------------------
Peter E. Madden
225 Franklin Street
Boston, MA
Trustee
Consultant; State Representative, Commonwealth of Massachusetts; Director,
Trustee, or Managing General Partner of the Funds; formerly, President, State
Street Bank and Trust Company and State Street Boston Corporation and Trustee,
Lahey Clinic Foundation, Inc.
- --------------------------------------------------------------------------------
Gregor F. Meyer
Two Gateway Center-Suite 674
Pittsburgh, PA
Trustee
Attorney-at-law; Partner, Henny, Koehuba, Meyer & Flaherty; Chairman, Meritcare,
Inc.; Director, Eat'N Park Restaurants, Inc.; Director, Trustee, or Managing
General Partner of the Funds; formerly, Vice Chairman, Horizon Financial, F.A.
- --------------------------------------------------------------------------------
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Trustee
Professor, Foreign Policy and Management Consultant; Trustee, Carnegie Endowment
for International Peace, RAND Corporation, Online Computer Library Center, Inc.,
and U.S. Space Foundation; Chairman, Czecho Slovak Management Center; Director,
Trustee, or Managing General Partner of the Funds; President Emeritus,
University of Pittsburgh; formerly, Chairman, National Advisory Council for
Environmental Policy and Technology.
- --------------------------------------------------------------------------------
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Trustee
Public relations/marketing consultant; Director, Trustee, or Managing General
Partner of the Funds.
- --------------------------------------------------------------------------------
Edward C. Gonzales*
Federated Investors Tower
Pittsburgh, PA
President, Treasurer and Trustee
Vice President, Treasurer, and Trustee, Federated Investors; Vice President and
Treasurer, Federated Advisers, Federated Management, Federated Research,
Federated Research Corp., and Passport Research, Ltd.; Executive Vice President,
Treasurer, and Director, Federated Securities Corp.; Trustee, Federated Services
Company and Federated Shareholder Services; Chairman, Treasurer, and Trustee,
Federated Administrative Services; Trustee or Director of some of the Funds;
Vice President and Treasurer of the Funds.
- --------------------------------------------------------------------------------
J. Christopher Donahue
Federated Investors Tower
Pittsburgh, PA
Vice President
President and Trustee, Federated Investors, Federated Advisors, Federated
Management, and Federated Research; President and Director, Federated Research
Corp.; President, Passport Research, Ltd.; Trustee, Federated Administrative
Services, Federated Services Company, and Federated Shareholder Services;
President or Vice President of the Funds; Director, Trustee, or Managing General
Partner of some of the Funds. Mr. Donahue is the son of John F. Donahue,
Chairman and Trustee of the Trust.
- --------------------------------------------------------------------------------
Richard B. Fisher
Federated Investors Tower
Pittsburgh, PA
Vice President
Executive Vice President and Trustee, Federated Investors; Director, Federated
Research Corp.; Chairman and Director, Federated Securities Corp.; President or
Vice President of some of the Funds; Director or Trustee of some of the Funds.
- --------------------------------------------------------------------------------
John W. McGonigle
Federated Investors Tower
Pittsburgh, PA
Vice President and Secretary
Vice President, Secretary, General Counsel, and Trustee, Federated Investors;
Vice President, Secretary, and Trustee, Federated Advisers, Federated
Management, and Federated Research; Vice President and Secretary, Federated
Research Corp. and Passport Research, Ltd.; Trustee, Federated Services Company;
Executive Vice President, Secretary, and Trustee, Federated Administrative
Services; Secretary and Trustee, Federated Shareholder Services; Executive Vice
President and Director, Federated Securities Corp.; Vice President and Secretary
of the Funds.
- --------------------------------------------------------------------------------
Charles L. Davis, Jr.
Federated Investors Tower
Pittsburgh, PA
Vice President and Assistant Treasurer
Vice President, Federated Administrative Services; Vice President and Assistant
Treasurer of some of the Funds; formerly, Vice President and Director of
Investor Relations, MNC Financial, Inc. and Vice President, Product Management,
MNC Financial, Inc.
- --------------------------------------------------------------------------------
* This Trustee is deemed to be an "interested person" as defined in the
Investment Company Act of 1940, as amended.
+ Member of the Executive Committee. The Executive Committee of the Board of
Trustees handles the responsibilities of the Board of Trustees between
meetings of the Board.
THE FUNDS
"The Funds" and "Funds" mean the following investment companies: American
Leaders Fund, Inc.; Annuity Management Series; Arrow Funds; Automated Cash
Management Trust; Automated Government Money Trust; California Municipal Cash
Trust; Cash Trust Series, Inc.; Cash Trust Series II; DG Investor Series; Edward
D. Jones & Co. Daily Passport Cash Trust; Federated ARMs Fund; Federated
Exchange Fund, Ltd.; Federated GNMA Trust; Federated Government Trust; Federated
Growth Trust; Federated High Yield Trust; Federated Income Securities Trust;
Federated Income Trust; Federated Index Trust; Federated Institutional Trust;
Federated Intermediate Government Trust; Federated Master Trust; Federated
Municipal Trust; Federated Short-Intermediate Government Trust; Federated
Short-Term U.S. Government Trust; Federated Stock Trust; Federated Tax-Free
Trust; Federated U.S. Government Bond Fund; First Priority Funds; Fixed Income
Securities, Inc.; Fortress Adjustable Rate U.S. Government Fund, Inc.; Fortress
Municipal Income Fund, Inc.; Fortress Utility Fund, Inc.; Fund for U.S.
Government Securities, Inc.; Government Income Securities, Inc.; High Yield Cash
Trust; Insight Institutional Series, Inc.; Insurance Management Series;
Intermediate Municipal Trust; International Series, Inc.; Investment Series
Funds, Inc.; Investment Series Trust; Liberty Equity Income Fund, Inc.; Liberty
High Income Bond Fund, Inc.; Liberty Municipal Securities Fund, Inc.; Liberty
Term Trust, Inc.-1999; Liberty U.S. Government Money Market Trust; Liberty
Utility Fund, Inc.; Liquid Cash Trust; Managed Series Trust; The Medalist Funds;
Money Market Management, Inc.; Money Market Obligations Trust; Money Market
Trust; Municipal Securities Income Trust; New York Municipal Cash Trust; 111
Corcoran Funds; The Planters Funds; Portage Funds; RIMCO Monument Funds; The
Shawmut Funds; Short-Term Municipal Trust; Star Funds; The Starburst Funds; The
Starburst Funds II; Stock and Bond Fund, Inc.; Sunburst Funds; Targeted Duration
Trust; Tax-Free Instruments Trust; Trademark Funds; Trust for Financial
Institutions; Trust for Government Cash Reserves; Trust for Short-Term U.S.
Government Securities; Trust for U.S. Treasury Obligations; and World Investment
Series, Inc.
FUND OWNERSHIP
Officers and Trustees own less than 1% of the Fund's outstanding shares.
As of November 4, 1994, the following shareholder of record owned 5% or more of
the outstanding shares of the Fund: Bank South N.A., Atlanta, Georgia, acting in
various capacities for numerous accounts, owned approximately 8,924,691 shares
(97.66%).
TRUSTEE LIABILITY
Peachtree Funds' Declaration of Trust provides that the Trustees are not 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 Bank serves as the Fund's investment adviser (the "Adviser"). 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 Trust.
Because of the internal controls maintained by the Bank to restrict the flow of
non-public information, Fund investments are typically made without any
knowledge of the Bank's or its affiliates' lending relationships with an issuer.
ADVISORY FEES
For its advisory services, the Adviser receives an annual investment advisory
fee as described in the Prospectus.
For the period from February 14, 1994 (date of initial public investment) to
September 30, 1994, the Adviser earned advisory fees of $352,666, of which
$33,571 was voluntarily waived.
STATE EXPENSE LIMITATIONS
The Adviser has undertaken to comply with the expense limitations
established by certain states for investment companies whose shares are
registered for sale in those states. If the Fund's normal operating
expenses (including the investment advisory fee, but not including
brokerage commissions, interest, taxes and extraordinary expenses) exceed
2.50% per year of the first $30 million of average net assets, 2.00% per
year of the next $70 million of average net assets, and 1.50% per year of
the remaining average net assets, the Adviser will reimburse the Fund for
its expenses over the limitation.
If the Fund's monthly projected operating expenses exceed this expense
limitation, the investment advisory fee paid will be reduced by the
amount of the excess, subject to an annual adjustment. If the expense
limitation is exceeded, the amount to be reimbursed by the Adviser will
be limited, in any single fiscal year, by the amount of the investment
advisory fee.
This arrangement is not part of the advisory contract and may be amended
or rescinded in the future.
ADMINISTRATIVE SERVICES
- --------------------------------------------------------------------------------
Federated Administrative Services, a subsidiary of Federated Investors, provides
administrative personnel and services to the Fund for the fees set forth in the
prospectus. For the period from February 14, 1994 (date of initial public
investment) to September 30, 1994, the Fund incurred administrative service fees
of $69,613.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
- --------------------------------------------------------------------------------
Federated Services Company serves as transfer agent and dividend disbursing
agent for the Fund. The fee paid to the transfer agent is based upon the size,
type and number of accounts and transactions made by shareholders.
Federated Services Company also maintains the Trust's accounting records. 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.
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 utilize those who are
recognized dealers in specific portfolio instruments, except when a better price
and execution of the order can be obtained elsewhere. The Adviser 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.
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.
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.
PURCHASING SHARES
- --------------------------------------------------------------------------------
Shares are sold at their offering price on days on which the New York Stock
Exchange and Federal Reserve Wire System are open for business. The procedure
for purchasing shares of the Fund is explained in the prospectus under
"Investing in the Fund."
ADMINISTRATIVE ARRANGEMENTS
The administrative services include, but are not limited to, providing office
space, equipment, telephone facilities, and various personnel, including
clerical, supervisory, and computer, as is necessary or beneficial to establish
and maintain shareholders' accounts and records, process purchase and redemption
transactions, process automatic investments of client account cash balances,
answer routine client inquiries regarding the Fund, assist clients in changing
dividend options, account designations, and addresses, and providing such other
services as the Fund may reasonably request.
DISTRIBUTION PLAN
With respect to the Fund, the Trust has adopted a Plan pursuant to Rule 12b-1
which was promulgated by the SEC pursuant to the Investment Company Act of 1940,
as amended (the "Act"). The Plan provides for payment of fees to the Distributor
to finance any activity which is principally intended to result in the sale of
the Fund's shares subject to the Plan. Such activities may include the
advertising and marketing of shares of the Fund; preparing, printing, and
distributing prospectuses and sales literature to prospective shareholders,
brokers, or administrators; and implementing and operating the Plan. Pursuant to
the Plan, the Distributor may pay fees to brokers and others for such services.
The Trustees expect that the adoption of the Plan will assist the Fund in
selling a sufficient number of shares so as to allow the Fund to achieve
economic viability. It is also anticipated that an increase in the size of the
Fund will facilitate more efficient portfolio management and thereby assist the
Fund in seeking to achieve its investment objective.
PURCHASING FUND SHARES WITH SECURITIES
The Fund in its sole discretion, may sell Fund shares to investors that desire
to purchase Fund shares with certain securities or a combination of certain
securities and cash. The Fund reserves the right to determine the acceptability
of securities used to effect such purchases. On the day securities are accepted
by the Fund, they are valued based upon independent bid and in the same manner
as the Fund values it assets. Investors wishing to use securities to purchase
Fund shares should first contact the Bank. Any such transfer of securities is
treated as a sale of the securities and will result in the recognition of any
gain or loss for federal income tax purposes by the seller of such securities,
except to the extent the seller is an ERISA plan or similar entity not subject
to tax. Unless such securities are to be acquired by the Fund in a bona fide
reorganization, statutory merger, or similar transaction, such securities must
meet the Fund's investment restrictions at the time of sale.
DETERMINING NET ASSET VALUE
- --------------------------------------------------------------------------------
Net asset value generally changes each day. The days on which the net asset
value is calculated by the Fund are described in the prospectus.
DETERMINING MARKET VALUE OF SECURITIES
Market values of the Fund's portfolio securities, other than options, are
determined as follows:
according to the mean between the over-the-counter bid and asked prices
provided by an independent pricing service, if available, or at fair value as
determined in good faith by the Trustees; or
for short-term obligations with remaining maturities of 60 days or less at the
time of purchase, at amortized cost unless the Trustees determine that
particular circumstances of the security indicate otherwise.
Prices provided by independent pricing services may be determined without
relying exclusively on quoted prices.
Pricing services may consider:
yield;
quality;
coupon rate;
maturity;
type of issue;
trading characteristics; and
other market data.
The Fund will value futures contracts, options, put options on futures and
financial futures at their market values established by the exchanges at the
close of option trading on such exchanges unless the Trustees determine in good
faith that another method of valuing option positions is necessary.
EXCHANGE PRIVILEGE
- --------------------------------------------------------------------------------
Shareholders of the Fund may exchange shares of the Fund for shares of other
funds advised by the Bank and certain other funds designated by the Bank and
distributed by the Distributor, subject to certain conditions. Exchange
procedures are explained in the Prospectus under "Exchange Privilege."
REDEEMING SHARES
- --------------------------------------------------------------------------------
The Fund redeems shares at the next computed net asset value after the Fund
receives the redemption request. Redemption procedures are explained in the
Prospectus under "Redeeming Shares."
REDEMPTION IN KIND
Although the Fund intends to redeem shares in cash, it reserves the right under
certain circumstances to pay the redemption price in whole or in part by a
distribution of securities from the Fund's portfolio.
Redemption in kind will be made in conformity with applicable SEC rules, taking
such securities at the same value employed in determining net asset value and
selecting the securities in a manner the Trustees determine to be fair and
equitable.
The Trust has elected to be governed by SEC Rule 18f-1 under the Act under which
each 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.
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 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 from 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.
SHAREHOLDERS' TAX STATUS
Shareholders are subject to federal income tax on dividends and capital gains
received as cash or additional shares. No portion of any income dividend paid by
the Fund is eligible for the dividends received deduction available to
corporations. These dividends, and any short-term capital gains, are taxable as
ordinary income.
CAPITAL GAINS
Long-term capital gains distributed to shareholders will be treated as
long-term capital gains regardless of how long shareholders have held
Fund shares.
TOTAL RETURN
- --------------------------------------------------------------------------------
The Fund's cumulative total return for the period from February 14, 1994 (date
of initial public investment) to September 30, 1994, was (5.54%). Cumulative
total return reflects the Fund's total performance over a specific period of
time. This total return assumes and is reduced by the payment of the maximum
sales load. The Fund's total return is representative of only eight months of
investment activity since the Fund's effective date.
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 maximum 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 load,
adjusted over the period by any additional shares, assuming the monthly
reinvestment of all dividends and distributions.
YIELD
- --------------------------------------------------------------------------------
The Fund's yield for the 30-day period ended September 30, 1994 was 5.54%.
The yield for the Fund is calculated by dividing the net investment income per
share (as defined by the Securities and Exchange Commission) earned by the Fund
over a 30-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 30-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 SEC
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.
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.
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 compositions of other funds, and methods
used to value portfolio securities and compute offering price. The financial
publications and/or indices which the Fund uses in advertising may include:
.LIPPER ANALYTICAL SERVICES, INC., ranks funds in various 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. From
time to time, the Fund will quote its Lipper ranking in the "U.S. government
funds" category in advertising and sales literature.
.LEHMAN BROTHERS GOVERNMENT/CORPORATE (Total) index is comprised of
approximately 5,000 issues which include: non-convertible bonds publicly issued
by the U.S. government or its agencies; corporate bonds guaranteed by the U.S.
government and quasi-federal corporations; and publicly issued, fixed-rate,
non-convertible domestic bonds of companies in industry, public utilities, and
finance. The average maturity of these bonds approximates nine years. Tracked
by Shearson Lehman Hutton, Inc., the index calculates total returns for one-
month, three-month, twelve-month, and ten-year periods, and year-to-date.
.SALOMON BROTHERS AAA-AA CORPORATE INDEX calculates total returns of
approximately 775 issues which include long-term high grade domestic corporate
taxable bonds, rated AAA-AA with maturities of twelve years or more and
companies in industry, public utilities, and finance.
.MERRILL LYNCH CORPORATE & GOVERNMENT MASTER INDEX is an unmanaged index
comprised of approximately 4,821 issues which include corporate debt
obligations rated BBB or better and publicly issued, non-convertible domestic
debt of the U.S. government or any agency thereof. These quality parameters are
based on composites of ratings assigned by Standard and Poor's Corp. and
Moody's Investors Service. Only bonds with a minimum maturity of one year are
included.
.MERRILL LYNCH CORPORATE MASTER INDEX is an unmanaged index comprised of
approximately 4,356 corporate debt obligations rated BBB or better. These
quality parameters are based on composites of ratings assigned by Standard and
Poor's Corp. and Moody's Investors Service. Only bonds with a minimum maturity
of one year are included.
.SALOMON BROTHERS BROAD INVESTMENT-GRADE ("BIG") BOND INDEX is designed to
provide the investment-grade bond manager with an all-inclusive universe of
institutionally traded U.S. Treasury, agency, mortgage and corporate securities
which can be used as a benchmark. The BIG Index is market
capitalization-weighted and includes all fixed rate bonds with a maturity of
one year or longer and a minimum of $50-million amount outstanding at entry
($200 million for mortgage coupons) and remain in the index until their amount
falls below $25 million.
.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. These total returns also
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.
APPENDIX
- --------------------------------------------------------------------------------
STANDARD AND POOR'S RATINGS GROUP CORPORATE BOND RATINGS
AAA--Debt rated "AAA" has the highest rating assigned by Standard & Poor's
Ratings Group. 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--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 (-): The ratings from "AA" to "CCC" 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., CORPORATE 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 each generic rating
classification from "AA" through "B" in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.
FITCH INVESTORS SERVICE, INC., 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 credit quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated "AAA." Because bonds rated in the "AAA" and
"AA" categories are not significantly vulnerable to foreseeable future
developments, short-term debt of these issuers is generally rated F-1+.
A--Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
BBB--Bonds considered to be investment grade and of satisfactory credit quality.
The obligor's ability to pay interest and repay principal is considered to be
adequate. Adverse changes in economic conditions and circumstances, however, are
more likely to have adverse impact on these bonds and, therefore, impair timely
payment.
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.
DUFF & PHELPS CREDIT RATING CO. LONG-TERM DEBT RATINGS
AAA--Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.
AA--High credit quality. Protection factors are strong. Risk is modest but may
vary slightly from time to time because of economic conditions.
A--Protection factors are average but adequate. However, risk factors are more
variable and greater in periods of economic stress.
BBB--Below average protection factors but still considered sufficient for
prudent investment. Considerable variability in risk during economic cycles.
COMMERCIAL PAPER RATINGS
STANDARD AND POOR'S RATINGS GROUP
A-1--This designation indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics are denoted with a plus (+) sign
designation.
A-2--Capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not as high as for issues designated
"A-1".
MOODY'S INVESTORS SERVICE, INC.
P-1--Issuers rated PRIME-1 (for 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:
conservative capitalization structures with moderate reliance on debt and ample
asset protection; broad margins in earning coverage of fixed financial charges
and high internal cash generation; and well-established access to a range of
financial markets and assured sources of alternative liquidity.
P-2--Issuers rated PRIME-2 (for 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.
FITCH INVESTORS SERVICE, INC.
FITCH-1--(Highest Grade) Commercial paper assigned this rating is regarded as
having the strongest degree of assurance for timely payment.
FITCH-2--(Very Good Grade) Issues assigned this rating reflect an assurance of
timely payment only slightly less in degree than the strongest issues.
DUFF & PHELPS CREDIT RATING CO.
DUFF 1+--Highest certainty of timely payment. Short-term liquidity, including
internal operating factors and/or access to alternative sources of funds, is
outstanding, and safety is just below risk-free U.S. Treasury short-term
obligations.
DUFF 1--Very high certainty of timely payment. Liquidity factors are excellent
and supported by good fundamental protection factors. Risk factors are minor.
DUFF 1---High certainty of timely payment. Liquidity factors are strong and
supported by good fundamental protection factors. Risk factors are very small.
GOOD GRADE
DUFF 2--Good certainty of timely payment. Liquidity factors and company
fundamentals are sound. Although ongoing funding needs may enlarge total
financing requirements, access to capital markets is good. Risk factors are
small.
A CREDIT RATING IS NOT A RECOMMENDATION TO BUY, SELL OR HOLD SECURITIES, AND IS
SUBJECT TO CHANGE AND/OR WITHDRAWAL BY THE RATING AGENCY.
70467H200
3092205B (11/94)
the Peachtree Funds
EQUITY
FUND
Prospectus
A Diversified Portfolio of
Peachtree Funds
an Open-End Management
Investment Company
(a Mutual Fund)
November 30, 1994
PEACHTREE EQUITY FUND
(A PORTFOLIO OF PEACHTREE FUNDS)
PROSPECTUS
The shares of the Peachtree Equity Fund (the "Fund") offered by this Prospectus
represent interests in a diversified portfolio of Peachtree Funds (the "Trust"),
an open-end management investment company (a mutual fund). The investment
objective of the Fund is to achieve long-term growth of capital and income. The
Fund pursues this objective by investing primarily in a portfolio of common
stocks of United States issuers.
This prospectus contains the information you should read carefully and
understand before you invest in the Fund. Keep this prospectus for future
reference.
The Fund has also filed a Statement of Additional Information dated November 30,
1994, with the Securities and Exchange Commission. 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
contacting the Peachtree Funds Service Center at 1-404-989-6200 or
1-800-621-8969.
SHARES OF THE FUND ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, AND ARE NOT ISSUED,
ENDORSED OR GUARANTEED BY, BANK SOUTH, N.A. (THE "BANK") OR ANY OF ITS
AFFILIATES. SUCH SHARES ARE NOT ISSUED, INSURED OR GUARANTEED BY THE U.S.
GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD
OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN THE FUND INVOLVES CERTAIN
RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
THE BANK IS THE INVESTMENT ADVISER TO THE FUND. THE FUND IS DISTRIBUTED BY
FEDERATED SECURITIES CORP., WHICH IS NOT AFFILIATED WITH THE BANK.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
November 30, 1994
The Peachtree Funds
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS 2
- ------------------------------------------------------
GENERAL INFORMATION 3
- ------------------------------------------------------
INVESTMENT INFORMATION 3
- ------------------------------------------------------
Investment Objective 3
Investment Policies 3
Acceptable Investments 3
Common Stocks 3
Other Corporate Securities 4
U.S. Government Securities 4
Options and Futures 4
Foreign Securities 4
Repurchase Agreements 4
When-Issued and Delayed Delivery
Transactions 4
Investing in Securities of
Other Investment Companies 5
Lending of Portfolio Securities 5
Temporary Investments 5
Restricted and Illiquid Securities 5
Certain Borrowing and Investment Limitations 6
PEACHTREE FUNDS INFORMATION 6
- ------------------------------------------------------
Management of the Trust 6
Board of Trustees 6
Investment Adviser 6
Advisory Fees 6
Adviser's Background 6
Portfolio Manager 7
Distribution of Shares 7
Distribution Plan 7
Administrative Arrangements 8
Administration of the Trust 8
Administrative Services 8
Shareholder Services Plan 8
Custodian 9
Transfer Agent, Dividend Disbursing
Agent, and Portfolio Accounting
Services 9
Legal Counsel 9
Independent Auditors 9
Expenses of the Fund 9
Brokerage Transactions 9
NET ASSET VALUE 9
- ------------------------------------------------------
INVESTING IN THE FUND 10
- ------------------------------------------------------
Share Purchases 10
By Telephone 10
By Mail 10
Payment by Check 10
Payment by Wire 10
Minimum Investment Required 10
Systematic Investment Program 10
What Shares Cost 10
Purchases at Net Asset Value 11
Sales Load Reallowance 11
Reducing the Sales Load 11
Quantity Discounts and Accumulated
Purchases 12
Letter of Intent 12
Reinvestment Privilege 12
Concurrent Purchases 12
Certificates and Confirmations 13
Dividends and Distributions 13
Purchasing Shares of the Fund with Securities 13
EXCHANGE PRIVILEGE 13
- ------------------------------------------------------
Peachtree Funds 13
By Telephone 14
REDEEMING SHARES 15
- ------------------------------------------------------
By Telephone 15
By Mail 15
Signatures 15
Receiving Payment 16
Systematic Withdrawal Program 16
Accounts with Low Balances 16
SHAREHOLDER INFORMATION 16
- ------------------------------------------------------
Voting Rights 16
Massachusetts Partnership Law 17
EFFECT OF BANKING LAWS 17
- ------------------------------------------------------
TAX INFORMATION 18
- ------------------------------------------------------
Federal Income Tax 18
State and Local Taxes 18
PERFORMANCE INFORMATION 18
- ------------------------------------------------------
FINANCIAL STATEMENTS 19
- ------------------------------------------------------
REPORT OF ERNST & YOUNG LLP,
INDEPENDENT AUDITORS 31
- ------------------------------------------------------
ADDRESSES 32
- ------------------------------------------------------
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)....................................................................... 3.75%
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)....................................................................... None
Contingent Deferred Sales Charge (as a percentage of original
purchase price or redemption proceeds, as applicable)..................................................... None
Exchange Fee................................................................................................ None
ANNUAL FUND OPERATING EXPENSES*
(As a percentage of projected average net assets)
Management Fee (after waiver) (1)........................................................................... 0.66%
12b-1 Fees (2).............................................................................................. 0.00%
Total Other Expenses........................................................................................ 0.34%
Shareholder Services Fees (3)................................................................ 0.00%
Total Fund Operating Expenses (after waiver) (4)................................................... 1.00%
</TABLE>
(1) The estimated management fee has been reduced to reflect the anticipated
voluntary waiver by the investment adviser. The adviser can terminate this
voluntary waiver at any time at its sole discretion. The maximum management
fee is 0.75%.
(2) As of the date of this prospectus, the Fund is not paying or accruing 12b-1
fees. The Fund can pay up to 0.75% as a 12b-1 fee to the distributor.
Certain trust clients of the Bank or its affiliates, including ERISA plans,
will not be affected by the distribution plan because the distribution plan
will not be activated unless and until a second, "Trust," class of shares of
the Fund (which would not have a Rule 12b-1 plan) is created and such trust
clients' investments in the Fund are converted to such Trust class.
(3) As of the date of the prospectus, the Fund is not paying or accruing
shareholder services fees. The Fund can pay up to 0.25% as a shareholder
services fee to certain financial institutions. Certain trust clients of the
Bank or its affiliates, including ERISA plans, will not be affected by the
shareholder services plan because the shareholder services plan will not be
activated unless and until a second, "Trust," class of shares of the Fund
(which would not have a services plan) is created and such clients'
investments in the Fund are converted to such Trust class.
(4) The Total Fund Operating Expenses in the table above are based on expenses
expected during the fiscal year ending September 30, 1995. The Total Fund
Operating Expenses are estimated to be 1.09% absent the voluntary waiver by
the investment adviser. The Total Fund Operating Expenses were 0.96% for the
fiscal year ended September 30, 1994 and were 1.05% absent the voluntary
waiver of a portion of the management and transfer agent fees.
* Expenses are estimated based on average expenses expected to be incurred
during the fiscal year ending September 30, 1995. During the course of this
period, expenses may be more or less than the average amount shown.
The purpose of this table is to assist an investor in understanding the
various costs and expenses that a shareholder of the Fund will bear, either
directly or indirectly. For more complete descriptions of the various costs and
expenses, see "Peachtree Funds Information" and "Investing in the Fund."
Wire-transferred redemptions may be subject to an additional fee.
<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. The Fund charges no redemption fees................. $47 $68 $91 $155
</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. THIS
EXAMPLE IS BASED ON ESTIMATED DATA FOR THE FUND'S FISCAL YEAR ENDING SEPTEMBER
30, 1995.
PEACHTREE EQUITY FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
Reference is made to the Report of Ernst & Young LLP, Independent Auditors, on
page 31.
<TABLE>
<CAPTION>
YEAR ENDED
SEPTEMBER 30, 1994*
-------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
- -----------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------------------
Net investment income 0.10
- -----------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.08)
- ----------------------------------------------------------------------------------------- -------
Total from investment operations 0.02
- -----------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
- -----------------------------------------------------------------------------------------
Dividends to shareholders from net investment income (0.10)
- ----------------------------------------------------------------------------------------- -------
NET ASSET VALUE, END OF PERIOD $ 9.92
- ----------------------------------------------------------------------------------------- -------
TOTAL RETURN** 0.20%
- -----------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -----------------------------------------------------------------------------------------
Expenses 0.96%(b)
- -----------------------------------------------------------------------------------------
Net investment income 1.66%(b)
- -----------------------------------------------------------------------------------------
Expense waiver/reimbursement (a) 0.09%(b)
- -----------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $96,796
- -----------------------------------------------------------------------------------------
Portfolio turnover rate 4%
- -----------------------------------------------------------------------------------------
</TABLE>
* Reflects operations for the period from February 14, 1994 (date of initial
public investment) to September 30, 1994.
** Based on net asset value which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(a) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(b) Computed on an annualized basis.
(See Notes which are an integral part of the Financial Statements)
Further information about the Fund's performance is contained in the Fund's
Annual Report for the fiscal year ended September 30, 1994, which can be
obtained free of charge.
GENERAL INFORMATION
- --------------------------------------------------------------------------------
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated September 22, 1993, as amended and restated dated December 20,
1993. The Declaration of Trust permits the Trust to offer separate series of
shares of beneficial interest representing interests in separate portfolios of
securities. This prospectus relates only to the Trust's Peachtree Equity Fund.
The Fund is designed as a convenient means of accumulating an interest in a
professionally managed, diversified portfolio consisting primarily of common
stocks of United States issuers. A minimum initial investment of $1,000 is
required ($500 for Individual Retirement Accounts ("IRAs") ), and subsequent
investments must be in amounts of at least $100. See "Investing in the Fund."
Fund shares are sold at net asset value plus a maximum sales load of 3.75% and
redeemed at net asset value.
INVESTMENT INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The Fund's investment objective is to achieve long-term growth of capital and
income. The investment objective cannot be changed without the approval of the
Fund's shareholders. 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.
INVESTMENT POLICIES
The Fund pursues its investment objective by investing in the securities of high
quality companies. Emphasis is placed on stocks where the market price of the
stock appears low when compared to present earnings. The Fund's investment
approach is based on the conviction that, over the long term, the economy will
continue to expand and develop and that this economic growth will be reflected
in the growth of the revenues and earnings of publicly-held corporations. Unless
indicated otherwise, the investment policies of the Fund may be changed by the
Trustees without the approval of shareholders. Shareholders will be notified
before any material change in these policies becomes effective.
ACCEPTABLE INVESTMENTS. The securities in which the Fund invests include, but
are not limited to:
COMMON STOCKS. The Fund invests primarily in common stocks of companies selected
by the Fund's investment adviser on the basis of traditional research
techniques, including assessment of earnings and dividend growth prospects of
the companies. Ordinarily, these companies will be in the top 30% of their
industries with regard to revenues. However, other factors such as product
position, market share, potential earnings growth, or asset values will be
considered by the investment adviser and may outweigh revenues. At least 65% of
the Fund's portfolio will be invested in common stocks, unless it is in a
defensive position.
OTHER CORPORATE SECURITIES. The Fund may invest in preferred stocks, convertible
securities, notes rated A or better by Moody's Investors Service, Inc., Standard
& Poor's Ratings Group, Duff & Phelps Credit Rating Co. or Fitch Investors
Service, Inc., or securities deemed by the investment adviser to be of
comparable quality to securities having such ratings, and warrants of these
companies. Corporate fixed income securities are subject to market and credit
risks. If any note invested in by the Fund loses its rating or has its rating
reduced after the Fund has purchased it, the Fund is not required to sell or
otherwise dispose of the security, but may consider doing so.
U.S. GOVERNMENT SECURITIES. The Fund may invest in U.S. government securities
and obligations of U.S. government agencies and instrumentalities.
OPTIONS AND FUTURES. The Fund may purchase and sell financial futures contracts
and purchase and sell options on financial futures contracts and on its
portfolio securities.
FOREIGN SECURITIES. The Fund may invest in foreign securities which are traded
publicly in the United States. Investments in foreign securities, particularly
those of non-governmental issuers, involve considerations which are not
ordinarily associated with investments in domestic issuers. These considerations
include the possibility of expropriation or nationalization, exchange rate
fluctuations, foreign taxation and withholding, the unavailability of financial
information or the difficulty of interpreting financial information prepared
under foreign accounting standards, less liquidity and more volatility in
foreign securities markets, the impact of political, social, or diplomatic
developments, and the difficulty of assessing economic trends in foreign
countries. It may also be more difficult to enforce contractual obligations
abroad than would be the case in the United States because of differences in the
legal systems. Transaction costs in foreign securities may be higher. The Fund's
investment adviser will consider these and other factors before investing in
foreign securities and will not make such investments unless, in its opinion,
such investments will meet the Fund's standards and objectives.
REPURCHASE AGREEMENTS. Repurchase agreements are arrangements in which banks,
broker-dealers and other financial institutions sell securities to the Fund and
agree at the time of sale to repurchase them at a mutually agreed upon time and
price including interest. To the extent that the seller does not repurchase the
securities from the Fund, the Fund could receive less than the repurchase price
on any sale of such securities. Repurchase agreements will be collateralized by
securities having a value equal at all times to at least 100% of the amount of
the securities subject to the repurchase agreement.
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 or less than the market value of the
securities on the settlement date.
The Fund may dispose of a commitment prior to settlement if the investment
adviser deems it appropriate to do so. In addition, the Fund may enter in
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.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES. The Fund may invest in
the securities of other investment companies, but will not own more than 3% of
the total outstanding voting stock of any investment company, invest more than
5% of total assets in any one investment company, or invest more than 10% of
total assets in investment companies in the aggregate. The Fund will invest in
other investment companies primarily for the purpose of investing short-term
cash which has not yet been invested in other portfolio instruments. It should
be noted that investment companies incur certain expenses, and therefore, any
investment by the Fund in Shares of another investment company would be subject
to certain duplicate expenses, particularly transfer agent and custodian fees.
The adviser will waive its investment advisory fee on assets invested in
securities of open-end investment companies.
LENDING OF PORTFOLIO SECURITIES. In order to generate additional income, the
Fund may lend its portfolio securities on a short-term or long-term basis, to
broker-dealers, banks, or other institutional borrowers of securities. The Fund
will limit the amount of portfolio securities it may lend to not more than 50%
of its total assets at any time. The Fund will only enter into loan arrangements
with broker-dealers, banks, or other institutions which the adviser has
determined are creditworthy under guidelines established by the Board of
Trustees, and will receive collateral equal to at least 100% of the value of the
securities loaned at all times.
TEMPORARY INVESTMENTS. For defensive purposes only, the Fund may also invest
temporarily in cash and money market instruments during times of unusual market
conditions. These investments include the following:
prime commercial paper, including master demand notes;
instruments of domestic and U.S. dollar denominated foreign banks and
savings and loans (such as certificates of deposit, demand and time
deposits, savings shares, and bankers' acceptances);
securities issued and/or guaranteed as to payment of principal and
interest by the U.S. government, its agencies, or instrumentalities;
repurchase agreements;
securities of other investment companies; and
other short-term money market instruments.
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 on resale under federal securities law. However, the Fund
will limit investments in illiquid securities, including certain restricted
securities not determined by the Trustees to be liquid, non-negotiable time
deposits, and repurchase agreements providing for settlement in more than seven
days after notice to 15% of its net assets.
CERTAIN BORROWING AND 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 33 1/3% of the value of its total assets and secure such
borrowings with up to 15% of the value of those assets at the time of
borrowing;
engage in short sales; or
with respect to 75% of its total assets, invest more than 5% in
securities of any one issuer other than cash, cash items, or securities
issued and/or guaranteed by the U.S. government, its agencies or
instrumentalities, and repurchase agreements collateralized by such
securities, or acquire more than 10% of the outstanding voting securities
of any one issuer.
The above investment limitations cannot be changed without Fund shareholder
approval.
PEACHTREE FUNDS INFORMATION
- --------------------------------------------------------------------------------
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees (the "Board" or
"Trustees"). The Board is responsible for managing the Trust's business affairs
and for exercising all the Trust's powers except those reserved for the
shareholders. The Executive Committee of the Board handles various of the
Board's delegable responsibilities between meetings of the Board.
INVESTMENT ADVISER. Investment decisions for the Fund are made by the Bank, as
the Fund's investment adviser (the "Adviser"), subject to direction by the
Board. The Adviser 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 Fund's assets.
ADVISORY FEES. The Adviser receives an annual investment advisory fee
equal to 0.75% of the Fund's average daily net assets. The fee paid by the
Fund, while higher than the advisory fee paid by certain other mutual
funds, is comparable to fees paid by many mutual funds with similar
objectives and policies. The Adviser has undertaken to reimburse the Fund,
up to the amount of the advisory fee, for operating expenses in excess of
limitations established by certain states. The Adviser may voluntarily
choose to waive a portion of its fee or reimburse other expenses of the
Fund, but reserves the right to terminate such waiver or reimbursement at
any time at its sole discretion.
ADVISER'S BACKGROUND. The Adviser, a national bank headquartered in
Atlanta, Georgia, is a wholly-owned subsidiary of Bank South Corporation, a
Georgia corporation which is a registered bank holding company. The Adviser
serves consumers through its network of banking offices with a full range
of deposit and lending products, as well as investment services. The
principal offices of the Adviser are located at 3350 Cumberland Circle,
Atlanta, GA 30339.
The Adviser has managed discretionary assets for its customers since 1931.
As of November 30, 1994, the Adviser managed in excess of $1 billion of
discretionary assets. The Bank has served as an investment adviser to
mutual funds since January 1994.
As part of its regular banking operations, the Bank 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 the Bank. The lending relationship will not be a factor in the selection
of securities.
PORTFOLIO MANAGER. Mr. W. Shelton Prince is primarily responsible for the
day-to-day management of the Fund's portfolio. Mr. Prince joined the
Adviser in March of 1968, and was promoted to Vice President in November
1979, and Senior Investment Manager in February 1993. Additionally, he is
responsible for the management of the Advisor's Equity Common Trust Fund
and has overall responsibility for the Advisor's Mutual Fund Management
Group. He also serves on the Advisor's Investment Strategy Advisory
Committee.
Mr. Prince's educational background includes a Bachelor of Science degree
from North Georgia College and a Master of Business Administration in both
Finance and Management from Georgia State University. He is a member of the
Atlanta Society of Financial Analysts.
DISTRIBUTION OF SHARES
Federated Securities Corp. (the "Distributor") is the principal distributor for
shares of the Fund. It is a Pennsylvania corporation organized on November 14,
1969, and is the principal distributor for a number of investment companies. The
Distributor is a subsidiary of Federated Investors.
DISTRIBUTION PLAN. Under a distribution plan (the "Plan") adopted in accordance
with Securities and Exchange Commission ("SEC") Rule 12b-1 under the Investment
Company Act of 1940, as amended, the Fund will pay an amount computed at an
annual rate of up to 0.75% of the average daily net asset value of the shares to
finance any activity which is principally intended to result in the sale of
shares subject to the Plan. Certain trust clients of the Bank, including ERISA
plans, will not be affected by the Plan because the Plan will not be activated
unless and until a second, "Trust" class of shares of the Fund (which would not
have a Rule 12b-1 plan) is created and such trust clients' investments in the
Fund are converted to such Trust class.
The Distributor may select other financial institutions (such as broker-dealers
or banks) to provide sales support services as agents for their clients or
customers who beneficially own shares. These financial institutions (including
the Bank) will receive fees from the Distributor based upon shares subject to
the Plan and owned by their clients or customers. The schedules of such fees and
the basis upon which such fees will be paid will be determined from time to time
by the Distributor.
The Fund's Plan is a compensation type plan. As such, the Fund pays the
Distributor the fee described above as opposed to reimbursing the Distributor
for actual expenses incurred. Therefore, the Fund does not pay for amounts
expended by the Distributor in excess of amounts received by it from the Fund,
which may include interest, carrying or other financing charges in connection
with excess amounts expended, or the Distributor's overhead expenses. However,
the Distributor may be able to recover such amounts or may earn a profit from
future payments made by the Fund under the Plan.
The Glass-Steagall Act prohibits a depository institution (such as a commercial
bank or a savings and loan association) from being an underwriter or distributor
of most securities. In the event the Glass-Steagall Act is deemed to prohibit
depository institutions from acting in the capacities described above or should
Congress relax current restrictions on depository institutions, the Trustees
will consider appropriate changes in the services.
State securities laws on this issue may differ from the interpretations of
federal law expressed herein and banks and financial institutions may be
required to register as dealers pursuant to certain states' securities laws.
ADMINISTRATIVE ARRANGEMENTS. The Distributor may also pay administrators a fee
based upon the average net asset value of shares of their customers invested in
the Trust for providing administrative services. This fee, if paid, will be
reimbursed by the Adviser and not the Trust.
ADMINISTRATION OF THE TRUST
ADMINISTRATIVE SERVICES. Federated Administrative Services, Pittsburgh,
Pennsylvania, a subsidiary of Federated Investors, provides certain
administrative personnel and services necessary to operate the Fund. Such
services include certain legal and accounting services. Federated Administrative
Services provides these at the annual rates specified below:
<TABLE>
<CAPTION>
MAXIMUM AVERAGE AGGREGATE DAILY
ADMINISTRATIVE FEE NET ASSETS OF THE TRUST
- --------------------- -----------------------
<S> <C>
.150 of 1% on the first $250 million
.125 of 1% on the next $250 million
.100 of 1% on the next $250 million
.075 of 1% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$100,000 per Fund. Federated Administrative Services may voluntarily choose to
waive a portion of its fee.
SHAREHOLDER SERVICES PLAN. The Fund has adopted a Shareholder Services Plan (the
"Services Plan") with respect to the shares. Under the Services Plan, financial
institutions will enter into shareholder service agreements with the Fund to
provide administrative support services to their customers who from time to time
may be owners of record or beneficial owners of the shares. In return for
providing these support services, a financial institution may receive payments
from the Fund at a rate not exceeding 0.25% of the average daily net assets of
the shares beneficially owned by the financial institution's customers for whom
it is holder of record or with whom it has a servicing relationship. These
administrative services may include, but are not limited to, the following
functions: providing office space, equipment, telephone facilities, and various
personnel including clerical, supervisory, and computer, as necessary or
beneficial to establish and maintain shareholder accounts and records;
processing purchase and redemption transactions and automatic investments of
client account cash balances; answering routine client inquiries regarding the
Fund; assisting clients in changing dividend options, account designations, and
addresses; and providing such other services as the Fund reasonably requests.
Certain trust clients of the Bank, including ERISA plans, will not be affected
by the Services Plan because the Services Plan will not be
activated unless and until a second, "Trust" class of shares of the Fund (which
would not have a Services Plan) is created and such trust clients' investments
in the Fund are converted to such Trust class.
CUSTODIAN. The Bank of New York, New York, New York is custodian for the
securities and cash of the Fund.
TRANSFER AGENT, DIVIDEND DISBURSING AGENT, AND PORTFOLIO ACCOUNTING SERVICES.
Federated Services Company, Pittsburgh, Pennsylvania, a subsidiary of Federated
Investors, is transfer agent (the "Transfer Agent") for the shares of, and
dividend disbursing agent for, the Fund. It also provides certain accounting and
recordkeeping services with respect to the Fund's portfolio investments.
LEGAL COUNSEL. Legal counsel is provided by Houston, Houston & Donnelly,
Pittsburgh, Pennsylvania, and Dickstein, Shapiro & Morin, L.L.P., Washington,
D.C.
INDEPENDENT AUDITORS. The independent auditors for the Fund are Ernst & Young
LLP, Pittsburgh, Pennsylvania.
EXPENSES OF THE FUND
The Fund pays all of its own expenses and its allocable share of the Trust's
expenses. The expenses borne by the Fund include, but are not limited to, the
cost of: organizing the Trust and continuing its existence; Trustees' fees;
investment advisory and administrative services; printing prospectuses and other
Fund documents for shareholders; registering the Trust, the Fund, and shares of
the Fund with federal and state securities authorities; taxes and commissions;
issuing, purchasing, repurchasing, and redeeming shares; fees for custodians,
transfer agents, dividend disbursing agents, shareholder servicing agents, and
registrars; printing, mailing, auditing, accounting, and legal expenses; reports
to shareholders and governmental agencies; meetings of Trustees and shareholders
and proxy solicitations therefor; insurance premiums; association membership
dues; and such nonrecurring and extraordinary items as may arise.
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 utilize those who are
recognized dealers in specific portfolio instruments, except when a better price
and execution of the order can be obtained elsewhere. In selecting among firms
believed to meet these criteria, the Adviser may give consideration to those
firms which have sold or are selling shares of the Fund. The Adviser makes
decisions on portfolio transactions and selects brokers and dealers subject to
review by the Fund's Board.
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 other assets, less
liabilities, by the number of shares outstanding.
INVESTING IN THE FUND
- --------------------------------------------------------------------------------
SHARE PURCHASES
Fund shares are sold on days on which the New York Stock Exchange and the
Federal Reserve Wire System are open for business. Shares of the Fund may be
purchased through the Bank. In connection with the sale of shares of the Fund,
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.
BY TELEPHONE. To place an order to purchase Fund shares, call the Peachtree
Funds Service Center at 1-404-989-6200 or 1-800-621-8969. Texas residents must
purchase shares of the Fund through Bank South Securities Corporation at
1-404-989-6181 or 1-800-621-8967. Your purchase order will be taken directly
over the telephone. The order must be placed by 4:00 p.m. (Eastern time) for
shares to be purchased at that day's price.
BY MAIL. Provide a letter of instruction to the Fund indicating your purchase
order, including the dollar amount of your order, your account title and/or
name, and your account number, and include a check made payable to the Fund.
PAYMENT BY CHECK. Mail to Peachtree Equity Fund, c/o the Peachtree Funds Service
Center, MC 684, P.O. Box 4387, Atlanta, Georgia 30302.
PAYMENT BY WIRE. To purchase shares by Federal Wire, contact your account
officer for wiring instructions. Wire orders will only be accepted on days on
which the Fund, the Bank and the Federal Reserve Banks are open for business.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in the Fund by an investor is $1,000 ($500 for
IRAs). Subsequent investments must be in amounts of at least $100. The Fund may
choose to waive its minimum investment requirements from time to time and for
accounts which select the Systematic Investment Program.
SYSTEMATIC INVESTMENT PROGRAM
Once an account has been opened, shareholders may add to their investment on a
regular basis in minimum amounts of $100, unless waived. Under this program,
funds may be automatically withdrawn periodically from the shareholder's
checking or other transaction deposit account and invested in Fund shares at the
net asset value next determined after an order is received by the Bank, plus an
applicable sales load. A shareholder may apply for participation in this program
through the Bank.
WHAT SHARES COST
Shares of the Fund are sold at their net asset value next determined after an
order is received plus a sales load as follows:
<TABLE>
<CAPTION>
SALES LOAD AS SALES LOAD AS
A PERCENTAGE A PERCENTAGE
OF PUBLIC OF NET AMOUNT
AMOUNT OF TRANSACTION OFFERING PRICE INVESTED
--------------------- -------------- ------------
<S> <C> <C>
Less than $100,000 3.75% 3.90%
$100,000 but less than $250,000 3.25% 3.38%
$250,000 but less than $500,000 2.75% 2.83%
$500,000 but less than $750,000 2.25% 2.30%
$750,000 but less than $1,000,000 1.00% 1.01%
$1,000,000 but less than $2,000,000 0.50% 0.50%
$2,000,000 or more 0.00% 0.00%
</TABLE>
The net asset value is determined at 4:00 p.m. (Eastern time), Monday through
Friday, except on: (i) days on which changes (if any) in the value of the Fund's
portfolio securities do not materially affect its net asset value; (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 load, by certain trust customers of the Bank and current
and retired directors, advisory committee members and employees of the Bank and
its affiliates and their spouses and children under 21. In addition, no sales
load is imposed for Fund shares purchased through Bank South Investment
Services, Inc.'s wrap fee program. Shareholders who wish to obtain more
information about the wrap fee program may contact Bank South Investment
Services, Inc. Investors who purchase shares through the wrap fee program may be
charged an additional fee by Bank South Investment Services, Inc.
SALES LOAD REALLOWANCE. The Bank and any authorized dealer or bank will normally
receive up to 85% of the applicable sales load as a transaction fee from its
customers and for sales and/or administrative services performed on behalf of
its customers in connection with the initiation of customer accounts and
purchases of Fund shares. Any portion of the sales load which is not paid to the
Bank or a dealer will be retained by the Distributor. However, the Distributor
will, periodically, uniformly offer to pay additional amounts in the form of
cash or promotional incentives consisting of trips to sales seminars at luxury
resorts, tickets or other items, to all dealers selling shares of the Fund. Such
payments, all or a portion of which may be paid from the sales load the
Distributor normally retains or any other source available to it, will be
predicated upon the amount of shares of the Fund that are sold by the dealer.
REDUCING THE SALES LOAD
The sales load can be reduced on the purchase of shares of the Fund through:
quantity discounts and accumulated purchases;
signing a 13-month letter of intent;
using the reinvestment privilege; or
concurrent purchases.
QUANTITY DISCOUNTS AND ACCUMULATED PURCHASES. As shown in the table on the
previous page, larger purchases reduce the sales load 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 load.
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 $90,000 and
purchases $10,000 more at the current public offering price, the sales load on
the additional purchase according to the schedule now in effect would be 3.25%,
not 3.75%.
To receive the sales load reduction, the Bank must be notified by the
shareholder in writing at the time the purchase is made that shares are already
owned or that purchases are being combined. The Fund will reduce the sales load
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 load may be reduced by
signing a letter of intent to that effect. This letter of intent includes a
provision for a sales load adjustment depending on the amount actually purchased
within the 13-month period and a provision for the custodian to hold up to 3.75%
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 load.
This letter of intent will not obligate the shareholder to purchase shares, but
if the shareholder does, each purchase during the period will be at the sales
load 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.
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 load. The Bank
must be notified by the shareholder in writing or by the shareholder's financial
institution of the reinvestment in order to eliminate a sales load. If the
shareholder redeems his shares in the Fund, there may be tax consequences.
CONCURRENT PURCHASES. For purposes of qualifying for a sales load reduction, a
shareholder has the privilege of combining concurrent purchases of two or more
funds in the Trust, the purchase price of which includes a sales load. For
example, if a shareholder concurrently invested $30,000 in one of the other
funds in the Trust with a sales load and $70,000 in this Fund, the sales load
would be reduced.
To receive this sales load reduction, the Distributor must be notified by the
shareholder in writing or by the Bank at the time the concurrent purchases are
made. The Fund will reduce the sales load after if confirms the purchases. See
"What Shares Cost" and "Addresses".
CERTIFICATES AND CONFIRMATIONS
The Transfer Agent for the Fund maintains a share account for each shareholder
of record. Share certificates are not issued unless requested in writing from
the Fund or the Transfer Agent.
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 quarterly to all shareholders invested in the
Fund on the record date.
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 load, unless a shareholder
makes written request for cash payments to the Fund or the Bank.
PURCHASING SHARES OF THE FUND WITH SECURITIES
The Fund in its sole discretion, may sell Fund shares to investors that desire
to purchase Fund shares with certain securities or a combination of certain
securities and cash. The Fund reserves the right to determine the acceptability
of securities used to effect such purchases. On the day securities are accepted
by the Fund, they are valued based upon independent bid and in the same manner
as the Fund values its assets. Investors wishing to use securities to purchase
Fund shares should first contact the Bank. Any such transfer of securities is
treated as a sale of the securities and will result in the recognition of any
gain or loss for federal income tax purposes by the seller of such securities,
except to the extent the seller is an ERISA plan or similar entity not subject
to tax.
EXCHANGE PRIVILEGE
- --------------------------------------------------------------------------------
PEACHTREE FUNDS
All shareholders of the Fund are shareholders of Peachtree Funds. Peachtree
Funds currently include the Fund, Peachtree Bond Fund, Peachtree Georgia
Tax-Free Income Fund, Peachtree Prime Money Market Fund, and Peachtree
Government Money Market Fund. Shareholders have easy access to each of the
portfolios of Peachtree Funds through a telephone exchange program. All
Peachtree Funds are advised by the Bank and distributed by the Distributor.
Shareholders may exchange shares of the Fund for shares of the other Peachtree
Funds. In addition, shares of the Fund may also be exchanged for certain other
funds designated by the Bank which are distributed by the Distributor, but are
not advised by the Bank ("Federated Funds"). For further information on the
availability of Federated Funds for exchanges, please call the Peachtree Funds
Service Center at 1-404-989-6200 or 1-800-621-8969. Shares of funds with a sales
load may be exchanged at net asset value for shares of other funds with an equal
sales load or no sales load. Shares of funds with a sales load may be exchanged
for shares of funds with a higher sales load at net asset value, plus the
additional sales load. Shares of funds with no sales load, acquired by direct
purchase, may be exchanged for shares of funds with a sales load at net asset
value, plus the applicable sales load.
When an exchange is made from a fund with a sales load to a fund with no sales
load , the shares exchanged and additional shares which have been purchased by
reinvesting dividends or capital gains on such shares retain the character of
the exchanged shares for purposes of exercising further exchange privileges;
thus, an exchange of such shares for shares of a fund with a sales load would be
at net asset value.
