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. 4 ............ X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 7 .......................... 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, 1995 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.
-----------------
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, 1995; or
intends to file the Notice required by that Rule on or about ;
------------
or
during the most recent fiscal year did not sell any securities pursuant to
Rule 24f-2 under the Investment Company Act of 1940, and, pursuant to
Rule 24f-2(b)(2), need not file the Notice.
Copies to:
Matthew G. Maloney, Esquire
Dickstein, Shapiro & Morin, L.L.P.
2101 L Street, N.W.
Washington, D.C. 20037
CROSS-REFERENCE SHEET
This Amendment to the Registration Statement of 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 and is comprised of the
following:
PART A. INFORMATION REQUIRED IN A PROSPECTUS.
Prospectus Heading
(Rule 404(c) Cross Reference)
Item 1. Cover Page...............(1-5) Cover Page
Item 2. Synopsis.................(1-5) Summary of Fund Expenses.
Item 3. Condensed Financial
Information..............(1-5) 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.
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 or Eliminating 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......... (1-5) Filed in Part A.
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, 1995. 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 (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, 1995
FEDERATED SECURITIES
CORP.
Distributor
GENERAL INFORMATION ABOUT THE FUND3 Fund Ownership 24
Trustees Compensation 24
INVESTMENT OBJECTIVE AND POLICIES3
Trustee Liability 26
Types of Investments 3 INVESTMENT ADVISORY SERVICES 26
Repurchase Agreements 4
Adviser to the Fund 26
Reverse Repurchase Agreements 4
Advisory Fees 26
When-Issued and Delayed Delivery
Transactions 5
Futures and Options Transactions5
Financial Futures Contracts 5
Put Options on Financial Futures
Contracts 6
Call Options on Financial Futures
Contracts 7
"Margin" in Futures Transactions8
Purchasing Put Options on Portfolio
Securities 8
Writing Covered Call Options on
Portfolio Securities 9
Risks 9
Restricted and Illiquid Securities
9
Lending of Portfolio Securities10
Weighted Average Portfolio Maturity
11
Portfolio Turnover 11
Investment Limitations 11
PEACHTREE FUNDS MANAGEMENT 16
APPENDIX 37
ADMINISTRATIVE SERVICES 27
TRANSFER AGENT AND DIVIDEND
DISBURSING AGENT 28
BROKERAGE TRANSACTIONS 28
PURCHASING SHARES 29
Administrative Arrangements 29
Distribution Plan 29
Purchasing Fund Shares with
Securities 30
DETERMINING NET ASSET VALUE 30
Determining Market Value of
Securities 30
EXCHANGE PRIVILEGE 31
REDEEMING SHARES 32
REDEMPTION IN KIND 32
TAX STATUS 32
The Fund's Tax Status 32
Shareholders' Tax Status 33
TOTAL RETURN 33
YIELD 34
PERFORMANCE COMPARISONS 34
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:
o 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.);
o 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;
o 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
o 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 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.
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 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:
o the frequency of trades and quotes for the security;
o the number of dealers willing to purchase or sell the security and the
number of other potential buyers;
o dealer undertakings to make a market in the security; and
o 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, and the
fiscal year ended September 30, 1995, the Fund's portfolio turnover rates were
21% and 76%, respectively.
INVESTMENT LIMITATIONS
SELLING SHORT AND BUYING ON MARGIN
The Fund will not sell any securities short or purchase any securities on
margin, but may obtain such short-term credits as 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, birthdates, present
positions Peachtree Funds, and principal occupations.
Pittsburgh, PA
Birthdate: July 28, 1924
Chairman and Trustee
Chairman and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; Chairman and Director, Federated Research
Corp. and Federated Global Research Corp.; Chairman, Passport Research, Ltd.;
Chief Executive Officer and Director, Trustee, or Managing General Partner of
the Funds. Mr. Donahue is the father of J. Christopher Donahue, President and
Trustee of the Trust.
Birthdate: February 3, 1934
Trustee
Director, Oberg Manufacturing Co.; Chairman of the Board, Children's Hospital of
Pittsburgh; Director, Trustee, or Managing General Partner of the Funds;
formerly, Senior Partner, Ernst & Young LLP.
Thomas G. Bigley
28th Floor, One Oxford
Centre. Donahue@*
FederatedhInvestors Tower
Birthdate: June 23, 1937
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.
Birthdate: July 4, 1918
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.