Shareholders who exercise this exchange privilege must exchange shares having a
net asset value of at least $1,000. Prior to any exchange, the shareholder must
receive a copy of the current prospectus of the fund into which an exchange is
to be effected.
The exchange privilege is available to shareholders residing in any state in
which the fund shares being acquired may legally be sold. Upon receipt of proper
instructions and all necessary supporting documents, shares submitted for
exchange will be redeemed at the next-determined net asset value for the
applicable fund. Written exchange instructions may require a signature
guarantee. Exercise of this privilege is treated as a sale for federal income
tax purposes and, depending on the circumstances, a short or long-term capital
gain or loss may be realized.
The Fund reserves the right to terminate the exchange privilege at any time on
60 days' notice. Shareholders will be notified if this privilege is terminated.
A shareholder may obtain further information on the exchange privilege by
calling the Peachtree Funds Service Center at 1-404-989-6200 or 1-800-621-8969.
BY TELEPHONE. Instructions for exchanges between funds which are part of the
Trust may be given by telephone to the Peachtree Funds Service Center at
1-404-989-6200 or 1-800-621-8969 or to the Distributor. Shares may be exchanged
by telephone only between fund accounts having identical shareholder
registrations.
Any shares held in certificate form cannot be exchanged by telephone but must be
forwarded to the Fund's Transfer Agent by the Bank and deposited to the
shareholder's mutual fund account before being exchanged. See "Addresses".
An authorization form permitting the Fund to accept telephone exchanges must
first be completed. It is recommended that investors request this privilege at
the time of their initial application. If not completed at the time of initial
application, authorization forms and information regarding this service are
available from the Bank. Telephone exchange 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.
Telephone exchange instructions must be received before 4:00 p.m. (Eastern time)
for shares to be exchanged the same day. The telephone exchange privilege may be
modified or terminated at any time. Shareholders will be notified of such
modification or termination. Shareholders may have difficulty in making
exchanges by telephone through the Bank during times of drastic economic or
market changes. If a shareholder cannot contact the Bank by telephone, it is
recommended that an exchange request be made in writing and sent by overnight
mail to Peachtree Funds, 3350 Cumberland Circle, 10th Floor, Atlanta, Georgia
30339.
REDEEMING SHARES
- --------------------------------------------------------------------------------
The Fund redeems shares at their net asset value next determined after the Bank
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 and can be made through the Bank or directly to
the Fund.
BY TELEPHONE. A shareholder may redeem shares of the Fund by contacting his
account officer or by calling the Peachtree Funds Service Center to request the
redemption. (Call 1-404-989-6200 or
1-800-621-8969). Shares will be redeemed at the net asset value next determined
after the Fund receives the redemption request from the Bank. Redemption
requests to the Bank must be received before 4:00 p.m. (Eastern time) in order
for shares to be redeemed at that day's net asset value, and the Bank will
promptly submit such redemption requests and provide written redemption
instructions to the Fund. If, at any time, the Fund should determine it
necessary to terminate or modify this method of redemption, shareholders would
be promptly notified.
An authorization form permitting the Fund to accept telephone redemption
requests must first be completed. It is recommended that investors request this
privilege at the time of their initial application. If not completed at the time
of initial application, authorization forms and information on this service are
available from the Bank. 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.
A shareholder may have the redemption proceeds directly deposited by electronic
funds transfer or wired directly to a domestic commercial bank previously
designated by the shareholder. Wire redemption orders will only be accepted on
days on which the Fund, the Bank and the Federal Reserve Wire System are open
for business. Wire-transferred redemptions may be subject to an additional fee.
In the event of extraordinary 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 your account officer at the Bank.
BY MAIL. Shareholders may redeem shares by sending a written request to the
Bank. 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 to the Bank.
Shareholders should call the Peachtree Funds Service Center at 1-404-989-6200 or
1-800-621-8969 for assistance in redeeming shares by mail.
SIGNATURES. Shareholders requesting a redemption of $50,000 or more, a
redemption requesting payment to an address other than that on record with the
Fund, or other than to the shareholder of record must make written redemption
requests with signatures guaranteed by:
a trust company or commercial bank whose deposits are insured by the
FDIC's BIF;
a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchange;
a savings bank or savings and loan association whose deposits are insured
by the FDIC's SAIF; or
any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934, as amended.
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.
RECEIVING PAYMENT. Normally, a check for the proceeds is mailed to the
shareholder within one business day, but in no event more than seven calendar
days, after receipt of a proper written redemption request, provided that the
Transfer Agent has received payment for shares from the shareholder.
SYSTEMATIC WITHDRAWAL PROGRAM
Shareholders who desire to receive payments of a predetermined amount may take
advantage of the Systematic Withdrawal Program. Under this program, Fund shares
are redeemed to provide for periodic withdrawal payments in an amount directed
by the shareholder. Depending upon the amount of the withdrawal payments and the
amount of dividends paid with respect to Fund shares, redemptions may reduce,
and eventually deplete, the shareholder's investment in the Fund. For this
reason, payments under this program should not be considered as yield or income
on the shareholder's investment in the Fund. To be eligible to participate in
this program, a shareholder must have an account value of at least $10,000. A
shareholder may apply for participation in this program through the Bank.
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, due to
shareholder redemptions, the account balance falls below the required minimum of
$1,000.
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 entitles shareholders to one vote in Trustee elections
and other matters submitted to shareholders of the Trust for vote. All shares of
each portfolio in the Trust have equal voting rights except that, in matters
affecting only a particular Fund, only shareholders of that Fund are entitled to
vote. 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. As of
November 4, 1994, Bank South N.A., Atlanta, Georgia, acting in various
capacities for numerous accounts, was the owner of record of approximately
9,105,732 shares (88.96%) 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.
Any Trustee may be removed by the Board of Trustees or by the shareholders at a
special meeting. A special meeting of the shareholders shall be called by the
Trustees upon the written request of shareholders owning at least 10% of the
Trust's outstanding shares.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for acts or obligations of the Trust. To
protect shareholders, 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 the Trust or its
Trustees enter into or sign on behalf of the Fund.
In the unlikely event a shareholder is held personally liable for the Trust's
obligations, the Trust is required by the Declaration of Trust to use its
property to indemnify, protect or compensate the shareholder. On request, the
Trust will defend any claim made and pay any judgment against a shareholder for
any act or obligation of the Trust. Therefore, financial loss resulting from
liability as a shareholder will occur only if the Trust cannot meet its
obligations to indemnify shareholders and pay judgments against them from assets
of the Fund.
EFFECT OF BANKING LAWS
- --------------------------------------------------------------------------------
Banking laws and regulations presently prohibit a bank holding company
registered under the federal Bank Holding Company Act of 1956, as amended or any
affiliate thereof from sponsoring, organizing, controlling, or distributing the
shares of a registered, open-end investment company continuously engaged in the
issuance of its shares, and prohibit banks generally from underwriting or
distributing securities. However, such banking laws and regulations do not
prohibit such a holding company affiliate or banks generally from acting as
investment adviser, transfer agent, or custodian to such an investment company
or from acting as agent for their customers in purchasing securities. The
Adviser is subject to such banking laws and regulations.
The Bank believes, based on the advice of its counsel, that it may perform the
services for the Fund contemplated by its advisory agreement with the Trust
without violating of 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 affiliates, as well as
further judicial or administrative decisions or interpretations of present or
future statutes and regulations, could prevent the Bank from continuing to
perform all or a part of the above services for its customers and/or the Fund.
If it were prohibited from engaging in these customer-related activities, the
Trustees would consider alternative advisers and means of continuing available
investment services. In such event, changes in the operation of the Fund may
occur, including possible termination of any automatic or other Fund share
investment and redemption services then being
provided by the Bank. It is not expected that existing shareholders would suffer
any adverse financial consequences (if another adviser with equivalent abilities
to the Bank 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 intends to meet
requirements of the Internal Revenue Code applicable to regulated investment
companies and to receive the special tax treatment afforded to such companies.
The Fund will be treated as a single, separate entity for federal income tax
purposes so that income (including capital gains) and losses realized by the
Trust's other portfolios will not be combined for tax purposes with those
realized by the Fund.
Unless otherwise exempt, shareholders are required to pay federal income tax on
any dividends and other distributions received. This applies whether dividends
and distributions are received in cash or as additional shares.
STATE AND LOCAL TAXES
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 may advertise its total return and yield.
Total return represents the change, over a specified period of time, in the
value of an investment in the Fund 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 30-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 yield does not
necessarily reflect income actually earned by the Fund and, therefore, may not
correlate to the dividends or other distributions paid to shareholders.
From time to time, the Fund may advertise its performance using certain
financial publications and/ or compare its performance to certain indices.
PEACHTREE EQUITY FUND
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
- ------------ ------------------------------------------------------------------------------------- -------------
COMMON STOCKS--89.0%
- ---------------------------------------------------------------------------------------------------
AEROSPACE & DEFENSE--3.4%
-------------------------------------------------------------------------------------
20,000 Boeing Co. $ 862,500
-------------------------------------------------------------------------------------
24,000 General Motors Corp. "H" 897,000
-------------------------------------------------------------------------------------
40,000 Loral Corp. 1,575,000
------------------------------------------------------------------------------------- -------------
Total 3,334,500
------------------------------------------------------------------------------------- -------------
AUTOMOTIVE--6.1%
-------------------------------------------------------------------------------------
23,000 Chrysler Corp. 1,032,125
-------------------------------------------------------------------------------------
30,000 Eaton Corp. 1,425,000
-------------------------------------------------------------------------------------
47,000 Echlin, Inc. 1,427,625
-------------------------------------------------------------------------------------
18,000 General Motors Corp. 843,750
-------------------------------------------------------------------------------------
42,000 Superior Industries International, Inc. 1,212,750
------------------------------------------------------------------------------------- -------------
Total 5,941,250
------------------------------------------------------------------------------------- -------------
BUILDING--1.7%
-------------------------------------------------------------------------------------
30,000 Masco Corp. 723,750
-------------------------------------------------------------------------------------
55,000 Ryland Group, Inc. 873,125
------------------------------------------------------------------------------------- -------------
Total 1,596,875
------------------------------------------------------------------------------------- -------------
CHEMICALS--2.0%
-------------------------------------------------------------------------------------
30,000 Avery Dennison Corp. 1,031,250
-------------------------------------------------------------------------------------
17,000 Imperial Chemical Industries PLC 888,250
------------------------------------------------------------------------------------- -------------
Total 1,919,500
------------------------------------------------------------------------------------- -------------
COMMERCIAL SERVICES--0.7%
-------------------------------------------------------------------------------------
2,000 Viacom, Inc.--Class A 81,750
-------------------------------------------------------------------------------------
25,000 Viacom, Inc.--Variable Common Rights 32,813
-------------------------------------------------------------------------------------
15,154 Viacom, Inc.--Class B 602,362
------------------------------------------------------------------------------------- -------------
Total 716,925
------------------------------------------------------------------------------------- -------------
</TABLE>
PEACHTREE EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
- ------------ ------------------------------------------------------------------------------------- -------------
COMMON STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT--3.2%
-------------------------------------------------------------------------------------
5,000 *Andrew Corp. $ 250,625
-------------------------------------------------------------------------------------
23,000 Emerson Electric Co. 1,371,375
-------------------------------------------------------------------------------------
30,000 General Electric Co. 1,443,750
------------------------------------------------------------------------------------- -------------
Total 3,065,750
------------------------------------------------------------------------------------- -------------
ELECTRICAL OFFICE EQUIPMENT--6.5%
-------------------------------------------------------------------------------------
46,000 American Business Products, Inc. 1,023,500
-------------------------------------------------------------------------------------
11,000 Hewlett Packard Co. 961,125
-------------------------------------------------------------------------------------
13,000 Intel Corp. 799,500
-------------------------------------------------------------------------------------
18,000 *Lotus Development Corp. 661,500
-------------------------------------------------------------------------------------
16,000 Motorola, Inc. 844,000
-------------------------------------------------------------------------------------
29,000 Texas Instruments, Inc. 1,982,875
------------------------------------------------------------------------------------- -------------
Total 6,272,500
------------------------------------------------------------------------------------- -------------
ENERGY--8.9%
-------------------------------------------------------------------------------------
21,000 Amerada Hess Corp. 976,500
-------------------------------------------------------------------------------------
25,000 Amoco Corp. 1,481,250
-------------------------------------------------------------------------------------
18,000 Anadarko Petroleum Corp. 805,500
-------------------------------------------------------------------------------------
35,000 Baker Hughes, Inc. 651,875
-------------------------------------------------------------------------------------
32,000 Equitable Resource, Inc. 960,000
-------------------------------------------------------------------------------------
20,000 Mapco, Inc. 1,120,000
-------------------------------------------------------------------------------------
15,000 Royal Dutch Petroleum Co. 1,610,625
-------------------------------------------------------------------------------------
18,000 Schlumberger Ltd. 978,750
------------------------------------------------------------------------------------- -------------
Total 8,584,500
------------------------------------------------------------------------------------- -------------
FINANCE--0.7%
-------------------------------------------------------------------------------------
15,000 Torchmark Inc. 658,125
------------------------------------------------------------------------------------- -------------
FINANCE-COMMERCIAL--5.8%
-------------------------------------------------------------------------------------
30,000 American Express Co. 911,250
-------------------------------------------------------------------------------------
32,000 Barnett Banks, Inc. 1,416,000
-------------------------------------------------------------------------------------
</TABLE>
PEACHTREE EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
- ------------ ------------------------------------------------------------------------------------- -------------
COMMON STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
FINANCE-COMMERCIAL--CONTINUED
-------------------------------------------------------------------------------------
10,000 Chubb Corp. $ 711,250
-------------------------------------------------------------------------------------
22,000 Morgan (J.P.) & Co., Inc. 1,336,500
-------------------------------------------------------------------------------------
25,000 Suntrust Banks, Inc. 1,218,750
------------------------------------------------------------------------------------- -------------
Total 5,593,750
------------------------------------------------------------------------------------- -------------
FOOD, BEVERAGES & HOUSEHOLD PRODUCTS--8.8%
-------------------------------------------------------------------------------------
20,000 Anheuser-Busch Companies, Inc. 1,017,500
-------------------------------------------------------------------------------------
68,250 Archer-Daniels-Midland Co. 1,774,500
-------------------------------------------------------------------------------------
58,000 Flowers Industries, Inc. 993,250
-------------------------------------------------------------------------------------
17,000 Gillette Co. 1,202,750
-------------------------------------------------------------------------------------
27,000 Pepsico, Inc. 894,375
-------------------------------------------------------------------------------------
20,000 Philip Morris Companies, Inc. 1,222,500
-------------------------------------------------------------------------------------
15,000 Ralston Purina Co. 620,625
-------------------------------------------------------------------------------------
37,000 Sara Lee Corp. 832,500
------------------------------------------------------------------------------------- -------------
Total 8,558,000
------------------------------------------------------------------------------------- -------------
FOREST PRODUCTS--1.8%
-------------------------------------------------------------------------------------
39,000 Weyerhaeuser Co. 1,740,375
------------------------------------------------------------------------------------- -------------
HEALTH CARE--9.8%
-------------------------------------------------------------------------------------
35,000 Abbott Laboratories 1,098,125
-------------------------------------------------------------------------------------
25,000 American Cyanamid Co. 2,525,000
-------------------------------------------------------------------------------------
20,000 Bausch & Lomb, Inc. 780,000
-------------------------------------------------------------------------------------
11,000 Bristol-Myers Squibb Co. 631,125
-------------------------------------------------------------------------------------
14,000 *Forest Labs, Inc. 689,500
-------------------------------------------------------------------------------------
25,000 Merck & Co., Inc. 887,500
-------------------------------------------------------------------------------------
25,000 Mylan Labs Inc. 637,500
-------------------------------------------------------------------------------------
9,000 Pfizer, Inc. 622,125
-------------------------------------------------------------------------------------
17,000 *Scherer R.P. Corp. 707,625
-------------------------------------------------------------------------------------
</TABLE>
PEACHTREE EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
- ------------ ------------------------------------------------------------------------------------- -------------
COMMON STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
HEALTH CARE--CONTINUED
-------------------------------------------------------------------------------------
30,000 Smithkline Beecham PLC $ 926,250
------------------------------------------------------------------------------------- -------------
Total 9,504,750
------------------------------------------------------------------------------------- -------------
MACHINERY-INDUSTRIAL--2.4%
-------------------------------------------------------------------------------------
40,000 Caterpillar, Inc. 2,165,000
-------------------------------------------------------------------------------------
10,000 R.P.M. Inc, Ohio 187,500
------------------------------------------------------------------------------------- -------------
Total 2,352,500
------------------------------------------------------------------------------------- -------------
MEDIA--2.7%
-------------------------------------------------------------------------------------
38,000 Reuters Holdings PLC 1,710,000
-------------------------------------------------------------------------------------
30,000 Times Mirror Co. 922,500
------------------------------------------------------------------------------------- -------------
Total 2,632,500
------------------------------------------------------------------------------------- -------------
METALS--2.6%
-------------------------------------------------------------------------------------
16,000 Aluminum Co. of America 1,356,000
-------------------------------------------------------------------------------------
17,000 Nucor Corp. 1,183,625
------------------------------------------------------------------------------------- -------------
Total 2,539,625
------------------------------------------------------------------------------------- -------------
MOVIES-ENTERTAINMENT--2.7%
-------------------------------------------------------------------------------------
20,000 Hilton Hotels Corp. 1,197,500
-------------------------------------------------------------------------------------
52,000 McDonalds Corp. 1,365,000
------------------------------------------------------------------------------------- -------------
Total 2,562,500
------------------------------------------------------------------------------------- -------------
PRODUCER MANUFACTURING--2.0%
-------------------------------------------------------------------------------------
8,000 Minnesota Mining & Manufacturing Co. 442,000
-------------------------------------------------------------------------------------
33,000 Tenneco, Inc. 1,456,125
------------------------------------------------------------------------------------- -------------
Total 1,898,125
------------------------------------------------------------------------------------- -------------
RETAIL TRADE--8.4%
-------------------------------------------------------------------------------------
35,000 *Autozone, Inc. 800,625
-------------------------------------------------------------------------------------
50,000 Circuit City Stores, Inc. 1,293,750
-------------------------------------------------------------------------------------
26,000 Home Depot, Inc. 1,092,000
-------------------------------------------------------------------------------------
40,000 K Mart Corp. 715,000
-------------------------------------------------------------------------------------
</TABLE>
PEACHTREE EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OR
SHARES VALUE
<S> <C> <C>
- ------------ ------------------------------------------------------------------------------------- -------------
COMMON STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
RETAIL TRADE--CONTINUED
-------------------------------------------------------------------------------------
48,000 Limited, Inc. $ 942,000
-------------------------------------------------------------------------------------
30,000 *Office Depot, Inc. 780,000
-------------------------------------------------------------------------------------
28,000 Penney (J.C.) Co., Inc. 1,445,500
-------------------------------------------------------------------------------------
15,000 Tandy Corp. 645,000
-------------------------------------------------------------------------------------
12,000 *Toys R Us, Inc. 427,500
------------------------------------------------------------------------------------- -------------
Total 8,141,375
------------------------------------------------------------------------------------- -------------
SERVICES--1.3%
-------------------------------------------------------------------------------------
42,000 WMX Technologies, Inc. 1,212,750
------------------------------------------------------------------------------------- -------------
TRANSPORTATION--1.5%
-------------------------------------------------------------------------------------
30,000 Southwest Airlines Co. 675,000
-------------------------------------------------------------------------------------
15,000 Union Pacific Corp. 804,375
------------------------------------------------------------------------------------- -------------
Total 1,479,375
------------------------------------------------------------------------------------- -------------
UTILITIES--6.0%
-------------------------------------------------------------------------------------
20,000 AT&T Corp. 1,080,000
-------------------------------------------------------------------------------------
15,000 Duke Power Co. 585,000
-------------------------------------------------------------------------------------
54,000 *LDDS Communications, Inc. 1,191,375
-------------------------------------------------------------------------------------
42,000 MCI Communications Corp. 1,076,250
-------------------------------------------------------------------------------------
30,000 Telefonos De Mexico S.A. de C.V. 1,875,000
------------------------------------------------------------------------------------- -------------
Total 5,807,625
------------------------------------------------------------------------------------- -------------
TOTAL COMMON STOCKS (IDENTIFIED COST $86,182,634) 86,113,175
------------------------------------------------------------------------------------- -------------
CASH EQUIVALENT--0.1%
- ---------------------------------------------------------------------------------------------------
$ 113,566 Bank of New York Cash Reserve, 4.25% 113,566
------------------------------------------------------------------------------------- -------------
</TABLE>
PEACHTREE EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ------------ ------------------------------------------------------------------------------------- -------------
**REPURCHASE AGREEMENTS--11.5%
- ---------------------------------------------------------------------------------------------------
$ 3,600,000 Lehman Brothers, Inc., 4.55%, dated 9/29/94, due 10/3/94 $ 3,600,000
-------------------------------------------------------------------------------------
3,800,000 Cantor, Fitzgerald Securities Corp., 4.75%, dated 9/30/94, due 10/4/94 3,800,000
-------------------------------------------------------------------------------------
3,700,000 HSBC Securities, Inc., 4.65%, dated 9/30/94, due 10/4/94 3,700,000
------------------------------------------------------------------------------------- -------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL REPURCHASE AGREEMENTS (AT AMORTIZED COST) 11,100,000
------------------------------------------------------------------------------------- -------------
TOTAL INVESTMENTS (IDENTIFIED COST $97,396,200) $ 97,326,741+
------------------------------------------------------------------------------------- -------------
</TABLE>
The cost of investments for federal tax purposes amounts to $97,396,200. The
net unrealized depreciation of investments on a federal tax basis amounts to
$69,459, which is comprised of $4,644,713 appreciation and $4,714,172
depreciation at September 30, 1994.
* Non-income producing.
** Repurchase agreements are fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio.
Note: The categories of investments are shown as a percentage of net assets
($96,796,487) at September 30, 1994.
(See Notes which are an integral part of the Financial Statements)
PEACHTREE EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- --------------------------------------------------------------------------------------------------
Investments in repurchase agreements $ 11,100,000
- -----------------------------------------------------------------------------------
Investments in securities 86,226,741
- ----------------------------------------------------------------------------------- -------------
Total investments, at amortized cost and value
(identified and tax cost $97,396,200) $ 97,326,741
- --------------------------------------------------------------------------------------------------
Interest receivable 3,280
- --------------------------------------------------------------------------------------------------
Receivable for Fund shares sold 9,480
- --------------------------------------------------------------------------------------------------
Dividends receivable 169,744
- --------------------------------------------------------------------------------------------------
Deferred expenses 29,942
- -------------------------------------------------------------------------------------------------- -------------
Total assets 97,539,187
- --------------------------------------------------------------------------------------------------
LIABILITIES:
- --------------------------------------------------------------------------------------------------
Payable for investments purchased 676,238
- -----------------------------------------------------------------------------------
Payable for Fund shares redeemed 2,668
- -----------------------------------------------------------------------------------
Accrued expenses 63,794
- ----------------------------------------------------------------------------------- -------------
Total liabilities 742,700
- -------------------------------------------------------------------------------------------------- -------------
NET ASSETS for 9,754,617 shares of beneficial interest outstanding $ 96,796,487
- -------------------------------------------------------------------------------------------------- -------------
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------------------------
Paid-in capital $ 96,804,124
- --------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments (69,459)
- --------------------------------------------------------------------------------------------------
Accumulated net realized gain (loss) on investments 46,181
- --------------------------------------------------------------------------------------------------
Undistributed net investment income 15,641
- -------------------------------------------------------------------------------------------------- -------------
Total Net Assets $ 96,796,487
- -------------------------------------------------------------------------------------------------- -------------
NET ASSET VALUE, and Redemption Proceeds Per Share
($96,796,487 / 9,754,617 shares of beneficial interest outstanding) $9.92
- -------------------------------------------------------------------------------------------------- -------------
Computation of Offering Price:
Offering Price Per Share (100/96.25 of $9.92)* $10.31
- -------------------------------------------------------------------------------------------------- -------------
</TABLE>
*See "What Shares Cost" in the prospectus.
(See Notes which are an integral part of the Financial Statements)
PEACHTREE EQUITY FUND
STATEMENT OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1994*
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------------------------
Dividend income $ 1,143,925
- ----------------------------------------------------------------------------------------------------
Interest income 198,563
- ---------------------------------------------------------------------------------------------------- ------------
Total investment income 1,342,488
- ----------------------------------------------------------------------------------------------------
EXPENSES:
- ----------------------------------------------------------------------------------------
Investment advisory fee $ 385,127
- ----------------------------------------------------------------------------------------
Administrative personnel and services fees 75,896
- ----------------------------------------------------------------------------------------
Custodian fees 12,935
- ----------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 20,608
- ----------------------------------------------------------------------------------------
Legal fees 1,050
- ----------------------------------------------------------------------------------------
Printing and postage 4,463
- ----------------------------------------------------------------------------------------
Portfolio accounting fees 32,395
- ----------------------------------------------------------------------------------------
Insurance premiums 4,000
- ----------------------------------------------------------------------------------------
Miscellaneous 4,829
- ---------------------------------------------------------------------------------------- ----------
Total expenses 541,303
- ----------------------------------------------------------------------------------------
Deduct--
- ----------------------------------------------------------------------------------------
Waiver of investment advisory fee $ 36,781
- -----------------------------------------------------------------------------
Waiver of transfer and dividend disbursing agent fees and expenses 12,000 48,781
- ----------------------------------------------------------------------------- --------- ----------
Net expenses 492,522
- ---------------------------------------------------------------------------------------------------- ------------
Net investment income 849,966
- ----------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- ----------------------------------------------------------------------------------------------------
Net realized gain (loss) on investment transactions (identified cost basis) 46,181
- ----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) of investments (69,459)
- ---------------------------------------------------------------------------------------------------- ------------
Net realized and unrealized gain (loss) on investments (23,278)
- ---------------------------------------------------------------------------------------------------- ------------
Change in net assets resulting from operations $ 826,688
- ---------------------------------------------------------------------------------------------------- ------------
</TABLE>
*For the period from February 14, 1994 (date of initial public investment) to
September 30, 1994.
(See Notes which are an integral part of the Financial Statements)
PEACHTREE EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED
SEPTEMBER 30, 1994*
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------------------------------------------------------
OPERATIONS--
- ----------------------------------------------------------------------------------------
Net investment income $ 849,966
- ----------------------------------------------------------------------------------------
Net realized gain (loss) on investment transactions ($46,181 net gain
as computed for federal tax purposes) 46,181
- ----------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) of investments (69,459)
- ---------------------------------------------------------------------------------------- ------------------------
Change in net assets resulting from operations 826,688
- ---------------------------------------------------------------------------------------- ------------------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ----------------------------------------------------------------------------------------
Dividends to shareholders from net investment income (834,325)
- ---------------------------------------------------------------------------------------- ------------------------
FUND SHARE (PRINCIPAL) TRANSACTIONS--
- ----------------------------------------------------------------------------------------
Proceeds from sales of shares 105,207,396
- ----------------------------------------------------------------------------------------
Net asset value of shares issued to shareholders
in payment of dividends declared 809,821
- ----------------------------------------------------------------------------------------
Cost of shares redeemed (9,213,093)
- ---------------------------------------------------------------------------------------- ------------------------
Change in net assets from Fund share transactions 96,804,124
- ---------------------------------------------------------------------------------------- ------------------------
Change in net assets 96,796,487
- ----------------------------------------------------------------------------------------
NET ASSETS:
- ----------------------------------------------------------------------------------------
Beginning of period --
- ---------------------------------------------------------------------------------------- ------------------------
End of period (including undistributed net investment income of $15,641) $ 96,796,487
- ---------------------------------------------------------------------------------------- ------------------------
</TABLE>
*For the period from February 14, 1994 (date of initial public investment) to
September 30, 1994.
(See Notes which are an integral part of the Financial Statements)
PEACHTREE EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1994
- --------------------------------------------------------------------------------
(1) ORGANIZATION
The Peachtree Funds (the "Trust") is registered under the Investment Company Act
of 1940, as amended (the "Act"), as an open-end, management investment company.
The Trust consists of four diversified portfolios and one non-diversified
portfolio. The financial statements included herein present only those of
Peachtree Equity Fund (the "Fund"). The financial statements of the other
portfolios are presented separately. The assets of each portfolio are segregated
and a shareholder's interest is limited to the portfolio in which shares are
held. As of September 30, 1994, Peachtree Georgia Tax-Free Income Fund was
effective but did not have public investment.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
A. INVESTMENT VALUATIONS--Listed equity securities are valued at the last sale
price reported on national securities exchanges. Unlisted securities and
short-term obligations (and private placement securities) are generally
valued at the price provided by an independent pricing service. Short-term
securities with remaining maturities of sixty days or less at time of
purchase may be stated at amortized cost, which approximates value.
B. REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral in support of
repurchase agreement investments. Additionally, procedures have been
established by the Fund to monitor, on a daily basis, the market value of
each repurchase agreement's underlying collateral to ensure that the value
of collateral at least equals the principal amount of the repurchase
agreement, including accrued interest.
The Funds will only enter into repurchase agreements with banks and other
recognized financial institutions, such as brokers/dealers, which are
deemed by the Fund's adviser to be creditworthy pursuant to guidelines
established by the Board of Trustees (the "Trustees"). Risks may arise from
the potential inability of counterparties to honor the terms of the
repurchase agreement. Accordingly, the Fund could receive less than the
repurchase price on the sale of collateral securities.
C. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Dividend income and
distributions to shareholders are recorded on the ex-dividend date.
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").
PEACHTREE EQUITY FUND
- --------------------------------------------------------------------------------
D. 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 taxable income.
Accordingly, no provisions for federal tax are necessary.
E. WHEN-LSSUED 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 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.
F. 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 using the straight-line method not to exceed a period of five
years from the Fund's commencement date.
G. OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED
SEPTEMBER 30, 1994*
<S> <C>
Shares sold 10,619,487
- ----------------------------------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared 82,917
- ----------------------------------------------------------------------------------------
Shares redeemed (947,787)
- ---------------------------------------------------------------------------------------- -------------
Net change resulting from Fund share transactions 9,754,617
- ---------------------------------------------------------------------------------------- -------------
</TABLE>
*For the period from February 14, 1994 (date of initial public investment) to
September 30, 1994.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Bank South, N.A., the Fund's investment adviser (the
"Adviser"), receives for its services an annual investment advisory fee equal to
0.75 of 1% of the Fund's average daily net assets. The Adviser may voluntarily
choose to waive a portion of its fee and reimburse certain operating expenses of
the Fund. The Adviser can modify or terminate this voluntary waiver and
reimbursement at any time at its sole discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
with certain administrative personnel and services. The FAS fee is based on the
level of average aggregate net assets of the Trust for the period. FAS may
voluntarily choose to waive a portion of its fee.
PEACHTREE EQUITY FUND
- --------------------------------------------------------------------------------
TRANSFER AND DIVIDEND DISBURSING AGENT AND ACCOUNTING FEES--Federated Services
Company ("FServ") serves as transfer and dividend disbursing agent for the Fund.
The FServ fee is based on the size, type, and number of accounts and
transactions made by shareholders. FServ may voluntarily choose to waive a
portion of its fee.
FServ also maintains the Fund's accounting records. The FServ fee is based on
the level of the Fund's average net assets for the period, plus out-of-pocket
expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses ($41,462) were borne initially
by FAS. The Fund has agreed to reimburse FAS for the organizational expenses
during the five year period following January 7, 1994 (date the Fund first
became effective). For the period ended September 30, 1994, the Fund paid $1,796
pursuant to this agreement.
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 September 30, 1994, were as follows:
<TABLE>
<S> <C>
- ---------------------------------------------------------------------------------------------------
PURCHASES $ 88,818,914
- --------------------------------------------------------------------------------------------------- -------------
SALES $ 2,678,027
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
REPORT OF ERNST & YOUNG LLP,
INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
To the Trustees and Shareholders of
PEACHTREE FUNDS:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Peachtree Equity Fund (one of the portfolios
comprising Peachtree Funds) as of September 30, 1994, and the related statement
of operations, the statement of changes in net assets and the financial
highlights for the period then ended. These financial statements and financial
highlights are the responsibility of the Trust's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of September 30, 1994,
by correspondence with the custodian and brokers. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Peachtree Equity Fund at September 30, 1994, the results of its operations, the
changes in its net assets and the financial highlights for the period then
ended, in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Pittsburgh, Pennsylvania
November 2, 1994
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Peachtree Equity Fund Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Investment Adviser
Bank South, N.A. 3350 Cumberland Circle
Atlanta, Georgia 30339
- ---------------------------------------------------------------------------------------------------------------------
Custodian
The Bank of New York 48 Wall Street
New York, New York 10286
- ---------------------------------------------------------------------------------------------------------------------
Transfer Agent, Dividend Disbursing Agent,
and Portfolio Accounting Services
Federated Services Company Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Legal Counsel
Houston, Houston & Donnelly 2510 Centre City Tower
Pittsburgh, Pennsylvania 15222
- ---------------------------------------------------------------------------------------------------------------------
Legal Counsel
Dickstein, Shapiro & Morin, L.L.P. 2101 L Street, N.W.
Washington, D.C. 20037
- ---------------------------------------------------------------------------------------------------------------------
Independent Auditors
Ernst & Young LLP One Oxford Centre
Pittsburgh, Pennsylvania 15219
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
[LOGO] BANK SOUTH, N.A.
I N V E S T M E N T A D V I S E R
3350 Cumberland Circle
Atlanta, GA 30339
[LOGO] FEDERATED SECURITIES CORP.
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
70467H101
3092102A (11/94)
PEACHTREE EQUITY FUND
(A PORTFOLIO OF PEACHTREE FUNDS)
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information should be read with the
prospectus of Peachtree Equity Fund (the "Fund") dated November 30,
1994. This Statement is not a prospectus itself. To receive a copy of
the prospectus, call the Peachtree Funds Service Center at
1-404-989-6200 or 1-800-621-8969.
SHARES OF THE FUND ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, AND ARE
NOT ISSUED, ENDORSED OR GUARANTEED BY, BANK SOUTH, N.A. (THE "BANK")
OR ANY OF ITS AFFILIATES. SUCH SHARES ARE NOT ISSUED, INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY.
AN INVESTMENT IN THE FUND INVOLVES CERTAIN RISKS, INCLUDING POSSIBLE
LOSS OF PRINCIPAL.
THE BANK IS INVESTMENT ADVISER TO THE FUND. THE FUND IS DISTRIBUTED BY
FEDERATED SECURITIES CORP., WHICH IS NOT AFFILIATED WITH THE BANK.
Statement dated November 30, 1994
FEDERATED SECURITIES CORP.
--------------------------------------------
Distributor
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
GENERAL INFORMATION ABOUT THE FUND 1
- ---------------------------------------------------------------
INVESTMENT OBJECTIVE AND POLICIES 1
- ---------------------------------------------------------------
Types of Investments 1
Other Permitted Investments 1
Futures and Options Transactions 1
Temporary Investments 3
When-Issued and Delayed Delivery
Transactions 4
Restricted and Illiquid Securities 4
Repurchase Agreements 4
Reverse Repurchase Agreements 5
Lending of Portfolio Securities 5
Portfolio Turnover 5
Investment Limitations 5
PEACHTREE FUNDS MANAGEMENT 8
- ---------------------------------------------------------------
The Funds 10
Fund Ownership 11
Trustee Liability 11
INVESTMENT ADVISORY SERVICES 11
- ---------------------------------------------------------------
Adviser to the Fund 11
Advisory Fees 11
ADMINISTRATIVE SERVICES 11
- ---------------------------------------------------------------
TRANSFER AGENT AND DIVIDEND
DISBURSING AGENT 11
- ---------------------------------------------------------------
BROKERAGE TRANSACTIONS 12
- ---------------------------------------------------------------
PURCHASING SHARES 12
- ---------------------------------------------------------------
Administrative Arrangements 12
Distribution Plan 12
Purchasing Fund Shares with Securities 12
DETERMINING NET ASSET VALUE 13
- ---------------------------------------------------------------
Determining Market Value of Securities 13
EXCHANGE PRIVILEGE 13
- ---------------------------------------------------------------
REDEEMING SHARES 13
- ---------------------------------------------------------------
Redemption in Kind 13
TAX STATUS 13
- ---------------------------------------------------------------
The Fund's Tax Status 13
Shareholders' Tax Status 13
TOTAL RETURN 14
- ---------------------------------------------------------------
YIELD 14
- ---------------------------------------------------------------
PERFORMANCE COMPARISONS 14
- ---------------------------------------------------------------
GENERAL INFORMATION ABOUT THE FUND
- --------------------------------------------------------------------------------
Peachtree Equity Fund (the "Fund") is a portfolio in Peachtree Funds (the
"Trust"), which was established as a Massachusetts business trust under a
Declaration of Trust dated as of September 22, 1993, as amended and restated
dated December 20, 1993.
INVESTMENT OBJECTIVE AND POLICIES
- --------------------------------------------------------------------------------
The Fund's investment objective is to achieve long-term growth of capital and
income. The investment objective cannot be changed without shareholder approval.
TYPES OF INVESTMENTS
The Fund invests principally in common stocks of United States issuers. Although
the Fund may invest in other securities and in money market instruments, it is
the Fund's policy under normal market conditions to invest at least 65% of its
portfolio in equity securities.
OTHER PERMITTED INVESTMENTS
CONVERTIBLE SECURITIES
Convertible securities are fixed income securities which may be exchanged
or converted into a predetermined number of shares of the issuer's
underlying common stock at the option of the holder during a specified
time period. Convertible securities may take the form of convertible
preferred stock or units consisting of "usable" bonds and warrants or a
combination of the features of several of these securities. The
investment characteristics of each convertible security vary widely,
which allows convertible securities to be employed for different
investment objectives.
The Fund will exchange or convert the convertible securities held in its
portfolio into shares of the underlying common stock in instances in
which, in the investment adviser's opinion, the investment
characteristics of the underlying common shares will assist the Fund in
achieving its investment objectives. Otherwise, the Fund may hold or
trade convertible securities. In selecting convertible securities for the
Fund, the Fund's adviser evaluates the investment characteristics of the
convertible security as a fixed income instrument, and the investment
potential of the underlying equity security for capital appreciation. In
evaluating these matters with respect to a particular convertible
security, the Fund's adviser considers numerous factors, including the
economic and political outlook, the value of the security relative to
other investment alternatives, trends in the determinants of the issuer's
profits, and the issuer's management capability and practices.
WARRANTS
Warrants are basically options to purchase common stock at a specific
price (usually at a premium above the market value of the underlying
common stock at the time of the issuance of the warrant) valid for a
specific period of time. Warrants may have a life ranging from less than
a year to twenty years or may be perpetual. However, most warrants have
expiration dates after which they are worthless. In addition, if the
market price of the common stock does not exceed the warrant's exercise
price during the life of the warrant, the warrant will expire as
worthless. Warrants have no voting rights, pay no dividends, and have no
rights with respect to the assets of the corporation issuing them. The
percentage increase or decrease in the market price of the warrant may
tend to be greater than the percentage increase or decrease in the market
price of the underlying common stock.
FUTURES AND OPTIONS TRANSACTIONS
As a means of reducing fluctuations in the net asset value of shares of the
Fund, the Fund may attempt to hedge all or a portion of its portfolio by buying
and selling financial futures contracts, buying put options on portfolio
securities and listed put options on futures contracts, and writing call options
on futures contracts. The Fund may also write covered call options on portfolio
securities to attempt to increase its current income. The Fund will maintain its
positions in securities, option rights, and segregated cash subject to puts and
calls until the options are exercised, closed, or have expired. An option
position on financial futures contracts may be closed out only on an exchange
which provides a secondary market for options of the same series.
FINANCIAL FUTURES CONTRACTS
A futures contract is a firm commitment by two parties: the seller who
agrees to make delivery of the specific type of security called for in
the contract ("going short") and the buyer who agrees to take delivery of
the security ("going long") at a certain time in the future.
Financial futures contracts may call for the delivery of shares of common
stocks represented in a particular index.
In addition, the Fund reserves the right to hedge the portfolio by
entering into financial futures contracts. The Fund will notify
shareholders before such a change in its operating policies is
implemented.
PUT OPTIONS ON FINANCIAL FUTURES CONTRACTS
The Fund may purchase exchange listed put options on financial futures
contracts. Unlike entering directly into a futures contract, which
requires the purchaser to buy a financial instrument on a set date at a
specified price, the purchase of a put option on a futures contract
entitles (but does not obligate) its purchaser to decide on or before a
future date whether to assume a short position at the specified price.
Generally, if the hedged portfolio securities decrease in value during
the term of an option, the related futures contracts will also decrease
in value and the option will increase in value. In such an event, the
Fund will normally close out its option by selling an identical option.
If the hedge is successful, the proceeds received by the Fund upon the
sale of the second option will be large enough to offset both the premium
paid by the Fund for the original option plus the decrease in value of
the hedged securities.
Alternatively, the Fund may exercise its put option to close out the
position. To do so, it would simultaneously enter into a futures contract
of the type underlying the option (for a price less than the strike price
of the option) and exercise the option. The Fund would then deliver the
futures contract in return for payment of the strike price. If the Fund
neither closes out nor exercises an option, the option will expire on the
date provided in the option contract, and only the premium paid for the
contract will be lost.
CALL OPTIONS ON FINANCIAL FUTURES CONTRACTS
In addition to purchasing put options on futures, the Fund may write
exchange listed call options on futures contracts to hedge its portfolio.
When the Fund writes a call option on a futures contract, it is
undertaking the obligation of assuming a short futures position (selling
a futures contract) at the fixed strike price at any time during the life
of the option if the option is exercised. As stock prices fall, causing
the prices of futures to go down, the Funds' obligation under a call
option on a future (to sell a futures contract) costs less to fulfill,
causing the value of the Fund's call option position to increase.
In other words, as the underlying futures price goes down below the
strike price, the buyer of the option has no reason to exercise the call,
so that the Fund keeps the premium received for the option. This premium
can substantially offset the drop in value of the Fund's fixed income or
indexed portfolio which is occurring as interest rates rise.
Prior to the expiration of a call written by the Fund, or exercise of it
by the buyer, the Fund may close out the option by buying an identical
option. If the hedge is successful, the cost of the second option will be
less than the premium received by the Fund for the initial option. The
net premium income of the Fund will then substantially offset the
decrease in value of the hedged securities.
The Fund will not maintain open positions in futures contracts it has
sold or call options it has written on futures contracts if, in the
aggregate, the value of the open positions (marked to market) exceeds the
current market value of its securities portfolio plus or minus the
unrealized gain or loss on those open positions, adjusted for the
correlation of volatility between the hedged securities and the futures
contracts. If this limitation is exceeded at any time, the Fund will take
prompt action to close out a sufficient number of open contracts to bring
its open futures and options positions within this limitation.
"MARGIN" IN FUTURES TRANSACTIONS
Unlike the purchase or sale of a security, the Fund does not pay or
receive money upon the purchase or sale of a futures contract. Rather,
the Fund is required to deposit an amount of "initial margin" in cash or
U.S. Treasury bills with its custodian (or the broker, if legally
permitted). The nature of initial margin in futures transactions is
different from that of margin in securities transactions in that initial
margin in futures transactions does not involve the borrowing of funds by
the Fund to finance the transactions. Initial margin is in the nature of
a performance bond or good faith deposit on the contract which is
returned to the Fund upon termination of the futures contract, assuming
all contractual obligations have been satisfied.
A futures contract held by the Fund is valued daily at the official
settlement price of the exchange on which it is traded. Each day the Fund
pays or receives cash, called "variation margin," equal to the daily
change in value of the futures contract. This process in known as
"marking to market." Variation margin does not represent a borrowing or
loan by the Fund but is instead settlement between the Fund and the
broker of the amount one would owe the other if the futures contract
expired. In computing its daily net asset value, the Fund will mark to
market its open futures positions.
The Fund is also required to deposit and maintain margin when it writes
call options on futures contracts.
PURCHASING PUT OPTIONS ON PORTFOLIO SECURITIES
The Fund may purchase put options on portfolio securities to protect
against price movements in particular securities in its portfolio. A put
option gives the Fund, in return for a premium, the right to sell the
underlying security to the writer (seller) at a specified price during
the term of the option.
WRITING COVERED CALL OPTIONS ON PORTFOLIO SECURITIES
The Fund may also write covered call options to generate income. As
writer of a call option, the Fund has the obligation upon exercise of the
option during the option period to deliver the underlying security upon
payment of the exercise price. The Fund may only sell call options either
on securities held in its portfolio or on securities which it has the
right to obtain without payment of further consideration (or has
segregated cash in the amount of any additional consideration).
RISKS
When the Fund uses financial futures and options on financial futures as
hedging devices, there is a risk that the prices of the securities
subject to the futures contracts may not correlate perfectly with the
prices of the securities in the Fund's portfolio. This may cause the
futures contract and any related options to react differently than the
portfolio securities to market changes. In addition, the Fund's
investment adviser could be incorrect in its expectations about the
direction or extent of market factors such as stock price movements. In
these events, the Fund may lose money on the futures contract or option.
It is not certain that a secondary market for positions in futures
contracts or for options will exist at all times. Although the investment
adviser will consider liquidity before entering into options
transactions, there is no assurance that a liquid secondary market on an
exchange or otherwise will exist for any particular futures contract or
option at any particular time. The Fund's ability to establish and close
out futures and options positions depends on this secondary market.
TEMPORARY INVESTMENTS
MONEY MARKET INSTRUMENTS
For defensive purposes only, the Fund may invest temporarily in cash and
money market instruments during times of unusual market conditions:
prime commercial paper (rated A-1 by Standard & Poor's Ratings Group,
P-1 by Moody's Investors Service, Inc., F-1 by Fitch Investors Service,
or Duff-1 by Duff & Phelps Credit Rating Co.) and Europaper (rated A-1,
P-1, F-1 or Duff-1 or above). In the case where commercial paper or
Europaper has received different ratings from different rating services,
such commercial paper or Europaper is an acceptable temporary investment
so long as at least one rating is one of the preceding high quality
ratings and provided the Fund's investment adviser has determined that
such investment presents minimal credit risks;
instruments of domestic and foreign banks and savings and loans if they
have capital, surplus, and undivided profits of over $100,000,000
("Eligible Institutions"), or if the principal amount of the instrument
is insured by the Bank Insurance Fund ("BIF") administered by the
Federal Deposit Insurance Corporation ("FDIC") or the Savings
Association Insurance Fund ("SAIF") administered by the FDIC. Such Fund
investments may include Eurodollar Certificates of Deposit ("ECDs"),
Eurodollar Time Deposits ("ETDs"), and Canadian Time Deposits issued by
Eligible Institutions;
obligations of the U.S. government or its agencies or instrumentalities;
repurchase agreements; and
other short-term instruments which are not rated but are determined by
the investment adviser to be of comparable quality to the other
temporary obligations in which the Fund may invest.
U.S. GOVERNMENT OBLIGATIONS
The types of U.S. government obligations in which the Fund may invest
generally include direct obligations of the U.S. Treasury (such as U.S.
Treasury bills, notes, and bonds) and obligations issued or guaranteed by
U.S. government agencies or instrumentalities. These securities are
backed by:
the full faith and credit of the U.S. Treasury;
the issuer's right to borrow an amount limited to a specific line of
credit from the U.S. Treasury;
the discretionary authority of the U.S. government to purchase certain
obligations of agencies or instrumentalities; or
the credit of the agency or instrumentality issuing the obligations.
Examples of agencies and instrumentalities which are permissible
investments which may not always receive financial support from the U.S.
government are:
Federal Farm Credit Banks;
Federal Home Loan Banks;
Federal National Mortgage Association;
Student Loan Marketing Association; and
Federal Home Loan Mortgage Corporation.
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. 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.
RESTRICTED AND ILLIQUID SECURITIES
The ability of the Trustees to determine the liquidity of certain restricted
securities is permitted under a Securities and Exchange Commission ("SEC") Staff
position set forth in the adopting release for Rule 144A under the Securities
Act of 1933. Rule 144A is a nonexclusive safe-harbor for certain secondary
market transactions involving securities subject to restrictions on resale under
federal securities laws. Rule 144A provides an exemption from registration for
resales of otherwise restricted securities to qualified institutional buyers.
Rule 144A was expected to further enhance the liquidity of the secondary market
for securities eligible for resale under Rule 144A. The Fund believes that the
Staff of the SEC has left the question of determining the liquidity of all
restricted securities to the Trustees. The Trustees consider the following
criteria in determining the liquidity of certain restricted securities:
.the frequency of trades and quotes for the security;
.the number of dealers willing to purchase or sell the security and the number
of other potential buyers;
.dealer undertakings to make a market in the security; and
.the nature of the security and the nature of the marketplace trades.
REPURCHASE AGREEMENTS
As collateral for the obligations of the seller to repurchase the securities
from the Fund, the Fund or its custodian will take possession of the securities
subject to repurchase agreements and these securities are marked to market
daily. 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 a defaulting seller filed for bankruptcy
or became insolvent, disposition of 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 will
only enter into repurchase agreements with banks and other financial
institutions, such as securities broker-dealers, which are deemed by the Fund's
adviser to be creditworthy pursuant to guidelines established by the Board of
Trustees (the "Trustees").
REVERSE REPURCHASE AGREEMENTS
The Fund may also enter into reverse repurchase agreements. These transactions
are similar to borrowing cash and pledging securities as collateral. In a
reverse repurchase agreement, the Fund transfers possession of a portfolio
instrument to another person, such as a financial institution or broker-dealer,
in return for a percentage of the instrument's market value in cash, and agrees
that on a stipulated date in the future the Fund will repurchase the portfolio
instrument by remitting the original consideration, plus interest at an agreed
upon rate. The use of reverse repurchase agreements may enable the Fund to avoid
selling portfolio instruments at a time when a sale may be deemed to be
disadvantageous, but the ability to enter into reverse repurchase agreements
does not ensure that the Fund will be able to avoid selling portfolio
instruments at a disadvantageous time.
When effecting reverse repurchase agreements, liquid assets of the Fund, in a
dollar amount sufficient to make payment for the obligations to be purchased,
are segregated at the trade date. These securities are marked to market daily
and are maintained until the transaction is settled.
LENDING OF PORTFOLIO SECURITIES
The collateral received when the Fund lends portfolio securities must be valued
daily and, should the market value of the loaned securities increase, the
borrower must furnish additional collateral to the Fund. During the time
portfolio securities are on loan, the borrower pays the Fund any dividends or
interest paid on such securities. Loans are subject to termination at the option
of the Fund or the borrower. The Fund may pay reasonable administrative and
custodial fees in connection with a loan and may pay a negotiated portion of the
interest earned on the cash or equivalent collateral to the borrower or placing
broker.
The Fund would not have the right to vote securities on loan, but would
terminate the loan and regain the right to vote if that were considered
important with respect to the investment.
PORTFOLIO TURNOVER
The Fund may trade or dispose of portfolio securities as considered necessary to
meet its investment objective. It is anticipated that, under stable market
conditions, the portfolio trading engaged in by the Fund will not result in its
annual rate of portfolio turnover exceeding 100%. For the period from February
14, 1994 (date of initial public investment) to September 30, 1994, the
portfolio turnover rate was 4.0%.
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 are necessary for
clearance of purchase and sale of securities. The deposit or payment by
the Fund of initial or variation margin in connection with financial
futures contracts or related options transactions is not considered the
purchase of a security on margin.
ISSUING SENIOR SECURITIES AND BORROWING MONEY
The Fund will not issue senior securities except that the Fund may borrow
money and engage in reverse repurchase agreements in amounts up to
33 1/3% of the value of its total assets, including the amounts borrowed
except to the extent that the Fund may enter into futures contracts. The
Fund will not borrow money or engage in reverse repurchase agreements for
investment leverage, but rather as a temporary, extraordinary, or
emergency measure to facilitate management of the portfolio by enabling
the Fund to meet redemption requests when the liquidation of portfolio
securities is deemed to be inconvenient or disadvantageous. The Fund will
not purchase any securities while borrowings in excess of 5% of its total
assets are outstanding.
PLEDGING ASSETS
The Fund will not mortgage, pledge, or hypothecate any assets, except to
secure permissible borrowings. In those cases, it may pledge assets
having a market value not exceeding the lesser of the dollar amounts
borrowed or 15% of the value of the Fund's total assets at the time of
the pledge. For purposes of this limitation, the following are not deemed
to be pledges: margin deposits for the purchase and sale of financial
futures contracts and related options; and segregation or collateral
arrangements made in connection with options activities or the purchase
of securities on a when-issued basis.
DIVERSIFICATION OF INVESTMENTS
With respect to securities comprising 75% of the value of its total
assets, the Fund will not purchase securities of any one issuer (other
than cash, cash items or securities issued or guaranteed by the
government of the United States or its agencies or instrumentalities and
repurchase agreements collateralized by such securities) if, as a result,
more than 5% of the value of its total assets would be invested in the
securities of that issuer and will not acquire more than 10% of the
outstanding voting securities of any one issuer.
CONCENTRATION OF INVESTMENTS
The Fund will not invest 25% or more of its total assets in securities of
issuers having their principal business activities in the same industry.
INVESTING IN COMMODITIES
The Fund will not purchase or sell commodities, commodity contracts, or
commodity futures contracts except that the Fund may purchase and sell
financial futures contracts and related options.
UNDERWRITING
The Fund will not underwrite any issue of securities, except as it may be
deemed to be an underwriter under the Securities Act of 1933 in
connection with the sale of restricted or other securities which the Fund
may purchase pursuant to its investment objective, policies and
limitations.
INVESTING IN REAL ESTATE
The Fund will not purchase or sell real estate, including limited
partnership interests, although it may invest in the securities of
companies whose business involves the purchase or sale of real estate or
in securities which are secured by real estate or which represent
interests in real estate.
LENDING CASH OR SECURITIES
The Fund will not lend any of its assets except portfolio securities up
to 50% of the value of its total assets. This shall not prevent the Fund
from purchasing or holding U.S. government obligations, money market
instruments, variable rate demand notes, bonds, debentures, notes,
certificates of indebtedness, or other debt securities, entering into
repurchase agreements, or engaging in other transactions where permitted
by the Fund's investment objective, policies, and limitations or
Declaration of Trust.
Except as noted, the above investment limitations cannot be changed without
shareholder approval. The following limitations, however, may be changed by the
Trustees without shareholder approval. Except as noted, shareholders will be
notified before any material change in the following limitations becomes
effective.
INVESTING IN NEW ISSUERS
The Fund will not invest more than 5% of the value of its total assets in
securities of issuers which have records of less than three years of
continuous operations, including the operation of any predecessor.
INVESTING IN FOREIGN SECURITIES
The Fund will not invest more than 15% of its total assets in securities
of foreign issuers.
INVESTING IN RESTRICTED SECURITIES
The Fund will not purchase restricted securities if immediately
thereafter more than 10% of the total assets of the Fund, taken at market
value, would be invested in such securities, except for securities which
meet the criteria for liquidity as established by the Trustees. To comply
with certain state restrictions, the Fund will limit these transactions
to 5% of its total assets. (If state restrictions change, this latter
restriction may be revised without shareholder approval or notification.)
INVESTING IN MINERALS
The Fund will not invest in interests in oil, gas, or other mineral
exploration or development programs or leases, other than debentures or
equity stock interests.
PURCHASING SECURITIES TO EXERCISE CONTROL
The Fund will not purchase securities of a company for the purpose of
exercising control or management.
INVESTING IN WARRANTS
The Fund will not invest more than 5% of its assets in warrants,
including those acquired in units or attached to other securities. To
comply with certain state restrictions, the Fund will limit its
investment in such warrants not listed on New York or American stock
exchanges to 2% of its total assets. (If state restrictions change, this
latter restriction may be revised without notice to shareholders.) For
purposes of
this investment restriction, warrants will be valued at the lower of cost
or market, except that warrants acquired by the Fund in units with or
attached to securities may be deemed to be without value.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
The Fund will limit its investment in other investment companies to no
more than 3% of the total outstanding voting stock of any investment
company, invest no more than 5% of the total assets in any investment
company, or invest more than 10% of its total assets in investment
companies in the aggregate. However, these limitations are not applicable
if the securities are acquired in a merger, consolidation, or acquisition
of assets.
INVESTING IN ILLIQUID SECURITIES
The Fund will not invest more than 15% of the value of its net assets in
illiquid securities, including repurchase agreements providing for
settlement more than seven calendar days after notice, over-the-counter
options, and restricted securities not determined by the Trustees to be
liquid.
INVESTING IN ISSUERS WHOSE SECURITIES ARE OWNED BY OFFICERS AND TRUSTEES OF
THE TRUST
The Fund will not purchase or retain the securities of any issuer if the
officers and Trustees of the Fund or the Adviser own individually more
than 0.5% of the issuer's securities or in the aggregate own more than 5%
of such issuer's securities.
ARBITRAGE TRANSACTIONS
To comply with certain state restrictions, the Fund will not enter into
transactions for the purpose of engaging in arbitrage. If state
requirements change, this restriction may be revised without shareholder
notification.
WRITING COVERED CALL OPTIONS
The Fund will not write call options on securities unless the securities
are held in the Fund's portfolio or unless the Fund is entitled to them
in deliverable form without further payment or after segregating cash in
the amount of any further payment.
INVESTING IN PUT OPTIONS
The Fund will not purchase put options on securities, other than put
options on stock indices, unless the securities are held in the Fund's
portfolio and not more than 5% of the value of the Fund's net assets
would be invested in premiums on open put option positions.
The Fund does not expect to borrow money in excess of 5% of the total value of
its net assets during the next fiscal year.
Except with respect to borrowing money, if a percentage limitation is adhered to
at the time of investment, a later increase or decrease in percentage resulting
from any change in value or net assets will not result in a violation of such
restriction.
Each fund of the Trust has the ability to issue more than one class of shares.
The Fund does not consider the issuance of separate classes of shares to
constitute an issue of "senior securities" within the meaning of the investment
limitations set forth above.
To comply with registration requirements in certain states, the Fund (1) will
limit the aggregate value of the assets underlying covered call options or put
options written by the Fund to not more than 25% of its net assets, (2) will
limit the premiums paid for options purchased by the Fund to 20% of its net
assets, and (3) will limit the margin deposits on futures contracts entered into
by the Fund to 5% of its net assets. (If state requirements change, these
restrictions may be revised without shareholder notification.)
For purposes of its policies and limitations, the Fund considers certificates of
deposit and demand and time deposits issued by a U.S. branch of a domestic bank
or savings and loan having capital, surplus, and undivided profits in excess of
$100,000,000 at the time of investment to be "cash items."
PEACHTREE FUNDS MANAGEMENT
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Officers and Trustees are listed with their addresses, present positions with
Peachtree Funds, and principal occupations.
- --------------------------------------------------------------------------------
John F. Donahue+*
Federated Investors Tower
Pittsburgh, PA
Chairman and Trustee
Chairman and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; Chairman and Director, Federated Research
Corp.; Chairman, Passport Research, Ltd.; Director, tna Life and Casualty
Company; Chief Executive Officer and Director, Trustee, or Managing General
Partner of the Funds. Mr. Donahue is the father of J. Christopher Donahue.
- --------------------------------------------------------------------------------
John T. Conroy, Jr.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, FL
Trustee
President, Investment Properties Corporation; Senior Vice-President, John R.
Wood and Associates, Inc., Realtors; President, Northgate Village Development
Corporation; Partner or Trustee in private real estate ventures in Southwest
Florida; Director, Trustee, or Managing General Partner of the Funds; formerly,
President, Naples Property Management, Inc.
- --------------------------------------------------------------------------------
William J. Copeland
One PNC Plaza-23rd Floor
Pittsburgh, PA
Trustee
Director and Member of the Executive Committee, Michael Baker, Inc.; Director,
Trustee, or Managing General Partner of the Funds; formerly, Vice Chairman and
Director, PNC Bank, N.A. and PNC Bank Corp. and Director, Ryan Homes, Inc.
- --------------------------------------------------------------------------------
James E. Dowd
571 Hayward Mill Road
Concord, MA
Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director, Trustee,
or Managing General Partner of the Funds; formerly, Director, Blue Cross of
Massachusetts, Inc.
- --------------------------------------------------------------------------------
Lawrence D. Ellis, M.D.
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA
Trustee
Hematologist, Oncologist, and Internist, Presbyterian and Montefiore Hospitals;
Professor of Medicine and Trustee, University of Pittsburgh; Director of
Corporate Health, University of Pittsburgh Medical Center; Director, Trustee, or
Managing General Partner of the Funds.
- --------------------------------------------------------------------------------
Edward L. Flaherty, Jr.+
Two Gateway Center-Suite 674
Pittsburgh, PA
Trustee
Attorney-at-law; Partner, Henny, Koehuba, Meyer & Flaherty; Director, Eat'N Park
Restaurants, Inc., and Statewide Settlement Agency, Inc.; Director, Trustee, or
Managing General Partner of the Funds; formerly, Counsel, Horizon Financial,
F.A., Western Region.
- --------------------------------------------------------------------------------
Peter E. Madden
225 Franklin Street
Boston, MA
Trustee
Consultant; State Representative, Commonwealth of Massachusetts; Director,
Trustee, or Managing General Partner of the Funds; formerly, President, State
Street Bank and Trust Company and State Street Boston Corporation and Trustee,
Lahey Clinic Foundation, Inc.
- --------------------------------------------------------------------------------
Gregor F. Meyer
Two Gateway Center-Suite 674
Pittsburgh, PA
Trustee
Attorney-at-law; Partner, Henny, Koehuba, Meyer & Flaherty; Chairman, Meritcare,
Inc.; Director, Eat'N Park Restaurants, Inc.; Director, Trustee, or Managing
General Partner of the Funds; formerly, Vice Chairman, Horizon Financial, F.A.
- --------------------------------------------------------------------------------
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Trustee
Professor, Foreign Policy and Management Consultant; Trustee, Carnegie Endowment
for International Peace, RAND Corporation, Online Computer Library Center, Inc.,
and U.S. Space Foundation; Chairman, Czecho Slovak Management Center; Director,
Trustee, or Managing General Partner of the Funds; President Emeritus,
University of Pittsburgh; formerly, Chairman, National Advisory Council for
Environmental Policy and Technology.
- --------------------------------------------------------------------------------
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Trustee
Public relations/marketing consultant; Director, Trustee, or Managing General
Partner of the Funds.
- --------------------------------------------------------------------------------
Edward C. Gonzales*
Federated Investors Tower
Pittsburgh, PA
President, Treasurer and Trustee
Vice President, Treasurer, and Trustee, Federated Investors; Vice President and
Treasurer, Federated Advisers, Federated Management, Federated Research,
Federated Research Corp., and Passport Research, Ltd.; Executive Vice President,
Treasurer, and Director, Federated Securities Corp.; Trustee, Federated Services
Company and Federated Shareholder Services; Chairman, Treasurer, and Trustee,
Federated Administrative Services; Trustee or Director of some of the Funds;
Vice President and Treasurer of the Funds.
- --------------------------------------------------------------------------------
J. Christopher Donahue
Federated Investors Tower
Pittsburgh, PA
Vice President
President and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; President and Director, Federated Research
Corp.; President, Passport Research, Ltd.; Trustee, Federated Administrative
Services, Federated Services Company, and Federated Shareholder Services;
President or Vice President of the Funds; Director, Trustee, or Managing General
Partner of some of the Funds. Mr. Donahue is the son of John F. Donahue,
Chairman and Trustee of the Trust.
- --------------------------------------------------------------------------------
Richard B. Fisher
Federated Investors Tower
Pittsburgh, PA
Vice President
Executive Vice President and Trustee, Federated Investors; Director, Federated
Research Corp.; Chairman and Director, Federated Securities Corp.; President or
Vice President of some of the Funds; Director or Trustee of some of the Funds.
- --------------------------------------------------------------------------------
John W. McGonigle
Federated Investors Tower
Pittsburgh, PA
Vice President and Secretary
Vice President, Secretary, General Counsel, and Trustee, Federated Investors;
Vice President, Secretary, and Trustee, Federated Advisers, Federated
Management, and Federated Research; Vice President and Secretary, Federated
Research Corp. and Passport Research, Ltd.; Trustee, Federated Services Company;
Executive Vice President, Secretary, and Trustee, Federated Administrative
Services; Secretary and Trustee, Federated Shareholder Services; Executive Vice
President and Director, Federated Securities Corp.; Vice President and Secretary
of the Funds.
- --------------------------------------------------------------------------------
Charles L. Davis, Jr.
Federated Investors Tower
Pittsburgh, PA
Vice President and Assistant Treasurer
Vice President, Federated Administrative Services; Vice President and Assistant
Treasurer of some of the Funds; formerly, Vice President and Director of
Investor Relations, MNC Financial, Inc. and Vice President, Product Management,
MNC Financial, Inc.
- --------------------------------------------------------------------------------
* This Trustee is deemed to be an "interested person" as defined in the
Investment Company Act of 1940, as amended.
+ Member of the Executive Committee. The Executive Committee of the Board of
Trustees handles the responsibilities of the Board of Trustees between
meetings of the Board.
THE FUNDS
"The Funds" and "Funds" mean the following investment companies: American
Leaders Fund, Inc.; Annuity Management Series; Arrow Funds; Automated Cash
Management Trust; Automated Government Money Trust; California Municipal Cash
Trust; Cash Trust Series, Inc.; Cash Trust Series II; DG Investor Series; Edward
D. Jones & Co. Daily Passport Cash Trust; Federated ARMs Fund; Federated
Exchange Fund, Ltd.; Federated GNMA Trust; Federated Government Trust; Federated
Growth Trust; Federated High Yield Trust; Federated Income Securities Trust;
Federated Income Trust; Federated Index Trust; Federated Institutional Trust;
Federated Intermediate Government Trust; Federated Master Trust; Federated
Municipal Trust; Federated Short-Intermediate Government Trust; Federated
Short-Term U.S. Government Trust; Federated Stock Trust; Federated Tax-Free
Trust; Federated U.S. Government Bond Fund; First Priority Funds; Fixed Income
Securities, Inc.; Fortress Adjustable Rate U.S. Government Fund, Inc.; Fortress
Municipal Income Fund, Inc.; Fortress Utility Fund, Inc.; Fund for U.S.
Government Securities, Inc.; Government Income Securities, Inc.; High Yield Cash
Trust; Insight Institutional Series, Inc.; Insurance Management Series;
Intermediate Municipal Trust; International Series, Inc.; Investment Series
Funds, Inc.; Investment Series Trust; Liberty Equity Income Fund, Inc.; Liberty
High Income Bond Fund, Inc.; Liberty Municipal Securities Fund, Inc.; Liberty
Term Trust, Inc.-1999; Liberty U.S. Government Money Market Trust; Liberty
Utility Fund, Inc.; Liquid Cash Trust; Managed Series Trust; The Medalist Funds;
Money Market Management Inc.; Money Market Obligations Trust; Money Market
Trust; Municipal Securities Income Trust; New York Municipal Cash Trust; 111
Corcoran Funds; The Planters Funds; Portage Funds; RIMCO Monument Funds; The
Shawmut Funds; Short-Term Municipal Trust; Star Funds; The Starburst Funds; The
Starburst Funds II; Stock and Bond Fund, Inc.; Sunburst Funds; Targeted Duration
Trust; Tax-Free Instruments Trust; Trademark Funds; Trust for Financial
Institutions; Trust for Government Cash Reserves; Trust for Short-Term U.S.
Government Securities; Trust for U.S. Treasury Obligations; and World Investment
Series, Inc.
FUND OWNERSHIP
Officers and Trustees own less than 1% of the Fund's outstanding Shares.
As of November 4, 1994, the following shareholder of record owned 5% or more of
the outstanding shares of the Fund: Bank South N.A., Atlanta, Georgia, acting in
various capacities for numerous accounts, owned approximately 10,008,164 shares
(97.78%).
TRUSTEE LIABILITY
Peachtree Funds' Declaration of Trust provides that the Trustees are not 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 Bank South, N.A., (the "Adviser"). 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 Trust.
Because of the internal controls maintained by the Bank to restrict the flow of
non-public information, Fund investments are typically made without any
knowledge of the Bank's or its affiliates' lending relationships with an issuer.
ADVISORY FEES
For its advisory services, the Adviser receives an annual investment advisory
fee as described in the prospectus.
For the period from February 14, 1994 (date of initial public investment) to
September 30, 1994, the Adviser earned advisory fees of $385,127 of which
$36,781 was voluntarily waived.
STATE EXPENSE LIMITATIONS
The Adviser has undertaken to comply with the expense limitations
established by certain states for investment companies whose shares are
registered for sale in those states. If the Fund's normal operating
expenses (including the investment advisory fee, but not including
brokerage commissions, interest, taxes and extraordinary expenses) exceed
2.50% per year of the first $30 million of average net assets, 2.00% per
year of the next $70 million of average net assets, and 1.50% per year of
the remaining average net assets, the Adviser will reimburse the Fund for
its expenses over the limitation.
If the Fund's monthly projected operating expenses exceed this expense
limitation, the investment advisory fee paid will be reduced by the
amount of the excess, subject to an annual adjustment. If the expense
limitation is exceeded, the amount to be reimbursed by the Adviser will
be limited, in any single fiscal year, by the amount of the investment
advisory fee.
This arrangement is not part of the advisory contract and may be amended
or rescinded in the future.
ADMINISTRATIVE SERVICES
- --------------------------------------------------------------------------------
Federated Administrative Services, a subsidiary of Federated Investors, provides
administrative personnel and services to the Fund for the fees set forth in the
prospectus. For the period from February 14, 1994 (date of initial public
investment) to September 30, 1994, the Fund incurred administrative service fees
of $75,896.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
- --------------------------------------------------------------------------------
Federated Services Company serves as transfer agent and dividend disbursing
agent for the Fund. The fee paid to the transfer agent is based upon the size,
type and number of accounts and transactions made by shareholders.
Federated Services Company also maintains the Trust's accounting records. 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.
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 utilize those who are
recognized dealers in specific portfolio instruments, except when a better price
and execution of the order can be obtained elsewhere. The Adviser 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.
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.
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.
PURCHASING SHARES
- --------------------------------------------------------------------------------
Shares are sold at their net asset value without a sales charge on days the New
York Stock Exchange and Federal Reserve Wire System are open for business. The
procedure for purchasing shares of the Fund is explained in the prospectus under
"Investing in the Fund."
ADMINISTRATIVE ARRANGEMENTS
The administrative services include, but are not limited to, providing office
space, equipment, telephone facilities, and various personnel, including
clerical, supervisory, and computer, as is necessary or beneficial to establish
and maintain shareholders' accounts and records, process purchase and redemption
transactions, process automatic investments of client account cash balances,
answer routine client inquiries regarding the Fund, assist clients in changing
dividend options, account designations, and addresses, and providing such other
services as the Fund may reasonably request.
DISTRIBUTION PLAN
With respect to the Fund, the Trust has adopted a Plan pursuant to Rule 12b-1
which was promulgated by the Securities and Exchange Commission ("SEC") pursuant
to the Investment Company Act of 1940, as amended (the "Act"). The Plan provides
for payment of fees to the Distributor to finance any activity which is
principally intended to result in the sale of the Fund's shares subject to the
Plan. Such activities may include the advertising and marketing of shares of the
Fund; preparing, printing, and distributing prospectuses and sales literature to
prospective shareholders, brokers, or administrators; and implementing and
operating the Plan. Pursuant to the Plan, the Distributor may pay fees to
brokers and others for such services.
The Trustees expect that the adoption of the Plan will assist the Fund in
selling a sufficient number of shares so as to allow the Fund to achieve
economic viability. It is also anticipated that an increase in the size of the
Fund will facilitate more efficient portfolio management and thereby assist the
Fund in seeking to achieve its investment objectives.
PURCHASING FUND SHARES WITH SECURITIES
The Fund in its sole discretion, may sell Fund shares to investors that desire
to purchase Fund shares with certain securities or a combination of certain
securities and cash. The Fund reserves the right to determine the acceptability
of securities used to effect such purchases. On the day securities are accepted
by the Fund, they are valued based upon independent bid and in the same manner
as the Fund values it assets. Investors wishing to use securities to purchase
Fund Shares should first contact the Bank. Any such transfer of securities is
treated as a sale of the securities and will result in the recognition of any
gain or loss for federal income tax purposes by the seller of such securities,
except to the extent the seller is an ERISA plan or similar entity not subject
to tax. Unless such securities are to be acquired by the Fund in a bona fide
reorganization, statutory merger, or similar transaction, such securities must
meet the Fund's investment restrictions at the time of sale.
DETERMINING NET ASSET VALUE
- --------------------------------------------------------------------------------
Net asset value generally changes each day. The days on which the net asset
value is calculated by the Fund are described in the prospectus.
DETERMINING MARKET VALUE OF SECURITIES
The market values of the Fund's portfolio securities, other than options, are
determined as follows:
.for equity securities, according to the last sale price on a national
securities exchange, if available;
.in the absence of recorded sales for listed equity securities, according to the
mean between the last closing bid and asked prices;
.for unlisted equity securities, the latest bid prices;
.for bonds and other fixed income securities, as determined by an independent
pricing service;
.according to the mean between the over-the-counter bid and asked prices
provided by an independent pricing service, if available, or at fair value as
determined in good faith by the Trustees;
.for short-term obligations with remaining maturities of 60 days or less at the
time of purchase, at amortized cost unless the Trustees determine that
particular circumstances of the security indicate otherwise; or
.for all other securities, at fair value as determined in good faith by the
Trustees.
The Fund will value futures contracts, options, put options on futures and
financial futures at their market values established by the exchanges at the
close of option trading on such exchanges unless the Trustees determines in good
faith that another method of valuing option positions is necessary.
EXCHANGE PRIVILEGE
- --------------------------------------------------------------------------------
Shareholders of the Fund may exchange shares of the Fund for shares of other
funds advised by the Bank and certain other Funds designated by the Bank and
distributed by the Distributor, subject to certain conditions. Exchange
procedures are explained in the prospectus under "Exchange Privilege."
REDEEMING SHARES
- --------------------------------------------------------------------------------
The Fund redeems shares at the next determined net asset value after the Fund
receives the redemption request. Redemption procedures are explained in the
Prospectus under "Redeeming Shares."
REDEMPTION IN KIND
Although the Fund intends to redeem shares in cash, it reserves the right under
certain circumstances to pay the redemption price in whole or in part by a
distribution of securities from the Fund's portfolio.
Redemption in kind will be made in conformity with applicable SEC rules, taking
such securities at the same value employed in determining net asset value and
selecting the securities in a manner the Trustees determine to be fair and
equitable.
The Trust has elected to be governed by SEC Rule 18f-1 under the Investment
Company Act of 1940 under which each 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.
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 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 from 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.
SHAREHOLDERS' TAX STATUS
Shareholders are subject to federal income tax on dividends and capital gains
received as cash or additional shares. No portion of any income dividend paid by
the Fund is eligible for the dividends received deduction available to
corporations. These dividends, and any short-term capital gains, are taxable as
ordinary income.
CAPITAL GAINS
Long-term capital gains distributed to shareholders will be treated as
long-term capital gains regardless of how long shareholders have held
Fund shares.
TOTAL RETURN
- --------------------------------------------------------------------------------
The Fund's cumulative total return for the period from February 14, 1994 (date
of initial public investment) to September 30, 1994, was (3.56%). Cumulative
total return reflects the Fund's total performance over a specific period of
time. This total return assumes and is reduced by the payment of the maximum
sales load. The Fund's total return is representative of only seven months of
investment activity since the Fund's effective date.
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 maximum 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 load,
adjusted over the period by any additional shares, assuming the quarterly
reinvestment of all dividends and distributions.
YIELD
- --------------------------------------------------------------------------------
The Fund's yield for the 30-day period ended September 30, 1994 was 1.40%.
The yield for the Fund is calculated by dividing the net investment income per
share (as defined by the Securities and Exchange Commission) earned by the Fund
over a 30-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 30-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.
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.
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 compositions of other funds, and methods
used to value portfolio securities and compute offering price. The financial
publications and/or indices which the Fund uses in advertising may include:
.STANDARD & POOR'S DAILY STOCK PRICE INDEX OF 500 COMMON STOCKS, a composite
index of common stocks in industry, transportation, financial and public
utility companies. In addition, the Standard & Poor's Index assumes
reinvestment of all dividends paid by stocks listed on the index. Taxes due on
any of these distributions are not included, nor are brokerage or other fees
calculated in the Standard & Poor's figures.
.DOW JONES INDUSTRIAL AVERAGE ("DJIA") represents share prices of selected large
capitalization, well-established blue-chip industrial corporations as well as
public utility and transportation companies. The DJIA indicates daily changes
in the average price of stocks in any of its categories. It also reports total
sales for each group of industries.
.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 net asset value over a specific period of time. From
time to time, the Fund will quote its Lipper ranking in the "growth and income
funds" category in advertising and sales literature.
.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. These total returns also
represent the historic change in the value of an investment in the Fund based on
quarterly reinvestment of dividends over a specified period of time.
70467H101
3092102B (11/94)
the
Peachtree Funds
GEORGIA
TAX-FREE
INCOME
FUND
Prospectus
A Diversified Portfolio of
Peachtree Funds,
an Open-End Management
Investment Company
(a Mutual Fund)
November 30, 1994
PEACHTREE GEORGIA TAX-FREE
INCOME FUND
(A PORTFOLIO OF PEACHTREE FUNDS)
PROSPECTUS
The shares of the Peachtree Georgia Tax-Free Income Fund (the "Fund") offered by
this Prospectus represent interests in a non-diversified portfolio of Peachtree
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 the personal income taxes imposed by the state of
Georgia. The Fund invests primarily in securities issued by and on behalf of the
State of Georgia and its political subdivisions, authorities and agencies, and
securities issued by other states, territories, and possessions of the United
States which are exempt from federal income tax and the personal income taxes
imposed by the State of Georgia ("Georgia Municipal Securities").
This prospectus contains the information you should read carefully and
understand before you invest in the Fund. Keep this prospectus for future
reference.
The Fund has also filed a Statement of Additional Information dated November 30,
1994, with the Securities and Exchange Commission. 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
contacting the Peachtree Funds Service Center at 1-404-989-6200 or
1-800-621-8969.
SHARES OF THE FUND ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, AND ARE NOT ISSUED,
ENDORSED OR GUARANTEED BY, BANK SOUTH, N.A. (THE "BANK") OR ANY OF ITS
AFFILIATES. SUCH SHARES ARE NOT ISSUED, INSURED OR GUARANTEED BY THE U.S.
GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD
OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN THE FUND INVOLVES CERTAIN
RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
THE BANK IS INVESTMENT ADVISER TO THE FUND. THE FUND IS DISTRIBUTED BY FEDERATED
SECURITIES CORP., WHICH IS NOT AFFILIATED WITH THE BANK.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
the
November 30, 1994 PEACHTREE FUNDS
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------
GENERAL INFORMATION 2
- ------------------------------------------------------
INVESTMENT INFORMATION 2
- ------------------------------------------------------
Investment Objective 2
Investment Policies 2
Acceptable Investments 2
Characteristics 3
Participation Interests 3
Variable Rate Municipal Securities 3
Municipal Leases 4
Restricted and Illiquid Securities 4
When-Issued and Delayed Delivery
Transactions 4
Investing in Securities of
Other Investment Companies 4
Temporary Investments 4
Portfolio Turnover 5
Georgia Municipal Securities 5
Investment Risks 6
Non-Diversification 6
Certain Borrowing and Investment Limitations 6
PEACHTREE FUNDS INFORMATION 7
- ------------------------------------------------------
Management of the Trust 7
Board of Trustees 7
Investment Adviser 7
Advisory Fees 7
Adviser's Background 7
Portfolio Manager 8
Distribution of Shares 8
Distribution Plan 8
Administrative Arrangements 9
Administration of the Trust 9
Administrative Services 9
Shareholder Services Plan 9
Custodian 10
Transfer Agent, Dividend Disbursing
Agent, and Portfolio Accounting
Services 10
Legal Counsel 10
Independent Auditors 10
Expenses of the Fund 10
NET ASSET VALUE 10
- ------------------------------------------------------
INVESTING IN THE FUND 10
- ------------------------------------------------------
Share Purchases 10
By Telephone 11
By Mail 11
Payment by Check 11
Payment by Wire 11
Minimum Investment Required 11
Systematic Investment Program 11
What Shares Cost 11
Purchases at Net Asset Value 12
Purchases with Proceeds from Redemptions
of Unaffiliated Investment Companies 12
Sales Load Reallowance 12
Reducing the Sales Load 12
Quantity Discounts and Accumulated
Purchases 12
Letter of Intent 13
Reinvestment Privilege 13
Concurrent Purchases 13
Certificates and Confirmations 13
Dividends and Distributions 13
Purchasing Shares of the Fund with Securities 14
EXCHANGE PRIVILEGE 14
- ------------------------------------------------------
Peachtree Funds 14
By Telephone 15
REDEEMING SHARES 15
- ------------------------------------------------------
By Telephone 15
By Mail 16
Signatures 16
Receiving Payment 17
Systematic Withdrawal Program 17
Accounts with Low Balances 17
SHAREHOLDER INFORMATION 17
- ------------------------------------------------------
Voting Rights 17
Massachusetts Partnership Law 18
EFFECT OF BANKING LAWS 18
- ------------------------------------------------------
TAX INFORMATION 19
- ------------------------------------------------------
Federal Income Tax 19
State of Georgia Income and
Intangibles Taxes 20
Other State and Local Taxes 20
PERFORMANCE INFORMATION 20
- ------------------------------------------------------
ADDRESSES 22
- ------------------------------------------------------
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)....................................................................... 2.50%
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)....................................................................... None
Contingent Deferred Sales Charge (as a percentage of original
purchase price or redemption proceeds, as applicable)..................................................... None
Exchange Fee................................................................................................ None
ANNUAL FUND OPERATING EXPENSES*
(As a percentage of projected average net assets)
Management Fee (after waiver)(1)............................................................................ 0.00%
12b-1 Fees(2)............................................................................................... 0.00%
Total Other Expenses (after waivers)(3)..................................................................... 0.00%
Shareholder Services Fees (4)................................................................ 0.00%
Total Fund Operating Expenses (after waiver)(5).................................................... 0.00%
</TABLE>
- ---------
(1) The estimated management fee has been reduced to reflect the anticipated
voluntary waiver by the investment adviser. The investment adviser can
terminate this voluntary waiver at any time in its sole discretion. The
maximum management fee is 0.75%.
(2) As of the date of this Prospectus, the Fund is not paying or accruing 12b-1
fees. The Fund can pay up to 0.75% as a 12b-1 fee to the distributor.
Certain trust clients of the Bank or its affiliates, including ERISA plans,
will not be affected by the distribution plan because the distribution plan
will not be activated unless and until a second, "Trust," class of shares of
the Fund (which would not have a Rule 12b-1 plan) is created and such trust
clients' investments in the Fund are converted to such Trust class.
(3) Total Other Expenses are estimated to be 4.12% absent the anticipated
voluntary waivers by the administrator and transfer agent and assumption by
the adviser.
(4) As of the date of the prospectus, the Fund is not paying or accruing
shareholder services fees. The Fund can pay up to 0.25% as a shareholder
services fee to certain financial institutions. Certain trust clients of the
Bank or its affiliates, including ERISA plans, will not be affected by the
shareholder services plan because the shareholder services plan will not be
activated unless and until a second, "Trust," class of shares of the Fund
(which would not a have a services plan) is created and such clients'
investments in the Fund are converted to such Trust class.
(5) The Total Fund Operating Expenses are estimated to be 4.87% absent the
anticipated voluntary waivers and assumption by the adviser, administrator,
and transfer agent.
* Expenses are estimated based on average expenses expected to be incurred
during the fiscal year ending September 30, 1995. During the course of this
period, expenses may be more or less than the average amount shown.
The purpose of this table is to assist an investor in understanding the
various costs and expenses that a shareholder of the Fund will bear, either
directly or indirectly. For more complete descriptions of the various costs and
expenses, see "Peachtree Funds Information" and "Investing in the Fund."
Wire-transfer redemptions may be subject to an additional fee.
<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. As
noted in the table above, the Fund charges no redemption fees............ $25 $25 $25 $25
</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. THIS
EXAMPLE IS BASED ON ESTIMATED DATA FOR THE FUND'S FISCAL YEAR ENDING SEPTEMBER
30, 1995.
GENERAL INFORMATION
- --------------------------------------------------------------------------------
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated September 22, 1993, as amended and restated dated December 20,
1993. The Declaration of Trust permits the Trust to offer separate series of
shares of beneficial interest representing interests in separate portfolios of
securities. This prospectus relates only to the Trust's Peachtree Georgia Tax-
Free Income Fund. The Fund is designed as a convenient means of accumulating an
interest in a professionally managed, non-diversified portfolio investing
primarily in Georgia Municipal Securities. A minimum initial investment of
$1,000 is required and subsequent investments must be in amounts of at least
$100.
The Fund is not likely to be a suitable investment for non-Georgia taxpayers or
retirement plans since Georgia Municipal Securities are not likely to produce
competitive after-tax yields for such persons and entities when compared to
other investments.
Fund shares are sold at net asset value plus a maximum sales load of 2.50%, and
are redeemed at net asset value.
INVESTMENT INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The Fund's investment objective is to provide current income exempt from federal
income tax and the personal income taxes imposed by the State of Georgia. The
investment objective cannot be changed without the approval of the Fund's
shareholders. 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 taxes 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 jurisdictions other than Georgia.
INVESTMENT POLICIES
The Fund pursues its investment objective by investing primarily in Georgia
Municipal Securities. As a matter of investment policy, which may not be changed
without shareholder approval, the Fund will invest its assets so that, under
normal circumstances, at least 80% of its annual interest income is exempt from
federal income tax (including alternative minimum tax). Unless indicated
otherwise, the other investment policies of the Fund may be changed by the Board
of Trustees without approval of shareholders. Shareholders will be notified
before any material change in these policies becomes effective.
ACCEPTABLE INVESTMENTS. Under normal circumstances, the Fund will invest at
least 65% of its total assets in Georgia Municipal Securities, which are
obligations issued by and on behalf of the State of Georgia, its political
subdivisions, authorities and 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 tax imposed by the State of Georgia. While the Fund
intends to invest primarily in securities issued by or on behalf of the State of
Georgia, its political subdivisions, authorities and agencies, it will invest in
other securities issued by states, territories, and possessions of the United
States which are exempt from federal income tax and the personal income taxes
imposed by the State of Georgia. The Fund will invest in such securities in
instances where, in the judgment of the Fund's investment adviser, the supply
and yield of such securities would be beneficial to the Fund's investment
performance.
CHARACTERISTICS. The Georgia Municipal Securities which the Fund buys are
investment-grade bonds rated, at the time of purchase, Aaa, Aa, A, or Baa
by Moody's Investors Service, Inc. ("Moody's"), or AAA, AA, A, or BBB by
Standard and Poor's Ratings Group ("S&P"), Fitch Investors Service, Inc.
("Fitch"), or Duff & Phelps Credit Rating Co. ("Duff & Phelps"). In certain
cases, the Fund's investment adviser may choose bonds which are unrated if
it determines that such bonds are of comparable quality or have similar
characteristics to investment-grade bonds. Bonds rated "BBB" by S&P, Fitch,
or Duff & Phelps 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. Downgrades will be evaluated
on a case-by-case basis by the investment adviser. The adviser will
determine whether or not the security continues to be an acceptable
investment. If not, the security will be sold when deemed appropriate by
its adviser given the costs of such a sale, including potential losses. A
description of the rating categories is contained in the Appendix to the
Statement of Additional Information. A credit rating is not a
recommendation to buy, sell or hold securities and is subject to change
and/or withdrawal by the rating agency.
PARTICIPATION INTERESTS. The Fund may purchase participation interests
from financial institutions such as commercial banks, savings and loan
associations, and insurance companies. These participation interests give
the Fund a fractional undivided interest in Georgia Municipal Securities.
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.
The Trustees will determine that participation interests meet the
prescribed quality standards for the Fund.
VARIABLE RATE MUNICIPAL SECURITIES. Some of the Georgia Municipal
Securities which the Fund purchases may have variable interest rates.
Variable interest rates are ordinarily stated as a percentage of the prime
rate of a bank or a similar standard, such as the 91-day U.S. Treasury bill
rate or established by a remarketing agent as the minimum rate that it
judges would be necessary on the securities prior to the next remarketing
date, having due regard for the prevailing financial markets in order to
sell such securities in a secondary market transaction. 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 be selected consistent with the Fund's quality standards. The Fund's
investment adviser has been instructed by the Trustees to monitor the
pricing, quality, and liquidity of the variable rate municipal securities,
including participation interests held by the Fund, on the basis of
published financial information and reports of the rating agencies and
other analytical services.
MUNICIPAL LEASES. Municipal leases are obligations issued by state and
local governments or authorities to finance the acquisition of equipment
and facilities and some may be considered to be illiquid. They may take the
form of a lease, an installment purchase contract, a conditional sales
contract, or a certificate of participation in any of the above.
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 on resale under federal securities law. However, the
Fund will limit investments in illiquid securities, including certain restricted
securities not determined by the Trustees to be liquid, non-negotiable time
deposits, and repurchase agreements providing for settlement in more than seven
days after notice, to 15% of its net assets.
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 or 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 in 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.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES. The Fund may invest in
the securities of other investment companies, but will not own more than 3% of
the total outstanding voting stock of any investment company, invest more than
5% of total assets in any one investment company, or invest more than 10% of
total assets in investment companies in the aggregate . The Fund will invest in
other investment companies primarily for the purpose of investing short-term
cash which has not yet been invested in other portfolio instruments. It should
be noted that investment companies incur certain expenses, and therefore, any
investment by the Fund in shares of another investment company would be subject
to certain duplicate expenses, particularly transfer agent and custodian fees.
The adviser will waive its investment advisory fee on assets invested in
securities of open-end investment companies.
TEMPORARY INVESTMENTS. From time to time, during periods of abnormal 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; securities of other investment
companies; and repurchase agreements (generally short-term arrangements in which
the Fund may buy securities subject to the seller's agreement to repurchase such
securities at a mutually agreed upon time and price such that the Fund earns
interest during the term of the agreement).
There are no rating requirements applicable to temporary investments. However,
the investment adviser will limit temporary investments to those within the
investment-grade categories described under "Acceptable
Investments_Characteristics" (if rated) or those which the investment adviser
judges to have similar characteristics as such investment-grade securities (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 Georgia.
PORTFOLIO TURNOVER
Although the Fund does not intend to invest for the purpose of seeking
short-term profits, securities in the portfolio will be sold whenever the
Adviser believes it is appropriate to do so in light of the Fund's investment
objective, without regard to the length of time a particular security may have
been held. The Adviser does not anticipate that the Fund's annual portfolio
turnover rate will exceed 200% under normal market conditions. A high portfolio
turnover rate may lead to increased costs and may also result in higher taxes
paid by the Fund's shareholders.
GEORGIA MUNICIPAL SECURITIES
Georgia 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. These are also issued to
repay outstanding obligations, to raise funds for general operating expenses,
and, under certain circumstances, to make loans for profit and non-profit public
and private entities.
The two principal classifications of municipal securities are "general
obligations" and "revenue" bonds. General obligation bonds are secured by the
issuer's pledge of its full faith and credit and/or 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.
A significant portion of revenue bonds issued by governmental units constitute
"private activity" bonds. Private activity bonds are issued by or on behalf of a
governmental unit, generally to finance the acquisition, construction and
equipping of facilities to be used, directly or indirectly, by private
for-profit and non-profit companies. These private activity bonds are generally
secured by a pledge of the revenues to be paid by such private companies under a
financing agreement (which usually takes the form of a lease, installment sale
or loan agreement) between a private company and a governmental unit, as well as
a security interest in the real and personal property acquired or constructed
with the proceeds of such bonds. Often the credit securing these types of
private activity bonds is enhanced through the issuance of a letter of credit or
guarantee by a credit-worthy financial institution. The credit ratings of these
so-called "credit enhanced" bond issues are based on the credit worthiness of
the financial institution issuing the credit enhancement and not the
private user of the facilities financed with the proceeds of such bonds or the
governmental unit issuing the bonds, which are not liable for the payment
thereof, other than through the assignment of revenues to be received by the
private user under the financing agreement.
INVESTMENT RISKS
Yields on Georgia Municipal Securities depend on a variety of factors,
including, but not limited to: the general conditions of the municipal bond
market; the size of the particular offering; the maturity of the obligations;
and the rating of the issue. Further, any adverse economic conditions or
developments affecting the State of Georgia or its municipalities, or companies
and financial institutions obligated under private activity bonds, could affect
the Fund's portfolio. The Fund's ability to achieve its investment objective
also depends on the continuing ability of the obligors of securities held by the
Fund to meet their obligations for the payment of interest and principal when
due. Investing in Georgia Municipal Securities which meet the Fund's quality
standards may not be possible if the State of Georgia and its municipalities do
not maintain their current credit ratings. In addition, certain Georgia
constitutional amendments, legislative measures, executive orders,
administrative regulations and voter initiatives could result in adverse
consequences affecting various Georgia Municipal Securities. A discussion of the
current economic risks associated with the purchase of Georgia Municipal
Securities is contained in the Statement of Additional Information.
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 risks and fluctuation in
market value of the Fund's portfolio than investments in a diversified portfolio
of securities. Any economic, political, or regulatory developments affecting the
value of the securities in the Fund's portfolio will have a greater effect on
the total value of the portfolio than would be the case if the portfolio were
diversified among more issuers. However, the Fund intends to comply with
Subchapter M of the Internal Revenue Code. 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.
CERTAIN BORROWING AND 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 33 1/3% of the value of its total assets and secure such
borrowings with up to 15% of the value of those assets at the time of
borrowing.
The above limitation cannot be changed without shareholder approval. The
following limitation however, can be changed by the Trustees without shareholder
approval. Shareholders will be notified before any material change in this
limitation becomes effective.
The Fund will not:
invest more than 5% of its total assets in industrial development bonds
where the payment of principal and interest is the responsibility of
companies (including guarantors where applicable) with less than three
years of continuous operations, including the operation of any
predecessor.
PEACHTREE FUNDS INFORMATION
- --------------------------------------------------------------------------------
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees (the "Board" or
"Trustees"). The Board is responsible for managing the Trust's business affairs
and for exercising all the Trust's powers except those reserved for the
shareholders. The Executive Committee of the Board handles various of the
Board's delegable responsibilities between meetings of the Board.
INVESTMENT ADVISER. Investment decisions for the Fund are made by the Bank, as
the Fund's investment adviser (the "Adviser"), subject to direction by the
Board. The Adviser 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 Fund's assets.
ADVISORY FEES. The Adviser receives an annual investment advisory fee
equal to 0.75% of the Fund's average daily net assets. The fee paid by the
Fund, while higher than the advisory fee paid by certain other mutual
funds, is comparable to fees paid by many mutual funds with similar
objectives and policies. The Adviser has undertaken to reimburse the Fund,
up to the amount of the advisory fee, for operating expenses in excess of
limitations established by certain states. The Adviser may voluntarily
choose to waive a portion of its fee or reimburse other expenses of the
Fund, but reserves the right to terminate such waiver or reimbursement at
any time at its sole discretion.
ADVISER'S BACKGROUND. The Adviser, a national bank headquartered in
Atlanta, Georgia, is a wholly-owned subsidiary of Bank South Corporation, a
Georgia corporation which is a registered bank holding company. The Adviser
serves consumers through its network of banking offices with a full range
of deposit and lending products, as well as investment services. The
principal offices of the Adviser are located at 3350 Cumberland Circle,
Atlanta, GA 30339.
The Adviser has managed discretionary assets for its consumers since 1931.
As of November 30, 1994, the Adviser managed in excess of $1 billion of
discretionary assets. The Bank has served as an investment adviser to
mutual funds since January, 1994.
As part of its regular banking operations, the Bank 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 the Bank. The lending relationship will not be a factor in
the selection of securities.
PORTFOLIO MANAGER. Mr. J.M. Johnston, Jr. is primarily responsible for the
day-to-day management of the Fund's portfolio. He joined the Adviser in
September of 1992. Mr. Johnston directs the investment management of
several large employee benefit plans, fixed income mutual and common trust
funds, money market mutual funds and personal trust accounts. He is also
responsible for securities analysis for various industries.
Mr. Johnston began his investment career in 1981. Prior to his affiliation
with the Bank, he spent six years with The Citizens & Southern National
Bank, Atlanta, Georgia as a portfolio manager.
Mr. Johnston holds a Bachelor of Science degree from the University of
Alabama and a Master of Business Administration in Finance from Georgia
State University. He is a member of the Atlanta Society of Financial
Analysts.
DISTRIBUTION OF SHARES
Federated Securities Corp. (the "Distributor") is the principal distributor for
shares of the Fund. It is a Pennsylvania corporation organized on November 14,
1969, and is the principal distributor for a number of investment companies. The
Distributor is a subsidiary of Federated Investors.
DISTRIBUTION PLAN. Under a distribution plan (the "Plan") adopted in accordance
with Securities and Exchange Commission ("SEC") Rule 12b-1 under the Investment
Company Act of 1940, as amended, the Fund will pay an amount computed at an
annual rate of up to 0.75% of the average daily net asset value of the shares to
finance any activity which is principally intended to result in the sale of
shares subject to the Plan. Certain trust clients of the Bank, including ERISA
plans, will not be affected by the Plan because the Plan will not be activated
unless and until a second, "Trust" class of shares of the Fund (which would not
have a Rule 12b-1 plan) is created and such trust clients' investments in the
Fund are converted to such Trust class.
The Distributor may select other financial institutions (such as broker-dealers
or banks) to provide sales support services as agents for their clients or
customers who beneficially own shares. These financial institutions (including
the Bank) will receive fees from the Distributor based upon shares owned by
their clients or customers. The schedules of such fees and the basis upon which
such fees will be paid will be determined from time to time by the Distributor.
The Fund's Plan is a compensation type plan. As such, the Fund pays the
Distributor the fee described above as opposed to reimbursing the Distributor
for actual expenses incurred. Therefore, the Fund does not pay for amounts
expended by the Distributor in excess of amounts received by it from the Fund,
which may include interest, carrying or other financing charges in connection
with excess amounts expended, or the Distributor's overhead expenses. However,
the Distributor may be able to recover such amounts or may earn a profit from
future payments made by the Fund under the Plan.
The Glass-Steagall Act prohibits a depository institution (such as a commercial
bank or a savings and loan association) from being an underwriter or distributor
of most securities. In the event the Glass-Steagall Act is deemed to prohibit
depository institutions from acting in the capacities described above or should
Congress relax current restrictions on depository institutions, the Trustees
will consider appropriate changes in the services.
State securities laws on this issue may differ from the interpretations of
federal law expressed herein and banks and financial institutions may be
required to register as dealers pursuant to certain states' securities laws
ADMINISTRATIVE ARRANGEMENTS. The Distributor may also pay administrators a fee
based upon the average net asset value of shares of their customers invested in
the Trust for providing administrative services. This fee, if paid, will be
reimbursed by the Adviser and not the Trust.
ADMINISTRATION OF THE TRUST
ADMINISTRATIVE SERVICES. Federated Administrative Services, Pittsburgh,
Pennsylvania, a subsidiary of Federated Investors, provides certain
administrative personnel and services necessary to operate the Fund. Such
services include certain legal and accounting services. Federated Administrative
Services provides these at the annual rates specified below:
<TABLE>
<CAPTION>
MAXIMUM AVERAGE AGGREGATE DAILY
ADMINISTRATIVE FEE NET ASSETS OF THE TRUST
<C> <S>
.150 of 1% on the first $250 million
.125 of 1% on the next $250 million
.100 of 1% on the next $250 million
.075 of 1% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$100,000 per Fund. Federated Administrative Services may voluntarily choose to
waive a portion of its fee.
SHAREHOLDER SERVICES PLAN. The Fund has adopted a Shareholder Services Plan (the
"Services Plan") with respect to the shares. Under the Services Plan, financial
institutions will enter into shareholder service agreements with the Fund to
provide administrative support services to their customers who from time to time
may be owners of record or beneficial owners of the shares. In return for
providing these support services, a financial institution may receive payments
from the Fund at a rate not exceeding 0.25% of the average daily net assets of
the shares beneficially owned by the financial institution's customers for whom
it is holder of record or with whom it has a servicing relationship. These
administrative services may include, but are not limited to, the following
functions: providing office space, equipment, telephone facilities, and various
personnel including clerical, supervisory, and computer, as necessary or
beneficial to establish and maintain shareholder accounts and records;
processing purchase and redemption transactions and automatic investments of
client account cash balances; answering routine client inquiries regarding the
Fund; assisting clients in changing dividend options, account designations, and
addresses; and providing such other services as the Fund reasonably requests.
Certain trust clients of the Bank, including ERISA plans, will not be affected
by the Services Plan because the Services Plan will not be activated unless and
until a second, "Trust" class of shares of the Fund (which would not have a
Services Plan) is created and such trust clients' investments in the Fund are
converted to such Trust class.
CUSTODIAN. The Bank of New York, New York, New York is custodian for the
securities and cash of the Fund.
TRANSFER AGENT, DIVIDEND DISBURSING AGENT, AND PORTFOLIO ACCOUNTING SERVICES.
Federated Services Company, Pittsburgh, Pennsylvania, a subsidiary of Federated
Investors, is transfer agent (the "Transfer Agent") for the shares of, and
dividend disbursing agent for, the Fund. It also provides certain accounting and
recordkeeping services with respect to the Fund's portfolio investments.
LEGAL COUNSEL. Legal counsel is provided by Houston, Houston & Donnelly,
Pittsburgh, Pennsylvania, and Dickstein, Shapiro & Morin, L.L.P., Washington,
D.C.
INDEPENDENT AUDITORS. The independent auditors for the Fund are Ernst & Young
LLP, Pittsburgh, Pennsylvania.
EXPENSES OF THE FUND
The Fund pays all of its own expenses and its allocable share of the Trust's
expenses. The expenses borne by the Fund include, but are not limited to, the
cost of: organizing the Trust and continuing its existence; Trustees' fees;
investment advisory and administrative services; printing prospectuses and other
Fund documents for shareholders; registering the Trust, the Fund, and shares of
the Fund with federal and state securities authorities; taxes and commissions;
issuing, purchasing, repurchasing, and redeeming shares; fees for custodians,
transfer agents, dividend disbursing agents, shareholder servicing agents, and
registrars; printing, mailing, auditing, accounting, and legal expenses; reports
to shareholders and governmental agencies; meetings of Trustees and shareholders
and proxy solicitations therefor; insurance premiums; association membership
dues; and such nonrecurring and extraordinary items as may arise.
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 other assets, less
liabilities, by the number of shares outstanding.
INVESTING IN THE FUND
- --------------------------------------------------------------------------------
SHARE PURCHASES
Fund shares are sold on days on which the New York Stock Exchange and the
Federal Reserve Wire System are open for business. Shares of the Fund may be
purchased through the Bank. In connection with the sale of shares of the Fund,
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.
BY TELEPHONE. To place an order to purchase Shares of the Fund, call the
Peachtree Funds Service Center at 1-404-989-6200 or 1-800-621-8969. Texas
residents must purchase shares of the Fund through Bank South Securities
Corporation at 1-404-989-6181 or 1-800-621-8967. Your purchase order will be
taken directly over the telephone. The order must be placed by 4:00 p.m.
(Eastern time) for shares to be purchased at that day's price.
BY MAIL. Provide a letter of instruction to the Fund indicating your purchase
order, including the dollar amount of your order, your account title and/or
name, and your account number, and include a check made payable to the Fund.
PAYMENT BY CHECK. Mail to Peachtree Georgia Tax-Free Income Fund, c/o the
Peachtree Funds Service Center, MC 684, P.O. Box 4387, Atlanta, Georgia 30302.
PAYMENT BY WIRE. To purchase shares by Federal Wire, contact your account
officer for wiring instructions. Wire orders will only be accepted on days on
which the Fund, the Bank and the Federal Reserve Banks are open for business.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in the Fund by an investor is $1,000. Subsequent
investments must be in amounts of at least $100. The Fund may choose to waive
its minimum investment requirements from time to time and for accounts which
select the Systematic Investment Program.
SYSTEMATIC INVESTMENT PROGRAM
Once an account has been opened, shareholders may add to their investment on a
regular basis in minimum amounts of $100, unless waived. Under this program,
funds may be automatically withdrawn periodically from the shareholder's
checking or other transaction deposit account and invested in Fund shares at the
net asset value next determined after an order is received by the Bank, plus an
applicable sales load. A shareholder may apply for participation in this program
through the Bank.
WHAT SHARES COST
Shares of the Fund are sold at their net asset value next determined after an
order is received plus a sales load as follows:
<TABLE>
<CAPTION>
SALES LOAD AS SALES LOAD AS
A PERCENTAGE A PERCENTAGE
OF PUBLIC OF NET AMOUNT
AMOUNT OF TRANSACTION OFFERING PRICE INVESTED
<S> <C> <C>
Less than $100,000 2.50% 2.56%
$100,000 but less than $250,000 2.00% 2.04%
$250,000 but less than $500,000 1.50% 1.52%
$500,000 but less than $750,000 1.00% 1.01%
$750,000 but less than $1,000,000 0.50% 0.50%
$1,000,000 and more 0.00% 0.00%
</TABLE>
The net asset value is determined at 4:00 p.m. (Eastern time), Monday through
Friday, except on: (i) days on which changes (if any) in the value of the Fund's
portfolio securities do not materially affect its net asset value; (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 load, by certain trust customers of the Bank and current
and retired directors, advisory committee members and employees of the Bank and
its affiliates and their spouses and children under 21. In addition, no sales
load is imposed for Fund shares purchased through Bank South Investment
Services, Inc.'s wrap fee program. Shareholders who wish to obtain more
information about the wrap fee program may contact Bank South Investment
Services, Inc. Investors who purchase shares through the wrap fee program may be
charged an additional fee by Bank South Investment Services, Inc.
SALES LOAD REALLOWANCE. The Bank and any authorized dealer or bank will normally
receive up to 85% of the applicable sales load as a transaction fee from its
customers, and for sales and/or administrative services performed on behalf of
its customers in connection with the initiation of customer accounts and
purchases of Fund shares. Any portion of the sales load which is not paid to the
Bank or a dealer will be retained by the Distributor. However, the Distributor
will, periodically, uniformly offer to pay additional amounts in the form of
cash or promotional incentives consisting of trips to sales seminars at luxury
resorts, tickets or other items, to all dealers selling shares of the Fund. Such
payments, all or a portion of which may be paid from the sales load the
Distributor normally retains or any other source available to it, will be
predicated upon the amount of shares of the Fund that are sold by the dealer.