Birthdate: May 18, 1922
Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director, Trustee,
or Managing General Partner of the Funds.
John T. Conroy, Jr.
Wood/IPC Commercial
Department
John R. Wood and
JamesiE.eDowdnc.,nRealtors
3255HTamiamiMTrailoNorthor
Naples,,FLA PA
Birthdate: October 11, 1932
Trustee
Professor of Medicine and Member, Board of Trustees, University of Pittsburgh;
Medical Director, University of Pittsburgh Medical Center - Downtown; Member,
Board of Directors, University of Pittsburgh Medical Center; formerly,
Hematologist, Oncologist, and Internist, Presbyterian and Montefiore Hospitals;
Director, Trustee, or Managing General Partner of the Funds.
Birthdate: June 18, 1924
Trustee
Attorney-at-law; Shareholder, Henny, Kochuba, Meyer and 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.
Birthdate: March 16, 1942
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.
Edward L. Flaherty, Jr.@
Henny, Kochuba, Meyer and
Lawrence D. Ellis, M.D.*
PeterFE.tMaddenue, -uSuite
674Westcliff Road
Westin,rMA, PA
Birthdate: October 6, 1926
Trustee
Attorney-at-law; Partner, Henny, Kochuba, Meyer and Flaherty; Chairman,
Meritcare, Inc.; Director, Eat'N Park Restaurants, Inc.; Director, Trustee, or
Managing General Partner of the Funds.
Birthdate: December 20, 1932
Trustee
President, Law Professor, Duquesne University; Consulting Partner, Mollica,
Murray and Hogue; Director, Trustee or Managing General Partner of the Funds.
Birthdate: September 14, 1925
Trustee
Professor, International Politics and Management Consultant; Trustee, Carnegie
Endowment for International Peace, RAND Corporation, Online Computer Library
Center, Inc., and U.S. Space Foundation; Chairman, Czecho Management Center;
Director, Trustee, or Managing General Partner of the Funds; President Emeritus,
University of Pittsburgh; founding Chairman, National Advisory Council for
Environmental Policy and Technology and Federal Emergency Management Advisory
Board.
Gregor F. Meyer
Henny,.Kochuba, MeyerJand,
WesleytW. Posvar
President,dDuquesne-aSuite
University of Pittsburgh
Pittsburgh, PA
Birthdate: June 21, 1935
Trustee
Public relations/marketing consultant; Conference Coordinator, Non-profit
entities; Director, Trustee, or Managing General Partner of the Funds.
Birthdate: October 22, 1930
President, Treasurer and Trustee
Chairman, Treasurer, and Trustee, Federated Investors; Vice President, Federated
Advisers, Federated Management, Federated Research, Federated Research Corp.,
Federated Global Research Corp., and Passport Research, Ltd.; Executive Vice
President and Director, Federated Securities Corp.; Trustee, Federated Services
Company; Chairman, Treasurer, and Trustee, Federated Administrative Services;
Trustee or Director of some of the Funds; Executive Vice President and Treasurer
of the Funds.
Birthdate: April 11, 1949
Executive Vice President
President and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; President and Director, Federated Research
Corp. and Federated Global Research Corp.; President, Passport Research, Ltd.;
Trustee, Federated 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.
EdwardiC.PGonzales*hue
FederatedrInvestors Tower
Pittsburgh, PA
Birthdate: May 17, 1923
Vice President
Executive Vice President and Trustee, Federated Investors; Chairman and
Director, Federated Securities Corp.; President or Vice President of some of the
Funds; Director or Trustee of some of the Funds.
Birthdate: October 26, 1938
Executive Vice President and Secretary
Vice President, Secretary, General Counsel, and Trustee, Federated Investors;
Trustee, Federated Advisers, Federated Management, and Federated Research;
Director, Federated Research Corp. and Federated Global Research Corp.; Trustee,
Federated Services Company; Executive Vice President, Secretary, and Trustee,
Federated Administrative Services; President and Trustee, Federated Shareholder
Services; Director, Federated Securities Corp.; Executive Vice President and
Secretary of the Funds.
Birthdate: March 23, 1960
Vice President and Assistant Treasurer
Vice Presdient, 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.
Charles L.GDavis, Jr.
Federated Investors Tower
Pittsburgh, PA
* 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.