REDUCING THE SALES LOAD
The sales load can be reduced on the purchase of shares of the Fund through:
quantity discounts and accumulated purchases;
signing a 13-month letter of intent;
using the reinvestment privilege; or
concurrent purchases.
QUANTITY DISCOUNTS AND ACCUMULATED PURCHASES. As shown in the table on the
previous page, larger purchases reduce the sales load 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 load.
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 $90,000 and
purchases $10,000 more at the current public offering price, the sales load on
the additional purchase according to the schedule now in effect would be 2.00%,
not 2.50%.
To receive the sales load reduction, the Bank must be notified by the
shareholder in writing at the time the purchase is made that shares are already
owned or that purchases are being combined. The Fund will reduce the sales load
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 load may be reduced by
signing a letter of intent to that effect. This letter of intent includes a
provision for a sales load adjustment depending on the amount actually purchased
within the 13-month period and a provision for the custodian to hold up to 2.50%
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 load.
This letter of intent will not obligate the shareholder to purchase shares, but
if the shareholder does, each purchase during the period will be at the sales
load 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.
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 load. The Bank
must be notified by the shareholder in writing or by the shareholder's financial
institution of the reinvestment in order to eliminate a sales load. If the
shareholder redeems his shares in the Fund, there may be tax consequences.
CONCURRENT PURCHASES. For purposes of qualifying for a sale load reduction, a
shareholder has the privilege of combining concurrent purchases of two or more
funds in the Trust, the purchase price of which includes a sales load. For
example, if a shareholder concurrently invested $30,000 in one of the other
funds in the Trust with a sales load and $70,000 in this Fund, the sales load
would be reduced.
To receive this sales load reduction, the Distributor must be notified by the
shareholder in writing or by the Bank at the time the concurrent purchases are
made. The Fund will reduce the sales load after it confirms the purchases. See
"What Shares Cost" and "Addresses".
CERTIFICATES AND CONFIRMATIONS
The Transfer Agent for the Fund maintains a share account for each shareholder
of record. Share certificates are not issued unless requested in writing from
the Fund or the Transfer Agent.
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 daily and paid monthly to all shareholders invested in
the Fund on the record date.
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 load, unless a shareholder makes a written request for cash payments to
the Fund or the Bank.
PURCHASING SHARES OF THE FUND WITH SECURITIES
The Fund in its sole discretion, may sell Fund shares to investors that desire
to purchase Fund shares with certain securities or a combination of certain
securities and cash. The Fund reserves the right to determine the acceptability
of securities used to effect such purchases. On the day securities are accepted
by the Fund, they are valued based upon independent bid and in the same manner
as the Fund values its assets. Investors wishing to use securities to purchase
Fund shares should first contact the Bank. Any such transfer of securities is
treated as a sale of the securities and will result in the recognition of any
gain or loss for federal income tax purposes by the seller of such securities,
except to the extent the seller is an ERISA plan or similar entity not subject
to tax.
EXCHANGE PRIVILEGE
- --------------------------------------------------------------------------------
PEACHTREE FUNDS
All shareholders of the Fund are Shareholders of Peachtree Funds. Peachtree
Funds currently include the Fund, Peachtree Bond Fund, Peachtree Equity Fund,
Peachtree Prime Money Market Fund, and Peachtree Government Money Market Fund.
Shareholders have easy access to each of the portfolios of Peachtree Funds
through a telephone exchange program. All Peachtree Funds are advised by the
Bank and distributed by the Distributor.
Shareholders may exchange shares of the Fund for shares of the other Peachtree
Funds. In addition, shares of the Fund may also be exchanged for certain other
funds designated by the Bank which are distributed by the Distributor, but that
are not advised by the Bank ("Federated Funds"). For further information on the
availability of Federated Funds for exchanges, please call the Peachtree Funds
Service Center at 1-404-989-6200 or 1-800-621-8969. Shares of funds with a sales
load may be exchanged at net asset value for shares of other funds with an equal
sales load or no sales load. Shares of funds with a sales load may be exchanged
for shares of funds with a higher sales load at net asset value, plus the
additional sales load. Shares of funds with no sales load, acquired by direct
purchase may be exchanged for shares of funds with a sales load at net asset
value, plus the applicable sales load.
When an exchange is made from a fund with a sales load to a fund with no sales
load, the shares exchanged and additional shares which have been purchased by
reinvesting dividends or capital gains on such shares retain the character of
the exchanged shares for purposes of exercising further exchange privileges;
thus, an exchange of such shares for shares of a fund with a sales load would be
at net asset value.
Shareholders who exercise this exchange privilege must exchange shares having a
net asset value of at least $1,000. Prior to any exchange, the shareholder must
receive a copy of the current prospectus of the fund into which an exchange is
to be effected.
The exchange privilege is available to shareholders residing in any state in
which the fund shares being acquired may legally be sold. Upon receipt of proper
instructions and all necessary supporting documents, shares submitted for
exchange will be redeemed at the next-determined net asset value for the
applicable fund. Written exchange instructions may require a signature
guarantee. Exercise of this privilege is treated as a sale for federal income
tax purposes and, depending on the circumstances, a short or long-term capital
gain or loss may be realized.
The Fund reserves the right to terminate the exchange privilege at any time on
60 days' notice. Shareholders will be notified if this privilege is terminated.
A shareholder may obtain further information on the exchange privilege by
calling the Peachtree Funds Service Center at 1-404-989-6200 or 1-800-621-8969.
BY TELEPHONE. Instructions for exchanges between funds which are part of the
Trust may be given by telephone to the Peachtree Funds Service Center at
1-404-989-6200 or 1-800-621-8969; or to the Distributor. Shares may be exchanged
by telephone only between fund accounts having identical shareholder
registrations.
Any shares held in certificate form cannot be exchanged by telephone but must be
forwarded to the Fund's Transfer Agent by the Bank and deposited to the
shareholder's mutual fund account before being exchanged. See "Addresses".
An authorization form permitting the Fund to accept telephone exchanges must
first be completed. It is recommended that investors request this privilege at
the time of their initial application. If not completed at the time of initial
application, authorization forms and information regarding this service are
available from the Bank. Telephone exchange 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.
Telephone exchange instructions must be received before 4:00 p.m. (Eastern time)
for shares to be exchanged the same day. The telephone exchange privilege may be
modified or terminated at any time. Shareholders will be notified of such
modification or termination. Shareholders may have difficulty in making
exchanges by telephone through the Bank during times of drastic economic or
market changes. If a shareholder cannot contact the Bank by telephone, it is
recommended that an exchange request be made in writing and sent by overnight
mail to Peachtree Funds, 3350 Cumberland Circle, 10th Floor, Atlanta, Georgia
30339.
REDEEMING SHARES
- --------------------------------------------------------------------------------
The Fund redeems shares at their net asset value next determined after the Bank
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 and can be made through the Bank or directly to
the Fund.
BY TELEPHONE. A shareholder may redeem shares of the Fund by contacting his
account officer or by calling the Peachtree Funds Service Center to request the
redemption. (Call 1-404-989-6200 or 1-800-621-8969.) Shares will be redeemed at
the net asset value next determined after the Fund receives the redemption
request from the Bank. Redemption requests to the Bank must be received by the
Bank before 4:00 p.m. (Eastern time) in order for shares to be redeemed at that
day's net asset value and the Bank will promptly submit such redemption requests
and provide written redemption instructions to the Fund. If, at any time, the
Fund should determine it necessary to terminate or modify this method of
redemption, shareholders would be promptly notified.
An authorization form permitting the Fund to accept telephonee redemption
requests must first be completed. It is recommended that investors request this
privilege at the time of their initial application. If not completed at the time
of initial application, authorization forms and information on this service are
available from the Bank. 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.
A shareholder may have the redemption proceeds directly deposited by electronic
funds transfer or wired directly to a domestic commercial bank previously
designated by the shareholder. Wire redemption orders will only be accepted on
days on which the Fund, the Bank and the Federal Reserve Wire System are open
for business. Wire-transferred redemptions may be subject to an additional fee.
In the event of extraordinary 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 your account officer at the Bank.
BY MAIL. Shareholders may redeem shares by sending a written request to the
Bank. 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 to the Bank.
Shareholders should call the Peachtree Funds Service Center at 1-404-989-6200 or
1-800-621-8969 for assistance in redeeming shares by mail.
SIGNATURES. Shareholders requesting a redemption of $50,000 or more, a
redemption requesting payment to an address other than that on record with the
Fund, or other than to the shareholder of record must make written redemption
requests with signatures guaranteed by:
a trust company or commercial bank whose deposits are insured by the
FDIC's BIF;
a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchange;
a savings bank or savings and loan association whose deposits are insured
by the FDIC's SAIF; or
any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934, as amended.
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.
RECEIVING PAYMENT. Normally, a check for the proceeds is mailed to the
shareholder within one business day, but in no event more than seven calendar
days, after receipt of a proper written redemption request, provided that the
Transfer Agent has received payment for shares from the shareholder.
SYSTEMATIC WITHDRAWAL PROGRAM
Shareholders who desire to receive payments of a predetermined amount may take
advantage of the Systematic Withdrawal Program. Under this program, Fund shares
are redeemed to provide for periodic withdrawal payments in an amount directed
by the shareholder. Depending upon the amount of the withdrawal payments and the
amount of dividends paid with respect to Fund shares, redemptions may reduce,
and eventually deplete, the shareholder's investment in the Fund. For this
reason, payments under this program should not be considered as yield or income
on the shareholder's investment in the Fund. To be eligible to participate in
this program, a shareholder must have an account value of at least $10,000. A
shareholder may apply for participation in this program through the Bank.
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, due to
shareholder redemptions, the account balance falls below the required minimum of
$1,000.
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 entitles shareholders to one vote in Trustee elections
and other matters submitted to shareholders of the Trust for vote. All shares of
each portfolio in the Trust have equal voting rights except that, in matters
affecting only a particular Fund, only shareholders of that Fund are entitled to
vote. 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. As of November 4, 1994, Bank South N.A.,
Atlanta, Georgia, acting in various capacities for numerous accounts, was the
owner of record of approximately 1,600 shares (80.22%) 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.
Any Trustee may be removed by the Board of Trustees or by the shareholders at a
special meeting. A special meeting of the shareholders shall be called by the
Trustees upon the written request of shareholders owning at least 10% of the
Trust's outstanding shares.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for acts or obligations of the Trust. To
protect shareholders, 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 the Trust or its
Trustees enter into or sign on behalf of the Fund.
In the unlikely event a shareholder is held personally liable for the Trust's
obligations, the Trust is required by the Declaration of Trust to use its
property to indemnify, protect or compensate the shareholder. On request, the
Trust will defend any claim made and pay any judgment against a shareholder for
any act or obligation of the Trust. Therefore, financial loss resulting from
liability as a shareholder will occur only if the Trust itself cannot meet its
obligations to indemnify shareholders and pay judgments against them from assets
of the Fund.
EFFECT OF BANKING LAWS
- --------------------------------------------------------------------------------
Banking laws and regulations presently prohibit a bank holding company
registered under the federal Bank Holding Company Act of 1956, as amended or any
affiliate thereof from sponsoring, organizing, controlling, or distributing the
shares of a registered, open-end investment company continuously engaged in the
issuance of its shares, and prohibit banks generally from underwriting or
distributing securities. However, such banking laws and regulations do not
prohibit such a holding company affiliate or bank from acting as investment
adviser, transfer agent, or custodian to such an investment company or from
acting as agent for their customers in purchasing securities. The Adviser is
subject to such banking laws and regulations.
The Bank believes, based on the advice of its counsel, that it may perform the
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 affiliates, as well as
further judicial or administrative decisions or interpretations of present or
future statutes and regulations, could prevent the Bank from continuing to
perform all or a part of the above services for its customers and/or the Fund.
If it were prohibited from engaging in these customer-related activities, the
Trustees would consider alternative advisers and means of continuing available
investment services. In such event, changes in the operation of the Fund may
occur, including possible termination of any automatic or other Fund share
investment and redemption services then being provided by the Bank. It is not
expected that existing shareholders would suffer any adverse financial
consequences (if another adviser with equivalent abilities to the Bank 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 intends to meet
requirements of the Internal Revenue Code applicable to regulated investment
companies and to receive the special tax treatment afforded to such companies.
The Fund will be treated as a single, separate entity for federal income tax
purposes so that income (including capital gains) and losses realized by the
Trust's other portfolios will not be combined for tax purposes with those
realized by the Fund.
Shareholders are not required to include any dividends received from the Fund
that represent net interest on tax-exempt municipal bonds in gross income for
federal income tax purposes. However, under the Tax Reform Act of 1986,
dividends representing net interest income earned on some municipal bonds are
included in calculating the federal individual alternative minimum tax or the
federal alternative minimum tax for corporations.
The alternative minimum tax, equal to up to 28% of alternative minimum taxable
income for individuals and 20% for corporations, applies when it exceeds the
regular tax for the taxable year. Alternative minimum taxable income is equal to
the regular taxable income for the taxpayer increased by certain "tax
preference" items not included in regular taxable income and reduced by only a
portion of the deductions allowed in the calculation of the regular income tax.
The Tax Reform Act of 1986 treats interest on certain "private activity" bonds
issued after August 7, 1986, as a tax-preference item for both individuals and
corporations. Unlike traditional government purpose municipal bonds, which
finance roads, schools, libraries, prisons, and other public facilities, private
activity bonds provide benefits to private parties. The Fund may purchase all
types of municipal bonds, including private activity bonds. Thus, while the Fund
has no present intention of purchasing any private activity bonds that would be
treated as tax preference items, should it purchase any such bonds, a portion of
the Fund's dividends may be treated as a tax-preference item.
In addition, in the case of a corporate shareholder, dividends of the Fund which
represent interest on municipal bonds will become subject to the 20% corporate
alternative minimum tax because the dividends are included in a corporation's
"adjusted current earnings." The corporate alternative minimum tax treats 75% of
the excess of a taxpayer's pre-tax "adjusted current earnings" over the
taxpayer's alternative minimum taxable income as a tax-preference item.
"Adjusted current earnings" are based upon the concept of a corporation's
"earnings and profits." Since "earnings and profits" generally includes the full
amount of any Fund dividend, and alternative minimum taxable income does not
include the portion of the Fund's dividend attributable to municipal bonds which
are not private activity bonds, the difference will be included in the
calculation of the corporation's alternative minimum tax.
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.
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 GEORGIA INCOME AND INTANGIBLES TAXES
Under existing Georgia law, shareholders of the Fund will not be subject to
Georgia income taxes on Fund dividends to the extent that such distributions
represent "exempt-interest dividends" for federal income tax purposes that are
attributable to (1) interest-bearing obligations issued by or on behalf of the
State of Georgia or its political subdivisions or (2) interest on obligations of
the United States or of any other issuer whose obligations are exempt from state
income taxes under federal law. Distributions, if any, derived from capital
gains or other sources generally will be taxable for Georgia income tax purposes
to shareholders of the Fund who are subject to the Georgia income tax. The Fund,
as a Massachusetts business trust, is not expected to be required to pay the
annual Georgia intangible property tax on the securities it holds. It is,
however, the current practice of the Georgia Department of Revenue to subject
trust interests similar to the shares to the intangibles tax at a rate equal to
10 cents per $1,000 of value if the owners of such interests reside or have
their principal business location in Georgia. The Department of Revenue is
currently considering whether the taxable value of trust interests representing
beneficial interests in tax-exempt securities may be reduced to take into
account the exempt nature of such securities. Georgia law exempts the following
securities from the intangibles tax: (1) obligations of the United States
(including United States government agencies and corporations established by
Acts of Congress), (2) obligations of the State of Georgia (including its
political subdivisions or public institutions); and (3) industrial development
revenue bonds issued pursuant to the laws of Georgia.
OTHER STATE AND LOCAL TAXES
Dividends payable with respect to the shares of the Fund may or may not be
subject to state or local state income taxation in jurisdictions other than
Georgia under applicable state or local laws. Similarly, shares in the Fund may
or may not be subject to an intangible personal property tax in states other
than Georgia. Each purchaser of the shares of the Fund is urged to consult his
or her own tax adviser regarding the tax-exempt status of the Fund shares and
dividends in state or local jurisdictions other than the State of Georgia.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time, the Fund may advertise its 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 the Fund after reinvesting all income and capital
gains distributions. It is calculated by dividing that change by the initial
investment and is expressed as a percentage.
The yield of the Fund is calculated by dividing the net investment income per
share (as defined by the Securities and Exchange Commission) earned by the Fund
over a thirty-day period by the maximum offering price per share of the Fund on
the last day of the period. This number is then annualized using semi-annual
compounding. The tax-equivalent yield of the Fund is calculated similarly to the
yield, but is adjusted to reflect the taxable yield that the Fund would have had
to earn to equal the actual after tax 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.
From time to time, the Fund may advertise its performance using certain
financial publications and/ or compare its performance to certain indices.
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Peachtree Georgia Tax-Free Federated Investors Tower
Income Fund Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Investment Adviser
Bank South, N.A. 3350 Cumberland Circle
Atlanta, Georgia 30339
- ---------------------------------------------------------------------------------------------------------------------
Custodian
The Bank of New York 48 Wall Street
New York, New York 10286
- ---------------------------------------------------------------------------------------------------------------------
Transfer Agent, Dividend Disbursing Agent,
and Portfolio Accounting Services
Federated Services Company Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Legal Counsel
Houston, Houston & Donnelly 2510 Centre City Tower
Pittsburgh, Pennsylvania 15222
- ---------------------------------------------------------------------------------------------------------------------
Legal Counsel
Dickstein, Shapiro & Morin, L.L.P. 2101 L Street, N.W.
Washington, D.C. 20037
- ---------------------------------------------------------------------------------------------------------------------
Independent Auditors
Ernst & Young LLP One Oxford Centre
Pittsburgh, Pennsylvania 15219
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
[LOGO] BANK SOUTH, N.A.
I N V E S T M E N T A D V I S E R
3350 Cumberland Circle
Atlanta, GA 30339
[LOGO] FEDERATED SECURITIES CORP.
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
70467H507 [LOGO]
3100503A (11/94)
PEACHTREE GEORGIA TAX-FREE INCOME FUND
(A PORTFOLIO OF PEACHTREE FUNDS)
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information should be read with the
prospectus of Peachtree Georgia Tax-Free Income Fund (the "Fund")
dated November 30, 1994. This Statement is not a prospectus itself. To
receive a copy of the prospectus call the Peachtree Funds Service
Center at 1-404-989-6200 or 1-800-621-8969.
SHARES OF THE FUND ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, AND ARE
NOT ISSUED, ENDORSED OR GUARANTEED BY, BANK SOUTH, N.A. (THE "BANK")
OR ANY OF ITS AFFILIATES. SUCH SHARES ARE NOT ISSUED, INSURED, OR
GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY.
AN INVESTMENT IN THE FUND INVOLVES CERTAIN RISKS, INCLUDING POSSIBLE
LOSS OF PRINCIPAL.
THE BANK IS INVESTMENT ADVISER TO THE FUND. THE FUND IS DISTRIBUTED BY
FEDERATED SECURITIES CORP., WHICH IS NOT AFFILIATED WITH THE BANK.
Statement dated November 30, 1994
FEDERATED SECURITIES CORP.
--------------------------------------------
Distributor
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
GENERAL INFORMATION ABOUT THE FUND 1
- ---------------------------------------------------------------
INVESTMENT OBJECTIVE AND POLICIES 1
- ---------------------------------------------------------------
Types of Investments 1
Types of Acceptable Investments 1
Participation Interests 1
Variable Rate Municipal Securities 1
Municipal Leases 2
When-Issued and Delayed
Delivery Transactions 2
Temporary Investments 2
Reverse Repurchase Agreements 2
Investment Limitations 3
Georgia Investment Risks 4
PEACHTREE FUNDS MANAGEMENT 5
- ---------------------------------------------------------------
Officers and Trustees 5
The Funds 7
Fund Ownership 8
Trustee Liability 8
INVESTMENT ADVISORY SERVICES 8
- ---------------------------------------------------------------
Adviser to the Fund 8
Advisory Fees 8
ADMINISTRATIVE SERVICES 8
- ---------------------------------------------------------------
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT 8
- ---------------------------------------------------------------
BROKERAGE TRANSACTIONS 8
- ---------------------------------------------------------------
PURCHASING SHARES 9
- ---------------------------------------------------------------
Administrative Arrangements 9
Distribution Plan 9
Purchasing Fund Shares with Securities 9
DETERMINING NET ASSET VALUE 9
- ---------------------------------------------------------------
Valuing Municipal Bonds 10
EXCHANGE PRIVILEGE 10
- ---------------------------------------------------------------
REDEEMING SHARES 10
- ---------------------------------------------------------------
Redemption in Kind 10
TAX STATUS 10
- ---------------------------------------------------------------
The Fund's Tax Status 10
Shareholders' Tax Status 10
TOTAL RETURN 11
- ---------------------------------------------------------------
YIELD 11
- ---------------------------------------------------------------
TAX EQUIVALENT YIELD 11
- ---------------------------------------------------------------
Tax-Equivalency Table 11
PERFORMANCE COMPARISONS 12
- ---------------------------------------------------------------
APPENDIX 13
- ---------------------------------------------------------------
GENERAL INFORMATION ABOUT THE FUND
- --------------------------------------------------------------------------------
Peachtree Georgia Tax-Free Income Fund (the "Fund") is a portfolio in Peachtree
Funds (the "Trust"), which was established as a Massachusetts business trust
under a Declaration of Trust dated September 22, 1993, as amended and restated
dated December 20, 1993.
INVESTMENT OBJECTIVE AND POLICIES
- --------------------------------------------------------------------------------
The Fund's investment objective is to provide current income exempt from federal
income tax and the personal income taxes imposed by the state of Georgia. The
investment objective cannot be changed without shareholder approval.
TYPES OF INVESTMENTS
The Fund invests primarily in a portfolio of municipal securities which are
exempt from federal income tax and the personal income taxes imposed by the
State of Georgia. The municipal securities in which the Fund invests include
those issued by or on behalf of the State of Georgia and its political
subdivisions, authorities and agencies and securities issued by other states,
territories, and possessions of the United States which are exempt from the
federal income tax and the personal income taxes imposed by the State of Georgia
("Georgia Municipal Securities").
CHARACTERISTICS
The Georgia 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 and Poor's Ratings Group
("S&P"), Duff & Phelps Credit Rating Co. ("Duff & Phelps") 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 Georgia Municipal Securities include:
.general obligation bonds;
.governmental lease certificates of participation issued by governmental units
where payment is secured by installment payments for equipment, buildings, or
other facilities being leased by the state or municipality (Government lease
certificates purchased by the Fund will not contain nonappropriation clauses.);
.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
.private activity and industrial development bonds issued to finance facilities
for use, directly and indirectly, by private for-profit and non-profit
companies.
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 of the securities with variable interest rates
purchased by the Fund will be 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
The Fund may purchase securities in the form of participation interests which
represent undivided fractional interests in lease payments by a governmental or
non-profit entity. 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 became 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.
In determining the liquidity of municipal lease obligations, the Fund's
investment adviser, under the authority delegated by the Trustees, will base its
determination on the following factors:
.whether the lease can be terminated by the lessee;
.the potential recovery, if any, from a sale of the leased property upon
termination of the lease;
.the lessee's general credit strength (e.g., its debt, administrative, economic,
and financial characteristics and prospects);
.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 non-appropriation"); and
.any credit enhancement or legal recourse provided upon an event of
non-appropriation 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. 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
The Fund may also invest in temporary investments during times of unusual market
conditions for defensive purposes.
REPURCHASE AGREEMENTS
Repurchase agreements are arrangements in which banks, securities
broker-dealers, and other financial institutions sell U.S. government and
agency securities to the Fund and agree at the time of sale to repurchase
them at a mutually agreed upon time and price including interest within
one year from the date of acquisition. As collateral for the obligation
of the seller to repurchase the securities from the Fund, the Fund or its
custodian will 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 will
only enter into repurchase agreements with banks and other financial
institutions, such as securities broker-dealers, which are deemed by the
Fund's investment adviser to be creditworthy pursuant to guidelines
established by the Trustees.
REVERSE REPURCHASE AGREEMENTS
The Fund may also enter into reverse repurchase agreements. These transactions
are similar to borrowing cash and pledging securities as collateral. In a
reverse repurchase agreement, the Fund transfers possession of a portfolio
instrument to another person, such as a financial institution or broker-dealer,
in return for a percentage of the instrument's market value in cash, and agrees
that on a stipulated date in the future the Fund will repurchase the portfolio
instrument by remitting the original consideration plus interest at an agreed
upon rate.
The use of reverse repurchase agreements may enable the Fund to avoid selling
portfolio instruments at a time when a sale may be deemed to be disadvantageous,
but the ability to enter into reverse repurchase agreements does not ensure that
the Fund will be able to avoid selling portfolio instruments at a
disadvantageous time.
When effecting reverse repurchase agreements, liquid assets of the Fund, in a
dollar amount sufficient to make payment for the obligations to be purchased,
are segregated at the trade date. These securities are marked to market daily
and are maintained until the transaction is settled.
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
the clearance of purchases and sales of portfolio securities.
ISSUING SENIOR SECURITIES AND BORROWING MONEY
The Fund will not issue senior securities except that the Fund may borrow
money and engage in reverse repurchase agreements in amounts up to
33 1/3% of the value of its total assets, including the amounts borrowed.
The Fund will not borrow money or engage in reverse repurchase agreements
for investment leverage, but rather as a temporary, extraordinary, or
emergency measure to facilitate management of the portfolio by enabling
the Fund to meet redemption requests when the liquidation of portfolio
securities is deemed to be inconvenient or disadvantageous. The Fund will
not purchase any securities while borrowings in excess of 5% of its total
assets are outstanding.
PLEDGING ASSETS
The Fund will not mortgage, pledge, or hypothecate any assets except to
secure permitted borrowings. In those cases, it may mortgage, pledge, or
hypothecate assets having a market value not exceeding 15% of the value
of the Fund's total assets at the time of the borrowing.
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 (the
"Securities Act") in connection with the sale of securities in accordance
with its investment objective, policies, and limitations.
INVESTING IN REAL ESTATE
The Fund will not invest in real estate, including limited partnership
interests, although it may invest in municipal bonds secured by real
estate or interests in real estate.
INVESTING IN COMMODITIES, COMMODITY CONTRACTS, OR COMMODITY FUTURES
CONTRACTS
The Fund will not purchase or sell commodities, commodity contracts, or
commodity futures contracts.
LENDING CASH OR SECURITIES
The Fund will not lend any of its assets, except that it may 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 or the Trust's Declaration of Trust.
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 private activity bonds or other securities, the interest
upon which is paid from revenues of similar types of projects. However,
the Fund may invest as temporary investments 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, such as repurchase
agreements.
The above investment limitations cannot be changed without shareholder approval.
The following limitations, however, may be change by the Trustees without
shareholder approval. Shareholders will be notified before any material change
in the following limitations becomes effective.
INVESTING IN RESTRICTED SECURITIES
The Fund will not invest more than 10% of the value of its total assets
in securities subject to restrictions on resale under the Securities Act
of 1933, except for certain restricted securities which meet the criteria
for liquidity as established by the Trustees.
INVESTING IN ILLIQUID SECURITIES
The Fund will not invest more than 15% of the value of its net assets in
securities, including repurchase agreements providing for settlement in
more than seven calendar days after notice, non-negotiable fixed time
deposits with maturities over seven days, and certain municipal leases
and restricted securities not determined by the Trustees to be liquid.
INVESTING IN ISSUERS WHOSE SECURITIES ARE OWNED BY OFFICERS AND TRUSTEES OF
THE TRUST
The Fund will not purchase or retain the securities of any issuer if the
officers and Trustees of the Trust or the Fund's investment adviser
owning individually more than 0.50% of the issuer's securities together
own more than 5% of the issuer's securities.
INVESTING IN NEW ISSUERS
The Fund will not invest more than 5% of the value of its total assets in
private activity bonds where the principal and interest are the
responsibility of companies (including guarantors, where applicable) with
less than three years of continuous operations, including the operation
of any predecessor.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
The Fund will limit its investment in other investment companies to no
more than 3% of the total outstanding voting stock of any investment
company, will not 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 the aggregate. However, these limitations are not
applicable if the securities are acquired in a merger, consolidation, or
acquisition of assets.
INVESTING IN MINERALS
The Fund will not purchase interests in oil, gas, or other mineral
exploration or development programs or leases, although it may invest in
securities of issuers which invest in or sponsor such programs.
Except with respect to borrowing money, if a percentage limitation is adhered to
at the time of investment, a later increase or decrease in percentage resulting
from any change in value or net assets will not result in a violation of such
restriction.
The Fund does not expect to borrow money or pledge securities in excess of 5% of
the value of its net assets in its next fiscal year. For purposes of its
policies and limitations, the Fund considers certificates of deposit and demand
and time deposits issued by a U.S. branch of a domestic bank or savings and loan
having capital, surplus, and undivided profits in excess of $100,000,000 at the
time of investment to be "cash items."
GEORGIA INVESTMENT RISKS
Georgia's economy is based on manufacturing (textiles, food products, paper
products, electronic equipment and aircraft), trade and a growing service
sector. Atlanta, with a service-oriented economy, is a trade, service and
transportation center for the Southeast region and is the focus of economic
growth in the State. In most other cities in Georgia, manufacturing
predominates. The State economy was only mildly affected by the early 1980's
recession and grew rapidly for most of the decade, with employment and personal
income growth in excess of comparable national rates. Despite continued
population growth, personal income per capita has steadily gained relative to
the nation. The economy began to slow in 1989, with less vigorous job growth
evident and relative per capita income position slipping.
Throughout the 1980's the State's expanding economy fostered strong income and
sales tax growth. This enabled the State to record fairly strong fiscal
operations from fiscal years 1984-1989. Financial operations have suffered since
fiscal year 1990, recording operating deficits in each of the fiscal years
1990-1992. Revenue projections were overly optimistic in fiscal year 1992 and
although the State reduced general fund expenditures, a minor operating deficit
was experienced.
The 1993 budget assumes a 6.9% increase in revenue from existing levels;
however, no surpluses or reserves from 1992 remain to carry over into fiscal
year 1993. If economic recovery is delayed or weakened, revenue shortfalls could
persist.
Except for the major building projects necessary for the 1996 Summer Olympics,
it appears unlikely that areas in and around metropolitan Atlanta will
experience the building construction rates of the mid to late 1980's.
PEACHTREE FUNDS MANAGEMENT
- --------------------------------------------------------------------------------
OFFICERS AND TRUSTEES
Officers and Trustees are listed with their addresses, present positions with
Peachtree Funds, and principal occupations.
- --------------------------------------------------------------------------------
John F. Donahue*+
Federated Investors Tower
Pittsburgh, PA
Chairman and Trustee
Chairman and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; Chairman and Director, Federated Research
Corp.; Chairman, Passport Research, Ltd.; Director, AEtna Life and Casualty
Company; Chief Executive Officer and Director, Trustee, or Managing General
Partner of the Funds. Mr. Donahue is the father of J. Christopher Donahue.
- --------------------------------------------------------------------------------
John T. Conroy, Jr.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, FL
Trustee
President, Investment Properties Corporation; Senior Vice-President, John R.
Wood and Associates, Inc., Realtors; President, Northgate Village Development
Corporation; Partner or Trustee in private real estate ventures in Southwest
Florida; Director, Trustee, or Managing General Partner of the Funds; formerly,
President, Naples Property Management, Inc.
- --------------------------------------------------------------------------------
William J. Copeland
One PNC Plaza-23rd Floor
Pittsburgh, PA
Trustee
Director and Member of the Executive Committee, Michael Baker, Inc.; Director,
Trustee, or Managing General Partner of the Funds; formerly, Vice Chairman and
Director, PNC Bank, N.A., and PNC Bank Corp. and Director, Ryan Homes, Inc.
- --------------------------------------------------------------------------------
James E. Dowd
571 Hayward Mill Road
Concord, MA
Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director, Trustee,
or Managing General Partner of the Funds; formerly, Director, Blue Cross of
Massachusetts, Inc.
- --------------------------------------------------------------------------------
Lawrence D. Ellis, M.D.
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA
Trustee
Hematologist, Oncologist, and Internist, Presbyterian and Montefiore Hospitals;
Professor of Medicine and Trustee, University of Pittsburgh; Director of
Corporate Health, University of Pittsburgh Medical Center; Director, Trustee, or
Managing General Partner of the Funds.
- --------------------------------------------------------------------------------
Edward L. Flaherty, Jr.+
Two Gateway Center-Suite 674
Pittsburgh, PA
Trustee
Attorney-at-law; Partner, Henny, Koehuba, Meyer & Flaherty; Director, Eat'N Park
Restaurants, Inc., and Statewide Settlement Agency, Inc.; Director, Trustee, or
Managing General Partner of the Funds; formerly, Counsel, Horizon Financial,
F.A., Western Region.
- --------------------------------------------------------------------------------
Peter E. Madden
225 Franklin Street
Boston, MA
Trustee
Consultant; State Representative, Commonwealth of Massachusetts; Director,
Trustee, or Managing General Partner of the Funds; formerly, President, State
Street Bank and Trust Company and State Street Boston Corporation and Trustee,
Lahey Clinic Foundation, Inc.
- --------------------------------------------------------------------------------
Gregor F. Meyer
Two Gateway Center-Suite 674
Pittsburgh, PA
Trustee
Attorney-at-law; Partner, Henny, Koehuba, Meyer & Flaherty; Chairman, Meritcare,
Inc.; Director, Eat'N Park Restaurants, Inc.; Director, Trustee, or Managing
General Partner of the Funds; formerly, Vice Chairman, Horizon Financial, F.A.
- --------------------------------------------------------------------------------
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Trustee
Professor, Foreign Policy and Management Consultant; Trustee, Carnegie Endowment
for International Peace, RAND Corporation, Online Computer Library Center, Inc.,
and U.S. Space Foundation; Chairman, Czecho Slovak Management Center; Director,
Trustee, or Managing General Partner of the Funds; President Emeritus,
University of Pittsburgh; formerly, Chairman, National Advisory Council for
Environmental Policy and Technology.
- --------------------------------------------------------------------------------
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Trustee
Public relations/marketing consultant; Director, Trustee, or Managing General
Partner of the Funds.
- --------------------------------------------------------------------------------
Edward C. Gonzales*
Federated Investors Tower
Pittsburgh, PA
President, Treasurer and Trustee
Vice President, Treasurer, and Trustee, Federated Investors; Vice President and
Treasurer, Federated Advisers, Federated Management, Federated Research,
Federated Research Corp., and Passport Research, Ltd.; Executive Vice President,
Treasurer, and Director, Federated Securities Corp.; Trustee, Federated Services
Company and Federated Shareholder Services; Chairman, Treasurer, and Trustee,
Federated Administrative Services; Trustee or Director of some of the Funds;
Vice President and Treasurer of the Funds.
- --------------------------------------------------------------------------------
J. Christopher Donahue
Federated Investors Tower
Pittsburgh, PA
Vice President
President and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; President and Director, Federated Research
Corp.; President, Passport Research, Ltd.; Trustee, Federated Administrative
Services, Federated Services Company, and Federated Shareholder Services;
President or Vice President of the Funds; Director, Trustee, or Managing General
Partner of some of the Funds. Mr. Donahue is the son of John F. Donahue,
Chairman and Trustee of the Trust.
- --------------------------------------------------------------------------------
Richard B. Fisher
Federated Investors Tower
Pittsburgh, PA
Vice President
Executive Vice President and Trustee, Federated Investors; Director, Federated
Research Corp.; Chairman and Director, Federated Securities Corp.; President or
Vice President of some of the Funds; Director or Trustee of some of the Funds.
- --------------------------------------------------------------------------------
John W. McGonigle
Federated Investors Tower
Pittsburgh, PA
Vice President and Secretary
Vice President, Secretary, General Counsel, and Trustee, Federated Investors;
Vice President, Secretary, and Trustee, Federated Advisers, Federated
Management, and Federated Research; Vice President and Secretary, Federated
Research Corp. and Passport Research, Ltd.; Trustee, Federated Services Company;
Executive Vice President, Secretary, and Trustee, Federated Administrative
Services; Secretary and Trustee, Federated Shareholder Services; Executive Vice
President and Director, Federated Securities Corp.; Vice President and Secretary
of the Funds.
- --------------------------------------------------------------------------------
Charles L. Davis, Jr.
Federated Investors Tower
Pittsburgh, PA
Vice President and Assistant Treasurer
Vice President, Federated Administrative Services; Vice President and Assistant
Treasurer of some of the Funds; formerly, Vice President and Director of
Investor Relations, MNC Financial, Inc. and Vice President, Product Management,
MNC Financial, Inc.
- --------------------------------------------------------------------------------
* This Trustee is deemed to be an "interested person" as defined in the
Investment Company Act of 1940, as amended.
+ Member of the Executive Committee. The Executive Committee of the Board of
Trustees handles various of the delegable responsibilities of the Board of
Trustees between meetings of the Board.
THE FUNDS
"The Funds" and "Funds" mean the following investment companies: American
Leaders Fund, Inc.; Annuity Management Series; Arrow Funds; Automated Cash
Management Trust; Automated Government Money Trust; California Municipal Cash
Trust; Cash Trust Series, Inc.; Cash Trust Series II; DG Investor Series; Edward
D. Jones & Co. Daily Passport Cash Trust; Federated ARMs Fund; Federated
Exchange Fund, Ltd.; Federated GNMA Trust; Federated Government Trust; Federated
Growth Trust; Federated High Yield Trust; Federated Income Securities Trust;
Federated Income Trust; Federated Index Trust; Federated Institutional Trust;
Federated Intermediate Government Trust; Federated Master Trust; Federated
Municipal Trust; Federated Short-Intermediate Government Trust; Federated
Short-Term U.S. Government Trust; Federated Stock Trust; Federated Tax-Free
Trust; Federated U.S. Government Bond Fund; First Priority Funds; Fixed Income
Securities, Inc.; Fortress Adjustable Rate U.S. Government Fund, Inc.; Fortress
Municipal Income Fund, Inc.; Fortress Utility Fund, Inc.; Fund for U.S.
Government Securities, Inc.; Government Income Securities, Inc.; High Yield Cash
Trust; Insight Institutional Series, Inc.; Insurance Management Series;
Intermediate Municipal Trust; International Series, Inc.; Investment Series
Funds, Inc.; Investment Series Trust; Liberty Equity Income Fund, Inc.; Liberty
High Income Bond Fund, Inc.; Liberty Municipal Securities Fund, Inc.; Liberty
Term Trust, Inc.-1999; Liberty U.S. Government Money Market Trust; Liberty
Utility Fund, Inc.; Liquid Cash Trust; Managed Series Trust; The Medalist Funds;
Money Market Management Inc.; Money Market Obligations Trust; Money Market
Trust; Municipal Securities Income Trust; New York Municipal Cash Trust; 111
Corcoran Funds; The Planters Funds; Portage Funds; RIMCO Monument Funds; The
Shawmut Funds; Short-Term Municipal Trust; Star Funds; The Starburst Funds; The
Starburst Funds II; Stock and Bond Fund, Inc.; Sunburst Funds; Targeted Duration
Trust; Tax-Free Instruments Trust; Trademark Funds; Trust for Financial
Institutions; Trust for Government Cash Reserves; Trust for Short-Term U.S.
Government Securities; Trust for U.S. Treasury Obligations and World Investment
Series, Inc.
FUND OWNERSHIP
Officers and Trustees own less than 1% of the Fund's outstanding shares.
As of November 4, 1994, the following shareholders of record owned 5% or more of
the outstanding shares of the Fund: Bank South N.A., Atlanta, Georgia, acting in
various capacities for numerous accounts, owned approximately 1600 shares
(80.22%); BHC Securities Inc. Philadelphia, Pennsylvania, acting in various
capacities for numerous accounts, owned approximately 369 shares (18.52%).
TRUSTEE LIABILITY
Peachtree Funds' Declaration of Trust provides that the Trustees are not 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 the Bank (the "Adviser"). 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 Trust.
Because of the internal controls maintained by the Bank to restrict the flow of
non-public information, Fund investments are typically made without any
knowledge of the Bank's or its affiliates' lending relationships with an
issuer.
ADVISORY FEES
For its advisory services, the Adviser receives an annual investment advisory
fee as described in the prospectus.
STATE EXPENSE LIMITATIONS
The Adviser has undertaken to comply with the expense limitations
established by certain states for investment companies whose shares are
registered for sale in those states. If the Fund's normal operating
expenses (including the investment advisory fee, but not including
brokerage commissions, interest, taxes and extraordinary expenses) exceed
2.50% per year of the first $30 million of average net assets, 2.00% per
year of the next $70 million of average net assets, and 1.50% per year of
the remaining average net assets, the Adviser will reimburse the Fund for
its expenses over the limitation.
If the Fund's monthly projected operating expenses exceed this expense
limitation, the investment advisory fee paid will be reduced by the
amount of the excess, subject to an annual adjustment. If the expense
limitation is exceeded, the amount to be reimbursed by the Adviser will
be limited, in any single fiscal year, by the amount of the investment
advisory fee.
This arrangement is not part of the advisory contract and may be amended
or rescinded in the future.
ADMINISTRATIVE SERVICES
- --------------------------------------------------------------------------------
Federated Administrative Services, a subsidiary of Federated Investors, provides
administrative personnel and services to the Fund for the fees set forth in the
prospectus.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
- --------------------------------------------------------------------------------
Federated Services Company serves as transfer agent and dividend disbursing
agent for the Fund. The fee paid to the transfer agent is based upon the size,
type and number of accounts and transactions made by shareholders.
Federated Services Company also maintains the Trust's accounting records. 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.
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 utilize those who
are recognized dealers in specific portfolio instruments, except when a better
price and execution of the order can be obtained elsewhere. The Adviser 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.
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.
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.
PURCHASING SHARES
- --------------------------------------------------------------------------------
Shares are sold at their offering price on days on which the New York Stock
Exchange and Federal Reserve Wire System are open for business. The procedure
for purchasing shares of the Fund is explained in the prospectus under
"Investing in the Fund."
ADMINISTRATIVE ARRANGEMENTS
The administrative services include, but are not limited to, providing office
space, equipment, telephone facilities, and various personnel, including
clerical, supervisory, and computer, as is necessary or beneficial to establish
and maintain shareholders' accounts and records, process purchase and redemption
transactions, process automatic investments of client account cash balances,
answer routine client inquiries regarding the Fund, assist clients in changing
dividend options, account designations, and addresses, and providing such other
services as the Fund may reasonably request.
DISTRIBUTION PLAN
With respect to the Fund, the Trust has adopted a Plan pursuant to Rule 12b-1
which was promulgated by the Securities and Exchange Commission ("SEC") pursuant
to the Investment Company Act of 1940, as amended (the "Act"). The Plan provides
for payment of fees to the Distributor to finance any activity which is
principally intended to result in the sale of the Fund's shares subject to the
Plan. Such activities may include the advertising and marketing of shares of the
Fund; preparing, printing, and distributing prospectuses and sales literature to
prospective shareholders, brokers, or administrators; and implementing and
operating the Plan. Pursuant to the Plan, the Distributor may pay fees to
brokers and others for such services.
PURCHASING FUND SHARES WITH SECURITIES
The Fund in its sole discretion, may sell Fund shares to investors that desire
to purchase Fund shares with certain securities or a combination of certain
securities and cash. The Fund reserves the right to determine the acceptability
of securities used to effect such purchases. On the day securities are accepted
by the Fund, they are valued based upon independent bid and in the same manner
as the Fund values it assets. Investors wishing to use securities to purchase
Fund Shares should first contact the Bank. Any such transfer of securities is
treated as a sale of the securities and will result in the recognition of any
gain or loss for federal income tax purposes by the seller of such securities,
except to the extent the seller is an ERISA plan or similar entity not subject
to tax. Unless such securities are to be acquired by the Fund in a bona fide
reorganization, statutory merger, or similar transaction, such securities must
meet the Fund's investment restrictions at the time of sale.
DETERMINING NET ASSET VALUE
- --------------------------------------------------------------------------------
Net asset value generally changes each day. The days on which the net asset
value is calculated by the Fund are described in the prospectus.
VALUING MUNICIPAL BONDS
The Board of Trustees uses 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.
EXCHANGE PRIVILEGE
- --------------------------------------------------------------------------------
Shareholders of the Fund may exchange shares of the Fund for shares of other
funds advised by the Bank and certain other funds designated by the Bank and
distributed by the Distributor, subject to certain conditions. Exchange
procedures are explained in the Prospectus under "Exchange Privilege."
REDEEMING SHARES
- --------------------------------------------------------------------------------
The Fund redeems shares at the next computed net asset value after the Fund
receives the redemption request. Redemption procedures are explained in the
Prospectus under "Redeeming Shares."
REDEMPTION IN KIND
Although the Fund intends to redeem shares in cash, it reserves the right under
certain circumstances to pay the redemption price in whole or in part by a
distribution of securities from the Fund's portfolio.
Redemption in kind will be made in conformity with applicable SEC rules, taking
such securities at the same value employed in determining net asset value and
selecting the securities in a manner the Trustees determine to be fair and
equitable.
The Trust has elected to be governed by SEC Rule 18f-1 under the Investment
Company Act of 1940 under which each 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.
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 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 from 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.
SHAREHOLDERS' 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 and as a result of discounts from par value on
securities held to maturity. 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.
Distribution of long-term capital gains are taxed as such, whether they
are taken in cash or reinvested, and regardless of the length of time the
shareholder has owned the shares.
TOTAL RETURN
- --------------------------------------------------------------------------------
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 maximum 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 load,
adjusted over the period by any additional shares, assuming the monthly
reinvestment of all dividends and distributions.
YIELD
- --------------------------------------------------------------------------------
The yield for the Fund is calculated by dividing the net investment income per
share (as defined by the SEC) earned by the Fund over a 30-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 30-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 tax-equivalent yield is calculated similarly to the yield, but is adjusted
to reflect the taxable yield necessary to equal on an after tax basis, the
actual yield of the Fund, assuming that income from the Fund 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 bonds in the portfolio
generally remains free from federal regular income tax,* and is often free from
state and local taxes as well. As the following table 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 1994
STATE OF GEORGIA
<TABLE>
<CAPTION>
TAX BRACKET: FEDERAL
15.00% 28.00% 31.00% 36.00% 39.60%
- -----------------------------------------------------------------------------------------------------------
COMBINED FEDERAL AND STATE
21.000% 34.000% 37.000% 42.000% 45.600%
- -----------------------------------------------------------------------------------------------------------
JOINT RETURN:
$1-38,000 $38,001-91,850 $91,851-140,000 $140,001-250,000 OVER $250,000
- -----------------------------------------------------------------------------------------------------------
SINGLE RETURN:
$1-22,750 $22,751-55,100 $55,101-115,000 $115,001-250,000 OVER $250,000
- -----------------------------------------------------------------------------------------------------------
TAX-EXEMPT
YIELD TAXABLE YIELD EQUIVALENT
<S> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
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
6.50 8.23 9.85 10.32 11.21 11.95
7.00 8.86 10.61 11.11 12.07 12.87
</TABLE>
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 chart above is for illustrative purposes only. It is not an indicator of
past or future performance of any class of shares.
*Some portion of each class's income may be subject to the federal alternative
minimum tax and state and local 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.
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 compositions of other funds, and methods
used to value portfolio securities and compute offering price. The financial
publications and/or indices which the Fund uses in advertising may include:
.LIPPER ANALYTICAL SERVICES, INC., ranks funds in various 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. From
time to time, the Fund will quote its Lipper ranking in a specific category in
advertising and sales literature.
.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. These total returns
represent the historic change in the value of an investment in the Fund based on
the monthly reinvestment of dividends over a specific period of time. In
addition, advertisements and sales literature for the Fund may include charts
and other illustrations which depict the hypothetical growth of an investment in
a systematic investment plan.
Advertisements may quote performance information which does not reflect the
effect of the sales load.
APPENDIX
- --------------------------------------------------------------------------------
STANDARD AND POOR'S RATINGS GROUP MUNICIPAL BOND RATING DEFINITIONS
AAA--Debt rated "AAA" has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.
AA--Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
A--Debt rated 'A' has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB--Debt rated "BBB" is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
MOODY'S INVESTORS SERVICE, INC., MUNICIPAL BOND RATING DEFINITIONS
AAA--Bonds which are rated "AAA" are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edged." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
AA--Bonds which are rated "AA" are judged to be of high quality by all
standards. Together with the "AAA" group they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in "AAA" securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long term risks appear somewhat larger than in "AAA"
securities.
A--Bonds which are rated "A" possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment some time in the future.
BAA--Bonds which are rated "BAA" are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
FITCH INVESTORS SERVICE, INC., 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 credit quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated "AAA". Because bonds rated in the AAA and AA
categories are not significantly vulnerable to foreseeable future developments,
short-term debt of these issuers is generally rated F-1+.
A--Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
BBB--Bonds considered to be investment grade and of satisfactory credit quality.
The obligor's ability to pay interest and repay principal is considered to be
adequate. Adverse changes in economic conditions and circumstances, however, are
more likely to have adverse impact on these bonds and, therefore, impair timely
payment.
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 " or "D" categories.
DUFF & PHELPS CREDIT RATING CO. MUNICIPAL BOND RATINGS DEFINITIONS
AAA--Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.
AA+, AA, AA- --High credit quality. Protection factors are strong. Risk is
modest but may vary slightly from time to time because of economic conditions.
A+, A, A- --Protection factors are average but adequate. However, risk factors
are more variable and greater in periods of economic stress.
BBB+, BBB, BBB- --Below average protection factors but still considered
sufficient for prudent investment. Considerable variability in risk during
economic cycles.
A CREDIT RATING IS NOT A RECOMMENDATION TO BUY, SELL OR HOLD SECURITIES, AND IS
SUBJECT TO CHANGE AND/OR WITHDRAWAL BY THE RATING AGENCY.
704674507
3100503B (11/94)
the
Peachtree Funds
PRIME MONEY
MARKET FUND
AND
GOVERNMENT
MONEY
MARKET FUND
Combined
Prospectus
Portfolios of
Peachtree Funds
an Open-End Management
Investment Company
(a Mutual Fund)
November 30, 1994
PEACHTREE PRIME MONEY MARKET FUND
PEACHTREE GOVERNMENT MONEY MARKET FUND
(PORTFOLIOS OF PEACHTREE FUNDS)
COMBINED PROSPECTUS
The shares of the Peachtree Government Money Market Fund (the "Government Money
Fund") and the Peachtree Prime Money Market Fund (the "Prime Money Fund")
(individually referred to as a "Fund" and collectively as the "Funds") offered
by this combined prospectus represent interests in two separate portfolios of
securities with distinct investment objectives and policies. The Funds are two
of a series of investment portfolios comprising Peachtree Funds (the "Trust"),
an open-end management investment company (a mutual fund).
THE FUNDS ATTEMPT TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE; THERE
CAN BE NO ASSURANCE THAT THE FUNDS WILL BE ABLE TO DO SO.
This prospectus contains the information you should read carefully and
understand before you invest in the Funds. Keep this prospectus for future
reference.
Each Fund has also filed a Statement of Additional Information dated November
30, 1994, with the Securities and Exchange Commission. The information contained
in the Statements of Additional Information is incorporated by reference into
this Combined Prospectus. You may request a copy of the Statement of Additional
Information for either fund free of charge, obtain other information, or make
inquiries about the Funds by contacting the Peachtree Funds Service Center at
1-404-989-6200 or 1-800-621-8969.
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, AND ARE NOT
ISSUED, ENDORSED OR GUARANTEED BY, BANK SOUTH, N.A. (THE "BANK") OR ANY OF ITS
AFFILIATES. SUCH SHARES ARE NOT ISSUED, INSURED OR GUARANTEED BY THE U.S.
GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD
OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN THE FUNDS INVOLVES CERTAIN
RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
THE BANK IS THE INVESTMENT ADVISER TO THE FUNDS. THE FUNDS ARE DISTRIBUTED BY
FEDERATED SECURITIES CORP., WHICH IS NOT AFFILIATED WITH THE BANK.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
the
November 30, 1994 PEACHTREE FUNDS
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS 3
- ------------------------------------------------------
GENERAL INFORMATION 5
- ------------------------------------------------------
PRIME MONEY FUND INVESTMENT INFORMATION 5
- ------------------------------------------------------
Investment Objective 5
Investment Policies 5
Acceptable Investments 5
Variable Rate Demand Notes 6
Demand Features 6
Bank Instruments 6
Asset-Backed Securities 6
Short-Term Credit Facilities 7
Ratings 7
Restricted and Illiquid Securities 7
Credit Enhancement 8
Investment Risks 8
GOVERNMENT MONEY FUND
INVESTMENT INFORMATION 8
- ------------------------------------------------------
Investment Objective 8
Investment Policies 8
Acceptable Investments 9
INVESTMENTS AND STRATEGIES OF THE FUNDS 9
- ------------------------------------------------------
Repurchase Agreements 9
Lending of Portfolio Securities 9
When-Issued And Delayed Delivery
Transactions 9
Investing in Securities of Other
Investment Companies 10
Certain Borrowing and Investment Limitations 10
Regulatory Compliance 10
PEACHTREE FUNDS INFORMATION 11
- ------------------------------------------------------
Management of the Trust 11
Board of Trustees 11
Investment Adviser 11
Advisory Fees 11
Adviser's Background 11
Distribution of Shares 12
Distribution Plan 12
Administrative Arrangements 12
Administration of the Trust 13
Administrative Services 13
Shareholder Services Plan 13
Custodian 13
Transfer Agent, Dividend Disbursing Agent
and Portfolio Accounting Services 13
Legal Counsel 13
Independent Auditors 14
Expenses of the Funds 14
NET ASSET VALUE 14
- ------------------------------------------------------
INVESTING IN THE FUNDS 14
- ------------------------------------------------------
Share Purchases 14
By Telephone 14
By Mail 14
Payment by Check 15
Payment by Wire 15
Minimum Investment Required 15
Systematic Investment Program 15
What Shares Cost 15
Certificates and Confirmations 15
Dividends 15
Purchasing Shares of the Funds
with Securities 16
EXCHANGE PRIVILEGE 16
- ------------------------------------------------------
Peachtree Funds 16
By Telephone 17
REDEEMING SHARES 17
- ------------------------------------------------------
By Telephone 18
By Mail 18
Signatures 18
Receiving Payment 19
Systematic Withdrawal Program 19
Accounts with Low Balances 19
SHAREHOLDER INFORMATION 19
- ------------------------------------------------------
Voting Rights 19
Massachusetts Partnership Law 20
EFFECT OF BANKING LAWS 20
- ------------------------------------------------------
TAX INFORMATION 21
- ------------------------------------------------------
Federal Income Tax 21
State and Local Taxes 21
PERFORMANCE INFORMATION 21
- ------------------------------------------------------
FINANCIAL STATEMENTS 22
- ------------------------------------------------------
REPORT OF ERNST & YOUNG LLP,
INDEPENDENT AUDITORS 35
- ------------------------------------------------------
ADDRESSES 36
- ------------------------------------------------------
PEACHTREE PRIME MONEY MARKET FUND
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)............................................................ None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)............................................................ None
Contingent Deferred Sales Charge (as a percentage of original purchase price or
redemption proceeds, as applicable)............................................................ None
Exchange Fee..................................................................................... None
ANNUAL FUND OPERATING EXPENSES*
(As a percentage of projected average net assets)
Management Fee (after waiver)(1)................................................................. 0.19%
12b-1 Fees(2).................................................................................... 0.00%
Total Other Expenses (after waiver).............................................................. 0.31%
Shareholder Services Fees(3)................................................................. 0.00%
Total Fund Operating Expenses (after waiver)(4)......................................... 0.50%
</TABLE>
- ---------
(1) The estimated management fee has been reduced to reflect the anticipated
voluntary waiver by the investment adviser. The investment adviser can
terminate this voluntary waiver at any time in its sole discretion. The
maximum management fee is 0.50%.
(2) As of the date of this prospectus, the Fund is not paying or accruing 12b-1
fees. The Fund can pay up to 0.25% as a 12b-1 fee to the distributor.
Certain trust clients of the Bank or its affiliates, including ERISA plans,
will not be affected by the distribution plan because the distribution plan
will not be activated unless and until a second, "Trust," class of shares of
the Fund (which would not have a Rule 12b-1 plan) is created and such
clients' investments in the Fund are converted to such Trust class.
(3) As of the date of the prospectus, the Fund is not paying or accruing
shareholder services fees. The Fund can pay up to 0.25% as a shareholder
services fee to certain financial institutions. Certain trust clients of the
Bank or its affiliates, including ERISA plans, will not be affected by the
shareholder services plan because the shareholder services plan will not be
activated unless and until a second, "Trust," class of shares of the Fund
(which would not have a services plan) is created and such clients'
investments in the Fund are converted to such Trust class.
(4) The Total Fund Operating Expenses are estimated to be 0.81% absent the
anticipated voluntary waiver by the adviser. The Total Fund Operating
Expenses were 0.38% for the fiscal year ended September 30, 1994 and were
0.89% absent the voluntary waiver of a portion of the management,
administrative and transfer agent fees.
* Expenses are estimated based on average expenses expected to be incurred
during the fiscal year ending September 30, 1995. During the course of this
period, expenses may be more or less than the amount shown.
The purpose of this table is to assist an investor in understanding the
various costs and expenses that a shareholder of the Fund will bear, either
directly or indirectly. For more complete descriptions of the various costs and
expenses, see "Peachtree Funds Information" and "Investing in the Fund."
Wire-transferred redemptions may be subject to an additional fee.
<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. As
noted in the table above, the Fund charges no redemption fees............ $5 $16 $28 $63
</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. THIS
EXAMPLE IS BASED ON ESTIMATED DATA FOR THE FUNDS' FISCAL YEAR ENDING SEPTEMBER
30, 1995.
PEACHTREE GOVERNMENT MONEY MARKET FUND
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)............................................................ None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)............................................................ None
Contingent Deferred Sales Charge (as a percentage of original purchase price or
redemption proceeds, as applicable)............................................................ None
Exchange Fee..................................................................................... None
ANNUAL FUND OPERATING EXPENSES*
(As a percentage of projected average net assets)
Management Fee (after waiver)(1)................................................................. 0.20%
12b-1 Fees(2).................................................................................... 0.00%
Total Other Expenses............................................................................. 0.30%
Shareholder Services Fees(3)................................................................. 0.00%
Total Fund Operating Expenses (after waiver)(4)......................................... 0.50%
</TABLE>
- ---------
(1) The estimated management fee has been reduced to reflect the anticipated
voluntary waiver by the investment adviser. The adviser can terminate this
voluntary waiver at any time at its sole discretion. The maximum management
fee is 0.50%.
(2) As of the date of this Prospectus, the Fund is not paying or accruing 12b-1
fees. The Fund can pay up to 0.25% as a 12b-1 fee to the distributor.
Certain trust clients of the Bank or its affiliates, including ERISA plans,
will not be affected by the distribution plan because the distribution plan
will not be activated unless and until a second, "Trust," class of shares of
the Fund (which would not have a Rule 12b-1 plan) is created and such trust
clients' investments in the Fund are converted to such Trust class.
(3) As of the date of the prospectus, the Fund is not paying or accruing
shareholder services fees. The Fund can pay up to 0.25% as a shareholder
services fee to certain financial institutions. Certain trust clients of the
Bank or its affiliates, including ERISA plans, will not be affected by the
shareholder services plan because the shareholder services plan will not be
activated unless and until a second, "Trust," class of shares of the Fund
(which would not have a services plan) is created and such clients'
investments in the Fund are converted to such Trust class.
(4) The Total Fund Operating Expenses in the table above are based on expenses
expected during the fiscal year ending September 30, 1995. The Total Fund
Operating Expenses are estimated to be 0.80% absent the voluntary waiver by
the investment adviser. The Total Fund Operating Expenses were 0.38% for the
fiscal year ended September 30, 1994 and were 0.91% absent the voluntary
waiver of a portion of the management, administrative, and transfer agent
fees.
* Expenses are estimated based on average expenses expected to be incurred
during the fiscal year ending September 30, 1995. During the course of this
period, expenses may be more or less than the amount shown.
The purpose of this table is to assist an investor in understanding the
various costs and expenses that a shareholder of the Fund will bear, either
directly or indirectly. For more complete descriptions of the various costs and
expenses, see "Peachtree Funds Information" and "Investing in the Funds."
Wire-transferred redemptions may be subject to an additional fee.
<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. The
Fund charges no redemption fees.......................................... $5 $16 $28 $63
</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. THIS
EXAMPLE IS BASED ON ESTIMATED DATA FOR THE FUND'S FISCAL YEAR ENDING SEPTEMBER
30, 1995.
PEACHTREE PRIME MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
Reference is made to the Report of Ernst & Young LLP, Independent Auditors, on
page 35.
<TABLE>
<CAPTION>
YEAR ENDED
SEPTEMBER 30, 1994*
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00
- ----------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------------------------
Net investment income 0.02
- ----------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
- ----------------------------------------------------------------------------------------
Dividends to shareholders from net investment income (0.02)
- ---------------------------------------------------------------------------------------- -------
NET ASSET VALUE, END OF PERIOD $ 1.00
- ---------------------------------------------------------------------------------------- -------
TOTAL RETURN** 2.41%
- ----------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------------------------
Expenses 0.38%(b)
- ----------------------------------------------------------------------------------------
Net investment income 3.99%(b)
- ----------------------------------------------------------------------------------------
Expense waiver/reimbursement (a) 0.51%(b)
- ----------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $84,680
- ----------------------------------------------------------------------------------------
</TABLE>
* Reflects operations for the period from February 14, 1994 (date of initial
public investment) to September 30, 1994.
** Based on net asset value which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(a) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(b) Computed on an annualized basis.
(See Notes which are an integral part of the Financial Statements)
PEACHTREE GOVERNMENT MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
Reference is made to the Report of Ernst & Young LLP, Independent Auditors, on
page 35.
<TABLE>
<CAPTION>
YEAR ENDED
SEPTEMBER 30, 1994*
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00
- ----------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------------------------
Net investment income 0.02
- ----------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
- ----------------------------------------------------------------------------------------
Dividends to shareholders from net investment income (0.02)
- ---------------------------------------------------------------------------------------- -------
NET ASSET VALUE, END OF PERIOD $ 1.00
- ---------------------------------------------------------------------------------------- -------
TOTAL RETURN** 2.44%
- ----------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------------------------
Expenses 0.38%(b)
- ----------------------------------------------------------------------------------------
Net investment income 4.05%(b)
- ----------------------------------------------------------------------------------------
Expense waiver/reimbursement (a) 0.53%(b)
- ----------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $90,440
- ----------------------------------------------------------------------------------------
</TABLE>
* Reflects operations for the period from February 14, 1994 (date of initial
public investment) to September 30, 1994.
** Based on net asset value which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(a) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(b) Computed on an annualized basis.
(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 September 22, 1993, as amended and restated dated December 20,
1993. The Declaration of Trust permits the Trust to offer separate series of
shares of beneficial interest representing interests in separate portfolios of
securities. This prospectus relates only to the Trust's Prime Money Fund and
Government Money Fund. A minimum initial investment of $1,000 is required ($500
for Individual Retirement Accounts ("IRAs")), and subsequent investments must be
in amounts of at least $100. See "Investing in the Funds."
The Funds attempt to stabilize the value of a share at $1.00. Shares are
currently sold and redeemed at that price. See "Net Asset Value."
PRIME MONEY FUND INVESTMENT INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The Prime Money Fund's investment objective is to achieve current income
consistent with stability of principal and liquidity. The investment objective
cannot be changed without the approval of the Prime Money Fund's shareholders.
While there is no assurance that the Prime Money Fund will achieve its
investment objective, it endeavors to do so by following the investment policies
described in this prospectus.
INVESTMENT POLICIES
The Prime Money Fund pursues its investment objective by investing in a
portfolio of high quality money market instruments maturing in 13 months or
less. The average maturity of money market instruments in the Prime Money Fund's
portfolio, computed on a dollar-weighted basis, will be 90 days or less. Unless
indicated otherwise, the investment policies may be changed by the Board of
Trustees without the approval of Prime Money Fund shareholders. Shareholders
will be notified before any material changes in these policies become effective.
ACCEPTABLE INVESTMENTS. The Prime Money Fund invests in high quality money
market instruments that are either rated in the highest short-term rating
category by one or more nationally recognized statistical rating organizations
("Rating Agencies") or are deemed by the Funds' investment adviser (the
"Adviser"), to be of comparable quality to securities having such ratings.
Examples of these instruments include, but are not limited to:
domestic issues of corporate debt obligations, including variable rate
demand notes;
commercial paper (including Canadian Commercial Paper ("CCP") and
Europaper);
certificates of deposit, demand and time deposits, bankers' acceptances
and other instruments of domestic and foreign banks and other depository
institutions ("Bank Instruments");
short-term credit facilities;
asset-backed securities, including commercial paper;
obligations issued or guaranteed as to payment of principal and interest
by the U.S. Government or one of its agencies or instrumentalities
("Government Securities"); and
other money market instruments.
The Prime Money Fund invests only in instruments denominated and payable in U.S.
dollars.
VARIABLE RATE DEMAND NOTES. Variable rate demand notes are generally long-term
debt instruments that have variable or floating interest rates and provide the
Prime Money Fund with the right to tender the security for repurchase at its
stated principal amount plus accrued interest. Such securities typically bear
interest at a rate that is intended to cause the securities to trade at par. The
interest rate may float or be adjusted at regular intervals (ranging from daily
to annually), and is normally based on an index or rate such as the prime rate,
LIBOR or another published rate or index. Most variable rate demand notes allow
the Prime Money Fund to demand the repurchase of the security on not more than
seven days prior notice. Other notes only permit the Prime Money Fund to tender
the security at the time of each interest rate adjustment or at other fixed
intervals. The Prime Money Fund treats variable rate demand notes as maturing on
the later of the next interest adjustment date or the date on which the Prime
Money Fund may next tender the security for repurchase. See "Demand Features."
DEMAND FEATURES. The Prime Money Fund may acquire securities that are subject
to puts and standby commitments ("demand features") to purchase such securities
at their principal amount (usually with accrued interest) within a fixed period
(usually seven days) following a demand by the Prime Money Fund. A demand
feature may be issued by the issuer of the underlying securities, a dealer in
the securities, or by another third party, and may not be transferred separately
from the underlying security. The Prime Money Fund uses these arrangements to
provide the Prime Money Fund with liquidity and not to protect against changes
in the market value of the underlying securities. The bankruptcy, receivership,
or default by the issuer of the demand feature, or a default on the underlying
security or other event that terminates the demand feature before its exercise,
will adversely affect the liquidity of the underlying security. Demand features
that are exercisable even after a payment default on the underlying security may
be treated as a form of credit enhancement.
BANK INSTRUMENTS. The Prime Money Fund only invests in Bank Instruments either
(i) issued by an institution having capital, surplus and undivided profits over
$100 million (an "Eligible Bank") or (ii) that are insured by the FDIC's Bank
Insurance Fund ("BIF") or Savings Association Insurance Fund ("SAIF"). Bank
Instruments may include Eurodollar Certificates of Deposit ("ECDs"), Yankee
Certificates of Deposit ("Yankee CDs") and Eurodollar Time Deposits ("ETDs")
issued by Eligible Banks. The Fund will treat securities that are credit
enhanced by an Eligible Bank's irrevocable letter of credit or unconditional
guaranty as Bank Instruments.
ASSET-BACKED SECURITIES. Asset-backed securities are securities issued
generally by special purpose entities, such as trusts, limited partnerships and
corporations whose primary assets consist of a pool of loans, leases or accounts
receivable (collectively, "Receivables"). The securities may take the form of
debt and other interests in the special purpose entities. Each special purpose
entity will be treated as a separate issuer for diversification purposes.
Although the securities often have some form of credit or liquidity enhancement,
payments on the securities depend predominantly upon collections of the
underlying Receivables and not upon the creditworthiness of the originator or
seller of the Receivables.
SHORT-TERM CREDIT FACILITIES. The Prime Money Fund may enter into, or acquire
participations in, short-term borrowing arrangements with corporations, often
consisting of either a short-term revolving credit facility or a master note
payable upon demand. Under these arrangements, the borrower may reborrow funds
during the term of the facility. The Prime Money Fund treats any commitments to
provide such advances as a standby commitment to purchase the borrower's notes.
RATINGS. For purposes of the Prime Money Fund, a Rating Agency's highest rating
category is determined without regard for sub-categories and gradations. For
example, securities rated A-1 or A-1+ by Standard & Poor's Ratings Group
("S&P"), Prime-1 by Moody's Investors Service, Inc. ("Moody's"), F-1 (+ or -) by
Fitch Investors Service, Inc. ("Fitch"), Duff-1 (+ or -) by Duff & Phelps Credit
Rating Co. ("Duff & Phelps") are all considered rated in the highest short-term
rating category. The Prime Money Fund will follow applicable Securities and
Exchange Commission ("SEC") regulations in determining whether a security rated
by more than one Rating Agency can be treated as being in the highest short-term
rating category; currently, such securities must be rated by two Rating Agencies
in their highest rating categories. See "Regulatory Compliance." A credit rating
is not a recommendation to buy, sell or hold securities, and is subject to
change and/or withdrawal by the rating agency.
RESTRICTED AND ILLIQUID SECURITIES. The Prime Money Fund intends to invest in
restricted securities. Restricted securities are any securities in which the
Prime Money Fund may otherwise invest pursuant to its investment objective and
policies but which are subject to restrictions on resale under federal
securities law. However, the Prime Money Fund will limit investments in illiquid
securities, including certain restricted securities not determined by the Board
of Trustees to be liquid, non-negotiable time deposits, and repurchase
agreements providing for settlement in more than seven days after notice, to 10%
of the Prime Money Fund's net assets.
The Prime Money Fund may invest in commercial paper (including asset-backed
commercial paper) issued in reliance on the exemption from registration afforded
by Section 4(2) of the Securities Act of 1933, as amended (the "Securities
Act"). Section 4(2) commercial paper is restricted as to disposition under the
Securities Act, and is generally sold to institutional investors, such as the
Prime Money Fund, who agree that they are purchasing the paper for investment
purposes and not with a view to public distribution. Any resale by the purchaser
must be in a transaction exempt from Securities Act registration. Section 4(2)
commercial paper is normally resold to other institutional investors like the
Prime Money Fund through or with the assistance of the issuer or investment
dealers who make a market in Section 4(2) commercial paper, thus providing
liquidity. The Prime Money Fund believes that Section 4(2) commercial paper and
possibly certain other restricted securities which meet the criteria for
liquidity established by the Trustees of the Prime Money Fund are quite liquid.
The Prime Money Fund intends, therefore, to treat the restricted securities
which meet the criteria for liquidity established by the Trustees, including
Section 4(2) commercial paper, as determined by the Fund's investment adviser,
as liquid and not subject to the investment limitations applicable to illiquid
securities. In addition, because Section 4(2) commercial paper is liquid, the
Prime Money Fund intends to not subject such paper to the limitation applicable
to restricted securities.
CREDIT ENHANCEMENT. Certain of the Prime Money Fund's acceptable investments
may be credit enhanced by a guaranty, letter of credit, cash collateral
accounts, or insurance. The Prime Money Fund typically evaluates the credit
quality and ratings of credit enhanced securities based upon the financial
condition and ratings of the party providing the credit enhancement (the "Credit
Enhancer"), rather than the issuer. Generally, the Prime Money Fund will not
treat credit enhanced securities as having been issued by the Credit Enhancer
for diversification purposes. However, under certain circumstances, applicable
regulations may require the Prime Money Fund to treat the securities as having
been issued by both the issuer and the Credit Enhancer. Any decline in the
Rating Agency ratings of the Credit Enhancer, or any bankruptcy, receivership,
or default of the Credit Enhancer will adversely affect the quality, value and
marketability of the underlying security.
INVESTMENT RISKS
ECDs, ETDs, Yankee CDs, CCPs and Europaper are subject to different risks than
domestic obligations of domestic banks or corporations. Examples of these risks
include international economic and political developments, foreign governmental
restrictions that may adversely affect the payment of principal or interest,
foreign withholding and taxes on interest income, difficulties in obtaining or
enforcing a judgment against the issuing entity, and the possible impact of
interruptions in the flow of international currency transactions. Risks may also
exist for ECDs, ETDs, and Yankee CDs because the banks issuing these
instruments, or their branches, are not necessarily subject to the same
regulatory requirements that apply to domestic banks, such as reserve
requirements, loan limitations, examinations, accounting, auditing,
recordkeeping, deposit insurance and the public availability of information.
These factors will be carefully considered by the Fund's adviser in selecting
investments for the Fund.
GOVERNMENT MONEY FUND INVESTMENT INFORMATION
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INVESTMENT OBJECTIVE
The Government Money Fund's investment objective is to achieve current income
consistent with stability of principal and liquidity. The investment objective
cannot be changed without the approval of the Government Money Fund's
shareholders. While there is no assurance that the Government Money Fund will
achieve its investment objective, it endeavors to do so by following the
investment policies described in this Prospectus.
INVESTMENT POLICIES
The Government Money Fund pursues its investment objective by investing in a
portfolio of short-term securities either issued directly by the U.S. government
or issued by agencies and instrumentalities of the U.S. government and backed by
the full faith and credit of the U.S. government, and, in either case, maturing
in 13 months or less from the date of acquisition unless they are purchased
under a repurchase agreement that provides for repurchase by the seller within
one year from the date of acquisition. The Government Money Fund invests only in
instruments denominated and payable in U.S. dollars. The average maturity of
U.S. government securities in the Government Money Fund's portfolio, computed on
a dollar-weighted basis, will be 90 days or less.
Unless indicated otherwise, the investment policies may be changed by the Board
of Trustees without the approval of shareholders. Shareholders will be notified
before any material changes in these policies become effective.
ACCEPTABLE INVESTMENTS. The U.S. government securities in which the Government
Money Fund invests are either issued directly by the U.S. government or are
issued by agencies or instrumentalities of the U.S. government and are backed by
the full faith and credit of the U.S. government. These securities include, but
are not limited to:
direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes, and bonds; and
notes, bonds, and discount notes of U.S. government agencies and
instrumentalities, such as the Government National Mortgage Association,
the Small Business Administration and the Federal Financing Bank.
INVESTMENTS AND STRATEGIES OF THE FUNDS
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REPURCHASE AGREEMENTS
Certain securities in which the Funds invest may be purchased pursuant to
repurchase agreements. Repurchase agreements are arrangements in which banks,
securities broker-dealers, and other financial institutions sell securities to
the Funds and agree at the time of sale to repurchase them at a mutually agreed
upon time and price with interest. As collateral for the obligation of the
seller to repurchase the securities from the Funds, the Funds or their custodian
will take possession of the securities subject to repurchase agreements, and
these securities will be marked to market daily. To the extent that the seller
does not repurchase the securities from the Funds, the Funds could receive less
than the repurchase price on any sale of such securities.
LENDING OF PORTFOLIO SECURITIES
In order to generate additional income, the Funds may lend their portfolio
securities on a short-term basis to securities broker-dealers, banks, or other
institutional borrowers of securities. The Funds will limit the amount of
portfolio securities they may lend to not more than 50% of their respective
total assets. The Funds will only enter into loan arrangements with
broker-dealers, banks, or other institutions which the investment adviser has
determined are creditworthy under guidelines established by the Trust's Board of
Trustees, where loaned securities are marked to market daily and where the Funds
receive collateral equal to at least 100% of the value of the securities loaned
at all times. The Government Money Fund does not intend to lend portfolio
securities during its next fiscal year.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Funds may purchase securities on a when-issued or delayed delivery basis.
These transactions are arrangements in which a Fund purchases securities with
payment and delivery scheduled for a future time. The seller's failure to
complete these transactions may cause a 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, a Fund may pay more or less than the
market value of the securities on the settlement date.
The Funds may dispose of a commitment prior to settlement if the Adviser deems
it appropriate to do so. In addition, the Funds may enter in transactions to
sell their purchase commitments to third parties at current market values and
simultaneously acquire other commitments to purchase similar securities at later
dates. The Funds may realize short-term profits or losses upon the sale of such
commitments.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
The Funds may invest in the securities of other investment companies, but will
not own more than 3% of the total outstanding voting stock of any investment
company, invest more than 5% of its total assets in any one investment company,
or invest more than 10% of its total assets in investment companies in the
aggregate. The Funds will only invest in other investment companies that are
money market funds having investment objectives and policies similar to those of
the respective Fund and primarily for the purpose of investing short-term cash
which has not yet been invested in other portfolio instruments. It should be
noted that investment companies incur certain expenses and therefore, any
investment by the Funds in shares of another investment company would be subject
to certain duplicate expenses, particularly transfer agent and custodian fees.
The Adviser will waive its advisory fee on assets invested in securities of
open-end investment companies.
CERTAIN BORROWING AND INVESTMENT LIMITATIONS
The Funds will not borrow money directly or through reverse repurchase
agreements (arrangements in which a Fund sells a money market 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 Funds may borrow up
to 33 1/3% of the value of their respective total assets and secure such
borrowings with up to 15% of the value of their respective total assets at the
time of borrowing.
With respect to 75% of the value of its total assets, Prime Money Fund will not
invest more than 5% of the value of its total assets in securities of any one
issuer (other than cash, cash items or securities issued or guaranteed by the
U.S. government, or its agencies or instrumentalities, and repurchase agreements
collateralized by such securities), or acquire more than 10% of the outstanding
voting securities of any one issuer.
The above limitations cannot be changed without shareholder approval. Both Funds
will limit their investment in restricted and illiquid securities, including
repurchase agreements providing for settlement more than seven days after
notice, to 10% of their respective net assets. See "Restricted and Illiquid
Securities."
REGULATORY COMPLIANCE
The Funds may follow non-fundamental operational policies that are more
restrictive than their fundamental investment limitations, as set forth in this
Combined Prospectus and respective Statements of Additional Information, in
order to comply with applicable laws and regulations, including the provisions
of and regulations under the Investment Company Act of 1940, as amended (the
"ICA"). In particular, the Funds will comply with the various requirements of
SEC Rule 2a-7 under the ICA which regulates money market mutual funds. For
example, with limited exceptions, Rule 2a-7 prohibits the investment of more
than 5% of a Fund's total assets in the securities of any one issuer, although
the Prime Money Fund's investment limitation only requires such 5%
diversification with respect to 75% of its assets. The Prime Money Fund will
invest more than 5% of its assets in any one issuer only under the circumstances
permitted by Rule 2a-7. The Prime Money Fund will also determine the effective
maturity of its investments, as well as its ability to consider a security as
having received the requisite short-term ratings by the Rating Agencies,
according to Rule 2a-7. The Prime Money Fund may change these operational
policies to reflect changes in the laws and regulations without the approval of
its shareholders.
PEACHTREE FUNDS INFORMATION
- --------------------------------------------------------------------------------
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees (the "Board" or
"Trustees"). The Board is responsible for managing the Trust's business affairs
and for exercising all the Trust's powers except those reserved for the
shareholders. The Executive Committee of the Board handles various of the
Board's delegable responsibilities between meetings of the Board.
INVESTMENT ADVISER. Investment decisions for the Funds are made by the Bank, as
the Funds' Adviser, subject to direction by the Board. The Adviser conducts
investment research and supervision for the Funds and is responsible for the
purchase or sale of portfolio instruments, for which it receives an annual fee
from the Funds' assets.
ADVISORY FEES. The Adviser receives an annual investment advisory fee
equal to 0.50% of each Fund's average daily net assets. The Adviser has
undertaken to reimburse the Funds, up to the amount of the advisory fee,
for operating expenses in excess of limitations established by certain
states. The Adviser also may voluntarily choose to waive a portion of its
fee or reimburse other expenses of the Funds, but reserves the right to
terminate such waiver or reimbursement at any time at their sole
discretion.
ADVISER'S BACKGROUND. The Adviser, a national bank headquartered in
Atlanta, Georgia, is a wholly-owned subsidiary of Bank South Corporation, a
Georgia corporation which is a registered bank holding company. The Adviser
serves consumers through its network of banking offices with a full range
of deposit and lending products, as well as investment services. The
principal offices of the Adviser are located at 3350 Cumberland Circle,
Atlanta, GA 30339.
The Adviser has managed discretionary assets for its customers since 1931.
As of November 30, 1994, the Adviser managed in excess of $1 billion of
discretionary assets. The Bank has served as an investment adviser to
mutual funds since January 1994.
As part of its regular banking operations, the Bank may make loans to
public companies. Thus, it may be possible, from time to time, for the
Funds to hold or acquire the securities of issuers which are also lending
clients of the Bank. The lending relationship will not be a factor in the
selection of securities.
DISTRIBUTION OF SHARES
Federated Securities Corp. (the "Distributor") is the principal distributor for
shares of the Funds. It is a Pennsylvania corporation organized on November 14,
1969, and is the principal distributor for a number of investment companies. The
Distributor is a subsidiary of Federated Investors.
DISTRIBUTION PLAN. Under a distribution plan (the "Plan") adopted in accordance
with SEC Rule 12b-1 under the Investment Company Act of 1940, as amended, each
of the Funds will pay an amount computed at an annual rate of up to 0.25% of the
average daily net asset value of the shares to finance any activity which is
principally intended to result in the sale of shares subject to the Plan.
Certain trust clients of the Bank, including ERISA plans, will not be affected
by the Plan because the Plan will not be activated unless and until a second,
"Trust" class of shares of each of the Funds (which would not have a Rule 12b-1
plan) is created and such trust clients' investments in the Funds are converted
to such Trust class.
The Distributor may select other financial institutions (such as broker-dealers
or banks) to provide sales support services as agents for their clients or
customers who beneficially own shares. These financial institutions (including
the Bank) will receive fees from the Distributor based upon shares owned by
their clients or customers. The schedules of such fees and the basis upon which
such fees will be paid will be determined from time to time by the Distributor.
The Funds' Plan is a compensation type plan. As such, each of the Funds pay the
Distributor the fee described above as opposed to reimbursing the Distributor
for actual expenses incurred. Therefore, the Funds do not pay for amounts
expended by the Distributor in excess of amounts received by it from each of the
Funds, which may include interest, carrying or other financing charges in
connection with excess amounts expended, or the Distributor's overhead expenses.
However, the Distributor may be able to recover such amounts or may earn a
profit from future payments made by the Funds under the Plan.
The Glass-Steagall Act prohibits a depository institution (such as a commercial
bank or a savings and loan association) from being an underwriter or distributor
of most securities. In the event the Glass-Steagall Act is deemed to prohibit
depository institutions from acting in the capacities described above or should
Congress relax current restrictions on depository institutions, the Trustees
will consider appropriate changes in the services.
State securities laws on this issue may differ from the interpretations of
federal law expressed herein and banks and financial institutions may be
required to register as dealers pursuant to certain states' securities laws.
ADMINISTRATIVE ARRANGEMENTS. The Distributor may also pay administrators a fee
based upon the average net asset value of shares of their customers invested in
the Trust for providing administrative services. This fee, if paid, will be
reimbursed by the Adviser and not the Trust.
ADMINISTRATION OF THE TRUST
ADMINISTRATIVE SERVICES. Federated Administrative Services, Pittsburgh,
Pennsylvania, a subsidiary of Federated Investors, provides certain
administrative personnel and services necessary to operate the Funds. Such
services include certain legal and accounting services. Federated Administrative
Services provides these at the annual rates specified below:
<TABLE>
<CAPTION>
MAXIMUM AVERAGE AGGREGATE DAILY
ADMINISTRATIVE FEE NET ASSETS OF THE TRUST
<S> <C>
.150 of 1% on the first $250 million
.125 of 1% on the next $250 million
.100 of 1% on the next $250 million
.075 of 1% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$100,000 per Fund. Federated Administrative Services may voluntarily choose to
waive a portion of its fee.
SHAREHOLDER SERVICES PLAN. The Funds have adopted a Shareholder Services Plan
(the "Services Plan") with respect to the shares. Under the Services Plan,
financial institutions will enter into shareholder service agreements with the
Funds to provide administrative support services to their customers who from
time to time may be owners of record or beneficial owners of the shares. In
return for providing these support services, a financial institution may receive
payments from the Funds at a rate not exceeding 0.25% of the average daily net
assets of the shares beneficially owned by the financial institution's customers
for whom it is holder of record or with whom it has a servicing relationship.
These administrative services may include, but are not limited to, the following
functions: providing office space, equipment, telephone facilities, and various
personnel including clerical, supervisory, and computer, as necessary or
beneficial to establish and maintain shareholder accounts and records;
processing purchase and redemption transactions and automatic investments of
client account cash balances; answering routine client inquiries regarding the
Funds; assisting clients in changing dividend options, account designations, and
addresses; and providing such other services as the Funds reasonably request.
Certain trust clients of the Bank, including ERISA plans, will not be affected
by the Services Plan because the Services Plan will not be activated unless and
until a second, "Trust" class of shares of the Funds (which would not have a
Services Plan) is created and such trust clients' investments in the Funds are
converted to such Trust class.
CUSTODIAN. The Bank of New York, New York, New York is custodian for the
securities and cash of the Funds.
TRANSFER AGENT, DIVIDEND DISBURSING AGENT AND PORTFOLIO ACCOUNTING SERVICES.
Federated Services Company, Pittsburgh, Pennsylvania, a subsidiary of Federated
Investors, is transfer agent (the "Transfer Agent") for the shares of, and
dividend disbursing agent for, the Funds. It also provides certain accounting
and recordkeeping services with respect to the Funds' portfolio investments.
LEGAL COUNSEL. Legal counsel is provided by Houston, Houston & Donnelly,
Pittsburgh, Pennsylvania and Dickstein, Shapiro & Morin, L.L.P., Washington,
D.C.
INDEPENDENT AUDITORS. The independent auditors for the Funds are Ernst & Young
LLP, Pittsburgh, Pennsylvania.
EXPENSES OF THE FUNDS
The Funds pay all of their own respective expenses and their allocable shares of
the Trust's expenses. The expenses borne by the Funds include, but are not
limited to, the cost of: organizing the Trust and continuing its existence;
Trustees' fees; investment advisory and administrative services; printing
prospectuses and other Fund documents for shareholders; registering the Trust,
the Funds and shares of the Funds with federal and state securities authorities;
taxes and commissions; issuing, purchasing, repurchasing, and redeeming shares;
fees for custodians, transfer agents, dividend disbursing agents, shareholder
servicing agents, and registrars; printing, mailing, auditing, accounting, and
legal expenses; reports to shareholders and governmental agencies; meetings of
Trustees and shareholders and proxy solicitations therefor; insurance premiums;
association membership dues; and such nonrecurring and extraordinary items as
may arise.
NET ASSET VALUE
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The Funds' attempt to stabilize the net asset value of their respective shares
at $1.00 by valuing the portfolio securities of each Fund using the amortized
cost method. The net asset value per share of each Fund is determined by
subtracting total liabilities from total assets and dividing the remainder by
the number of shares outstanding. The Funds, of course, cannot guarantee that
their net asset value will always remain at $1.00 per share.
INVESTING IN THE FUNDS
- --------------------------------------------------------------------------------
SHARE PURCHASES
Funds' shares are sold on days on which the New York Stock Exchange and the
Federal Reserve Wire System are open for business. Shares of the Funds may be
purchased through the Bank. In connection with the sale of shares of the Funds,
the Distributor may, from time to time, offer certain items of nominal value to
any shareholder or investor. The Funds reserve the right to reject any purchase
request.
BY TELEPHONE. To place an order to purchase shares of the Funds, call the
Peachtree Funds Service Center at 1-404-989-6200 or 1-800-621-8969. Texas
residents must purchase shares of the Funds through Bank South Securities
Corporation at 1-404-989-6181 or 1-800-621-8967. Your purchase order will be
taken directly over the telephone. The order must be placed by 4:00 p.m.
(Eastern time) for shares to be purchased at that day's price.
BY MAIL. Provide a letter of instruction to the appropriate Fund indicating
your purchase order, including the dollar amount of your order, your account
title and/or name, and your account number, and include a check made payable to
the appropriate Fund.
PAYMENT BY CHECK. Mail to Peachtree Prime Money Market Fund or Peachtree
Government Money Market Fund, c/o the Peachtree Funds Service Center, MC 684,
P.O. Box 4387, Atlanta, Georgia 30302.
PAYMENT BY WIRE. To purchase shares by Federal Wire, contact your account
officer for wiring instructions. Wire orders will only be accepted on days on
which the Funds, the Bank and the Federal Reserve Banks are open for business.
Payment by federal funds must be received before 12:00 noon (Eastern time) on
the same day as the order to earn dividends for that day.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in either of the Funds by an investor is $1,000
($500 for IRA accounts). Subsequent investments in each Fund must be in amounts
of at least $100. The Funds may choose to waive their minimum investment
requirements from time to time and for accounts which select the Systematic
Investment Program.
SYSTEMATIC INVESTMENT PROGRAM
Once a Fund account has been opened, shareholders may add to their investment in
such Fund on a regular basis in minimum amounts of $100, unless waived. Under
this program, funds may be automatically withdrawn periodically from the
shareholder's checking or other transaction deposit account and invested in Fund
shares at the net asset value next determined after an order is received by the
Bank. A shareholder may apply for participation in this program through the
Bank.
WHAT SHARES COST
Shares of the Funds are sold at their net asset value next determined after an
order is received. There is no sales load imposed by the Funds.
The net asset value is determined at 12:00 noon (Eastern time) and 4:00 p.m.
(Eastern time), Monday through Friday, except on: (i) days on which changes (if
any) in the value of the Funds' portfolio securities do not materially affect
its net asset value; (ii) days during which no shares are tendered for
redemption and no orders to purchase shares are received; or (iii) on 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.
CERTIFICATES AND CONFIRMATIONS
The Transfer Agent for the Funds maintains a share account for each shareholder
of record. Share certificates are not issued unless requested in writing from
the Funds or the Transfer Agent.
Monthly confirmations are sent to report transactions such as purchases and
redemptions as well as dividends paid during the month.
DIVIDENDS
Dividends are declared daily and paid monthly. Dividends are automatically
reinvested on payment dates in additional shares of the appropriate Fund, unless
a shareholder makes a written request for cash payments to the Bank or the
Funds. Shares purchased by wire before 12:00 (Eastern time) begin earning
dividends that day. Shares purchased by check begin earning dividends the day
after the check is converted into available federal funds.
The Funds do not expect to realize any capital gains or losses. If capital gains
or losses were to occur, they could result in an increase or decrease in
dividends. The Funds will distribute in cash or additional shares any realized
net long-term capital gains at least once every 12 months.
PURCHASING SHARES OF THE FUNDS WITH SECURITIES
The Funds, in their sole discretion, may sell shares of each Fund to investors
that desire to purchase shares of each Fund with certain securities or a
combination of certain securities and cash. Each Fund reserves the right to
determine the acceptability of securities used to effect such purchases. On the
day securities are accepted by a Fund, they are valued based upon independent
bid and in the same manner as the Fund values its own assets. Investors wishing
to use securities to purchase shares of one or both of these Funds should first
contact the Bank. Any such transfer of securities is treated as a sale of the
securities and will result in the recognition of any gain or loss for federal
income tax purposes by the seller of such securities, except to the extent the
seller is an ERISA plan or similar entity not subject to tax.
EXCHANGE PRIVILEGE
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PEACHTREE FUNDS
All shareholders of the Funds are shareholders of the Peachtree Funds. The
Peachtree Funds currently include the Funds, Peachtree Bond Fund, Peachtree
Equity Fund and Peachtree Georgia Tax-Free Income Fund. Shareholders have easy
access to each of the portfolios of the Peachtree Funds through a telephone
exchange program. All Peachtree Funds are advised by the Bank and distributed by
the Distributor.
Shareholders may exchange shares of each Fund for shares of the other Peachtree
Funds. In addition, shares of the Funds may be exchanged for certain other funds
designated by the Bank which are distributed by the Distributor, but that are
not advised by the Bank ("Federated Funds"). For further information on the
availability of Federated Funds for exchanges, please call the Peachtree Funds
Service Center at 1-404-989-6200 or 1-800-621-8969. Shares of funds with a sales
load may be exchanged at net asset value for shares of other funds with an equal
sales load or no sales load. Shares of funds with a sales load may be exchanged
for shares of funds with a higher sales load at net asset value, plus the
additional sales load. Shares of funds with no sales load, acquired by direct
purchase may be exchanged for shares of funds with a sales load at net asset
value, plus the applicable sales load.
When an exchange is made from a fund with a sales load to a fund with no sales
load, the shares exchanged and additional shares which have been purchased by
reinvesting dividends or capital gains on such shares retain the character of
the exchanged shares for purposes of exercising further exchange privileges;
thus, an exchange of such shares for shares of a fund with a sales load would be
at net asset value.
Shareholders who exercise this exchange privilege must exchange shares having a
net asset value of at least $1,000. Prior to any exchange, the shareholder must
receive a copy of the current prospectus of the fund into which an exchange is
to be effected.
The exchange privilege is available to shareholders residing in any state in
which the fund shares being acquired may legally be sold. Upon receipt of proper
instructions and all necessary supporting documents, shares submitted for
exchange will be redeemed at the next-determined net asset value for the
applicable fund. Written exchange instructions may require a signature
guarantee. Exercise of this privilege is treated as a sale for federal income
tax purposes and, depending on the circumstances, a short or long-term capital
gain or loss may be realized.
The Funds reserve the right to terminate the exchange privilege at any time on
60 days' notice. Shareholders will be notified if this privilege is terminated.
A shareholder may obtain further information on the exchange privilege by
calling the Peachtree Funds Service Center at 1-404-989-6200 or 1-800-621-8969.
BY TELEPHONE. Instructions for exchanges between funds which are part of the
Trust may be given by telephone to the Peachtree Funds Service Center at
1-404-989-6200 or 1-800-621-8969; or to the Distributor. Shares may be exchanged
by telephone only between fund accounts having identical shareholder
registrations.
Any shares held in certificate form cannot be exchanged by telephone but must be
forwarded to the Funds' Transfer Agent by the Bank and deposited to the
shareholder's mutual fund account before being exchanged. See "Addresses".
An authorization form permitting the Funds to accept telephone exchanges must
first be completed. It is recommended that investors request this privilege at
the time of their initial application. If not completed at the time of initial
application, authorization forms and information regarding this service are
available from the Bank. Telephone exchange instructions may be recorded. If
reasonable procedures are not followed by the Funds, they may be liable for
losses due to unauthorized or fraudulent telephone instructions.
Telephone exchange instructions must be received before 4:00 p.m. (Eastern time)
for shares to be exchanged the same day. The telephone exchange privilege may be
modified or terminated at any time. Shareholders will be notified of such
modification or termination. Shareholders may have difficulty in making
exchanges by telephone through the Bank during times of drastic economic or
market changes. If a shareholder cannot contact the Bank by telephone, it is
recommended that an exchange request be made in writing and sent by overnight
mail to Peachtree Funds, 3350 Cumberland Circle, 10th Floor, Atlanta, Georgia
30339.
REDEEMING SHARES
- --------------------------------------------------------------------------------
The Funds redeem shares at their net asset value next determined after the Bank
receives the redemption request. Redemptions will be made on days on which the
respective Fund computes its respective net asset value. Telephone or written
requests for redemption must be received in proper form and can be made through
the Bank or directly to the appropriate Fund.
BY TELEPHONE. A shareholder may redeem shares of the Funds by contacting his
account officer or by calling the Peachtree Funds Service Center to request the
redemption. (Call 1-404-989-6200 or 1-800-621-8969.) Shares will be redeemed at
the net asset value next determined after the Funds receive the redemption
request from the Bank. Redemption requests to the Bank must be received before
4:00 p.m. (Eastern time) in order for shares to be redeemed at that day's net
asset value, and the Bank will promptly submit such redemption requests and
provide proper written redemption instructions to the Funds. If, at any time,
the Funds should determine it necessary to terminate or modify this method of
redemption, shareholders would be promptly notified.
An authorization form permitting the Funds to accept telephone redemption
requests must first be completed. It is recommended that investors request this
privilege at the time of their initial application. If not completed at the time
of initial application, authorization forms and information on this service are
available from the Bank. Telephone redemption instructions may be recorded. If
reasonable procedures are not followed by the Funds, they may be liable for
losses due to unauthorized or fraudulent telephone instructions.
A shareholder may have the redemption proceeds directly deposited by electronic
funds transfer or wired directly to a domestic commercial bank previously
designated by the shareholder. Wire redemption orders will only be accepted on
days on which the Funds, the Bank and the Federal Reserve Wire System are open
for business. Wire-transferred redemptions may be subject to an additional fee.
In the event of extraordinary 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 your account officer at the Bank.
BY MAIL. Shareholders may redeem shares by sending a written request to the
Bank. The written request should include the shareholder's name, the Fund's
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 to the Bank.
Shareholders should call the Peachtree Funds Service Center at 1-404-989-6200 or
1-800-621-8969 for assistance in redeeming shares by mail.
SIGNATURES. Shareholders requesting a redemption of $50,000 or more, a
redemption requesting payment to an address other than that on record with the
Funds, or other than to the shareholder of record must make written redemption
requests with signatures guaranteed by:
a trust company or commercial bank whose deposits are insured by the
FDIC's BIF;
a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchange;
a savings bank or savings and loan association whose deposits are insured
by the FDIC's SAIF; or
any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934, as amended.
The Funds do not accept signatures guaranteed by a notary public.
The Funds and their Transfer Agent have adopted standards for accepting
signature guarantees from the above institutions. The Funds may elect in the
future to limit eligible signature guarantors to institutions that are members
of a signature guarantee program. The Funds and their Transfer Agent reserve the
right to amend these standards at any time without notice.
RECEIVING PAYMENT. Normally, a check for the proceeds is mailed to the
shareholder within one business day, but in no event more than seven calendar
days, after receipt of a proper written redemption request, provided that the
Transfer Agent has received payment for shares from the shareholder.
SYSTEMATIC WITHDRAWAL PROGRAM
Shareholders who desire to receive payments of a predetermined amount may take
advantage of the Systematic Withdrawal Program. Under this program, shares of
the selected Fund or Funds are redeemed to provide for periodic withdrawal
payments in an amount directed by the shareholder. Depending upon the amount of
the withdrawal payments and the amount of dividends paid with respect to shares
of the Funds, redemptions may reduce, and eventually deplete, the shareholder's
investment in the Funds. For this reason, payments under this program should not
be considered as yield or income on the shareholder's investment in the Funds.
To be eligible to participate in this program, a shareholder must have an
account value of at least $10,000. A shareholder may apply for participation in
this program through the Bank.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, each Fund may
redeem shares in any account and pay the proceeds to the shareholder if, due to
shareholder redemptions, the account balance in either Fund falls below the
required minimum of $1,000 ($500 for IRAs).
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 Funds entitles the shareholders to one vote in Trustee
elections and other matters submitted to shareholders of the Trust for vote. All
shares of each portfolio in the Trust have equal voting rights except that, in
matters affecting only a particular Fund, only shareholders of that Fund are
entitled to vote. 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 Funds' operation and for the election
of Trustees under certain circumstances. As of November 4, 1994, Bank South
N.A., Atlanta, Georgia, acting in various capacities for numerous accounts, was
the owner of record of approximately 87,338,585 shares (99.43%) of the Peachtree
Government Money Market Fund, and was the owner of record of approximately
84,255,368 shares (94.34%) of the Peachtree Prime Money Market Fund, and
therefore, may, for certain purposes, be deemed to control the Funds and be able
to affect the outcome of certain matters presented for a vote of shareholders.
Any Trustee may be removed by the Board of Trustees or by the shareholders at a
special meeting. A special meeting of the shareholders shall be called by the
Trustees upon the written request of shareholders owning at least 10% of the
Trust's outstanding shares.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Trust. To protect
shareholders, the Trust has filed legal documents with Massachusetts that
expressly disclaim the liability of shareholders of the Funds for such acts or
obligations of the Trust. These documents require notice of this disclaimer to
be given in each agreement, obligation, or instrument the Trust or its Trustees
enter into or sign on behalf of the Funds.
In the unlikely event a shareholder is held personally liable for the Trust's
obligations, the Trust is required by the Declaration of Trust to use its
property to indemnify, protect or compensate the shareholder. On request, the
Trust will defend any claim made and pay any judgment against a shareholder for
any act or obligation of the Trust. Therefore, financial loss resulting from
liability as a shareholder will occur only if the Trust itself cannot meet its
obligations to indemnify shareholders and pay judgments against them from the
assets of the Funds.
EFFECT OF BANKING LAWS
- --------------------------------------------------------------------------------
Banking laws and regulations presently prohibit a bank holding company
registered under the federal Bank Holding Company Act of 1956, as amended or any
affiliate thereof from sponsoring, organizing, controlling or distributing the
shares of a registered, open-end investment company continuously engaged in the
issuance of its shares, and prohibit banks generally from underwriting or
distributing securities. However, such laws and regulations do not prohibit such
a holding company affiliate or bank from acting as investment adviser, transfer
agent, or custodian to such an investment company or from acting as agent for
their customers in purchasing securities. The Adviser is subject to such banking
laws and regulations.
The Bank believes, based on the advice of its counsel, that it may perform the
services for the Funds 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 affiliates, as well as
further judicial or administrative decisions or interpretations of present or
future statutes and regulations, could prevent the Bank from continuing to
perform all or a part of the above services for its customers and/or the Funds.
If it were prohibited from engaging in these customer-related activities, the
Trustees would consider alternative investment advisers and means of continuing
available investment services. In such event, changes in the operation of the
Funds may occur, including possible termination of any automatic or other Fund
share investment and redemption services then being provided by the Bank. It is
not expected that existing shareholders would suffer any adverse financial
consequences (if another adviser with equivalent abilities to the Bank is found)
as a result of any of these occurrences.
TAX INFORMATION
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX
The Funds expect to pay no federal income tax because they intend to meet
requirements of the Internal Revenue Code applicable to regulated investment
companies and to receive the special tax treatment afforded to such companies.
Each Fund will be treated as a single, separate entity for federal income tax
purposes so that income (including capital gains) and losses realized by the
Trust's other portfolios will not be combined for tax purposes with those
realized by either of the Funds.
Unless otherwise exempt, shareholders are required to pay federal income tax on
any dividends and other distributions received. This applies whether dividends
and distributions are received in cash or as additional shares.
STATE AND LOCAL TAXES
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 Funds may advertise their yield and effective yield.
Yield represents the annualized rate of income earned on an investment over a
seven-day period. It is the annualized amount of dividends earned during the
period on an investment shown as a percentage of the investment. The effective
yield is calculated similarly to the yield, but when annualized, the income
earned by an investment is assumed to be reinvested daily. The effective yield
will be slightly higher than the yield because of the compounding effect of this
assumed reinvestment.
Advertisements and sales literature may also refer to total return. Total return
represents the change, over a specified period of time, in the value of an
investment in the Fund after reinvesting all income distributions. It is
calculated by dividing that change by the initial investment and is expressed as
a percentage.
From time to time, the Funds may advertise their performance using certain
financial publications and/or compare their performance to certain indices.