As used in the table above, "The Funds" and "Funds" mean the following
investment companies: American Leaders Fund, Inc.; Annuity Management Series;
Arrow Funds; Automated Government Money Trust; Blanchard Funds; Blanchard
Precious Metals, Inc.; Cash Trust Series II; Cash Trust Series, Inc.; DG
Investor Series; Edward D. Jones & Co. Daily Passport Cash Trust; Federated ARMs
Fund; Federated Equity Funds; Federated Exchange Fund, Ltd.; Federated GNMA
Trust; Federated Government Trust; Federated High Yield Trust; Federated Income
Securities Trust; Federated Income Trust; Federated Index Trust; Federated
Institutional Trust; Federated Master Trust; Federated Municipal Trust;
Federated Short-Term Municipal Trust; Federated Short-Term U.S. Government
Trust; Federated Stock Trust; Federated Tax-Free Trust; Federated Total Return
Series, Inc.; Federated U.S. Government Bond Fund; Federated U.S. Government
Securities Fund: 1-3 Years; Federated U.S, Government Securities Fund: 3-5
Years; First Priority Funds; 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;; 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 Term Trust, Inc. - 1999; Liberty
Utility Fund, Inc.; Liquid Cash Trust; Managed Series Trust; Money Market
Management, Inc.; Money Market Obligations Trust; Money Market Trust; Municipal
Securities Income Trust; Newpoint Funds; 111 Corcoran Funds; Peachtree Funds;
The Planters Funds; RIMCO Monument Funds; The Shawmut Funds; Star Funds; The
Starburst Funds; The Starburst Funds II; Stock and Bond Fund, Inc.; Sunburst
Funds; Targeted Duration Trust; Tax-Free Instruments Trust; Trust for Financial
Institutions; Trust For Government Cash Reserves; Trust for Short-Term U.S.
Government Securities; Trust for U.S. Treasury Obligations; The Virtus Funds;
World Investment Series, Inc.
FUND OWNERSHIP
Officers and Trustees own less than 1% of the Fund's outstanding shares.
As of November 3, 1995, the following shareholder of record owned 5% or more of
the outstanding shares of the Fund: Bank South, Atlanta, Georgia, acting in
various capacities for numerous accounts, owned approximately 9,404,352 shares
(96.76%).
TRUSTEES COMPENSATION
AGGREGATE
NAME , COMPENSATION
POSITION WITH FROM
TRUST TRUST*#
John F. Donahue $0
Chairman and Trustee
Thomas G. Bigley $338
Trustee
John T. Conroy, Jr. $4,862
Trustee
William J. Copeland $4,862
Trustee
James E. Dowd $4,862
Trustee
Lawrence D. Ellis, M.D. $4,681
Trustee
Edward L. Flaherty, Jr. $4,862
Trustee
Edward C. Gonzales $0
Trustee
Peter E. Madden $4,681
Trustee
Gregor F. Meyer $4,681
Trustee
John E. Murray, Jr., $4,681
Trustee
Wesley W. Posvar $4,681
Trustee
Marjorie P. Smuts $4,681
Trustee
*Information is furnished for the fiscal year ended September 30, 1995. The
Trust is the only investment company in the Fund Complex.
#The aggregate compensation is provided for the Trust which is comprised of six
portfolios.
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, and the fiscal year ended September 30, 1995, the Adviser
earned advisory fees of $352,666 and $635,619, of which $33,571 and $129,744,
respectively, were 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, and the fiscal year ended September 30, 1995,
the Fund incurred administrative service fees of $69,613 and $120,318,
respectively.
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:
o advice as to the advisability of investing in securities;
o security analysis and reports;
o economic studies;
o industry studies;
o receipt of quotations for portfolio evaluations; and
o 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 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
Market values of the Fund's portfolio securities, other than options, are
determined as follows:
o 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
o 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:
o yield;
o quality;
o coupon rate;
o maturity;
o type of issue;
o trading characteristics; and
o 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:
o derive at least 90% of its gross income from dividends, interest, and gains
from the sale of securities;
o derive less than 30% of its gross income from the sale of securities held
less than three months;
o invest in securities within certain statutory limits; and
o distribute to its shareholders at least 90% of its net income earned during
the year.
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 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.
For the one year period ended September 30, 1995 and for the period from
February 14, 1994 (date of initial public investment) to September 30, 1995, the
Fund's average annual total returns were 6.56% and 1.97%, respectively.