PEACHTREE PRIME MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- ----------------------------------------------------------------------------------- -------------
*COMMERCIAL PAPER--34.7%
- --------------------------------------------------------------------------------------------------
AUTOMOTIVE & RELATED--3.5%
-----------------------------------------------------------------------------------
$ 3,000,000 Ford Motor Credit Co., 4.59%, 10/17/94 $ 2,993,933
----------------------------------------------------------------------------------- -------------
ELECTRICAL EQUIPMENT--3.5%
-----------------------------------------------------------------------------------
1,000,000 General Electric Co., 4.79%, 10/11/94 998,686
-----------------------------------------------------------------------------------
1,000,000 General Electric Co., 3.72%, 10/12/94 998,891
-----------------------------------------------------------------------------------
1,000,000 General Electric Co., 5.31%, 4/10/95 972,836
----------------------------------------------------------------------------------- -------------
Total 2,970,413
----------------------------------------------------------------------------------- -------------
ENERGY--5.3%
-----------------------------------------------------------------------------------
1,000,000 Atlantic Richfield Co., 4.13%, 10/4/94 999,663
-----------------------------------------------------------------------------------
3,500,000 Chevron Corp., 4.73%, 10/24/94 3,489,423
----------------------------------------------------------------------------------- -------------
Total 4,489,086
----------------------------------------------------------------------------------- -------------
FINANCE--22.4%
-----------------------------------------------------------------------------------
3,000,000 Associates Corp. North America Inc., 4.78%, 10/13/94 2,995,220
-----------------------------------------------------------------------------------
2,000,000 Beneficial Corp., 4.75%, 10/17/94 1,995,778
-----------------------------------------------------------------------------------
2,000,000 Commercial Credit Corp., 4.54%, 10/4/94 1,999,250
-----------------------------------------------------------------------------------
3,000,000 Exxon Credit Corp., 4.62%, 11/1/94 2,988,194
-----------------------------------------------------------------------------------
1,000,000 Heller Financial Inc., 4.27%, 10/3/94 999,768
-----------------------------------------------------------------------------------
1,000,000 Household Finance Corp., 4.72%, 12/1/94 992,121
-----------------------------------------------------------------------------------
2,000,000 Household Finance Corp., 4.90%, 12/5/94 1,982,667
-----------------------------------------------------------------------------------
2,000,000 IBM Credit Corp., 4.79%, 10/11/94 1,997,339
-----------------------------------------------------------------------------------
3,000,000 IBM Credit Corp., 4.84%, 10/13/94 2,995,160
----------------------------------------------------------------------------------- -------------
Total 18,945,497
----------------------------------------------------------------------------------- -------------
TOTAL COMMERCIAL PAPER 29,398,929
----------------------------------------------------------------------------------- -------------
CORPORATE BONDS--20.8%
- --------------------------------------------------------------------------------------------------
AUTOMOTIVE & RELATED--0.4%
-----------------------------------------------------------------------------------
350,000 Ford Motor Credit Co., 8.75%, 1/15/95 354,053
----------------------------------------------------------------------------------- -------------
CHEMICAL--1.2%
-----------------------------------------------------------------------------------
$ 1,000,000 Dow Chemical Co., 9.12%, 3/30/95 $ 1,017,298
----------------------------------------------------------------------------------- -------------
CONSTRUCTION/AGRICULTURAL EQUIPMENT--0.2%
-----------------------------------------------------------------------------------
200,000 John Deere Capital Corp., 5.00%, 1/15/95 200,474
----------------------------------------------------------------------------------- -------------
ELECTRICAL EQUIPMENT--0.7%
-----------------------------------------------------------------------------------
150,000 General Electric Capital Corp., 8.60% 11/15/94 150,823
-----------------------------------------------------------------------------------
50,000 General Electric Capital Corp., 5.63%, 1/15/95 50,222
-----------------------------------------------------------------------------------
400,000 General Electric Co., 5.88%, 12/1/94 400,678
----------------------------------------------------------------------------------- -------------
Total 601,723
----------------------------------------------------------------------------------- -------------
ENERGY--1.2%
-----------------------------------------------------------------------------------
1,000,000 Atlantic Richfield Co., 8.57%, 3/15/95 1,013,057
----------------------------------------------------------------------------------- -------------
FINANCE--1.5%
-----------------------------------------------------------------------------------
1,000,000 Dow Capital, 6.45%, 5/15/95 1,005,131
-----------------------------------------------------------------------------------
200,000 IBM Credit Corp., 6.13%, 11/15/94 200,494
-----------------------------------------------------------------------------------
50,000 ITT Financial Corp., 7.13%, 10/1/94 50,000
----------------------------------------------------------------------------------- -------------
Total 1,255,625
----------------------------------------------------------------------------------- -------------
FOOD, BEVERAGES & HOUSEHOLD PRODUCTS--4.5%
-----------------------------------------------------------------------------------
1,000,000 Coca-Cola Enterprises Inc., 8.35%, 6/20/95 1,018,913
-----------------------------------------------------------------------------------
1,500,000 PepsiCo Inc., 5.88%, 12/15/94 1,502,358
-----------------------------------------------------------------------------------
1,000,000 PepsiCo Inc., 5.625%, 7/1/95 1,000,096
-----------------------------------------------------------------------------------
325,000 Philip Morris Cos., Inc., 8.75%, 11/15/94 326,824
----------------------------------------------------------------------------------- -------------
Total 3,848,191
----------------------------------------------------------------------------------- -------------
POLLUTION CONTROL--3.2%
-----------------------------------------------------------------------------------
1,150,000 WMX Technologies, Inc., 7.75%, 2/1/95 1,160,197
-----------------------------------------------------------------------------------
1,520,000 WMX Technologies, Inc., 4.88%, 7/1/95 1,512,842
----------------------------------------------------------------------------------- -------------
Total 2,673,039
----------------------------------------------------------------------------------- -------------
RAILROADS--1.2%
-----------------------------------------------------------------------------------
1,000,000 Consolidated Rail Corp., 8.75%, 11/1/94 1,003,323
----------------------------------------------------------------------------------- -------------
TELECOMMUNICATIONS--0.1%
-----------------------------------------------------------------------------------
100,000 AT&T Credit Corp., 8.50%, 11/1/94 100,382
----------------------------------------------------------------------------------- -------------
UTILITIES--6.6%
-----------------------------------------------------------------------------------
$ 2,500,000 Carolina Power & Light Co., 8.86%, 7/20/95 $ 2,563,163
-----------------------------------------------------------------------------------
2,000,000 Kansas City Power & Light Co., 6.60%, 11/22/94 2,005,278
-----------------------------------------------------------------------------------
1,000,000 Public Service Electric & Gas Co., 6.00%, 6/1/95 1,003,308
----------------------------------------------------------------------------------- -------------
Total 5,571,749
----------------------------------------------------------------------------------- -------------
TOTAL CORPORATE BONDS 17,638,914
----------------------------------------------------------------------------------- -------------
CASH EQUIVALENT--1.2%
- --------------------------------------------------------------------------------------------------
1,003,643 Bank of New York Cash Reserves, 4.25% 1,003,643
----------------------------------------------------------------------------------- -------------
**REPURCHASE AGREEMENTS--43.2%
- --------------------------------------------------------------------------------------------------
4,000,000 Caroll McEntee & McGinley, 4.65%, dated 9/30/94, due 10/3/94 4,000,000
-----------------------------------------------------------------------------------
14,146,373 Sanwa-BGK Securities Co., 4.60%, dated 9/29/94, due 10/3/94 14,146,373
-----------------------------------------------------------------------------------
18,472,158 Cantor, Fitzgerald Securities Corp., 4.75%, dated 9/30/94, due 10/4/94 18,472,158
----------------------------------------------------------------------------------- -------------
TOTAL REPURCHASE AGREEMENTS 36,618,531
----------------------------------------------------------------------------------- -------------
TOTAL INVESTMENTS (AT AMORTIZED COST) $ 84,660,017+
----------------------------------------------------------------------------------- -------------
</TABLE>
Also represents cost for federal tax purposes.
* Each issue shows the rate at the time of purchase.
** Repurchase agreements are fully collateralized by U.S. government and/or
agency obligations, based on market prices at the date of the portfolio.
Note: The categories of investments are shown as a percentage of net assets
($84,679,688) at September 30, 1994.
(See Notes which are an integral part of the Financial Statements)
PEACHTREE PRIME MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- --------------------------------------------------------------------------------------------------
Investments in repurchase agreements $ 36,618,531
- -----------------------------------------------------------------------------------
Investments in securities 48,041,486
- ----------------------------------------------------------------------------------- -------------
Total investments, at amortized cost and value $ 84,660,017
- --------------------------------------------------------------------------------------------------
Interest receivable 336,762
- --------------------------------------------------------------------------------------------------
Deferred expenses 9,603
- -------------------------------------------------------------------------------------------------- -------------
Total assets 85,006,382
- --------------------------------------------------------------------------------------------------
LIABILITIES:
- --------------------------------------------------------------------------------------------------
Dividends payable 278,688
- -----------------------------------------------------------------------------------
Accrued expenses 48,006
- ----------------------------------------------------------------------------------- -------------
Total liabilities 326,694
- -------------------------------------------------------------------------------------------------- -------------
NET ASSETS for 84,679,688 shares of beneficial interest outstanding $ 84,679,688
- -------------------------------------------------------------------------------------------------- -------------
NET ASSET VALUE, Offering Price, and Redemption Proceeds Per Share:
($84,679,688 / 84,679,688 shares of beneficial interest outstanding) $1.00
- -------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
PEACHTREE PRIME MONEY MARKET FUND
STATEMENT OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1994*
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------------------------
Interest income $ 1,432,384
- ---------------------------------------------------------------------------------------------------
EXPENSES:
- ---------------------------------------------------------------------------------------------------
Investment advisory fee $ 164,020
- ---------------------------------------------------------------------------------------
Administrative personnel and services fees 48,187
- ---------------------------------------------------------------------------------------
Custodian fees 13,682
- ---------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 21,497
- ---------------------------------------------------------------------------------------
Legal fees 2,950
- ---------------------------------------------------------------------------------------
Printing and postage 6,441
- ---------------------------------------------------------------------------------------
Portfolio accounting fees 27,649
- ---------------------------------------------------------------------------------------
Insurance premiums 4,900
- ---------------------------------------------------------------------------------------
Miscellaneous 2,874
- --------------------------------------------------------------------------------------- ----------
Total expenses 292,200
- ---------------------------------------------------------------------------------------
Deduct--
- ---------------------------------------------------------------------------
Waiver of investment advisory fee $ 138,469
- ---------------------------------------------------------------------------
Waiver of administrative personnel and services fees 18,184
- ---------------------------------------------------------------------------
Waiver of transfer and dividend disbursing agent fees and expenses 12,000 168,653
- --------------------------------------------------------------------------- ---------- ----------
Net expenses 123,547
- --------------------------------------------------------------------------------------------------- ------------
Net investment income $ 1,308,837
- --------------------------------------------------------------------------------------------------- ------------
</TABLE>
*For the period from February 14, 1994 (date of initial public investment) to
September 30, 1994.
(See Notes which are an integral part of the Financial Statements)
PEACHTREE PRIME MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED
SEPTEMBER 30, 1994*
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------------------------------------------------------
OPERATIONS--
- ----------------------------------------------------------------------------------------
Net investment income $ 1,308,837
- ---------------------------------------------------------------------------------------- ------------------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ----------------------------------------------------------------------------------------
Dividends to shareholders from net investment income (1,308,837)
- ---------------------------------------------------------------------------------------- ------------------------
FUND SHARE (PRINCIPAL) TRANSACTIONS--
- ----------------------------------------------------------------------------------------
Proceeds from sale of shares 159,735,721
- ----------------------------------------------------------------------------------------
Net asset value of shares issued to shareholders
in payment of dividends declared 38,293
- ----------------------------------------------------------------------------------------
Cost of shares redeemed (75,094,326)
- ---------------------------------------------------------------------------------------- ------------------------
Change in net assets from Fund share transactions 84,679,688
- ---------------------------------------------------------------------------------------- ------------------------
Change in net assets 84,679,688
- ----------------------------------------------------------------------------------------
NET ASSETS:
- ----------------------------------------------------------------------------------------
Beginning of period --
- ---------------------------------------------------------------------------------------- ------------------------
End of period $ 84,679,688
- ---------------------------------------------------------------------------------------- ------------------------
</TABLE>
*For the period from February 14, 1994 (date of initial public investment) to
September 30, 1994.
(See Notes which are an integral part of the Financial Statements)
PEACHTREE GOVERNMENT MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- ----------------------------------------------------------------------------------- -------------
SHORT-TERM U.S. TREASURY OBLIGATIONS--55.6%
- --------------------------------------------------------------------------------------------------
$ 6,290,000 U.S. Treasury Bills, 11/3/94-6/29/95 $ 6,158,619
-----------------------------------------------------------------------------------
44,000,000 U.S. Treasury Notes, 3.875%-9.50%, 10/15/94-5/31/95 44,131,940
----------------------------------------------------------------------------------- -------------
TOTAL SHORT-TERM U.S. TREASURY OBLIGATIONS 50,290,559
----------------------------------------------------------------------------------- -------------
*REPURCHASE AGREEMENTS--42.9%
- --------------------------------------------------------------------------------------------------
3,000,000 Carroll McEntee & McGinley, Inc., 4.65%, dated 9/30/94, due 10/3/94 3,000,000
-----------------------------------------------------------------------------------
15,038,748 Sanwa-BGK Securities, Inc., 4.60%, dated 9/29/94, due 10/3/94 15,038,748
-----------------------------------------------------------------------------------
20,752,199 Cantor, Fitzgerald Securities Corp., 4.75%, dated 9/30/94, due 10/4/94 20,752,199
----------------------------------------------------------------------------------- -------------
TOTAL REPURCHASE AGREEMENTS 38,790,947
----------------------------------------------------------------------------------- -------------
TOTAL INVESTMENTS (AT AMORTIZED COST) $ 89,081,506+
----------------------------------------------------------------------------------- -------------
</TABLE>
+ Also represents cost for federal tax purposes.
* Repurchase agreements are fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio.
Note: The categories of investments are shown as a percentage of net assets
($90,440,186) at September 30, 1994.
(See Notes which are an integral part of the Financial Statements)
PEACHTREE GOVERNMENT MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -----------------------------------------------------------------------------------
Investments in repurchase agreements $ 38,790,947
- -----------------------------------------------------------------------------------
Investments in securities 50,290,559
- ----------------------------------------------------------------------------------- -------------
Total investments, at amortized cost and value $ 89,081,506
- --------------------------------------------------------------------------------------------------
Interest receivable 1,035,885
- --------------------------------------------------------------------------------------------------
Receivable for Fund shares sold 678,761
- --------------------------------------------------------------------------------------------------
Deferred expenses 43,164
- -------------------------------------------------------------------------------------------------- -------------
Total assets 90,839,316
- --------------------------------------------------------------------------------------------------
LIABILITIES:
- --------------------------------------------------------------------------------------------------
Dividends payable 324,536
- -----------------------------------------------------------------------------------
Accrued expenses 74,594
- ----------------------------------------------------------------------------------- -------------
Total liabilities 399,130
- -------------------------------------------------------------------------------------------------- -------------
NET ASSETS for 90,440,186 shares of beneficial interest outstanding $ 90,440,186
- -------------------------------------------------------------------------------------------------- -------------
NET ASSET VALUE, Offering Price, and Redemption Proceeds Per Share:
($90,440,186 / 90,440,186 shares of beneficial interest outstanding) $1.00
- -------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
PEACHTREE GOVERNMENT MONEY MARKET FUND
STATEMENT OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1994*
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------------------------
Interest income $ 1,166,311
- ---------------------------------------------------------------------------------------------------
EXPENSES:
- ---------------------------------------------------------------------------------------------------
Investment advisory fee $ 131,694
- ---------------------------------------------------------------------------------------
Administrative personnel and services fees 38,575
- ---------------------------------------------------------------------------------------
Custodian fees 6,529
- ---------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 19,805
- ---------------------------------------------------------------------------------------
Legal fees 1,100
- ---------------------------------------------------------------------------------------
Printing and postage 4,591
- ---------------------------------------------------------------------------------------
Portfolio accounting fees 27,222
- ---------------------------------------------------------------------------------------
Insurance premiums 4,500
- ---------------------------------------------------------------------------------------
Miscellaneous 5,964
- --------------------------------------------------------------------------------------- ----------
Total expenses 239,980
- ---------------------------------------------------------------------------------------
Deduct--
- ---------------------------------------------------------------------------------------
Waiver of investment advisory fee $ 121,371
- ---------------------------------------------------------------------------
Waiver of administrative personnel and services fees 7,494
- ---------------------------------------------------------------------------
Waiver of transfer and dividend disbursing agent fees and expenses 12,000 140,865
- --------------------------------------------------------------------------- ---------- ----------
Net expenses 99,115
- --------------------------------------------------------------------------------------------------- ------------
Net investment income $ 1,067,196
- --------------------------------------------------------------------------------------------------- ------------
</TABLE>
*For the period from January 7, 1994 (start of business) to September 30, 1994.
(See Notes which are an integral part of the Financial Statements)
PEACHTREE GOVERNMENT MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED
SEPTEMBER 30, 1994*
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------------------------------------------------------
OPERATIONS--
- ----------------------------------------------------------------------------------------
Net investment income $ 1,067,196
- ---------------------------------------------------------------------------------------- ------------------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ----------------------------------------------------------------------------------------
Dividends to shareholders from net investment income (1,067,196)
- ---------------------------------------------------------------------------------------- ------------------------
FUND SHARE (PRINCIPAL) TRANSACTIONS--
- ----------------------------------------------------------------------------------------
Proceeds from sale of shares 130,044,343
- ----------------------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of
dividends declared 834
- ----------------------------------------------------------------------------------------
Cost of shares redeemed (39,704,991)
- ---------------------------------------------------------------------------------------- ------------------------
Change in net assets from Fund share transactions 90,340,186
- ---------------------------------------------------------------------------------------- ------------------------
Change in net assets 90,340,186
- ----------------------------------------------------------------------------------------
NET ASSETS:
- ----------------------------------------------------------------------------------------
Beginning of period 100,000
- ---------------------------------------------------------------------------------------- ------------------------
End of period $ 90,440,186
- ---------------------------------------------------------------------------------------- ------------------------
</TABLE>
*For the period from January 7, 1994 (start of business) to September 30, 1994.
(See Notes which are an integral part of the Financial Statements)
PEACHTREE FUNDS
COMBINED NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1994
- --------------------------------------------------------------------------------
(1) ORGANIZATION
The Peachtree Funds (the "Trust") is registered under the Investment Company Act
of 1940, as amended (the "Act"), as an open-end, management investment company.
The Trust consists of four diversified portfolios and one non-diversified
portfolio. The financial statements included herein are only those of Peachtree
Prime Money Market Fund ("Prime Money Fund") and Peachtree Government Money
Market Fund ("Government Money Fund"), (individually referred to as the "Fund,"
or collectively as the "Funds"). The financial statements of the other
portfolios are presented separately. The assets of each portfolio are segregated
and a shareholder's interest is limited to the portfolio in which shares are
held. As of September 30, 1994, Peachtree Georgia Tax-Free Income Fund was
effective but did not have public investment.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
A. INVESTMENT VALUATIONS--The Funds' use of the amortized cost method to value
its portfolio securities is in accordance with Rule 2a-7 under the Act.
B. REPURCHASE AGREEMENTS--It is the policy of the Funds to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral in support of
repurchase agreement investments. Additionally, procedures have been
established by the Funds to monitor, on a daily basis, the market value of
each repurchase agreement's underlying collateral to ensure that the value
of collateral at least equals the principal amount of the repurchase
agreement, including accrued interest.
The Funds will only enter into repurchase agreements with banks and other
recognized financial institutions such as broker/dealers, which are deemed
by the Funds' adviser to be creditworthy pursuant to guidelines established
by the Board of Trustees (the "Trustees"). Risks may arise from the
potential inability of counterparties to honor the terms of the repurchase
agreement. Accordingly, the Funds could receive less than the repurchase
price on the sale of collateral securities.
C. 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.
D. FEDERAL TAXES--It is the Funds' policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of their taxable income.
Accordingly, no provisions for federal tax are necessary.
E. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Funds may engage in
when-issued or delayed delivery transactions. The Funds record when-issued
securities on the trade date and maintain 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.
F. DEFERRED EXPENSES--The costs incurred by the Funds with respect to
registration of their shares in their first fiscal year, excluding the
initial expense of registering their shares, have been deferred and are
being amortized using the straight-line method not to exceed a period of
five years from each Fund's commencement date.
G. OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value). At
September 30, 1994, capital paid-in for Prime Money Fund and Government Money
Fund aggregated $84,679,688 and $90,440,186, respectively. Transactions in Fund
shares were as follows:
<TABLE>
<CAPTION>
PRIME GOVERNMENT
MONEY FUND MONEY FUND
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 1994* SEPTEMBER 30, 1994*
<S> <C> <C>
Shares sold 159,735,721 130,044,343
- --------------------------------------------------------------
Shares issued to shareholders in payment
of dividends declared 38,293 834
- --------------------------------------------------------------
Shares redeemed (75,094,326) (39,704,991)
- -------------------------------------------------------------- ------------------------ ------------------------
Net change resulting from Fund share
transactions 84,679,688 90,340,186
- -------------------------------------------------------------- ------------------------ ------------------------
</TABLE>
* For the period from February 14, 1994 (date of initial public investment) to
September 30, 1994.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Bank South, N.A., the Funds' investment adviser (the
"Adviser"), receives for its services an annual investment advisory fee equal to
.50 of 1% of each Fund's average daily net assets. The Adviser may voluntarily
choose
to waive a portion of its fee. The Adviser can modify or terminate this
voluntary waiver
at any time at its sole discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Funds
with certain administrative personnel and services. The FAS fee is based on the
level of average aggregate net assets of the Trust for the period. FAS may
voluntarily choose to waive a portion of its fee.
TRANSFER AND DIVIDEND DISBURSING AGENT AND ACCOUNTING FEES--Federated Services
Company ("FServ") serves as transfer and dividend disbursing agent for the
Funds. The FServ fee is based on the size, type, and number of accounts and
transactions made by shareholders. FServ may voluntarily choose to waive a
portion of its fee.
FServ also maintains the Funds' accounting records. The FServ fee is based on
the level of each Fund's average net assets for the period, plus out-of-pocket
expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses ($39,837 for Prime Money Fund
and $39,426 for Government Money Fund) were borne initially by FAS. The Funds
have agreed to reimburse FAS for the organizational expenses during the five
year period following January 7, 1994 (date the Funds first became effective).
For the period ended September 30, 1994, Prime Money Fund and Government Money
Fund paid $1,792 and $1,834, respectively pursuant to this agreement.
Certain of the Officers and Trustees of the Trust are Officers and Trustees of
the above companies.
REPORT OF ERNST & YOUNG LLP,
INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
To the Trustees and Shareholders of
PEACHTREE FUNDS:
We have audited the accompanying statements of assets and liabilities, including
the portfolios of investments, of Peachtree Prime Money Market Fund and
Peachtree Government Money Market Fund (two of the portfolios comprising
Peachtree Funds) as of September 30, 1994, and the related statements of
operations, the statements of changes in net assets, and the financial
highlights for the periods then ended. These financial statements and financial
highlights are the responsibility of the Trust's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
September 30, 1994, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Peachtree Prime Money Market Fund and Peachtree Government Money Market Fund at
September 30, 1994, the results of their operations, the changes in their net
assets, and the financial highlights for the periods then ended, in conformity
with generally accepted accounting principles.
ERNST & YOUNG LLP
Pittsburgh, Pennsylvania
November 2, 1994
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Peachtree Prime Money Market Fund Federated Investors Tower
Peachtree Government Money Market Fund Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Investment Adviser
Bank South, N.A. 3350 Cumberland Circle
Atlanta, Georgia 30339
- ---------------------------------------------------------------------------------------------------------------------
Custodian
The Bank of New York 48 Wall Street
New York, New York 10286
- ---------------------------------------------------------------------------------------------------------------------
Transfer Agent, Dividend Disbursing Agent,
and Portfolio Accounting Services
Federated Services Company Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Legal Counsel
Houston, Houston & Donnelly 2510 Centre City Tower
Pittsburgh, Pennsylvania 15222
- ---------------------------------------------------------------------------------------------------------------------
Legal Counsel
Dickstein, Shapiro & Morin, L.L.P. 2101 L Street, N.W.
Washington, D.C. 20037
- ---------------------------------------------------------------------------------------------------------------------
Independent Auditors
Ernst & Young LLP One Oxford Centre
Pittsburgh, Pennsylvania 15219
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
[LOGO] BANK SOUTH, N.A.
I N V E S T M E N T A D V I S E R
3350 Cumberland Circle
Atlanta, GA 30339
[LOGO] FEDERATED SECURITIES CORP.
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
70467H408
70467H309
3092207A (11/94)
PEACHTREE GOVERNMENT MONEY MARKET FUND
(A PORTFOLIO OF PEACHTREE FUNDS)
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information should be read with the
prospectus of Peachtree Government Money Market Fund (the "Fund")
dated November 30, 1994. This Statement is not a prospectus itself.
To receive a copy of the prospectus call the Peachtree Funds Service
Center at 1-404-989-6200 or 1-800-621-8969.
SHARES OF THE FUND ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, AND ARE
NOT ISSUED, ENDORSED OR GUARANTEED BY, BANK SOUTH, N.A. (THE "BANK")
OR ANY OF ITS AFFILIATES. SUCH SHARES ARE NOT ISSUED, INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENT
AGENCY. AN INVESTMENT IN THE FUND INVOLVES CERTAIN RISKS, INCLUDING
POSSIBLE LOSS OF PRINCIPAL.
THE BANK IS INVESTMENT ADVISER TO THE FUND. THE FUND IS DISTRIBUTED
BY FEDERATED SECURITIES CORP., WHICH IS NOT AFFILIATED WITH THE
BANK.
Statement dated November 30, 1994
FEDERATED SECURITIES CORP.
--------------------------------------------
Distributor
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
GENERAL INFORMATION ABOUT THE FUND 1
- ---------------------------------------------------------------
INVESTMENT OBJECTIVE AND POLICIES 1
- ---------------------------------------------------------------
Types of Investments 1
When-Issued and Delayed Delivery
Transactions 1
Repurchase Agreements 1
Reverse Repurchase Agreements 1
Lending of Portfolio Securities 1
Investment Limitations 2
PEACHTREE FUNDS MANAGEMENT 3
- ---------------------------------------------------------------
The Funds 5
Fund Ownership 6
Trustee Liability 6
INVESTMENT ADVISORY SERVICES 6
- ---------------------------------------------------------------
Adviser to the Fund 6
Advisory Fees 6
ADMINISTRATIVE SERVICES 6
- ---------------------------------------------------------------
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT 6
- ---------------------------------------------------------------
BROKERAGE TRANSACTIONS 7
- ---------------------------------------------------------------
PURCHASING SHARES 7
- ---------------------------------------------------------------
Administrative Arrangements 7
Distribution Services Plan 7
Purchasing Fund Shares with Securities 7
DETERMINING NET ASSET VALUE 8
- ---------------------------------------------------------------
Use of the Amortized Cost Method 8
EXCHANGE PRIVILEGE 9
- ---------------------------------------------------------------
Requirements for Exchange 9
Making an Exchange 9
REDEEMING SHARES 9
- ---------------------------------------------------------------
Redemption in Kind 9
TAX STATUS 9
- ---------------------------------------------------------------
The Fund's Tax Status 9
Shareholders' Tax Status 9
YIELD 10
- ---------------------------------------------------------------
EFFECTIVE YIELD 10
- ---------------------------------------------------------------
PERFORMANCE COMPARISONS 10
- ---------------------------------------------------------------
GENERAL INFORMATION ABOUT THE FUND
- --------------------------------------------------------------------------------
Peachtree Government Money Market Fund (the "Fund") is a portfolio of Peachtree
Funds (the "Trust") which was established as a Massachusetts business trust
under a Declaration of Trust dated as of September 22, 1993, as amended and
restated dated December 20, 1993.
INVESTMENT OBJECTIVE AND POLICIES
- --------------------------------------------------------------------------------
The Fund's investment objective is to achieve current income consistent with
stability of principal and liquidity. The investment objective cannot be changed
without approval of shareholders.
TYPES OF INVESTMENTS
The Fund invests in short-term U.S. government securities.
VARIABLE RATE U.S. GOVERNMENT SECURITIES
Some of the short-term U.S. government securities the Fund may purchase
carry variable interest rates. These securities have a rate of interest
subject to adjustment at least annually. This adjusted interest rate is
ordinarily tied to some objective standard, such as the 91-day U.S.
Treasury bill rate.
Variable interest rates will reduce the changes in the market value of
such securities from their original purchase prices. Accordingly, the
potential for capital appreciation or capital depreciation should not be
greater than the potential for capital appreciation or capital
depreciation of fixed interest rate U.S. government securities having
maturities equal to the interest rate adjustment dates of the variable
rate U.S. government securities.
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. 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.
REPURCHASE AGREEMENTS
As collateral for the obligation of the seller to repurchase the securities from
the Fund, the Fund or its custodian will take possession of the securities
subject to repurchase agreements, and these securities will be marked to market
daily. 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 will only enter
into repurchase agreements with banks and other financial institutions, such as
broker-dealers, which are deemed by the Fund's Adviser to be creditworthy
pursuant to guidelines established by the Trustees.
REVERSE REPURCHASE AGREEMENTS
The Fund may enter into reverse repurchase agreements. These transactions are
similar to borrowing cash and pledging securities as collateral. In a reverse
repurchase agreement, the Fund transfers possession of a portfolio instrument to
another person, such as a financial institution or broker-dealer, in return for
a percentage of the instrument's market value in cash, and agrees that on a
stipulated date in the future the Fund will repurchase the portfolio instrument
by remitting the original consideration plus interest at an agreed upon rate.
The use of reverse repurchase agreements may enable the Fund to avoid selling
portfolio instruments at a time when a sale may be deemed to be disadvantageous,
but the ability to enter into reverse repurchase agreements does not ensure that
the Fund will be able to avoid selling portfolio instruments at a disadvantaged
time.
When effecting reverse repurchase agreements, liquid assets of the Fund, in a
dollar amount sufficient to make payment for the obligations to be purchased,
are segregated at the trade date. These assets are marked to market daily and
maintained until the transaction is settled.
LENDING OF PORTFOLIO SECURITIES
The collateral received when the Fund lends portfolio securities must be valued
daily and, should the market value of the loaned securities increase, the
borrower must furnish additional collateral to the Fund. During the time
portfolio securities are on loan, the borrower pays the Fund any dividends or
interest paid on such securities. Loans are subject to termination at the
option of the Fund or the borrower. The Fund may pay reasonable administrative
and custodial fees in connection with a loan and may pay a negotiated portion
of the interest earned on the cash or equivalent collateral to the borrower or
placing broker.
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 transactions.
ISSUING SENIOR SECURITIES AND BORROWING MONEY
The Fund will not issue senior securities except that the Fund may borrow
money directly or through reverse repurchase agreements in amounts up to
33 1/3% of the value of its total assets, including the amounts borrowed.
The Fund will not borrow money or engage in reverse repurchase agreements
for investment leverage, but rather as a temporary, extraordinary, or
emergency measure or to facilitate management of the portfolio by
enabling the Fund to meet redemption requests when the liquidation of
portfolio securities is deemed to be inconvenient or disadvantageous. The
Fund will not purchase any securities while borrowings in excess of 5% of
the value of its total assets are outstanding.
PLEDGING ASSETS
The Fund will not mortgage, pledge, or hypothecate any assets except to
secure permitted borrowings. In those cases, it may pledge assets having
a value not exceeding the lesser of the dollar amounts borrowed or 15% of
the value of total assets at the time of the pledge.
LENDING CASH OR SECURITIES
The Fund will not lend any of its assets, except portfolio securities up
to 50% of the value of its total assets. This shall not prevent the Fund
from purchasing or holding bonds, debentures, notes, certificates of
indebtedness, or other debt securities, entering into repurchase
agreements, or engaging in other transactions where permitted by the
Fund's investment objective, policies, limitations, or its Declaration of
Trust.
The above investment limitations cannot be changed without shareholder approval.
The following limitations, however, may be changed by the Board of Trustees
without shareholder approval. Shareholders will be notified before any material
change in the following limitations becomes effective.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
The Fund will limit its investment in other investment companies to no
more than 3% of the total outstanding voting stock of any investment
company, will not 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 the aggregate. However, these limitations are not
applicable if the securities are acquired in a merger, consolidation, or
acquisition of assets.
INVESTING IN ILLIQUID SECURITIES
The Fund will not invest more than 10% of the value of its net assets in
illiquid securities, including repurchase agreements providing for
settlement in more than seven days after notice, non-negotiable fixed
time deposits with maturities over seven calendar days, and certain
restricted securities not determined by the Trustees to be liquid.
Except with respect to borrowing money, if a percentage limitation is adhered to
at the time of investment, a later increase or decrease in percentage resulting
from any change in value or net assets will not result in a violation of such
restriction.
The Fund does not expect to borrow money or pledge securities in excess of 5% of
the value of its net assets during its next fiscal year.
PEACHTREE FUNDS MANAGEMENT
- --------------------------------------------------------------------------------
Officers and Trustees are listed with their addresses, present positions with
Peachtree Funds, and principal occupations.
- --------------------------------------------------------------------------------
John F. Donahue+*
Federated Investors Tower
Pittsburgh, PA
Chairman and Trustee
Chairman and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; Chairman and Director, Federated Research
Corp.; Chairman, Passport Research, Ltd.; Director, AEtna Life and Casualty
Company; Chief Executive Officer and Director, Trustee, or Managing General
Partner of the Funds. Mr. Donahue is the father of J. Christopher Donahue.
- --------------------------------------------------------------------------------
John T. Conroy, Jr.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, FL
Trustee
President, Investment Properties Corporation; Senior Vice-President, John R.
Wood and Associates, Inc., Realtors; President, Northgate Village Development
Corporation; Partner or Trustee in private real estate ventures in Southwest
Florida; Director, Trustee, or Managing General Partner of the Funds; formerly,
President, Naples Property Management, Inc.
- --------------------------------------------------------------------------------
William J. Copeland
One PNC Plaza-23rd Floor
Pittsburgh, PA
Trustee
Director and Member of the Executive Committee, Michael Baker, Inc.; Director,
Trustee, or Managing General Partner of the Funds; formerly, Vice Chairman and
Director, PNC Bank, N.A., and PNC Bank Corp. and
Director, Ryan Homes, Inc.
- --------------------------------------------------------------------------------
James E. Dowd
571 Hayward Mill Road
Concord, MA
Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director, Trustee,
or Managing General Partner of the Funds; formerly, Director, Blue Cross of
Massachusetts, Inc.
- --------------------------------------------------------------------------------
Lawrence D. Ellis, M.D.
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA
Trustee
Hematologist, Oncologist, and Internist, Presbyterian and Montefiore Hospitals;
Professor of Medicine and Trustee, University of Pittsburgh; Director of
Corporate Health, University of Pittsburgh Medical Center; Director, Trustee, or
Managing General partner of the Funds.
- --------------------------------------------------------------------------------
Edward L. Flaherty, Jr.+
Two Gateway Center-Suite 674
Pittsburgh, PA
Trustee
Attorney-at-law; Partner, Henny, Koehuba, Meyer & Flaherty; Director, Eat'N Park
Restaurants, Inc., and Statewide Settlement Agency, Inc.; Director, Trustee, or
Managing General Partner of the Funds; formerly, Counsel, Horizon Financial,
F.A., Western Region.
Peter E. Madden
225 Franklin Street
Boston, MA
Trustee
Consultant; State Representative, Commonwealth of Massachusetts; Director,
Trustee, or Managing General Partner of the Funds; formerly, President, State
Street Bank and Trust Company and State Street Boston Corporation and Trustee,
Lahey Clinic Foundation, Inc.
- --------------------------------------------------------------------------------
Gregor F. Meyer
Two Gateway Center-Suite 674
Pittsburgh, PA
Trustee
Attorney-at-law; Partner, Henny, Koehuba, Meyer & Flaherty; Chairman, Meritcare,
Inc.; Director, Eat'N Park Restaurants, Inc.; Director, Trustee, or Managing
General Partner of the Funds; formerly, Vice Chairman, Horizon Financial, F.A.
- --------------------------------------------------------------------------------
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Trustee
Professor, Foreign Policy and Management Consultant; Trustee, Carnegie Endowment
for International Peace, RAND Corporation, Online Computer Library Center, Inc.,
and U.S. Space Foundation; Chairman, Czecho Slovak Management Center; Director,
Trustee, or Managing General Partner of the Funds; President Emeritus,
University of Pittsburgh; formerly, Chairman, National Advisory Council for
Environmental Policy and Technology.
- --------------------------------------------------------------------------------
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Trustee
Public relations/marketing consultant; Director, Trustee, or Managing General
Partner of the Funds.
- --------------------------------------------------------------------------------
Edward C. Gonzales*
Federated Investors Tower
Pittsburgh, PA
President, Treasurer and Trustee
Vice President, Treasurer, and Trustee, Federated Investors; Vice President and
Treasurer, Federated Advisers, Federated Management, Federated Research,
Federated Research Corp., and Passport Research, Ltd.; Executive Vice President,
Treasurer, and Director, Federated Securities Corp.; Trustee, Federated Services
Company and Federated Shareholder Services; Chairman, Treasurer, and Trustee,
Federated Administrative Services; Trustee or Director of some of the Funds;
Vice President and Treasurer of the Funds.
- --------------------------------------------------------------------------------
J. Christopher Donahue
Federated Investors Tower
Pittsburgh, PA
Vice President
President and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; President and Director, Federated Research
Corp.; President, Passport Research, Ltd.; Trustee, Federated Administrative
Services, Federated Services Company, and Federated Shareholder Services;
President or Vice President of the Funds; Director, Trustee, or Managing General
Partner of some of the Funds. Mr. Donahue is the son of John F. Donahue,
Chairman and Trustee of the Trust.
- --------------------------------------------------------------------------------
Richard B. Fisher
Federated Investors Tower
Pittsburgh, PA
Vice President
Executive Vice President and Trustee, Federated Investors; Director, Federated
Research Corp.; Chairman and Director, Federated Securities Corp.; President or
Vice President of some of the Funds; Director or Trustee of some of the Funds.
- --------------------------------------------------------------------------------
John W. McGonigle
Federated Investors Tower
Pittsburgh, PA
Vice President and Secretary
Vice President, Secretary, General Counsel, and Trustee, Federated Investors;
Vice President, Secretary, and Trustee, Federated Advisers, Federated
Management, and Federated Research; Vice President and Secretary, Federated
Research Corp. and Passport Research, Ltd.; Trustee, Federated Services Company;
Executive Vice President, Secretary, and Trustee, Federated Administrative
Services; Secretary and Trustee, Federated Shareholder Services; Executive Vice
President and Director, Federated Securities Corp.; Vice President and Secretary
of the Funds.
- --------------------------------------------------------------------------------
Charles L. Davis, Jr.
Federated Investors Tower
Pittsburgh, PA
Vice President and Assistant Treasurer
Vice President, Federated Administrative Services; Vice President and Assistant
Treasurer of some of the Funds; formerly, Vice President and Director of
Investor Relations, MNC Financial, Inc. and Vice President, Product Management,
MNC Financial, Inc.
- --------------------------------------------------------------------------------
*This Trustee is deemed to be an "interested person" as defined in the
Investment Company Act of 1940, as amended.
+Member of the Executive Committee. The Executive Committee of the Board of
Trustees handles various of the delegable responsibilities of the Board of
Trustees between meetings of the Board.
THE FUNDS
"The Funds" and "Funds" mean the following investment companies: American
Leaders Fund, Inc.; Annuity Management Series; Arrow Funds; Automated Cash
Management Trust; Automated Government Money Trust; California Municipal Cash
Trust; Cash Trust Series, Inc.; Cash Trust Series II; DG Investor Series; Edward
D. Jones & Co. Daily Passport Cash Trust; Federated ARMs Fund; Federated
Exchange Fund, Ltd.; Federated GNMA Trust; Federated Government Trust; Federated
Growth Trust; Federated High Yield Trust; Federated Income Securities Trust;
Federated Income Trust; Federated Index Trust; Federated Institutional Trust;
Federated Intermediate Government Trust; Federated Master Trust; Federated
Municipal Trust; Federated Short-Intermediate Government Trust; Federated
Short-Term U.S. Government Trust; Federated Stock Trust; Federated Tax-Free
Trust; Federated U.S. Government Bond Fund; First Priority Funds; Fixed Income
Securities, Inc.; Fortress Adjustable Rate U.S. Government Fund, Inc.; Fortress
Municipal Income Fund, Inc.; Fortress Utility Fund, Inc.; Fund for U.S.
Government Securities, Inc.; Government Income Securities, Inc.; High Yield Cash
Trust; Insight Institutional Shares, Inc.; Insurance Management Series;
Intermediate Municipal Trust; International Series Inc.; Investment Series
Funds, Inc.; Intermediate Municipal Trust; Investment Series Trust; Liberty
Equity Income Fund, Inc.; Liberty High Income Bond Fund, Inc.; Liberty Municipal
Securities Fund, Inc.; Liberty Term Trust, Inc.-1999; Liberty U.S. Government
Money Market Trust; Liberty Utility Fund, Inc.; Liquid Cash Trust; Managed
Series Trust; The Medalist Funds; Money Market Management Inc.; Money Market
Obligations Trust; Money Market Trust; Municipal Securities Income Trust; New
York Municipal Cash Trust; 111 Corcoran Funds; The Planters Funds; Portage
Funds; RIMCO Monument Funds; The Shawmut Funds; Short-Term Municipal Trust; Star
Funds; The Starburst Funds; The Starburst Funds II; Stock and Bond Fund, Inc.;
Sunburst Funds; Targeted Duration Trust; Tax-Free Instruments Trust; Trademark
Funds; Trust for Financial Institutions; Trust for Government Cash Reserves;
Trust for Short-Term U.S. Government Securities; Trust for U.S. Treasury
Obligations and World Investment Series, Inc.
FUND OWNERSHIP
Officers and Trustees own less than 1% of the Fund's outstanding shares.
As of November 4, 1994, the following shareholder of record owned 5% or more of
the outstanding shares of the Fund: Bank South N.A., Atlanta, Georgia, acting in
various capacities for numerous accounts, owned approximately 87,338,585 shares
(99.43%).
TRUSTEE LIABILITY
The Trust's Declaration of Trust provides that the Trustees are not 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 Bank South, N.A. (the "Adviser"). 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 Trust.
Because of the internal controls maintained by the Bank to restrict the flow of
non-public information, Fund investments are typically made without any
knowledge of the Bank's or its affiliates' lending relationships with an issuer.
ADVISORY FEES
For its advisory services, the Adviser receives an annual investment advisory
fee as described in the Prospectus. During the period from January 7, 1994
(start of business) through September 30, 1994, the Adviser earned advisory fees
of $131,694, of which $121,371 was voluntarily waived.
STATE EXPENSE LIMITATIONS
The Fund has undertaken to comply with the expense limitations
established by certain states for investment companies whose shares are
registered for sale in those states. If the Fund's normal operating
expenses (including the investment advisory fee, but not including
brokerage commissions, interest, taxes, and extraordinary expenses)
exceed 2.50% per year of the first $30 million of average net assets,
2.00% per year of the next $70 million of average net assets, and 1.50%
per year of the remaining average net assets, the Adviser has agreed to
reimburse the Fund for its expenses over the limitation.
If the Fund's monthly projected operating expenses exceed this
limitation, the investment advisory fee paid will be reduced by the
amount of the excess, subject to an annual adjustment. If the expense
limitation is exceeded, the amount to be reimbursed by the Adviser will
be limited, in any single fiscal year, by the amount of the investment
advisory fee.
This arrangement is not part of the advisory contract and may be amended
or rescinded in the future.
ADMINISTRATIVE SERVICES
- --------------------------------------------------------------------------------
Federated Administrative Services, a subsidiary of Federated Investors, provides
administrative personnel and services to the Fund for the fees set forth in the
prospectus. For the period from January 7, 1994 (start of business) to September
30, 1994, the Fund incurred administrative service costs of $38,575, of which
$7,497 was voluntarily waived.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
- --------------------------------------------------------------------------------
Federated Services Company serves as transfer agent and dividend disbursing
agent for the Fund. The fee paid to the transfer agent is based upon the size,
type and number of accounts and transactions made by shareholders.
Federated Services Company also maintains the Trust's accounting records. 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.
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 utilize those who are
recognized dealers in specific portfolio instruments, except when a better price
and execution of the order can be obtained elsewhere. The Adviser 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.
The Adviser exercises reasonable business judgment in selecting brokers who
offer brokerage and research services to execute securities transactions. The
Adviser determines in good faith that commissions charged by such persons are
reasonable in relationship to the value of the brokerage and research services
provided.
Research services provided by brokers and dealers may be used by the Adviser in
advising the Fund and other accounts. To the extent that receipt of these
services may supplant services for which the Adviser might otherwise have paid,
it would tend to reduce its expenses.
PURCHASING SHARES
- --------------------------------------------------------------------------------
Shares are sold at their net asset value without a sales charge on days the New
York Stock Exchange and the Federal Reserve Wire System are open for business.
The procedure for purchasing shares of the Fund is explained in the prospectus
under "Investing in the Funds."
ADMINISTRATIVE ARRANGEMENTS
The administrative services include, but are not limited to, providing office
space, equipment, telephone facilities, and various personnel, including
clerical, supervisory, and computer, as is necessary or beneficial to establish
and maintain shareholders' accounts and records, process purchase and redemption
transactions, process automatic investments of client account cash balances,
answer routine client inquiries regarding the Fund, assist clients in changing
dividend options, account designations, and addresses, and providing such other
services as the Fund may reasonably request.
DISTRIBUTION PLAN
With respect to the Fund, the Trust has adopted a Plan pursuant to Rule 12b-1
which was promulgated by the Securities and Exchange Commission ("SEC") pursuant
to the Investment Company Act of 1940, as amended (the "Act"). The Plan provides
for payment of fees to the Distributor to finance any activity which is
principally intended to result in the sale of the Fund's shares subject to the
Plan. Such activities may include the advertising and marketing of shares of the
Fund; preparing, printing, and distributing prospectuses and sales literature to
prospective shareholders, brokers, or administrators; and implementing and
operating the Plan. Pursuant to the Plan, the Distributor may pay fees to
brokers and others for such services.
PURCHASING FUND SHARES WITH SECURITIES
The Fund in its sole discretion, may sell Fund shares to investors that desire
to purchase Fund shares with certain securities or a combination of certain
securities and cash. The Fund reserves the right to determine the acceptability
of securities used to effect such purchases. On the day securities are accepted
by the Fund, they are valued based upon independent bid and in the same manner
as the Fund values it assets. Investors wishing to use securities to purchase
Fund shares should first contact the Bank. Any such transfer of securities is
treated as a sale of the securities and will result in the recognition of any
gain or loss for federal income tax purposes by the seller of such securities,
except to the extent the seller is an ERISA plan or similar entity not subject
to tax. Unless such securities are to be acquired by the Fund in a bona fide
reorganization, statutory merger, or similar transaction, such securities must
meet the investment restrictions at the time of sale.
TAX CONSEQUENCES
Exercise of this exchange privilege is currently treated as a sale for
federal income tax purposes. Depending upon the cost basis of the
securities exchanged for Fund shares, a gain or loss may be realized by
the investor.
DETERMINING NET ASSET VALUE
- --------------------------------------------------------------------------------
The Fund attempts to stabilize the value of a share at $1.00. The days on which
net asset value is calculated by the Fund are described in the prospectus.
USE OF THE AMORTIZED COST METHOD
The Trustees have decided that the best method for determining the value of
portfolio instruments is amortized cost. Under this method, portfolio
instruments are valued at the acquisition cost as adjusted for amortization of
premium or accumulation of discount rather than at current market value.
The Fund's use of the amortized cost method of valuing portfolio instruments
depends on its compliance with certain conditions of SEC Rule 2a-7 under the
Act. Under this Rule, the Trustees must establish procedures reasonably designed
to stabilize the net asset value per share, as computed for purposes of
distribution and redemption, at $1.00 per share, taking into account current
market conditions and the Fund's investment objective.
Under such Rule, the Fund is permitted to purchase instruments which are subject
to demand features or standby commitments. As defined by this Rule, a demand
feature entitles the Fund to receive the principal amount of the instrument from
the issuer or a third party (1) on no more than 30 days' notice or (2) at
specified intervals not exceeding one year on no more than 30 days' notice. A
standby commitment entitles the Fund to achieve same day settlement and to
receive an exercise price equal to the amortized cost of the underlying
instrument plus accrued interest at the time of exercise.
MONITORING PROCEDURES
The Trustees' procedures include monitoring the relationship between the
amortized cost value per share and the net asset value per share based
upon available indications of market value. The Trustees will decide
what, if any, steps should be taken if there is a difference of more than
0.50% between the two values. The Trustees will take any steps they
consider appropriate (such as redemption in kind or shortening the
average portfolio maturity) to minimize any material dilution or other
unfair results arising from differences between the two methods of
determining net asset value.
INVESTMENT RESTRICTIONS
Rule 2a-7 requires that the Fund limit its investments to instruments
that, in the opinion of the Trustees, present minimal credit risks and
have received the requisite rating from one or more nationally recognized
statistical rating organizations. If the instruments are not rated, the
Trustees must determine that they are of comparable quality. The Rule
also requires the Fund to maintain a dollar-weighted average portfolio
maturity (not more than 90 days) appropriate to the objective of
maintaining a stable net asset value of $1.00 per share. In addition, no
instruments with a remaining maturity of more than 13 months days can be
purchased by the Fund.
Should the disposition of a portfolio security result in a
dollar-weighted average portfolio maturity of more than 90 days, the Fund
will invest its available cash to reduce the average maturity to 90 days
or less as soon as possible.
The Fund may attempt to increase yield by trading portfolio securities to take
advantage of short-term market variations. This policy may, from time to time,
result in high portfolio turnover. Under the amortized cost method of valuation,
neither the amount of daily income nor the net asset value is affected by any
unrealized appreciation or depreciation of the portfolio.
In periods of declining interest rates, the indicated daily yield on shares of
the Fund computed by dividing the annualized daily income on the Fund's
portfolio by the net asset value computed as above may tend to be higher than a
similar computation made by using a method of valuation based upon market prices
and estimates.
In periods of rising interest rates, the indicated daily yield on shares of the
Fund computed the same way may tend to be lower than a similar computation made
by using a method of calculation based upon market prices and estimates.
EXCHANGE PRIVILEGE
- --------------------------------------------------------------------------------
Shareholders of the Fund may exchange shares of the Fund for shares of other
Funds advised by the Bank and certain other funds designated by the Bank and
distributed by the Distributor, subject to certain conditions. Exchange
procedures are explained in the Prospectus under "Exchange Privilege".
REQUIREMENTS FOR EXCHANGE
Shareholders using the exchange privilege must exchange shares having a net
asset value of at least $1,000. Before the exchange, the shareholder must
receive a prospectus of the fund for which the exchange is being made.
This privilege is available to shareholders resident in any state in which
shares being acquired may be sold. Upon receipt of proper instructions and
required supporting documents, shares submitted for exchange are redeemed and
the proceeds invested in shares of the other fund. Further information on the
exchange privilege and prospectuses may be obtained by calling the Bank at the
number on the cover of this Statement of Additional Information.
MAKING AN EXCHANGE
Instructions for exchanges may be given in writing. Written instructions may
require a signature guarantee.
REDEEMING SHARES
- --------------------------------------------------------------------------------
The Fund redeems shares at the next computed net asset value after the Bank
receives the redemption request. Redemption will be made on days on which the
Fund computes its net asset value. Redemption requests cannot be executed on
days on which the New York Stock Exchange is closed or on federal holidays
restricting wire transfers. Redemption procedures are explained in the
prospectus under "Redeeming Shares."
REDEMPTION IN KIND
Although the Fund intends to redeem shares in cash, it reserves the right under
certain circumstances to pay the redemption price, in whole or in part, by a
distribution of securities from the Fund's portfolio. To satisfy registration
requirements in a particular state, redemption in kind will be made in readily
marketable securities to the extent that such securities are available. If such
a state's policy changes, the Fund reserves the right to redeem in kind by
delivering those securities it deems appropriate.
Redemption in kind will be made in conformity with applicable SEC rules, taking
such securities at the same value employed in determining net asset value and
selecting the securities in a manner the Trustees determine to be fair and
equitable.
The Trust has elected to be governed by SEC Rule 18f-1 under the Act 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.
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 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 from 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.
SHAREHOLDERS' TAX STATUS
Shareholders are subject to federal income tax on dividends received as cash or
additional shares. No portion of any income dividend paid by the Fund is
eligible for the dividends received deduction available to corporations. These
dividends and any short-term capital gains are taxable as ordinary income.
CAPITAL GAINS
Capital gains experienced by the Fund could result in an increase in
dividends. Capital losses could result in a decrease in dividends. If,
for some extraordinary reason, the Fund realizes net long-term capital
gains, it will distribute them at least once every 12 months.
YIELD
- --------------------------------------------------------------------------------
The Fund's yield for the seven-day period ended September 30, 1994 was 4.25%.
The Fund calculates its yield daily based upon the seven days ending on the day
of the calculation, called the "base period." This yield is computed by:
.determining the net change in the value of a hypothetical account with a
balance of one share at the beginning of the base period, with the net change
excluding capital changes but including the value of any additional shares
purchased with dividends earned from the original one share and all dividends
declared on the original and any purchased shares;
.dividing the net change in the account's value by the value of the account at
the beginning of the base period to determine the base period return; and
.multiplying the base period return by (365/7).
To the extent that financial institutions and brokers/dealers charge fees in
connection with services and provided in conjunction with an investment in the
Fund, the performance will be reduced for those shareholders paying those fees.
EFFECTIVE YIELD
- --------------------------------------------------------------------------------
The Fund's effective yield for the seven-day period ended September 30, 1994 was
4.34%.
The Fund's effective yield is computed by compounding the unannualized base
period return by:
.adding 1 to the base period return;
.raising the sum of the 365/7th power; and
.subtracting 1 from the result.
PERFORMANCE COMPARISONS
- --------------------------------------------------------------------------------
The Fund's performance depends upon such variables as:
.portfolio quality;
.average portfolio maturity;
.type of instruments in which the portfolio is invested;
.changes in interest rates on money market instruments;
.changes in Fund expenses; and
.the relative amount of Fund cash flow.
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 compositions of other funds, and methods
used to value portfolio securities and compute offering price. The financial
publications and/or indices which the Fund uses in advertising may include:
.LIPPER ANALYTICAL SERVICES, INC., ranks funds in various fund categories by
making comparative calculations using total return. Total return assumes the
reinvestment of all income dividends and capital gains distributions, if any.
From time to time, the Fund will quote its Lipper ranking in the "short-term
U.S. government funds" category in advertising and sales literature.
.MONEY, a monthly magazine, regularly ranks money market funds in various
categories based on the latest available seven-day compound (effective) yield.
From time to time, the Fund will quote its Money ranking in advertising and
sales literature.
.SALOMON 30-DAY TREASURY BILL INDEX is a weekly quote of the most representative
yields for selected securities, issued by the U.S. Treasury, maturing in 30
days.
Advertisements and other sales literature for the Fund may refer to total
return. Total return is the historic change in the value of an investment in the
Fund based on the monthly reinvestment of dividends over a specified period of
time.
70467H309
3093003B (11/94)
PEACHTREE PRIME MONEY MARKET FUND
(A PORTFOLIO OF PEACHTREE FUNDS)
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information should be read with the
prospectus of Peachtree Prime Money Market Fund (the "Fund") dated
November 30, 1994. This Statement is not a prospectus itself. To
receive a copy of the prospectus call the Peachtree Funds Service
Center at 1-404-989-6200 or 1-800-621-8969.
SHARES OF THE FUND ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, AND ARE
NOT ISSUED, ENDORSED OR GUARANTEED BY, BANK SOUTH, N.A. (THE "BANK")
OR ANY OF ITS AFFILIATES. SUCH SHARES ARE NOT ISSUED, INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY.
AN INVESTMENT IN THE FUND INVOLVES CERTAIN RISKS, INCLUDING POSSIBLE
LOSS OF PRINCIPAL.
THE BANK IS INVESTMENT ADVISER TO THE FUND. THE FUND IS DISTRIBUTED BY
FEDERATED SECURITIES CORP., WHICH IS NOT AFFILIATED WITH THE BANK.
Statement dated November 30, 1994
FEDERATED SECURITIES CORP.
--------------------------------------------
Distributor
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
GENERAL INFORMATION ABOUT THE FUND 1
- ---------------------------------------------------------------
INVESTMENT OBJECTIVE AND POLICIES 1
- ---------------------------------------------------------------
Types of Investments 1
U.S. Government Obligations 1
Bank Instruments 1
When-Issued and Delayed Delivery
Transactions 1
Repurchase Agreements 1
Reverse Repurchase Agreements 2
Investment Limitations 2
PEACHTREE FUNDS MANAGEMENT 4
- ---------------------------------------------------------------
The Funds 6
Fund Ownership 7
Trustee Liability 7
INVESTMENT ADVISORY SERVICES 7
- ---------------------------------------------------------------
Adviser to the Fund 7
Advisory Fees 7
ADMINISTRATIVE SERVICES 7
- ---------------------------------------------------------------
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT 7
- ---------------------------------------------------------------
BROKERAGE TRANSACTIONS 8
- ---------------------------------------------------------------
PURCHASING SHARES 8
- ---------------------------------------------------------------
Administrative Arrangements 8
Distribution Plan 8
Purchasing Fund Shares with Securities 8
DETERMINING NET ASSET VALUE 9
- ---------------------------------------------------------------
Use of the Amortized Cost Method 9
EXCHANGE PRIVILEGE 9
- ---------------------------------------------------------------
Requirements for Exchange 10
Making an Exchange 10
REDEEMING SHARES 10
- ---------------------------------------------------------------
Redemption in Kind 10
TAX STATUS 10
- ---------------------------------------------------------------
The Fund's Tax Status 10
Shareholders' Tax Status 10
YIELD 11
- ---------------------------------------------------------------
EFFECTIVE YIELD 11
- ---------------------------------------------------------------
PERFORMANCE COMPARISONS 11
- ---------------------------------------------------------------
APPENDIX 12
- ---------------------------------------------------------------
GENERAL INFORMATION ABOUT THE FUND
- --------------------------------------------------------------------------------
Peachtree Prime Money Market Fund (the "Fund") is a portfolio of Peachtree Funds
(the "Trust"), which was established as a Massachusetts business trust under a
Declaration of Trust dated as of September 22, 1993, as amended and restated
dated December 20, 1993.
INVESTMENT OBJECTIVE AND POLICIES
- --------------------------------------------------------------------------------
The Fund's investment objective is to achieve current income consistent with
stability of principal and liquidity. The investment objective cannot be changed
without approval of shareholders.
TYPES OF INVESTMENTS
The Fund invests in money market instruments which mature in 13 months or less,
and which include, but are not limited to, commercial paper and variable amount
master demand notes, bank instruments, U.S. government obligations, and
repurchase agreements.
The instruments of banks that are members of the Federal Deposit Insurance
Corporation ("FDIC"), such as certificates of deposit, demand and time deposits,
and bankers' acceptances, are not necessarily guaranteed or insured by FDIC's
BIF or SAIF or any other governmental agency.
U.S. GOVERNMENT OBLIGATIONS
The types of U.S. government obligations in which the Fund may invest generally
include direct obligations of the U.S. Treasury (such as U.S. Treasury bills,
notes, and bonds) and obligations issued or guaranteed by U.S. government
agencies or instrumentalities. These securities are backed by:
.the full faith and credit of the U.S. Treasury;
.the issuer's right to borrow from the U.S. Treasury;
.the discretionary authority of the U.S. government to purchase certain
obligations of agencies or instrumentalities; or
.the credit of the agency or instrumentality issuing the obligations.
Examples of agencies and instrumentalities which may not always receive
financial support from the U.S. government are:
.Federal Farm Credit Banks;
.Federal Home Loan Banks;
.Federal National Mortgage Association;
.Student Loan Marketing Association; and
.Federal Home Loan Mortgage Corporation.
BANK INSTRUMENTS
In addition to domestic bank obligations, such as certificates of deposit,
demand and time deposits, and bankers' acceptances, the Fund may invest in:
.Eurodollar Certificates of Deposit issued by foreign branches of U.S. or
foreign banks;
.Eurodollar Time Deposits, which are U.S. dollar-denominated deposits in foreign
branches of U.S. or foreign banks;
.Canadian Time Deposits, which are U.S. dollar-denominated deposits issued by
branches of major Canadian banks located in the United States; and
.Yankee Certificates of Deposit, which are U.S. dollar-denominated certificates
of deposit issued by U.S. branches of foreign banks and held in the United
States.
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. 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.
REPURCHASE AGREEMENTS
As collateral for the obligation of the seller to repurchase the securities from
the Fund, the Fund or its custodian will take possession of the securities
subject to repurchase agreements, and these securities will be marked to
market daily. 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 will
only enter into repurchase agreements with banks and other financial
institutions, such as broker-dealers, which are deemed by the Fund's Adviser to
be creditworthy pursuant to guidelines established by the Trustees.
REVERSE REPURCHASE AGREEMENTS
The Fund may also enter into reverse repurchase agreements. These transactions
are similar to borrowing cash and pledging securities as collateral. In a
reverse repurchase agreement, the Fund transfers possession of a portfolio
instrument to another person, such as a financial institution or broker-dealer,
in return for a percentage of the instrument's market value in cash, and agrees
that on a stipulated date in the future the Fund will repurchase the portfolio
instrument by remitting the original consideration plus interest at an agreed
upon rate. The use of reverse repurchase agreements may enable the Fund to avoid
selling portfolio instruments at a time when a sale may be deemed to be
disadvantageous, but the ability to enter into reverse repurchase agreements
does not ensure that the Fund will be able to avoid selling portfolio
instruments at a disadvantageous time.
When effecting reverse repurchase agreements, liquid assets of the Fund, in a
dollar amount sufficient to make payment for the obligations to be purchased,
are segregated at the trade date. These assets are marked to market daily and
are maintained until the transaction has been settled.
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 transactions.
ISSUING SENIOR SECURITIES AND BORROWING MONEY
The Fund will not issue senior securities except that the Fund may borrow
money and engage in reverse repurchase agreements in amounts up to
33 1/3% of the value of its total assets, including the amounts borrowed.
The Fund will not borrow money or engage in reverse repurchase agreements
for investment leverage, but rather as a temporary, extraordinary, or
emergency measure or to facilitate management of the portfolio by
enabling the Fund to meet redemption requests when the liquidation of
portfolio securities is deemed to be inconvenient or disadvantageous.
PLEDGING ASSETS
The Fund will not mortgage, pledge, or hypothecate any assets except to
secure permitted borrowings. In these cases, it may pledge assets having
a market value not exceeding the lesser of the dollar amounts borrowed or
15% of the value of total assets at the time of the pledge.
CONCENTRATION OF INVESTMENTS
The Fund will not invest 25% or more of the value of its total assets in
any one industry. However, the Fund may invest more than 25% of the value
of its total assets in cash or cash items, securities issued or
guaranteed by the U.S. government, its agencies or instrumentalities, or
instruments secured by money market instruments, such as repurchase
agreements.
INVESTING IN COMMODITIES, COMMODITY CONTRACTS, OR COMMODITY FUTURES
CONTRACTS
The Fund will not purchase or sell commodities, commodity contracts, or
commodity futures contracts.
INVESTING IN REAL ESTATE
The Fund will not purchase or sell real estate, although it may invest in
the securities of issuers whose business involves the purchase or sale of
real estate or in securities which are secured by real estate or interest
in real estate.
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 (the
"Securities Act") in connection with the sale of securities in accordance
with its investment objective, policies, and limitations.
LENDING CASH OR SECURITIES
The Fund will not lend any of its assets, except portfolio securities up
to 50% of the value of its total assets, and except that it may purchase
or hold money market instruments, including repurchase agreements and
variable amount demand master notes, in accordance with its investment
objective, policies, and limitations.
DIVERSIFICATION OF INVESTMENTS
With respect to 75% of the value of its assets, the Fund will not
purchase securities of any one issuer (other than cash, cash items or
securities issued or guaranteed by the government of the United States or
its agencies or instrumentalities and repurchase agreements
collateralized by U.S. government securities) if as a result more than 5%
of the value of its total assets would be invested in the securities of
that issuer and will not acquire more than 10% of the outstanding voting
securities of any one issuer.
The above investment limitations cannot be changed without shareholder approval.
The following investment limitations, however, may be changed by the Trust's
Board of Trustees ("Trustees") without shareholder approval. Shareholders will
be notified before any material change in the following limitations become
effective.
INVESTING IN ILLIQUID SECURITIES
The Fund will not invest more than 10% of the value of its net assets in
illiquid securities, including repurchase agreements providing for
settlement in more than seven days after notice, non-negotiable fixed
time deposits with maturities over seven days, and certain restricted
securities not determined by the Trustees to be liquid.
INVESTING IN NEW ISSUERS
The Fund will not invest more than 5% of the value of its total assets in
securities of issuers which have records of less than three years of
continuous operations, including the operation of any predecessor.
INVESTING IN MINERALS
The Fund will not purchase interests in oil, gas, or other mineral
exploration or development programs or leases, although it may purchase
the securities of issuers which invest in or sponsor such programs.
INVESTING IN ISSUERS WHOSE SECURITIES ARE OWNED BY OFFICERS AND TRUSTEES OF
THE TRUST
The Fund will not purchase or retain the securities of any issuer if the
officers and Trustees of the Trust or the Fund's investment adviser
owning individually more than 0.5% of the issuer's securities together
own more than 5% of the issuer's securities.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
The Fund will limit its investment in other investment companies to no
more than 3% of the total outstanding voting stock of any investment
company, will not 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 the aggregate. However, these limitations are not
applicable if the securities are acquired in a merger, consolidation, or
acquisition of assets.
Except with respect to borrowing money, if a percentage limitation is adhered to
at the time of investment, a later increase or decrease in percentage resulting
from any change in value or net assets will not result in a violation of such
restriction.
The Fund does not expect to borrow money or pledge securities, except as a
temporary, extraordinary, or emergency measure, in excess of 5% of the value of
its net assets in its next fiscal year.
For purposes of its policies and limitations, the Fund considers certificates of
deposit and demand and time deposits issued by a U.S. branch of a domestic bank
or savings and loan having capital, surplus, and undivided profits in excess of
$100,000,000 at the time of investment to be cash items.
PEACHTREE FUNDS MANAGEMENT
- --------------------------------------------------------------------------------
Officers and Trustees are listed with their addresses, present positions with
Peachtree Funds, and principal occupations.
- --------------------------------------------------------------------------------
John F. Donahue+*
Federated Investors Tower
Pittsburgh, PA
Chairman and Trustee
Chairman and Trustee, Federated Investors; Federated Advisers, Federated
Management, and Federated Research; Chairman and Director, Federated Research
Corp.; Chairman, Passport Research, Ltd.; Director, AEtna Life and Casualty
Company; Chief Executive Officer and Director, Trustee, or Managing General
Partner of the Funds. Mr. Donahue is the father of J. Christopher Donahue.
- --------------------------------------------------------------------------------
John T. Conroy, Jr.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, FL
Trustee
President, Investment Properties Corporation; Senior Vice-President, John R.
Wood and Associates, Inc., Realtors; President, Northgate Village Development
Corporation; Partner or Trustee in private real estate ventures in Southwest
Florida; Director, Trustee, or Managing General Partner of the Funds; formerly,
President, Naples Property Management, Inc.
- --------------------------------------------------------------------------------
William J. Copeland
One PNC Plaza-23rd Floor
Pittsburgh, PA
Trustee
Director and Member of the Executive Committee, Michael Baker, Inc.; Director,
Trustee, or Managing General Partner of the Funds; formerly, Vice Chairman and
Director, PNC Bank, N.A., and PNC Bank Corp. and Director, Ryan Homes, Inc.
- --------------------------------------------------------------------------------
James E. Dowd
571 Hayward Mill Road
Concord, MA
Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director, Trustee,
or Managing General Partner of the Funds; formerly, Director, Blue Cross of
Massachusetts, Inc.
- --------------------------------------------------------------------------------
Lawrence D. Ellis, M.D.
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA
Trustee
Hematologist, Oncologist, and Internist, Presbyterian and Montefiore Hospitals;
Professor of Medicine and Trustee, University of Pittsburgh; Director of
Corporate Health, University of Pittsburgh Medical Center; Director, Trustee, or
Managing General Partner of the Funds.
- --------------------------------------------------------------------------------
Edward L. Flaherty, Jr.+
Two Gateway Center-Suite 674
Pittsburgh, PA
Trustee
Attorney-at-law; Partner, Henny, Koehuba, Meyer & Flaherty; Director, Eat'N Park
Restaurants, Inc., and Statewide Settlement Agency, Inc.; Director, Trustee, or
Managing General Partner of the Funds; formerly, Counsel, Horizon Financial,
F.A., Western Region.
- --------------------------------------------------------------------------------
Peter E. Madden
225 Franklin Street
Boston, MA
Trustee
Consultant; State Representative, Commonwealth of Massachusetts; Director,
Trustee, or Managing General Partner of the Funds; formerly, President, State
Street Bank and Trust Company and State Street Boston Corporation and Trustee,
Lahey Clinic Foundation, Inc.
- --------------------------------------------------------------------------------
Gregor F. Meyer
Two Gateway Center-Suite 674
Pittsburgh, PA
Trustee
Attorney-at-law; Partner, Henny, Koehuba, Meyer & Flaherty; Chairman, Meritcare,
Inc.; Director, Eat'N Park Restaurants, Inc.; Director, Trustee, or Managing
General Partner of the Funds; formerly, Vice Chairman, Horizon Financial, F.A.
- --------------------------------------------------------------------------------
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Trustee
Professor, Foreign Policy and Management Consultant; Trustee, Carnegie Endowment
for International Peace, RAND Corporation, Online Computer Library Center, Inc.,
and U.S. Space Foundation; Chairman, Czecho Slovak Management Center; Director,
Trustee, or Managing General Partner of the Funds; President Emeritus,
University of Pittsburgh; formerly, Chairman, National Advisory Council for
Environmental Policy and Technology.
- --------------------------------------------------------------------------------
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Trustee
Public relations/marketing consultant; Director, Trustee, or Managing General
Partner of the Funds.
- --------------------------------------------------------------------------------
Edward C. Gonzales*
Federated Investors Tower
Pittsburgh, PA
President, Treasurer and Trustee
Vice President, Treasurer, and Trustee, Federated Investors; Vice President and
Treasurer, Federated Advisers, Federated Management, Federated Research,
Federated Research Corp., and Passport Research, Ltd.; Executive Vice President,
Treasurer, and Director, Federated Securities Corp.; Trustee, Federated Services
Company and Federated Shareholder Services; Chairman, Treasurer, and Trustee,
Federated Administrative Services; Trustee or Director of some of the Funds;
Vice President and Treasurer of the Funds.
- --------------------------------------------------------------------------------
J. Christopher Donahue
Federated Investors Tower
Pittsburgh, PA
Vice President
President and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; President and Director, Federated Research
Corp.; President, Passport Research, Ltd.; Trustee, Federated Administrative
Services, Federated Services Company, and Federated Shareholder Services;
President or Vice President of the Funds; Director, Trustee, or Managing General
Partner of some of the Funds. Mr. Donahue is the son of John F. Donahue,
Chairman and Trustee of the Trust.
- --------------------------------------------------------------------------------
Richard B. Fisher
Federated Investors Tower
Pittsburgh, PA
Vice President
Executive Vice President and Trustee, Federated Investors; Director, Federated
Research Corp.; Chairman and Director, Federated Securities Corp.; President or
Vice President of some of the Funds; Director or Trustee of some of the Funds.
- --------------------------------------------------------------------------------
John W. McGonigle
Federated Investors Tower
Pittsburgh, PA
Vice President and Secretary
Vice President, Secretary, General Counsel, and Trustee, Federated Investors;
Vice President, Secretary, and Trustee, Federated Advisers, Federated
Management, and Federated Research; Vice President and Secretary, Federated
Research Corp. and Passport Research, Ltd.; Trustee, Federated Services Company;
Executive Vice President, Secretary, and Trustee, Federated Administrative
Services; Secretary and Trustee, Federated Shareholder Services; Executive Vice
President and Director, Federated Securities Corp.; Vice President and Secretary
of the Funds.
- --------------------------------------------------------------------------------
Charles L. Davis, Jr.
Federated Investors Tower
Pittsburgh, PA
Vice President and Assistant Treasurer
Vice President, Federated Administrative Services; Vice President and Assistant
Treasurer of some of the Funds; formerly, Vice President and Director of
Investor Relations, MNC Financial, Inc. and Vice President, Product Management,
MNC Financial, Inc.
- --------------------------------------------------------------------------------
* This Trustee is deemed to be an "interested person" as defined in the
Investment Company Act of 1940, as amended.
+ Member of the Executive Committee. The Executive Committee of the Board of
Trustees handles various of the delegable responsibilities of the Board of
Trustees between meetings of the Board.
THE FUNDS
"The Funds" and "Funds" mean the following investment companies: American
Leaders Fund, Inc.; Annuity Management Series; Arrow Funds; Automated Cash
Management Trust; Automated Government Money Trust; California Municipal Cash
Trust; Cash Trust Series, Inc.; Cash Trust Series II; DG Investor Series; Edward
D. Jones & Co. Daily Passport Cash Trust; Federated ARMs Fund; Federated
Exchange Fund, Ltd.; Federated GNMA Trust; Federated Government Trust; Federated
Growth Trust; Federated High Yield Trust; Federated Income Securities Trust;
Federated Income Trust; Federated Index Trust; Federated Institutional Trust;
Federated Intermediate Government Trust; Federated Master Trust; Federated
Municipal Trust; Federated Short-Intermediate Government Trust; Federated
Short-Term U.S. Government Trust; Federated Stock Trust; Federated Tax-Free
Trust; Federated U.S. Government Bond Fund; First Priority Funds; Fixed Income
Securities, Inc.; Fortress Adjustable Rate U.S. Government Fund, Inc.; Fortress
Municipal Income Fund, Inc.; Fortress Utility Fund, Inc.; Fund for U.S.
Government Securities, Inc.; Government Income Securities, Inc.; High Yield Cash
Trust; Insight Institutional Series, Inc.; Insurance Management Series;
Intermediate Municipal Trust; International Series Inc.; Investment Series
Funds, Inc.; Investment Series Trust; Liberty Equity Income Fund, Inc.; Liberty
High Income Bond Fund, Inc.; Liberty Municipal Securities Fund, Inc.; Liberty
Term Trust, Inc.-1999; Liberty U.S. Government Money Market Trust; Liberty
Utility Fund, Inc.; Liquid Cash Trust; Managed Series Trust; The Medalist Funds;
Money Market Management Inc.; Money Market Obligations Trust; Money Market
Trust; Municipal Securities Income Trust; New York Municipal Cash Trust; 111
Corcoran Funds; The Planters Funds; Portage Funds; RIMCO Monument Funds; The
Shawmut Funds; Short-Term Municipal Trust; Star Funds; The Starburst Funds; The
Starburst Funds II; Stock and Bond Fund, Inc.; Sunburst Funds; Targeted Duration
Trust; Tax-Free Instruments Trust; Trademark Funds; Trust for Financial
Institutions; Trust for Government Cash Reserves; Trust for Short-Term U.S.
Government Securities; Trust for U.S. Treasury Obligations and World Investment
Series, Inc.
FUND OWNERSHIP
Officers and Trustees own less than 1% of the Fund's outstanding shares.
As of November 4, 1994, the following shareholder of record owned 5% or more of
the outstanding shares of the Fund: Bank South N.A., Atlanta, Georgia, acting in
various capacities for numerous accounts, owned approximately 84,255,368 shares
(94.34%).
TRUSTEE LIABILITY
The Trust's Declaration of Trust provides that the Trustees are not 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 the Bank (the "Adviser"). 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 Trust.
Because of the internal controls maintained by the Bank to restrict the flow of
non-public information, Fund investments are typically made without any
knowledge of the Bank's or its affiliates' lending relationships with an issuer.
ADVISORY FEES
For its advisory services, the Adviser receives an annual investment advisory
fee as described in the Prospectus.
STATE EXPENSE LIMITATIONS
The Fund has undertaken to comply with the expense limitations
established by certain states for investment companies whose shares are
registered for sale in those states. If the Fund's normal operating
expenses (including the investment advisory fee, but not including
brokerage commissions, interest, taxes, and extraordinary expenses)
exceed 2.50% per year of the first $30 million of average net assets,
2.00% per year of the next $70 million of average net assets, and 1.50%
per year of the remaining average net assets, the Adviser has agreed to
reimburse the Fund for its expenses over the limitation.
If the Fund's monthly projected operating expenses exceed this
limitation, the investment advisory fee paid will be reduced by the
amount of the excess, subject to an annual adjustment. If the expense
limitation is exceeded, the amount to be reimbursed by the Adviser will
be limited, in any single fiscal year, by the amount of the investment
advisory fee.
This arrangement is not part of the advisory contract and may be amended
or rescinded in the future.
For the period from February 14, 1994 (date of initial public investment)
to September 30, 1994, the Adviser earned $164,020 of which $138,469 was
voluntarily waived.
ADMINISTRATIVE SERVICES
- --------------------------------------------------------------------------------
Federated Administrative Services, a subsidiary of Federated Investors, provides
administrative personnel and services to the Fund for the fees set forth in the
prospectus. For the period from February 14, 1994 (date of initial public
investment) to September 30, 1994, Federated Administrative Services earned
$48,187 for administrative services, of which $18,184 was voluntarily waived.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
- --------------------------------------------------------------------------------
Federated Services Company serves as transfer agent and dividend disbursing
agent for the Fund. The fee paid to the transfer agent is based upon the size,
type and number of accounts and transactions made by shareholders.
Federated Services Company also maintains the Trust's accounting records. 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.
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 utilize those who are
recognized dealers in specific portfolio instruments, except when a better price
and execution of the order can be obtained elsewhere. The Adviser 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.
The Adviser exercises reasonable business judgment in selecting brokers who
offer brokerage and research services to execute securities transactions. The
Adviser determines in good faith that commissions charged by such persons are
reasonable in relationship to the value of the brokerage and research services
provided.
Research services provided by brokers and dealers may be used by the Adviser in
advising the Fund and other accounts. To the extent that receipt of these
services may supplant services for which the Adviser might otherwise have paid,
it would tend to reduce its expenses.
PURCHASING SHARES
- --------------------------------------------------------------------------------
Shares are sold at their net asset value without a sales charge on days the New
York Stock Exchange and the Federal Reserve Wire System are open for business.
The procedure for purchasing shares of the Fund is explained in the prospectus
under "Investing in the Funds."
ADMINISTRATIVE ARRANGEMENTS
The administrative services include, but are not limited to, providing office
space, equipment, telephone facilities, and various personnel, including
clerical, supervisory, and computer, as is necessary or beneficial to establish
and maintain shareholders' accounts and records, process purchase and redemption
transactions, process automatic investments of client account cash balances,
answer routine client inquiries regarding the Fund, assist clients in changing
dividend options, account designations, and addresses, and providing such other
services as the Fund may reasonably request.
DISTRIBUTION PLAN
With respect to the Fund, the Trust has adopted a Plan pursuant to Rule 12b-1
which was promulgated by the Securities and Exchange Commission ("SEC") pursuant
to the Investment Company Act of 1940, as amended (the "Act"). The Plan provides
for payment of fees to the Distributor to finance any activity which is
principally intended to result in the sale of the Fund's shares subject to the
Plan. Such activities may include the advertising and marketing of shares of the
Fund; preparing, printing, and distributing prospectuses and sales literature to
prospective shareholders, brokers, or administrators; and implementing and
operating the Plan. Pursuant to the Plan, the Distributor may pay fees to
brokers and others for such services.
PURCHASING FUND SHARES WITH SECURITIES
The Fund in its sole discretion, may sell Fund shares to investors that desire
to purchase Fund shares with certain securities or a combination of certain
securities and cash. The Fund reserves the right to determine the acceptability
of securities used to effect such purchases. On the day securities are accepted
by the Fund, they are valued based upon independent bid and in the same manner
as the Fund values it assets. Investors wishing to use securities to purchase
Fund shares should first contact the Bank. Any such transfer of securities is
treated as a sale of the securities and will result in the recognition of any
gain or loss for federal income tax purposes by the seller of such securities,
except to the extent the seller is an ERISA plan or similar entity not subject
to tax. Unless such securities are to be acquired by the Fund in a bona fide
reorganization, statutory merger, or similar transaction, such securities must
meet the Fund's investment restrictions at the time of sale.
DETERMINING NET ASSET VALUE
- --------------------------------------------------------------------------------
The Fund attempts to stabilize the value of a share at $1.00. The days on which
net asset value is calculated by the Fund are described in the prospectus.
USE OF THE AMORTIZED COST METHOD
The Trustees have decided that the best method for determining the value of
portfolio instruments is amortized cost. Under this method, portfolio
instruments are valued at the acquisition cost as adjusted for amortization of
premium or accumulation of discount rather than at current market value.
The Fund's use of the amortized cost method of valuing portfolio instruments
depends on its compliance with certain conditions of SEC Rule 2a-7 under the
ICA. Under this Rule, the Trustees must establish procedures reasonably designed
to stabilize the net asset value per share, as computed for purposes of
distribution and redemption, at $1.00 per share, taking into account current
market conditions and the Fund's investment objective.
Under such Rule, the Fund is permitted to purchase instruments which are subject
to demand features or standby commitments. As defined by Rule 2a-7, a demand
feature entitles the Fund to receive the principal amount of the instrument from
the issuer or a third party (1) on no more than 30 days' notice or (2) at
specified intervals not exceeding one year on no more than 30 days' notice. A
standby commitment entitles the Fund to achieve same day settlement and to
receive an exercise price equal to the amortized cost of the underlying
instrument plus accrued interest at the time of exercise.
MONITORING PROCEDURES
The Trustees' procedures include monitoring the relationship between the
amortized cost value per share and the net asset value per share based
upon available indications of market value. The Trustees will decide
what, if any, steps should be taken if there is a difference of more than
0.50% between the two values. The Trustees will take any steps they
consider appropriate (such as redemption in kind or shortening the
average portfolio maturity) to minimize any material dilution or other
unfair results arising from differences between the two methods of
determining net asset value.
INVESTMENT RESTRICTIONS
Rule 2a-7 requires that the Fund limit its investments to instruments
that, in the opinion of the Trustees, present minimal credit risks and
have received the requisite rating from one or more nationally recognized
statistical rating organizations. If the instruments are not rated, the
Trustees must determine that they are of comparable quality. The Rule
also requires the Fund to maintain a dollar-weighted average portfolio
maturity (not more than 90 days) appropriate to the objective of
maintaining a stable net asset value of $1.00 per share. In addition, no
instruments with a remaining maturity of more than 13 months can be
purchased by the Fund.
Should the disposition of a portfolio security result in a
dollar-weighted average portfolio maturity of more than 90 days, the Fund
will invest its available cash to reduce the average maturity to 90 days
or less as soon as possible.
The Fund may attempt to increase yield by trading portfolio securities to take
advantage of short-term market variations. This policy may, from time to time,
result in high portfolio turnover. Under the amortized cost method of valuation,
neither the amount of daily income nor the net asset value is affected by any
unrealized appreciation or depreciation of the portfolio.
In periods of declining interest rates, the indicated daily yield on shares of
the Fund computed by dividing the annualized daily income on the Fund's
portfolio by the net asset value computed as above may tend to be higher than a
similar computation made by using a method of valuation based upon market prices
and estimates.
In periods of rising interest rates, the indicated daily yield on shares of the
Fund computed the same way may tend to be lower than a similar computation made
by using a method of calculation based upon market prices and estimates.
EXCHANGE PRIVILEGE
- --------------------------------------------------------------------------------
Shareholders of the Fund may exchange shares of the Fund for shares of other
Funds advised by the Bank and certain other funds designated by the Bank and
distributed by the Distributor, subject to certain conditions. Exchange
procedures are explained in the Prospectus under "Exchange Privilege".
REQUIREMENTS FOR EXCHANGE
Shareholders using the exchange privilege must exchange shares having a net
asset value of at least $1,000. Before the exchange, the shareholder must
receive a prospectus of the fund for which the exchange is being made.
This privilege is available to shareholders resident in any state in which the
fund shares being acquired may be sold. Upon receipt of proper instructions and
required supporting documents, shares submitted for exchange are redeemed and
the proceeds invested in shares of the other fund. Further information on the
exchange privilege and prospectuses may be obtained by calling the Bank at the
number on the cover of this Statement of Additional Information.
MAKING AN EXCHANGE
Instructions for exchanges may be given in writing. Written instructions may
require a signature guarantee.
REDEEMING SHARES
- --------------------------------------------------------------------------------
The Fund redeems shares at the next computed net asset value after the Bank
receives the redemption request. Redemptions will be made on days on which the
Fund computes its net asset value. Redemption requests cannot be executed on
days on which the New York Stock Exchange is closed or on federal holidays
restricting wire transfers. Redemption procedures are explained in the
prospectus under "Redeeming Shares."
REDEMPTION IN KIND
Although the Fund intends to redeem shares in cash, it reserves the right under
certain circumstances to pay the redemption price, in whole or in part, by a
distribution of securities from the Fund's portfolio. To satisfy registration
requirements in a particular state, redemption in kind will be made in readily
marketable securities to the extent that such securities are available. If such
a state's policy changes, the Fund reserves the right to redeem in kind by
delivering those securities it deems appropriate.
Redemption in kind will be made in conformity with applicable SEC rules, taking
such securities at the same value employed in determining net asset value and
selecting the securities in a manner the Trustees determine to be fair and
equitable.
The Trust has elected to be governed by SEC Rule 18f-1 under the ICA where 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.
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 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 from 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.
SHAREHOLDERS' TAX STATUS
Shareholders are subject to federal income tax on dividends received as cash or
additional shares. No portion of any income dividend paid by the Fund is
eligible for the dividends received deduction available to corporations. These
dividends and any short-term capital gains are taxable as ordinary income.
CAPITAL GAINS
Capital gains experienced by the Fund could result in an increase in
dividends. Capital losses could result in a decrease in dividends. If,
for some extraordinary reason, the Fund realizes net long-term capital
gains, it will distribute them at least once every 12 months.
YIELD
- --------------------------------------------------------------------------------
The Fund's yield for the seven-day period ended September 30, 1994 was 4.29%.
The Fund calculates its yield daily based upon the seven days ending on the day
of the calculation, called the "base period." This yield is computed by:
.determining the net change in the value of a hypothetical account with a
balance of one share at the beginning of the base period, with the net change
excluding capital changes but including the value of any additional shares
purchased with dividends earned from the original one share and all dividends
declared on the original and any purchased shares;
.dividing the net change in the account's value by the value of the account at
the beginning of the base period to determine the base period return; and
.multiplying the base period return by (365/7).
To the extent that financial institutions and brokers/dealers charge fees in
connection with services and provided in conjunction with an investment in the
Fund, the performance will be reduced for those shareholders paying those fees.
EFFECTIVE YIELD
- --------------------------------------------------------------------------------
The Fund's effective yield for the seven-day period ended September 30, 1994 was
4.38%.
The Fund's effective yield is computed by compounding the unannualized base
period return by:
.adding 1 to the base period return;
.raising the sum of the 365/7th power; and
.subtracting 1 from the result.
PERFORMANCE COMPARISONS
- --------------------------------------------------------------------------------
The Fund's performance depends upon such variables as:
.portfolio quality;
.average portfolio maturity;
.type of instruments in which the portfolio is invested;
.changes in interest rates on money market instruments;
.changes in Fund expenses; and
.the relative amount of Fund cash flow.
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 compositions of other funds, and methods
used to value portfolio securities and compute offering price. The financial
publications and/or indices which the Fund uses in advertising may include:
.LIPPER ANALYTICAL SERVICES, INC., ranks funds in various fund categories by
making comparative calculations using total return. Total return assumes the
reinvestment of all income dividends and capital gains distributions, if any.
From time to time, the Fund will quote its Lipper ranking in the "money market
instrument funds" category in advertising and sales literature.
.MONEY, a monthly magazine, regularly ranks money market funds in various
categories based on the latest available seven-day compound (effective) yield.
From time to time, the Fund will quote its Money ranking in advertising and
sales literature.
Advertisements and other sales literature for the Fund may refer to total
return. Total return is the historic change in the value of an investment in the
Fund based on the monthly reinvestment of dividends over a specified period of
time.
APPENDIX
- --------------------------------------------------------------------------------
STANDARD & POOR'S RATINGS GROUP CORPORATE BOND RATING DEFINITIONS
AAA_Debt rated "AAA" has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.
AA_Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
A_Debt rated "A" has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effect of changes in
circumstances and economic conditions than debt in higher rated categories.
MOODY'S INVESTORS SERVICE, INC., CORPORATE BOND RATING DEFINITIONS
AAA_Bonds which are rated "AAA" are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edged." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
AA_Bonds which are rated "AA" are judged to be of high quality by all
standards. Together with the "AAA" group, they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in "AAA" securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.
A_Bonds which are rated "A" possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment sometime in the future.
STANDARD & POOR'S RATINGS GROUP COMMERCIAL PAPER RATING DEFINITIONS
A-1_This designation indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics are denoted with a plus (+) sign
designation.
A-2_Capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not as high as for issues designated
"A-1".
MOODY'S INVESTORS SERVICE, INC., COMMERCIAL PAPER RATING DEFINITIONS
P-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:
conservative capitalization structures 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.
P-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.
FITCH INVESTORS SERVICE, INC., SHORT-TERM DEBT RATING DEFINITIONS
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.
DUFF & PHELPS' CREDIT RATING CO. SHORT-TERM DEBT RATING DEFINITIONS
DUFF 1+_Highest certainty of timely payment. Short-term liquidity, including
internal operating factors and/or access to alternative sources of funds, is
outstanding, and safety is just below risk-free U.S. Treasury short-term
obligations.
DUFF 1_Very high certainty of timely payment. Liquidity factors are excellent
and supported by good fundamental protection factors. Risk factors are minor.
DUFF 1_High certainty of timely payment. Liquidity factors are strong and
supported by good fundamental protection factors. Risk factors are very small.
DUFF 2_Good certainty of timely payment. Liquidity factors and company
fundamentals are sound. Although ongoing funding needs may enlarge total
financing requirements, access to capital markets is good. Risk factors are
small.
A CREDIT RATING IS NOT A RECOMMENDATION TO BUY, SELL OR HOLD SECURITIES, AND IS
SUBJECT TO CHANGE AND/OR WITHDRAWAL BY THE RATING AGENCY.
70467H408
3092207B (11/94)
PART C. OTHER INFORMATION.
Item 24. Financial Statements and Exhibits:
(a) Financial Statements: Filed in Part A (1,2,4,5);
To be filed by Amendment (3)
(b) Exhibits:
(1) (i) Conformed Copy of Declaration of Trust
of the Registrant (1);
(ii) Conformed Copy of Amended and Restated
Declaration of Trust of the Registrant
(2);
(iii) Conformed Copy of Amendment No. 2
to the Declaration of
Trust (3);
(2) Copy of By-Laws of the Registrant (2);
(3) Not applicable;
(4) a. Copy of Specimen Certificates
for Shares of Beneficial Interest of the
Registrant; +
(i) Peachtree Bond Fund;+
(ii) Peachtree Equity Fund;+
(iii)Peachtree Georgia Tax-Free Income Fund;+
(iv) Peachtree Government Money Market Fund+
(v) Peachtree Prime Money Market Fund;+
b. Copy of Revised Specimen
Certificates for Shares of Beneficial
Interest of the Registrant (to be filed
by Amendment);
(5) Conformed Copy of Investment Advisory
Contract of the Registrant (2);
(6) (i) Conformed Copy of Distributor's
Contract of the Registrant (2);
(ii) Conformed Copy of Administrative
Services Agreement (2);
(7) Not applicable;
(8) Conformed Copy of Custodian Agreement of the
Registrant (4);
(9) (i) Conformed Copy of Agreement for Fund
Accounting, Shareholder
Recordkeeping and Custody Services
Procurment Agreement of the Registrant
(2);
(ii) Conformed Copy of Shareholder
Services Plan of the Registrant
(2);
(10) Conformed Copy of Opinion and Consent of
Counsel as to legality of shares being
registered (2);
(11) (i) Conformed Copy of Consent of
Independent Public Accountants; +
(12) Not applicable;
(13) Conformed Copy of Initial Capital
Understanding (2);
(14) Not applicable;
+ All Exhibits have been filed electronically.
1. Response is incorporated by reference to Registrant's
Initial Registration Statement on Form N-1A filed October
15, 1993. (File Nos. 33-50635 and 811-3432).
2. Response is incorporated by reference to Registrant's Pre-
effective Amendment No. 2 on Form N-1A filed January 7,
1994. (File Nos. 33-50635 and 811-3432).
3. Response is incorporated by reference to Registrant's
Registration Statement on Form N-1A filed April 8, 1994.
(File Nos. 33-50635 and 811-3432)
. 4. Response is incorporated by reference to Registrant's
Registration Statement on Form N-1A filed May 27, 1994.
(File Nos. 33-50635 and 811-3432).
(15) (i)Conformed Copy of Distribution
Plan (2);
(ii) Copy of Form of 12b-1
Agreement (2);
(16) Schedule for Computation of Fund
Performance Data:
(i) Peachtree Bond Fund (4);
(ii) Peachtree Equity Fund (4);
(iii) Peachtree Government Money Market
Fund(4);
(iv) Peachtree Prime Money Market Fund
(4);
(17) Financial Data Schedules;+
(18) Opinion and Consent of Counsel as to
Availability of Rule 485(b); +
(19) Power of Attorney ;+
Item 25. Persons Controlled by or Under Common Control with
Registrant
None
Item 26. Number of Holders of Securities:
Number of Record Holders
Title of Class as of November 4, 1994
Shares of
Beneficial Interest
(no par value)
Peachtree Georgia Tax-Free Income Fund 8
Peachtree Government Money Market Fund 14
Peachtree Prime Money Market Fund 53
Peachtree Bond Fund 26
Peachtree Equity Fund 86
Item 27. Indemnification: (1)
Item 28. Business and Other Connections of Investment Adviser:
(a) Bank South National Association (the "Bank") is
headquartered in Atlanta Georgia and is a wholly
owned subsidiary of Bank South Corporation, a
Georgia corporation which is a registered bank
holding company. The Bank serves consumers
through its network of banking offices with a full
range of deposit and lending products, as well as
investment services. The principal executive
offices of the Adviser are located at 3350
Cumberland Circle, Atlanta, GA 30339. The Bank
has managed discretionary assets for its consumers
since 1931. As of January, 1994, the Bank managed
in excess of $1 billion of discretionary assets.
Prior to the date hereof, the Bank has not served
as an investment adviser to mutual funds.
+ All Exhibits have been filed electronically.
1. Response is incorporated by reference to Registrant's
Initial Registration Statement on Form N-1A filed October
15, 1993. (File Nos. 33-50635 and 811-3432).
2. Response is incorporated by reference to Registrant's Pre-
effective Amendment No. 2 on Form N-1A filed January 7,
1994. (File Nos. 33-50635 and 811-3432).
4. Response is incorporated by reference to Registrant's
Registration Statement on Form N-1A filed May 27, 1994.
(File Nos. 33-50635 and 811-3432).
The principal executive offices and directors of
the Trust's Investment Adviser are set forth in
the following tables. Unless otherwise noted, the
position listed under Other Substantial Business,
Profession, Vocation or Employment is with the
Bank.
(1) (2) (3)
Other Substantial
Position with Business
Profession,
Name the Adviser Vocation or
Employment
Bernard W. Abrams Director Chairman of the
Board and Chief
Executive Officer of
Abrams Industries,
Inc., a holding
company for
subsidiaries doing
business in general
contracting, real
estate development
and manufacturing of
store fixtures.
Ray C. Anderson Director Chairman and Chief
Executive Officer of
Interface, Inc., a
manufacturer of
carpet, textiles and
chemicals.
Kenneth W. Cannestra Director President of
Lockheed
Aeronautical Systems
Co.
John S. Carr Director President of John S.
Carr and Associates,
Inc., a real estate
development company.
Patrick L. Flinn Chairman and ___ ___
Chief Executive
Officer
Ralph E. Hutchens, Jr. Chief ___ ___
Financial Officer
Sidney E. Jennette, Jr. Director Management
consultant.
Lynn H. Johnston Director Chairman of Life
Insurance Company of
Georgia.
William M. McClatchey, M.D. Director President
of Piedmont Internal
Medicine Associates,
P.A. and is a doctor
of internal medicine
and rheumatology
John E. McKinley, III Principle Operating ___ ___
Officer
(1) (2) (3)
Other Substantial
Position with Business
Profession,
Name the Adviser Vocation or
Employment
Julia W. Morgan Director President and Chief
Executive Officer of
Ed Morgan &
Associates, an
insurance company.
Barry Phillips Director Partner of
Kilpatrick & Cody,
Attorneys.
Ben. G. Porter Director Chairman of Piedmont
Communications
Corporation.
John W. Robinson, Jr. Director President of
Southern Waistbands,
Inc.
Lee M. Sessions, Jr. Principle Operating
Officer
Felker W. Ward, Jr. Director President of Ward &
Associates,
investment bankers.
Virgil R. Williams Director President of
Equipment
Technology, Inc.,
President of
International
Banking
Technologies, Inc.
and the President
and Publisher of
Georgia Trend.
Item 29. Principal Underwriters:
(a) Federated Securities Corp., the
Distributor for shares of the Registrant, also
acts as principal underwriter for the following
open-end investment companies: Alexander Hamilton
Funds; American Leaders Fund, Inc.; Annuity
Management Series; Arrow Funds; Automated Cash
Management Trust; Automated Government Money
Trust; BayFunds; The Biltmore Funds; The Biltmore
Municipal Funds; California Municipal Cash Trust;
Cash Trust Series, Inc.; Cash Trust Series II; DG
Investor Series; Edward D. Jones & Co. Daily
Passport Cash Trust; Federated ARMs Fund;
Federated Exchange Fund, Ltd.; Federated GNMA
Trust; Federated Government Trust; Federated
Growth Trust; Federated High Yield Trust;
Federated Income Securities Trust; Federated
Income Trust; Federated Index Trust; Federated
Institutional Trust; Federated Intermediate
Government Trust; Federated Master Trust;
Federated Municipal Trust; Federated Short-
Intermediate Government Trust; Federated Short-
Term U.S. Government Trust; Federated Stock Trust;
Federated Tax-Free Trust; Federated U.S.
Government Bond Fund; First Priority Funds; First
Union Funds; Fixed Income Securities, Inc.;
Fortress Adjustable Rate U.S. Government Fund,
Inc.; Fortress Municipal Income Fund, Inc.;
Fortress Utility Fund, Inc.; Fountain Square
Funds; Fund for U.S. Government Securities, Inc.;
Government Income Securities, Inc.; High Yield
Cash Trust; Independence One Mutual Funds; Insight
Institutional Series, Inc.; Insurance Management
Series; Intermediate Municipal Trust;
International Series Inc.; Investment Series
Funds, Inc.; Investment Series Trust; Liberty
Equity Income Fund, Inc.; Liberty High Income Bond
Fund, Inc.; Liberty Municipal Securities Fund,
Inc.; Liberty U.S. Government Money Market Trust;
Liberty Utility Fund, Inc.; Liquid Cash Trust;
Managed Series Trust; Marshall Funds, Inc.; Money
Market Management, Inc.; The Medalist Funds; Money
Market Obligations Trust; Money Market Trust; The
Monitor Funds; Municipal Securities Income Trust;
New York Municipal Cash Trust; 111 Corcoran Funds;
Peachtree Funds; The Planters Funds; Portage
Funds; RIMCO Monument Funds; The Shawmut Funds;
Short-Term Municipal Trust; SouthTrust Vulcan
Funds; Star Funds; The Starburst Funds; The
Starburst Funds II; Stock and Bond Fund, Inc.;
Sunburst Funds; Targeted Duration Trust; Tax-Free
Instruments Trust; Tower Mutual Funds; Trademark
Funds; Trust for Financial Institutions; Trust for
Government Cash Reserves; Trust for Short-Term
U.S. Government Securities; Trust for U.S.
Treasury Obligations; Vision Fiduciary Funds,
Inc.; Vision Group of Funds, Inc.; and World
Investment Series, Inc.
Federated Securities Corp. also acts as principal
underwriter for the following closed-end
investment company: Liberty Term Trust, Inc.-
1999.
(b)
(1) (2) (3)
Name and Principal Positions and Offices Positions and
Offices
Business Address With Underwriter With
Registrant
Richard B. Fisher Director, Chairman, Chief Vice
President
Federated Investors Tower Executive Officer, Chief
Pittsburgh, PA 15222-3779 Operating Officer, and
Asst. Treasurer, Federated
Securities Corp.
Edward C. Gonzales Director, Executive Vice President,
Federated Investors Tower President, and Treasurer, Treasurer
and
Pittsburgh, PA 15222-3779 Federated Securities Trustee
Corp.
John W. McGonigle Director, Executive Vice Vice
President and
Federated Investors Tower President, and Assistant Secretary
Pittsburgh, PA 15222-3779 Secretary, Federated
Securities Corp.
John B. Fisher President-Institutional Sales, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James F. Getz President-Broker/Dealer, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark R. Gensheimer Executive Vice President of --
Federated Investors Tower Bank/Trust
Pittsburgh, PA 15222-3779 Federated Securities Corp.
(1) (2) (3)
Name and Principal Positions and Offices Positions and
Offices
Business Address With Underwriter With
Registrant
Mark W. Bloss 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
H. Joseph Kennedy 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
Timothy C. Pillion Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard W. Boyd Vice President, --
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
Laura M. Deger Vice President, --
Federated Investors Tower Federated
Securities Corp.
Pittsburgh, PA 15222-3779
Jill Ehrenfeld Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and
Offices
Business Address With Underwriter With
Registrant
Mark D. Fisher Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Michael D. Fitzgerald Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Joseph D. Gibbons Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
David C. Glabicki Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard C. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Scott A. Hutton Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William J. Kerns Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William E. Kugler Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Dennis M. Laffey Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Francis J. Matten, Jr. 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
R. Jeffrey Niss Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Michael P. O'Brien Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and
Offices
Business Address With Underwriter With
Registrant
Robert D. Oehlschlager Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Solon A. Person, IV Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Robert F. Phillips Vice President, --
Federated Investors Tower Federated
Securities Corp.
Pittsburgh, PA 15222-3779
Eugene B. Reed Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Paul V. Riordan Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Charles A. Robison Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
David W. Spears Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jeffrey A. Stewart Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Thomas E. Territ Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jamie M. Teschner Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William C. Tustin Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard B. Watts Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Philip C. Hetzel Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Ernest L. Linane Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
S. Elliott Cohan Secretary, Federated Assistant
Federated Investors Tower Securities Corp. Secretary
Pittsburgh, PA 15222-3779
(c) Not applicable.
Item 30. Location of Accounts and Records:
All accounts and records required to be maintained by Section
31(a) of the Investment Company Act of 1940 and Rules 31a-1
through 31a-3 promulgated thereunder are maintained at one of the
following locations:
Registrant Federated Investors
Tower
Federated Services Company
("Administrator") Pittsburgh, PA
Federated Administrative Services 15222-3779
("Transfer Agent, Dividend Disbursing
Agent and Portfolio Recordkeeper")
The Bank of New York 48 Wall Street
("Custodian") New York, New York
10286
Bank South National Association
("Adviser") 3350 Cumberland
Circle
Atlanta, Georgia
30339
Item 31. Management Services: Not applicable.
Item 32. Undertakings:
Registrant hereby undertakes to comply with the
provisions of Section 16(c) of the 1940 Act with
respect to the removal of Trustees and the calling of
special shareholder meetings by shareholders.
Registrant hereby undertakes to furnish each person to
whom a prospectus is delivered with a copy of the
Registrant's latest annual report to shareholders,
upon request and without charge.
Registrant hereby undertakes to file a post-effective
amendment, for the Peachtree Georgia Tax-Free Income,
using financial statements which need not be
certified, within four to six months from the
effective date of Registrant's 1933 Act Registration
Statement.
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933 and the Investment Company Act of 1940, the Registrant,
PEACHTREE FUNDS, 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 22nd day
of November, 1994.
PEACHTREE FUNDS
BY: /s/ C. Grant Anderson
C. Grant Anderson, Assistant Secretary
Attorney in Fact for John F. Donahue
November 22, 1994
Pursuant to the requirements of the Securities Act of
1933, this Amendment to its Registration Statement has been
signed below by the following person in the capacity and on
the date indicated:
NAME TITLE
DATE
By: /s/ C. Grant Anderson
C. Grant Anderson Attorney In Fact November 22,
1994
ASSISTANT SECRETARY For the Persons
Listed Below
NAME TITLE
John F. Donahue* Chairman and Trustee
(Chief Executive Officer)
Edward C. Gonzales* President, Treasurerand Trustee
(Principal Financial and
Accounting Officer)
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
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 ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the references to our firm under the captions
"Financial Highlights" and "Independent Auditors" and to the
use of our reports dated November 2, 1994, in Post-Effective
Amendment Number 2 to the Registration Statement (Form N-1A
Number 33-50635) and the related Prospectuses of Peachtree
Funds (comprising respectively, Peachtree Prime Money Market
Fund, Peachtree Government Money Market Fund, Peachtree Equity
Fund and Peachtree Bond Fund) dated November 30, 1994.
By: Ernst & Young LLP
Pittsburgh, Pennsylvania
November 21, 1994
Exhibit 18 under Form N-1A
Exhibit 99 under Item 601/Reg. S-K
HOUSTON, HOUSTON & DONNELLY
ATTORNEYS AT LAW
2510 CENTRE CITY TOWER
WILLIAM McC. HOUSTONPITTSBURGH, PA. 15222
FRED CHALMERS HOUSTON, JR.__________
THOMAS J. DONNELLY
JOHN F. MECK (412) 471-5828 FRED CHALMERS HOUSTON
FAX (412) 471-0736 (1914 - 1971)
MARIO SANTILLI, JR.
THEODORE M. HAMMER
November 18, 1994
Peachtree Funds
Federated Investors Tower
Pittsburgh, PA 15222-3779
Gentlemen:
As counsel to Peachtree Funds ("Trust") we have reviewed
Post-effective Amendment No. 2 to the Trust's Registration
Statement to be filed with the Securities and Exchange Commission
under the Securities Act of 1933 (File No. 33-50635). The
subject Post-effective Amendment will be filed pursuant to
Paragraph (b) of Rule 485 and become effective pursuant to said
Rule on November 30, 1994.
Our review also included an examination of other relevant
portions of the amended 1933 Act Registration Statement of the
Trust and such other documents and records deemed appropriate.
On the basis of this review we are of the opinion that Post-
effective Amendment No. 2 does not contain disclosures which
would render it ineligible to become effective pursuant to
Paragraph (b) of Rule 485.
We hereby consent to the filing of this representation
letter as a part of the Trust's Registration Statement filed with
the Securities and Exchange Commission under the Securities Act
of 1933 and as part of any application or registration statement
filed under the Securities Laws of the States of the United
States.
Very truly yours,
Houston, Houston & Donnelly
By: /s/Thomas J. Donnelly
TJD:heh
Exhibit 19 under Form N-1A
Exhibit 99 under Item
601/Reg. S-K
POWER OF ATTORNEY
Each person whose signature appears below hereby
constitutes and appoints the Secretary and Assistant Secretary
of
PEACHTREE
FUNDS___________________________________________________ and
the Assistant General Counsel of Federated Investors, and each
of them, their true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution for them
and in their names, place and stead, in any and all
capacities, to sign any and all documents to be filed with the
Securities and Exchange Commission pursuant to the Securities
Act of 1933, the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, by means of the Securities and
Exchange Commission's electronic disclosure system known as
EDGAR; and to file the same, with all exhibits thereto and
other documents in connection therewith, with the Securities
and Exchange Commission, granting unto said attorneys-in-fact
and agents, and each of them, full power and authority to sign
and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all
intents and purposes as each of them might or could do in
person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his
substitute or substitutes, may lawfully do or cause to be done
by virtue thereof.
SIGNATURES TITLE DATE
_/s/ John F. Donahue________ Chairman
John F. Donahue (Chief Executive Officer)
11/22/94
_/s/Edward C. Gonzales_______ President and Treasurer
11/22/94
Edward C. Gonzales (Principal Financial and
Accounting Officer)
_/s/Thomas G. Bigley__________ Trustee
11/22/94
Thomas G. Bigley
_/s/John T. Conroy, Jr.______ Trustee
11/22/94
John T. Conroy, Jr.
_/s/_William J. Copeland___ Trustee
11/22/94
William J. Copeland
_/s/James E. Dowd______________ Trustee
11/22/94
James E. Dowd
SIGNATURES TITLE DATE
_/s/_Lawrence D. Ellis, M.D.____ Trustee
11/22/94
Lawrence D. Ellis, M.D.
_/s/_Edward L. Flaherty, Jr.____ Trustee
11/22/94
Edward L. Flaherty, Jr.
_/s/_Peter E. Madden__________ _ Trustee
11/22/94
Peter E. Madden
_/s/Gregor F. Meyer____________ Trustee
11/22/94
Gregor F. Meyer
_/s/Wesley W. Posvar__________ Trustee
11/22/94
Wesley W. Posvar
/s/_Marjorie P. Smuts_________ Trustee
11/22/94
Marjorie P. Smuts
Sworn to and subscribed before me this 22 day of November,
1994
__/s/ Elaine Polens______
Notary Public
Exhibit 4(i) under Form N-1A
Exhibit 3(c) under Item 601/Reg.
S-K
PEACHTREE FUNDS
PEACHTREE BOND FUND
PORTFOLIO
Number Shares
_____ _____
Account No. Alpha Code Organized Under the
See Reverse Side For
Laws of the Commonwealth Certain
Definitions
of Massachusetts
THIS IS TO CERTIFY THAT is the owner of
CUSIP 70467H200
Fully Paid and Non-Assessable Shares of Beneficial Interest of
PEACHTREE BOND FUND Portfolio of the PEACHTREE FUNDS hereafter
called the "Trust," transferable on the books of the Trust by
the owner in person or by duly authorized attorney upon
surrender of this Certificate properly endorsed.
The shares represented hereby are issued and shall be held
subject to the provisions of the Declaration of Trust and By-
Laws of the Trust and all amendments thereto, all of which the
holder by acceptance hereof assents.
This Certificate is not valid unless countersigned by the
Transfer Agent.
IN WITNESS WHEREOF, the Trust has caused this Certificate
to be signed in its name by its proper officers and to be sealed
with its Seal.
Dated: PEACHTREE FUNDS
1994
Massachusetts
/s/ Edward C. Gonzales
/s/ John F. Donahue
President, Treasurer Chairman
& Trustee
Countersigned: Federated Services
Company
Transfer Agent
By:
Authorized Signature
The following abbreviations, when used in the inscription on the
face of this Certificate, shall be construed as though they were
written out in full according to applicable laws or regulations;
TEN COM - as tenants in common UNIF
GIFT MIN ACT-...Custodian...
TEN ENT - as tenants by the entireties
(Cust) (Minors)
JT TEN - as joint tenants with right
of under Uniform Gifts to Minors
survivorship and not as tenants
Act.............................
in common (State)
Additional abbreviations may also be used though not in the
above list.
For value received__________ hereby sell, assign, and
transfer unto
Please insert social security or other
identifying number of assignee
______________________________________
________________________________________________________________
_____________
(Please print or typewrite name and address, including zip code,
of assignee)
________________________________________________________________
_____________
________________________________________________________________
_____________
________________________________________________________________
______ shares
of beneficial interest represented by the within Certificate,
and do hereby irrevocably constitute and appoint
__________________________________________
____________________________________________________________
_____Attorney
to transfer the said shares on the books of the within named
Trust with full power of substitution in the premises.
Dated______________________
NOTICE:___________________________
___
The signature to this assignment
must correspond with the name as
written upon the face of the
certificate in every particular,
without alteration or enlargement
or any change whatever.
All persons dealing with PEACHTREE FUNDS, a Massachusetts
business trust, must look solely to the Trust property for the
enforcement of any claim against the Trust, as the Trustees,
officers, agents or shareholders of the Trust assume no personal
liability whatsoever for obligations entered into on behalf of
the Trust.
THIS SPACE MUST NOT BE COVERED IN ANY WAY
DOCUMENT DESCRIPTION - SPECIMEN STOCK CERTIFICATE
Page One
A. The Certificate is outlined by an (color) one-half inch
border.
B. The number in the upper left-hand corner and the number
of shares in the upper right-hand corner are outlined by
octagonal boxes.
C. The cusip number in the middle right-hand area of the
page is boxed.
D. The Massachusetts corporate seal appears in the bottom
middle of the page.
Page Two
The social security or other identifying number of the
assignee appears in a box in the top-third upper-left area of
the page.
Exhibit 4(ii) under Form N-1A
Exhibit 3(c) under Item 601/Reg.
S-K
PEACHTREE FUNDS
PEACHTREE EQUITY FUND
PORTFOLIO
Number Shares
_____ _____
Account No. Alpha Code Organized Under the
See Reverse Side For
Laws of the Commonwealth Certain
Definitions
of Massachusetts
THIS IS TO CERTIFY THAT is the owner of
CUSIP 70467H101
Fully Paid and Non-Assessable Shares of Beneficial Interest of
PEACHTREE EQUITY FUND Portfolio of the PEACHTREE FUNDS hereafter
called the "Trust," transferable on the books of the Trust by
the owner in person or by duly authorized attorney upon
surrender of this Certificate properly endorsed.
The shares represented hereby are issued and shall be held
subject to the provisions of the Declaration of Trust and By-
Laws of the Trust and all amendments thereto, all of which the
holder by acceptance hereof assents.
This Certificate is not valid unless countersigned by the
Transfer Agent.
IN WITNESS WHEREOF, the Trust has caused this Certificate
to be signed in its name by its proper officers and to be sealed
with its Seal.
Dated: PEACHTREE FUNDS
1994
Massachusetts
/s/ Edward C. Gonzales
/s/ John F. Donahue
President, Treasurer Chairman
& Trustee
Countersigned: Federated Services
Company
Transfer Agent
By:
Authorized Signature
The following abbreviations, when used in the inscription on the
face of this Certificate, shall be construed as though they were
written out in full according to applicable laws or regulations;
TEN COM - as tenants in common UNIF
GIFT MIN ACT-...Custodian...
TEN ENT - as tenants by the entireties
(Cust) (Minors)
JT TEN - as joint tenants with right
of under Uniform Gifts to Minors
survivorship and not as tenants
Act.............................
in common (State)
Additional abbreviations may also be used though not in the
above list.
For value received__________ hereby sell, assign, and
transfer unto
Please insert social security or other
identifying number of assignee
______________________________________
________________________________________________________________
_____________
(Please print or typewrite name and address, including zip code,
of assignee)
________________________________________________________________
_____________
________________________________________________________________
_____________
________________________________________________________________
______ shares
of beneficial interest represented by the within Certificate,
and do hereby irrevocably constitute and appoint
__________________________________________
____________________________________________________________
_____Attorney
to transfer the said shares on the books of the within named
Trust with full power of substitution in the premises.
Dated______________________
NOTICE:___________________________
___
The signature to this assignment
must correspond with the name as
written upon the face of the
certificate in every particular,
without alteration or enlargement
or any change whatever.
All persons dealing with PEACHTREE FUNDS, a Massachusetts
business trust, must look solely to the Trust property for the
enforcement of any claim against the Trust, as the Trustees,
officers, agents or shareholders of the Trust assume no personal
liability whatsoever for obligations entered into on behalf of
the Trust.
THIS SPACE MUST NOT BE COVERED IN ANY WAY
DOCUMENT DESCRIPTION - SPECIMEN STOCK CERTIFICATE
Page One
A. The Certificate is outlined by an (color) one-half inch
border.
B. The number in the upper left-hand corner and the number
of shares in the upper right-hand corner are outlined by
octagonal boxes.
C. The cusip number in the middle right-hand area of the
page is boxed.
D. The Massachusetts corporate seal appears in the bottom
middle of the page.
Page Two
The social security or other identifying number of the
assignee appears in a box in the top-third upper-left area of
the page.
Exhibit 4(iii) under Form N-1A
Exhibit 3(c) under Item 601/Reg.
S-K
PEACHTREE FUNDS
PEACHTREE GEORGIA TAX-FREE INCOME FUND
PORTFOLIO
Number Shares
_____ _____
Account No. Alpha Code Organized Under the
See Reverse Side For
Laws of the Commonwealth Certain
Definitions
of Massachusetts
THIS IS TO CERTIFY THAT is the owner of
CUSIP 70467H507
Fully Paid and Non-Assessable Shares of Beneficial Interest of
PEACHTREE GEORGIA TAX-FREE INCOME FUND Portfolio of the
PEACHTREE FUNDS hereafter called the "Trust," transferable on
the books of the Trust by the owner in person or by duly
authorized attorney upon surrender of this Certificate properly
endorsed.
The shares represented hereby are issued and shall be held
subject to the provisions of the Declaration of Trust and By-
Laws of the Trust and all amendments thereto, all of which the
holder by acceptance hereof assents.
This Certificate is not valid unless countersigned by the
Transfer Agent.
IN WITNESS WHEREOF, the Trust has caused this Certificate
to be signed in its name by its proper officers and to be sealed
with its Seal.
Dated: PEACHTREE FUNDS
1994
Massachusetts
/s/ Edward C. Gonzales
/s/ John F. Donahue
President, Treasurer Chairman
& Trustee
Countersigned: Federated Services
Company
Transfer Agent
By:
Authorized Signature
The following abbreviations, when used in the inscription on the
face of this Certificate, shall be construed as though they were
written out in full according to applicable laws or regulations;
TEN COM - as tenants in common UNIF
GIFT MIN ACT-...Custodian...
TEN ENT - as tenants by the entireties
(Cust) (Minors)
JT TEN - as joint tenants with right
of under Uniform Gifts to Minors
survivorship and not as tenants
Act.............................
in common (State)
Additional abbreviations may also be used though not in the
above list.
For value received__________ hereby sell, assign, and
transfer unto
Please insert social security or other
identifying number of assignee
______________________________________
________________________________________________________________
_____________
(Please print or typewrite name and address, including zip code,
of assignee)
________________________________________________________________
_____________
________________________________________________________________
_____________
________________________________________________________________
______ shares
of beneficial interest represented by the within Certificate,
and do hereby irrevocably constitute and appoint
__________________________________________
____________________________________________________________
_____Attorney
to transfer the said shares on the books of the within named
Trust with full power of substitution in the premises.
Dated______________________
NOTICE:___________________________
___
The signature to this assignment
must correspond with the name as
written upon the face of the
certificate in every particular,
without alteration or enlargement
or any change whatever.
All persons dealing with PEACHTREE FUNDS, a Massachusetts
business trust, must look solely to the Trust property for the
enforcement of any claim against the Trust, as the Trustees,
officers, agents or shareholders of the Trust assume no personal
liability whatsoever for obligations entered into on behalf of
the Trust.
THIS SPACE MUST NOT BE COVERED IN ANY WAY
DOCUMENT DESCRIPTION - SPECIMEN STOCK CERTIFICATE
Page One
A. The Certificate is outlined by an (color) one-half inch
border.
B. The number in the upper left-hand corner and the number
of shares in the upper right-hand corner are outlined by
octagonal boxes.
C. The cusip number in the middle right-hand area of the
page is boxed.
D. The Massachusetts corporate seal appears in the bottom
middle of the page.
Page Two
The social security or other identifying number of the
assignee appears in a box in the top-third upper-left area of
the page.
Exhibit 4(iv) under Form N-1A
Exhibit 3(c) under Item 601/Reg.
S-K
PEACHTREE FUNDS
PEACHTREE GOVERNMENT MONEY MARKET FUND
PORTFOLIO
Number Shares
_____ _____
Account No. Alpha Code Organized Under the
See Reverse Side For
Laws of the Commonwealth Certain
Definitions
of Massachusetts
THIS IS TO CERTIFY THAT is the owner of
CUSIP 70467H309
Fully Paid and Non-Assessable Shares of Beneficial Interest of
PEACHTREE GOVERNMENT MONEY MARKET FUND Portfolio of the
PEACHTREE FUNDS hereafter called the "Trust," transferable on
the books of the Trust by the owner in person or by duly
authorized attorney upon surrender of this Certificate properly
endorsed.
The shares represented hereby are issued and shall be held
subject to the provisions of the Declaration of Trust and By-
Laws of the Trust and all amendments thereto, all of which the
holder by acceptance hereof assents.
This Certificate is not valid unless countersigned by the
Transfer Agent.
IN WITNESS WHEREOF, the Trust has caused this Certificate
to be signed in its name by its proper officers and to be sealed
with its Seal.
Dated: PEACHTREE FUNDS
1994
Massachusetts
/s/ Edward C. Gonzales
/s/ John F. Donahue
President, Treasurer Chairman
& Trustee
Countersigned: Federated Services
Company
Transfer Agent
By:
Authorized Signature
The following abbreviations, when used in the inscription on the
face of this Certificate, shall be construed as though they were
written out in full according to applicable laws or regulations;
TEN COM - as tenants in common UNIF
GIFT MIN ACT-...Custodian...
TEN ENT - as tenants by the entireties
(Cust) (Minors)
JT TEN - as joint tenants with right
of under Uniform Gifts to Minors
survivorship and not as tenants
Act.............................
in common (State)
Additional abbreviations may also be used though not in the
above list.
For value received__________ hereby sell, assign, and
transfer unto
Please insert social security or other
identifying number of assignee
______________________________________
________________________________________________________________
_____________
(Please print or typewrite name and address, including zip code,
of assignee)
________________________________________________________________
_____________
________________________________________________________________
_____________
________________________________________________________________
______ shares
of beneficial interest represented by the within Certificate,
and do hereby irrevocably constitute and appoint
__________________________________________
____________________________________________________________
_____Attorney
to transfer the said shares on the books of the within named
Trust with full power of substitution in the premises.
Dated______________________
NOTICE:___________________________
___
The signature to this assignment
must correspond with the name as
written upon the face of the
certificate in every particular,
without alteration or enlargement
or any change whatever.
All persons dealing with PEACHTREE FUNDS, a Massachusetts
business trust, must look solely to the Trust property for the
enforcement of any claim against the Trust, as the Trustees,
officers, agents or shareholders of the Trust assume no personal
liability whatsoever for obligations entered into on behalf of
the Trust.
THIS SPACE MUST NOT BE COVERED IN ANY WAY
DOCUMENT DESCRIPTION - SPECIMEN STOCK CERTIFICATE
Page One
A. The Certificate is outlined by an (color) one-half inch
border.
B. The number in the upper left-hand corner and the number
of shares in the upper right-hand corner are outlined by
octagonal boxes.
C. The cusip number in the middle right-hand area of the
page is boxed.
D. The Massachusetts corporate seal appears in the bottom
middle of the page.
Page Two
The social security or other identifying number of the
assignee appears in a box in the top-third upper-left area of
the page.
Exhibit 4(v) under Form N-1A
Exhibit 3(c) under Item 601/Reg.
S-K
PEACHTREE FUNDS
PEACHTREE PRIME MONEY MARKET FUND
PORTFOLIO
Number Shares
_____ _____
Account No. Alpha Code Organized Under the
See Reverse Side For
Laws of the Commonwealth Certain
Definitions
of Massachusetts
THIS IS TO CERTIFY THAT is the owner of
CUSIP 70467H408
Fully Paid and Non-Assessable Shares of Beneficial Interest of
PEACHTREE PRIME MONEY MARKET FUND Portfolio of the PEACHTREE
FUNDS hereafter called the "Trust," transferable on the books of
the Trust by the owner in person or by duly authorized attorney
upon surrender of this Certificate properly endorsed.
The shares represented hereby are issued and shall be held
subject to the provisions of the Declaration of Trust and By-
Laws of the Trust and all amendments thereto, all of which the
holder by acceptance hereof assents.
This Certificate is not valid unless countersigned by the
Transfer Agent.
IN WITNESS WHEREOF, the Trust has caused this Certificate
to be signed in its name by its proper officers and to be sealed
with its Seal.
Dated: PEACHTREE FUNDS
1994
Massachusetts
/s/ Edward C. Gonzales
/s/ John F. Donahue
President, Treasurer Chairman
& Trustee
Countersigned: Federated Services
Company
Transfer Agent
By:
Authorized Signature
The following abbreviations, when used in the inscription on the
face of this Certificate, shall be construed as though they were
written out in full according to applicable laws or regulations;
TEN COM - as tenants in common UNIF
GIFT MIN ACT-...Custodian...
TEN ENT - as tenants by the entireties
(Cust) (Minors)
JT TEN - as joint tenants with right
of under Uniform Gifts to Minors
survivorship and not as tenants
Act.............................
in common (State)
Additional abbreviations may also be used though not in the
above list.
For value received__________ hereby sell, assign, and
transfer unto
Please insert social security or other
identifying number of assignee
______________________________________
________________________________________________________________
_____________
(Please print or typewrite name and address, including zip code,
of assignee)
________________________________________________________________
_____________
________________________________________________________________
_____________
________________________________________________________________
______ shares
of beneficial interest represented by the within Certificate,
and do hereby irrevocably constitute and appoint
__________________________________________
____________________________________________________________
_____Attorney
to transfer the said shares on the books of the within named
Trust with full power of substitution in the premises.
Dated______________________
NOTICE:___________________________
___
The signature to this assignment
must correspond with the name as
written upon the face of the
certificate in every particular,
without alteration or enlargement
or any change whatever.
All persons dealing with PEACHTREE FUNDS, a Massachusetts
business trust, must look solely to the Trust property for the
enforcement of any claim against the Trust, as the Trustees,
officers, agents or shareholders of the Trust assume no personal
liability whatsoever for obligations entered into on behalf of
the Trust.
THIS SPACE MUST NOT BE COVERED IN ANY WAY
DOCUMENT DESCRIPTION - SPECIMEN STOCK CERTIFICATE
Page One
A. The Certificate is outlined by an (color) one-half inch
border.
B. The number in the upper left-hand corner and the number
of shares in the upper right-hand corner are outlined by
octagonal boxes.
C. The cusip number in the middle right-hand area of the
page is boxed.
D. The Massachusetts corporate seal appears in the bottom
middle of the page.
Page Two
The social security or other identifying number of the
assignee appears in a box in the top-third upper-left area of
the page.
Exhibit 9 (i) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
AGREEMENT
for
FUND ACCOUNTING,
SHAREHOLDER RECORDKEEPING,
and
CUSTODY SERVICES PROCUREMENT
AGREEMENT made as of the 1st day of December, 1993, by and between
those investment companies listed on Exhibit 1 as may be amended from
time to time, having their principal office and place of business at
Federated Investors Tower, Pittsburgh, PA 15222-3779 (the "Trust"), on
behalf of the portfolios (individually referred to herein as a "Fund" and
collectively as "Funds") of the Trust, and FEDERATED SERVICES COMPANY, a
Delaware business trust, having its principal office and place of
business at Federated Investors Tower, Pittsburgh, Pennsylvania 15222-
3779 (the "Company").
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended
(the "1940 Act"), with authorized and issued shares of capital stock or
beneficial interest ("Shares"); and
WHEREAS, the Trust wishes to retain the Company to provide certain
pricing, accounting and recordkeeping services for each of the Funds,
including any classes of shares issued by any Fund ("Classes"), and the
Company is willing to furnish such services; and
WHEREAS, the Trust desires to appoint the Company as its transfer
agent, dividend disbursing agent, and agent in connection with certain
other activities, and the Company desires to accept such appointment; and
WHEREAS, the Trust desires to appoint the Company as its agent to
select, negotiate and subcontract for custodian services from an approved
list of qualified banks and the Company desires to accept such
appointment; and
WHEREAS, from time to time the Trust may desire and may instruct the
Company to subcontract for the performance of certain of its duties and
responsibilities hereunder to State Street Bank and Trust Company or
another agent (the "Agent"); and
WHEREAS, the words Trust and Fund may be used interchangeably for
those investment companies consisting of only one portfolio;
NOW THEREFORE, in consideration of the premises and mutual covenants
herein contained, and intending to be legally bound hereby, the parties
hereto agree as follows:
SECTION ONE: Fund Accounting.
Article 1. Appointment.
The Trust hereby appoints the Company to provide certain pricing and
accounting services to the Funds, and/or the Classes, for the period and
on the terms set forth in this Agreement. The Company accepts such
appointment and agrees to furnish the services herein set forth in return
for the compensation as provided in Article 3 of this Section.
Article 2. The Company and Duties.
Subject to the supervision and control of the Trust's Board of
Trustees or Directors ("Board"), the Company will assist the Trust with
regard to fund accounting for the Trust, and/or the Funds, and/or the
Classes, and in connection therewith undertakes to perform the following
specific services;
A. Value the assets of the Funds and determine the net asset value per
share of each Fund and/or Class, at the time and in the manner from
time to time determined by the Board and as set forth in the
Prospectus and Statement of Additional Information ("Prospectus")
of each Fund;
B. Calculate the net income of each of the Funds, if any;
C. Calculate capital gains or losses of each of the Funds resulting
from sale or disposition of assets, if any;
D. Maintain the general ledger and other accounts, books and financial
records of the Trust, including for each Fund, and/or Class, as
required under Section 31(a) of the 1940 Act and the Rules
thereunder in connection with the services provided by the Company;
E. Preserve for the periods prescribed by Rule 31a-2 under the 1940
Act the records to be maintained by Rule 31a-1 under the 1940 Act
in connection with the services provided by the Company. The
Company further agrees that all such records it maintains for the
Trust are the property of the Trust and further agrees to surrender
promptly to the Trust such records upon the Trust's request;
F. At the request of the Trust, prepare various reports or other
financial documents required by federal, state and other applicable
laws and regulations; and
G. Such other similar services as may be reasonably requested by the
Trust.
Article 3. Compensation and Allocation of Expenses.
A. The Funds will compensate the Company for its services rendered
pursuant to Section One of this Agreement in accordance with the
fees set forth on Fee Schedules A ("A1, A2, A3 etc..."), annexed
hereto and incorporated herein, as may be added or amended from
time to time. Such fees do not include out-of-pocket disbursements
of the Company for which the Funds shall reimburse the Company upon
receipt of a separate invoice. Out-of-pocket disbursements shall
include, but shall not be limited to, the items specified in
Schedules B ("B1, B2, B3, etc..."), annexed hereto and incorporated
herein, as may be added or amended from time to time. Schedules B
may be modified by the Company upon not less than thirty days'
prior written notice to the Trust.
B. The Fund and/or the Class, and not the Company, shall bear the cost
of: custodial expenses; membership dues in the Investment Company
Institute or any similar organization; transfer agency expenses;
investment advisory expenses; costs of printing and mailing stock
certificates, Prospectuses, reports and notices; administrative
expenses; interest on borrowed money; brokerage commissions; taxes
and fees payable to federal, state and other governmental agencies;
fees of Trustees or Directors of the Trust; independent auditors
expenses; Federated Administrative Services and/or Federated
Administrative Services, Inc. legal and audit department expenses
billed to Federated Services Company for work performed related to
the Trust, the Funds, or the Classes; law firm expenses; or other
expenses not specified in this Article 3 which may be properly
payable by the Funds and/or classes.
C. The Company will send an invoice to each of the Funds as soon as
practicable after the end of each month. Each invoice will provide
detailed information about the compensation and out-of-pocket
expenses in accordance with Schedules A and Schedules B. The Funds
and or the Classes will pay to the Company the amount of such
invoice within 30 days of receipt of the invoices.
D. Any compensation agreed to hereunder may be adjusted from time to
time by attaching to Schedules A revised Schedules dated and signed
by a duly authorized officer of the Trust and/or the Funds and a
duly authorized officer of the Company.
E. The fee for the period from the effective date of this Agreement
with respect to a Fund or a Class to the end of the initial month
shall be prorated according to the proportion that such period
bears to the full month period. Upon any termination of this
Agreement before the end of any month, the fee for such period
shall be prorated according to the proportion which such period
bears to the full month period. For purposes of determining fees
payable to the Company, the value of the Fund's net assets shall be
computed at the time and in the manner specified in the Fund's
Prospectus.
F. The Company, in its sole discretion, may from time to time
subcontract to, employ or associate with itself such person or
persons as the Company may believe to be particularly suited to
assist it in performing services under this Section One. Such
person or persons may be third-party service providers, or they may
be officers and employees who are employed by both the Company and
the Funds. The compensation of such person or persons shall be
paid by the Company and no obligation shall be incurred on behalf
of the Trust, the Funds, or the Classes in such respect.
SECTION TWO: Shareholder Recordkeeping.
Article 4. Terms of Appointment.
Subject to the terms and conditions set forth in this Agreement, the
Trust hereby appoints the Company to act as, and the Company agrees to
act as, transfer agent and dividend disbursing agent for each Fund's
Shares, and agent in connection with any accumulation, open-account or
similar plans provided to the shareholders of any Fund
("Shareholder(s)"), including without limitation any periodic investment
plan or periodic withdrawal program.
As used throughout this Agreement, a "Proper Instruction" means a
writing signed or initialed by one or more person or persons as the Board
shall have from time to time authorized. Each such writing shall set
forth the specific transaction or type of transaction involved. Oral
instructions will be deemed to be Proper Instructions if (a) the Company
reasonably believes them to have been given by a person previously
authorized in Proper Instructions to give such instructions with respect
to the transaction involved, and (b) the Trust, or the Fund, and the
Company promptly cause such oral instructions to be confirmed in writing.
Proper Instructions may include communications effected directly between
electro-mechanical or electronic devices provided that the Trust, or the
Fund, and the Company are satisfied that such procedures afford adequate
safeguards for the Fund's assets. Proper Instructions may only be
amended in writing.
Article 5. Duties of the Company.
The Company shall perform the following services in accordance with
Proper Instructions as may be provided from time to time by the Trust as
to any Fund:
A. Purchases
(1) The Company shall receive orders and payment for the purchase
of shares and promptly deliver payment and appropriate
documentation therefore to the custodian of the relevant Fund,
(the "Custodian"). The Company shall notify the Fund and the
Custodian on a daily basis of the total amount of orders and
payments so delivered.
(2) Pursuant to purchase orders and in accordance with the Fund's
current Prospectus, the Company shall compute and issue the
appropriate number of Shares of each Fund and/or Class and
hold such Shares in the appropriate Shareholder accounts.
(3) For certificated Funds and/or Classes, if a Shareholder or its
agent requests a certificate, the Company, as Transfer Agent,
shall countersign and mail by first class mail, a certificate
to the Shareholder at its address as set forth on the transfer
books of the Funds, and/or Classes, subject to any Proper
Instructions regarding the delivery of certificates.
(4) In the event that any check or other order for the purchase of
Shares of the Fund and/or Class is returned unpaid for any
reason, the Company shall debit the Share account of the
Shareholder by the number of Shares that had been credited to
its account upon receipt of the check or other order, promptly
mail a debit advice to the Shareholder, and notify the Fund
and/or Class of its action. In the event that the amount paid
for such Shares exceeds proceeds of the redemption of such
Shares plus the amount of any dividends paid with respect to
such Shares, the Fund and/the Class or its distributor will
reimburse the Company on the amount of such excess.
B. Distribution
(1) Upon notification by the Funds of the declaration of any
distribution to Shareholders, the Company shall act as
Dividend Disbursing Agent for the Funds in accordance with the
provisions of its governing document and the then-current
Prospectus of the Fund. The Company shall prepare and mail or
credit income, capital gain, or any other payments to
Shareholders. As the Dividend Disbursing Agent, the Company
shall, on or before the payment date of any such distribution,
notify the Custodian of the estimated amount required to pay
any portion of said distribution which is payable in cash and
request the Custodian to make available sufficient funds for
the cash amount to be paid out. The Company shall reconcile
the amounts so requested and the amounts actually received
with the Custodian on a daily basis. If a Shareholder is
entitled to receive additional Shares by virtue of any such
distribution or dividend, appropriate credits shall be made to
the Shareholder's account, for certificated Funds and/or
Classes, delivered where requested; and
(2) The Company shall maintain records of account for each Fund
and Class and advise the Trust, each Fund and Class and its
Shareholders as to the foregoing.
C. Redemptions and Transfers
(1) The Company shall receive redemption requests and redemption
directions and, if such redemption requests comply with the
procedures as may be described in the Fund Prospectus or set
forth in Proper Instructions, deliver the appropriate
instructions therefor to the Custodian. The Company shall
notify the Funds on a daily basis of the total amount of
redemption requests processed and monies paid to the Company
by the Custodian for redemptions.
(2) At the appropriate time upon receiving redemption proceeds
from the Custodian with respect to any redemption, the Company
shall pay or cause to be paid the redemption proceeds in the
manner instructed by the redeeming Shareholders, pursuant to
procedures described in the then-current Prospectus of the
Fund.
(3) If any certificate returned for redemption or other request
for redemption does not comply with the procedures for
redemption approved by the Fund, the Company shall promptly
notify the Shareholder of such fact, together with the reason
therefor, and shall effect such redemption at the price
applicable to the date and time of receipt of documents
complying with said procedures.
(4) The Company shall effect transfers of Shares by the registered
owners thereof.
(5) The Company shall identify and process abandoned accounts and
uncashed checks for state escheat requirements on an annual
basis and report such actions to the Fund.
D. Recordkeeping
(1) The Company shall record the issuance of Shares of each Fund,
and/or Class, and maintain pursuant to applicable rules of the
Securities and Exchange Commission ("SEC") a record of the
total number of Shares of the Fund and/or Class which are
authorized, based upon data provided to it by the Fund, and
issued and outstanding. The Company shall also provide the
Fund on a regular basis or upon reasonable request with the
total number of Shares which are authorized and issued and
outstanding, but shall have no obligation when recording the
issuance of Shares, except as otherwise set forth herein, to
monitor the issuance of such Shares or to take cognizance of
any laws relating to the issue or sale of such Shares, which
functions shall be the sole responsibility of the Funds.
(2) The Company shall establish and maintain records pursuant to
applicable rules of the SEC relating to the services to be
performed hereunder in the form and manner as agreed to by the
Trust or the Fund to include a record for each Shareholder's
account of the following:
(a) Name, address and tax identification number (and whether
such number has been certified);
(b) Number of Shares held;
(c) Historical information regarding the account, including
dividends paid and date and price for all transactions;
(d) Any stop or restraining order placed against the account;
(e) Information with respect to withholding in the case of a
foreign account or an account for which withholding is
required by the Internal Revenue Code;
(f) Any dividend reinvestment order, plan application,
dividend address and correspondence relating to the
current maintenance of the account;
(g) Certificate numbers and denominations for any Shareholder
holding certificates;
(h) Any information required in order for the Company to
perform the calculations contemplated or required by this
Agreement.
(3) The Company shall preserve any such records required to be
maintained pursuant to the rules of the SEC for the periods
prescribed in said rules as specifically noted below. Such
record retention shall be at the expense of the Company, and
such records may be inspected by the Fund at reasonable times.
The Company may, at its option at any time, and shall
forthwith upon the Fund's demand, turn over to the Fund and
cease to retain in the Company's files, records and documents
created and maintained by the Company pursuant to this
Agreement, which are no longer needed by the Company in
performance of its services or for its protection. If not so
turned over to the Fund, such records and documents will be
retained by the Company for six years from the year of
creation, during the first two of which such documents will be
in readily accessible form. At the end of the six year
period, such records and documents will either be turned over
to the Fund or destroyed in accordance with Proper
Instructions.
E. Confirmations/Reports
(1) The Company shall furnish to the Fund periodically the
following information:
(a) A copy of the transaction register;
(b) Dividend and reinvestment blotters;
(c) The total number of Shares issued and outstanding in each
state for "blue sky" purposes as determined according to
Proper Instructions delivered from time to time by the
Fund to the Company;
(d) Shareholder lists and statistical information;
(e) Payments to third parties relating to distribution
agreements, allocations of sales loads, redemption fees,
or other transaction- or sales-related payments;
(f) Such other information as may be agreed upon from time to
time.
(2) The Company shall prepare in the appropriate form, file with
the Internal Revenue Service and appropriate state agencies,
and, if required, mail to Shareholders, such notices for
reporting dividends and distributions paid as are required to
be so filed and mailed and shall withhold such sums as are
required to be withheld under applicable federal and state
income tax laws, rules and regulations.
(3) In addition to and not in lieu of the services set forth
above, the Company shall:
(a) Perform all of the customary services of a transfer
agent, dividend disbursing agent and, as relevant, agent
in connection with accumulation, open-account or similar
plans (including without limitation any periodic
investment plan or periodic withdrawal program),
including but not limited to: maintaining all
Shareholder accounts, mailing Shareholder reports and
Prospectuses to current Shareholders, withholding taxes
on accounts subject to back-up or other withholding
(including non-resident alien accounts), preparing and
filing reports on U.S. Treasury Department Form 1099 and
other appropriate forms required with respect to
dividends and distributions by federal authorities for
all Shareholders, preparing and mailing confirmation
forms and statements of account to Shareholders for all
purchases and redemptions of Shares and other confirmable
transactions in Shareholder accounts, preparing and
mailing activity statements for Shareholders, and
providing Shareholder account information; and
(b) provide a system which will enable the Fund to monitor
the total number of Shares of each Fund and/or Class sold
in each state ("blue sky reporting"). The Fund shall by
Proper Instructions (i) identify to the Company those
transactions and assets to be treated as exempt from the
blue sky reporting for each state and (ii) verify the
classification of transactions for each state on the
system prior to activation and thereafter monitor the
daily activity for each state. The responsibility of the
Company for each Fund's and/or Class's state blue sky
registration status is limited solely to the recording of
the initial classification of transactions or accounts
with regard to blue sky compliance and the reporting of
such transactions and accounts to the Fund as provided
above.
F. Other Duties
(1) The Company shall answer correspondence from Shareholders
relating to their Share accounts and such other correspondence
as may from time to time be addressed to the Company;
(2) The Company shall prepare Shareholder meeting lists, mail
proxy cards and other material supplied to it by the Fund in
connection with Shareholder Meetings of each Fund; receive,
examine and tabulate returned proxies, and certify the vote of
the Shareholders;
(3) The Company shall establish and maintain facilities and
procedures for safekeeping of stock certificates, check forms
and facsimile signature imprinting devices, if any; and for
the preparation or use, and for keeping account of, such
certificates, forms and devices.
Article 6. Duties of the Trust.
A. Compliance
The Trust or Fund assume full responsibility for the preparation,
contents and distribution of their own and/or their classes'
Prospectus and for complying with all applicable requirements of
the Securities Act of 1933, as amended (the "1933 Act"), the 1940
Act and any laws, rules and regulations of government authorities
having jurisdiction.
B. Share Certificates
The Trust shall supply the Company with a sufficient supply of
blank Share certificates and from time to time shall renew such
supply upon request of the Company. Such blank Share certificates
shall be properly signed, manually or by facsimile, if authorized
by the Trust and shall bear the seal of the Trust or facsimile
thereof; and notwithstanding the death, resignation or removal of
any officer of the Trust authorized to sign certificates, the
Company may continue to countersign certificates which bear the
manual or facsimile signature of such officer until otherwise
directed by the Trust.
C. Distributions
The Fund shall promptly inform the Company of the declaration of
any dividend or distribution on account of any Fund's shares.
Article 7. Compensation and Expenses.
A. Annual Fee
For performance by the Company pursuant to Section Two of this
Agreement, the Trust and/or the Fund agree to pay the Company an
annual maintenance fee for each Shareholder account as set out in
Schedules C ("C1, C2, C3 etc..."), attached hereto, as may be added
or amended from time to time. Such fees may be changed from time
to time subject to written agreement between the Trust and the
Company. Pursuant to information in the Fund Prospectus or other
information or instructions from the Fund, the Company may sub-
divide any Fund into Classes or other sub-components for
recordkeeping purposes. The Company will charge the Fund the fees
set forth on Schedule C for each such Class or sub-component the
same as if each were a Fund.
B. Reimbursements
In addition to the fee paid under Article 7A above, the Trust
and/or Fund agree to reimburse the Company for out-of-pocket
expenses or advances incurred by the Company for the items set out
in Schedules D ("D1, D2, D3 etc..."), attached hereto, as may be
added or amended from time to time. In addition, any other
expenses incurred by the Company at the request or with the consent
of the Trust and/or the Fund, will be reimbursed by the appropriate
Fund.
C. Payment
The Company shall send an invoice with respect to fees and
reimbursable expenses to the Trust or each of the Funds as soon as
practicable at the end of each month. Each invoice will provide
detailed information about the Compensation and out-of-pocket
expenses in accordance with Schedules C and Schedules D. The Trust
or the Funds will pay to the Company the amount of such invoice
within 30 days following the receipt of the invoices.
Article 8. Assignment of Shareholder Recordkeeping.
Except as provided below, no right or obligation under this Section
Two may be assigned by either party without the written consent of
the other party.
(1) This Agreement shall inure to the benefit of and be binding
upon the parties and their respective permitted successors and
assigns.
(2) The Company may without further consent on the part of the
Trust subcontract for the performance hereof with (A) State
Street Bank and its subsidiary, Boston Financial Data
Services, Inc., a Massachusetts Trust ("BFDS"), which is duly
registered as a transfer agent pursuant to Section 17A(c)(1)
of the Securities Exchange Act of 1934, as amended, or any
succeeding statute ("Section 17A(c)(1)"), or (B) a BFDS
subsidiary duly registered as a transfer agent pursuant to
Section 17A(c)(1), or (C) a BFDS affiliate, or (D) such other
provider of services duly registered as a transfer agent under
Section 17A(c)(1) as Company shall select; provided, however,
that the Company shall be as fully responsible to the Trust
for the acts and omissions of any subcontractor as it is for
its own acts and omissions; or
(3) The Company shall upon instruction from the Trust subcontract
for the performance hereof with an Agent selected by the
Trust, other than BFDS or a provider of services selected by
Company, as described in (2) above; provided, however, that
the Company shall in no way be responsible to the Trust for
the acts and omissions of the Agent.
SECTION THREE: Custody Services Procurement
Article 9. Appointment.
The Trust hereby appoints Company as its agent to evaluate and
obtain custody services from a financial institution that (i) meets
the criteria established in Section 17(f) of the 1940 Act and (ii)
has been approved by the Board as eligible for selection by the
Company as a custodian (the "Eligible Custodian"). The Company
accepts such appointment.
Article 10. The Company and Its Duties.
Subject to the review, supervision and control of the Board, the
Company shall:
(1) evaluate the nature and the quality of the custodial services
provided by the Eligible Custodian;
(2) employ the Eligible Custodian to serve on behalf of the Trust
as Custodian of the Trust's assets substantially on the terms
set forth as the form of agreement in Exhibit 2;
(3) negotiate and enter into agreements with the Custodians for
the benefit of the Trust, with the Trust as a party to each
such agreement. The Company shall not be a party to any
agreement with any such Custodian;
(4) establish procedures to monitor the nature and the quality of
the services provided by the Custodians;
(5) continuously monitor the nature and the quality of services
provided by the Custodians; and
(6) periodically provide to the Trust (i) written reports on the
activities and services of the Custodians; (ii) the nature and
amount of disbursement made on account of the Trust with
respect to each custodial agreement; and (iii) such other
information as the Board shall reasonably request to enable it
to fulfill its duties and obligations under Sections 17(f) and
36(b) of the 1940 Act and other duties and obligations
thereof.
Article 11. Fees and Expenses.
A. Annual Fee
For the performance by the Company pursuant to Section Three of
this Agreement, the Trust and/or the Fund agree to pay the Company
an annual fee as set forth in Schedule E, attached hereto.
B. Payment
The Company shall send an invoice with respect to fees and
reimbursable expenses to each of the Trust/or Fund as soon as
practicable at the end of each month. Each invoice will provide
detailed information about the Compensation and out-of-pocket
expenses in occurrence with Schedule E. The Trust and/or Fund will
pay to the Company the amount of such invoice within 30 days
following the receipt of the invoice.
Article 12. Representations.
The Company represents and warrants that it has obtained all
required approvals from all government or regulatory authorities
necessary to enter into this arrangement and to provide the
services contemplated in Section Three of this Agreement.
SECTION FOUR: General Provisions.
Article 13. Documents.
A. In connection with the appointment of the Company under this
Agreement, the Trust shall file with the Company the following
documents:
(1) A copy of the Charter and By-Laws of the Trust and all
amendments thereto;
(2) A copy of the resolution of the Board of the Trust authorizing
this Agreement;
(3) Specimens of all forms of outstanding Share certificates of
the Trust or the Funds in the forms approved by the Board of
the Trust with a certificate of the Secretary of the Trust as
to such approval;
(4) All account application forms and other documents relating to
Shareholders accounts; and
(5) A copy of the current Prospectus for each Fund.
B. The Fund will also furnish from time to time the following
documents:
(1) Each resolution of the Board of the Trust authorizing the
original issuance of each Fund's, and/or Class's Shares;
(2) Each Registration Statement filed with the SEC and amendments
thereof and orders relating thereto in effect with respect to
the sale of Shares of any Fund, and/or Class;
(3) A certified copy of each amendment to the governing document
and the By-Laws of the Trust;
(4) Certified copies of each vote of the Board authorizing
officers to give Proper Instructions to the Custodian and
agents for fund accountant, custody services procurement, and
shareholder recordkeeping or transfer agency services;
(5) Specimens of all new Share certificates representing Shares of
any Fund, accompanied by Board resolutions approving such
forms;
(6) Such other certificates, documents or opinions which the
Company may, in its discretion, deem necessary or appropriate
in the proper performance of its duties; and
(7) Revisions to the Prospectus of each Fund.
Article 14. Representations and Warranties.
A. Representations and Warranties of the Company
The Company represents and warrants to the Trust that:
(1) It is a business trust duly organized and existing and in good
standing under the laws of the State of Delaware.
(2) It is duly qualified to carry on its business in the State of
Delaware.
(3) It is empowered under applicable laws and by its charter and
by-laws to enter into and perform this Agreement.
(4) All requisite corporate proceedings have been taken to
authorize it to enter into and perform its obligations under
this Agreement.
(5) It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement.
(6) It is in compliance with federal securities law requirements
and in good standing as a transfer agent.
B. Representations and Warranties of the Trust
The Trust represents and warrants to the Company that:
(1) It is an investment company duly organized and existing and in
good standing under the laws of its state of organization;
(2) It is empowered under applicable laws and by its Charter and
By-Laws to enter into and perform its obligations under this
Agreement;
(3) All corporate proceedings required by said Charter and By-Laws
have been taken to authorize it to enter into and perform its
obligations under this Agreement;
(4) The Trust is an open-end investment company registered under
the 1940 Act; and
(5) A registration statement under the 1933 Act will be effective,
and appropriate state securities law filings have been made
and will continue to be made, with respect to all Shares of
each Fund being offered for sale.
Article 15. Indemnification.
A. Indemnification by Trust
The Company shall not be responsible for and the Trust or Fund
shall indemnify and hold the Company, including its officers,
directors, shareholders and their agents employees and affiliates,
harmless against any and all losses, damages, costs, charges,
counsel fees, payments, expenses and liabilities arising out of or
attributable to:
(1) The acts or omissions of any Custodian,
(2) The Trust's or Fund's refusal or failure to comply with the
terms of this Agreement, or which arise out of the Trust's or
The Fund's lack of good faith, negligence or willful
misconduct or which arise out of the breach of any
representation or warranty of the Trust or Fund hereunder or
otherwise.
(3) The reliance on or use by the Company or its agents or
subcontractors of information, records and documents in proper
form which
(a) are received by the Company or its agents or
subcontractors and furnished to it by or on behalf of the
Fund, its Shareholders or investors regarding the
purchase, redemption or transfer of Shares and
Shareholder account information; or
(b) have been prepared and/or maintained by the Fund or its
affiliates or any other person or firm on behalf of the
Trust.
(4) The reliance on, or the carrying out by the Company or its
agents or subcontractors of Proper Instructions of the Trust
or the Fund.
(5) The offer or sale of Shares in violation of any requirement
under the federal securities laws or regulations or the
securities laws or regulations of any state that such Shares
be registered in such state or in violation of any stop order
or other determination or ruling by any federal agency or any
state with respect to the offer or sale of such Shares in such
state.
Provided, however, that the Company shall not be protected by
this Article 15.A. from liability for any act or omission
resulting from the Company's willful misfeasance, bad faith,
gross negligence or reckless disregard of its duties.
B. Indemnification by the Company
The Company shall indemnify and hold the Trust or each Fund
harmless from and against any and all losses, damages, costs,
charges, counsel fees, payments, expenses and liabilities arising
out of or attributable to any action or failure or omission to act
by the Company as a result of the Company's willful misfeasance,
bad faith, gross negligence or reckless disregard of its duties.
C. Reliance
At any time the Company may apply to any officer of the Trust or
Fund for instructions, and may consult with legal counsel with
respect to any matter arising in connection with the services to be
performed by the Company under this Agreement, and the Company and
its agents or subcontractors shall not be liable and shall be
indemnified by the Trust or the appropriate Fund for any action
reasonably taken or omitted by it in reliance upon such
instructions or upon the opinion of such counsel provided such
action is not in violation of applicable federal or state laws or
regulations. The Company, its agents and subcontractors shall be
protected and indemnified in recognizing stock certificates which
are reasonably believed to bear the proper manual or facsimile
signatures of the officers of the Trust or the Fund, and the proper
countersignature of any former transfer agent or registrar, or of a
co-transfer agent or co-registrar.
D. Notification
In order that the indemnification provisions contained in this
Article 15 shall apply, upon the assertion of a claim for which
either party may be required to indemnify the other, the party
seeking indemnification shall promptly notify the other party of
such assertion, and shall keep the other party advised with respect
to all developments concerning such claim. The party who may be
required to indemnify shall have the option to participate with the
party seeking indemnification in the defense of such claim. The
party seeking indemnification shall in no case confess any claim or
make any compromise in any case in which the other party may be
required to indemnify it except with the other party's prior
written consent.
Article 16. Termination of Agreement.
This Agreement may be terminated by either party upon one hundred
twenty (120) days written notice to the other. Should the Trust
exercise its rights to terminate, all out-of-pocket expenses
associated with the movement of records and materials will be borne
by the Trust or the appropriate Fund. Additionally, the Company
reserves the right to charge for any other reasonable expenses
associated with such termination. The provisions of Article 15
shall survive the termination of this Agreement.
Article 17. Amendment.
This Agreement may be amended or modified by a written agreement
executed by both parties.
Article 18. Interpretive and Additional Provisions.
In connection with the operation of this Agreement, the Company and
the Trust may from time to time agree on such provisions
interpretive of or in addition to the provisions of this Agreement
as may in their joint opinion be consistent with the general tenor
of this Agreement. Any such interpretive or additional provisions
shall be in a writing signed by both parties and shall be annexed
hereto, provided that no such interpretive or additional provisions
shall contravene any applicable federal or state regulations or any
provision of the Charter. No interpretive or additional provisions
made as provided in the preceding sentence shall be deemed to be an
amendment of this Agreement.
Article 19. Governing Law.
This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the
Commonwealth of Massachusetts
Article 20. Notices.
Except as otherwise specifically provided herein, Notices and other
writings delivered or mailed postage prepaid to the Trust at
Federated Investors Tower, Pittsburgh, Pennsylvania, 15222-3779, or
to the Company at Federated Investors Tower, Pittsburgh,
Pennsylvania, 15222-3779, or to such other address as the Trust or
the Company may hereafter specify, shall be deemed to have been
properly delivered or given hereunder to the respective address.
Article 21. Counterparts.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original.
Article 22. Limitations of Liability of Trustees and Shareholders of
the Trust.
The execution and delivery of this Agreement have been authorized
by the Trustees of the Trust and signed by an authorized officer of
the Trust, acting as such, and neither such authorization by such
Trustees nor such execution and delivery by such officer shall be
deemed to have been made by any of them individually or to impose
any liability on any of them personally, and the obligations of
this Agreement are not binding upon any of the Trustees or
Shareholders of the Trust, but bind only the appropriate property
of the Fund, or Class, as provided in the Declaration of Trust.
Article 23. Limitations of Liability of Trustees and Shareholders of
the Company.
The execution and delivery of this Agreement have been authorized
by the Trustees of the Company and signed by an authorized officer
of the Company, acting as such, and neither such authorization by
such Trustees nor such execution and delivery by such officer shall
be deemed to have been made by any of them individually or to
impose any liability on any of them personally, and the obligations
of this Agreement are not binding upon any of the Trustees or
Shareholders of the Company, but bind only the property of the
Company as provided in the Declaration of Trust.
Article 24. Assignment.
This Agreement and the rights and duties hereunder shall not be
assignable with respect to the Trust or the Funds by either of the
parties hereto except by the specific written consent of the other
party.
Article 25. Merger of Agreement.
This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the
subject hereof whether oral or written.
Article 26. Successor Agent.
If a successor agent for the Trust shall be appointed by the Trust,
the Company shall upon termination of this Agreement deliver to
such successor agent at the office of the Company all properties of
the Trust held by it hereunder. If no such successor agent shall
be appointed, the Company shall at its office upon receipt of
Proper Instructions deliver such properties in accordance with such
instructions.
In the event that no written order designating a successor agent or
Proper Instructions shall have been delivered to the Company on or
before the date when such termination shall become effective, then
the Company shall have the right to deliver to a bank or trust
company, which is a "bank" as defined in the 1940 Act, of its own
selection, having an aggregate capital, surplus, and undivided
profits, as shown by its last published report, of not less than
$2,000,000, all properties held by the Company under this
Agreement. Thereafter, such bank or trust company shall be the
successor of the Company under this Agreement.
Article 27. Force Majeure.
The Company shall have no liability for cessation of services
hereunder or any damages resulting therefrom to the Fund as a
result of work stoppage, power or other mechanical failure, natural
disaster, governmental action, communication disruption or other
impossibility of performance.
Article 28. Assignment; Successors.
This Agreement shall not be assigned by either party without the
prior written consent of the other party, except that either party
may assign to a successor all of or a substantial portion of its
business, or to a party controlling, controlled by, or under common
control with such party. Nothing in this Article 28 shall prevent
the Company from delegating its responsibilities to another entity
to the extent provided herein.
Article 29. Severability.
In the event any provision of this Agreement is held illegal, void
or unenforceable, the balance shall remain in effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed in their names and on their behalf under their seals by and
through their duly authorized officers, as of the day and year first
above written.
ATTEST: INVESTMENT COMPANIES (listed on Exhibit 1)
/s/ John W. McGonigle_______ By:__/s/ John F. Donahue___
John W. McGonigle John F. Donahue
Secretary Chairman
ATTEST: FEDERATED SERVICES COMPANY
/s/ Jeannette Fisher-Garber By:_/s/ James J. Dolan_____
Jeannette Fisher-Garber James J. Dolan
Secretary President
Exhibit 1
The Peachtree Funds
Peachtree Equity Fund
Peachtree Bond Fund
Peachtree Georgia Tax-Free Income Fund
Peachtree Government Money Market Fund
Peachtree Prime Money Market Fund
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<NAME> PEACHTREE BOND FUND
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<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-END> SEP-30-1994
<INVESTMENTS-AT-COST> 84,126,445
<INVESTMENTS-AT-VALUE> 79,873,675
<RECEIVABLES> 1,781,545
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<TOTAL-LIABILITIES> 88,692
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<ACCUMULATED-NET-GAINS> (954,157)
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<ACCUM-APPREC-OR-DEPREC> (4,252,770)
<NET-ASSETS> 81,594,268
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<OTHER-INCOME> 0
<EXPENSES-NET> 458,055
<NET-INVESTMENT-INCOME> 2,781,233
<REALIZED-GAINS-CURRENT> (954,157)
<APPREC-INCREASE-CURRENT> (4,252,770)
<NET-CHANGE-FROM-OPS> (2,425,694)
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<DISTRIBUTIONS-OF-INCOME> 2,781,233
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<NUMBER-OF-SHARES-SOLD> 10,178,415
<NUMBER-OF-SHARES-REDEEMED> 1,731,721
<SHARES-REINVESTED> 288,542
<NET-CHANGE-IN-ASSETS> 81,594,268
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</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> PEACHTREE EQUITY FUND
<PERIOD-TYPE> 8-MOS
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<PERIOD-END> SEP-30-1994
<INVESTMENTS-AT-COST> 97,396,200
<INVESTMENTS-AT-VALUE> 97,326,741
<RECEIVABLES> 182,504
<ASSETS-OTHER> 29,942
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 97,539,187
<PAYABLE-FOR-SECURITIES> 676,238
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 66,462
<TOTAL-LIABILITIES> 742,700
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 96,804,124
<SHARES-COMMON-STOCK> 9,754,617
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 15,641
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 46,181
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (69,459)
<NET-ASSETS> 96,796,487
<DIVIDEND-INCOME> 1,143,925
<INTEREST-INCOME> 198,563
<OTHER-INCOME> 0
<EXPENSES-NET> 492,522
<NET-INVESTMENT-INCOME> 849,966
<REALIZED-GAINS-CURRENT> 46,181
<APPREC-INCREASE-CURRENT> (69,459)
<NET-CHANGE-FROM-OPS> 826,688
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 834,325
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 10,619,487
<NUMBER-OF-SHARES-REDEEMED> 947,787
<SHARES-REINVESTED> 82,917
<NET-CHANGE-IN-ASSETS> 96,796,487
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 385,127
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 541,303
<AVERAGE-NET-ASSETS> 81,706,794
<PER-SHARE-NAV-BEGIN> 10.000
<PER-SHARE-NII> .100
<PER-SHARE-GAIN-APPREC> (.080)
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<PER-SHARE-NAV-END> 9.920
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<AVG-DEBT-PER-SHARE> .000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
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<NAME> PEACHTREE GEORGIA TAX-FREE INCOME FUND
<PERIOD-TYPE> YEAR
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<PERIOD-END> SEP-30-1994
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
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<NAME> PEACHTREE GOVERNMENT MONEY MARKET FUND
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<PERIOD-END> SEP-30-1994
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<TOTAL-LIABILITIES> 399,130
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<SHARES-COMMON-PRIOR> 100,000
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<DIVIDEND-INCOME> 0
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<EXPENSES-NET> 99,115
<NET-INVESTMENT-INCOME> 1,067,196
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<NET-CHANGE-FROM-OPS> 1,067,196
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<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 130,044,343
<NUMBER-OF-SHARES-REDEEMED> 39,704,991
<SHARES-REINVESTED> 834
<NET-CHANGE-IN-ASSETS> 90,340,186
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 131,694
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 239,980
<AVERAGE-NET-ASSETS> 42,165,293
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> .020
<PER-SHARE-GAIN-APPREC> .000
<PER-SHARE-DIVIDEND> .020
<PER-SHARE-DISTRIBUTIONS> .000
<RETURNS-OF-CAPITAL> .000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 38
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> .000
</TABLE>
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<ARTICLE> 6
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<NUMBER> 5
<NAME> PEACHTREE PRIME MONEY MARKET FUND
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-END> SEP-30-1994
<INVESTMENTS-AT-COST> 84,660,017
<INVESTMENTS-AT-VALUE> 84,660,017
<RECEIVABLES> 336,762
<ASSETS-OTHER> 9,603
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 85,006,382
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 326,694
<TOTAL-LIABILITIES> 326,694
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</TABLE>