YIELD
The Fund's yield for the 30-day period ended September 30, 1995 was 5.65%.
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:
o portfolio quality;
o average portfolio maturity;
o type of instruments in which the portfolio is invested;
o changes in interest rates and market value of portfolio securities;
o changes in the Fund's expenses; and
o various other factors.
The Fund's performance fluctuates on a daily basis largely because net earnings
and offering price per share fluctuate daily. Both net earnings and offering
price per share are factors in the computation of yield and total return.
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:
o 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.
o 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.
o 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.
o 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.
o 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.
o 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.
o MORNINGSTAR, INC. an independent rating service, is the publisher of the
bi-weekly Mutual Fund Values. Mutual Fund Values rates more than 1,000
NASDAQ-listed mutual funds of all types, according to their risk-adjusted
returns. The maximum rating is five stars, and ratings are effective for
two weeks.
Advertisements and other sales literature for the Fund may quote total returns
which are calculated on non-standardized base periods. 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.
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,
1995. This Statement is not a prospectus itself. To receive a copy of the
70467H200
3092205B (11/95)
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 OBLIGATIONS OF BANK SOUTH (THE
"BANK") OR ANY OF ITS AFFILIATES, OR ANY BANK, AND ARE NOT INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY.
INVESTMENT IN THE SHARES OF THIS FUND INVOLVE INVESTMENT RISKS, INCLUDING
POSSIBLE LOSS OF PRINCIPAL. THE FUND ATTEMPTS TO MAINTAIN A STABLE NET ASSET
VALUE OF $1.00 PER SHARE; THERE CAN BE NO ASSURANCE THAT IT WILL BE ABLE TO
DO SO.
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, 1995
FEDERATED SECURITIES
CORP.
Distributor
GENERAL INFORMATION ABOUT THE FUND2 PURCHASING SHARES 18
INVESTMENT OBJECTIVE AND POLICIES2 Administrative Arrangements 18
Distribution Plan 18
Types of Investments 2
Purchasing Fund Shares With
When-Issued and Delayed Delivery
Securities 19
Transactions 2
DETERMINING NET ASSET VALUE 19
Repurchase Agreements 3
Reverse Repurchase Agreements 3 Use of the Amortized Cost Method20
Lending of Portfolio Securities 4 EXCHANGE PRIVILEGE 22
Investment Limitations 4
Requirements for Exchange 22
PEACHTREE FUNDS MANAGEMENT 6
Making an Exchange 22
Fund Ownership 13 REDEEMING SHARES 22
Trustees Compensation 13
Redemption in Kind 22
Trustee Liability 15
TAX STATUS 23
INVESTMENT ADVISORY SERVICES 15
The Fund's Tax Status 23
Adviser to the Fund 15
Shareholders' Tax Status 24
Advisory Fees 15
YIELD 24
ADMINISTRATIVE SERVICES 16
EFFECTIVE YIELD 25
TRANSFER AGENT AND DIVIDEND
DISBURSING AGENT 17 PERFORMANCE COMPARISONS 25
BROKERAGE TRANSACTIONS 17
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, birthdates, present
positions Peachtree Funds, and principal occupations.
Pittsburgh, PA
Birthdate: July 28, 1924
Chairman and Trustee
Chairman and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; Chairman and Director, Federated Research
Corp. and Federated Global Research Corp.; Chairman, Passport Research, Ltd.;
Chief Executive Officer and Director, Trustee, or Managing General Partner of
the Funds. Mr. Donahue is the father of J. Christopher Donahue, President and
Trustee of the Trust.
John F. Donahue@*
Federated Investors Tower
Birthdate: February 3, 1934
Trustee
Director, Oberg Manufacturing Co.; Chairman of the Board, Children's Hospital of
Pittsburgh; Director, Trustee, or Managing General Partner of the Funds;
formerly, Senior Partner, Ernst & Young LLP.
Birthdate: June 23, 1937
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.
Birthdate: July 4, 1918
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.
John T. Conroy, Jr.
Wood/IPC Commercial
Department
JohnaR.GWoodgand
WilliamtJ.,Copelandealtors
OnetPNCmPlazaT-a23rdoFloor
Naples,rFL, PA
Birthdate: May 18, 1922
Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director, Trustee,
or Managing General Partner of the Funds.
Birthdate: October 11, 1932
Trustee
Professor of Medicine and Member, Board of Trustees, University of Pittsburgh;
Medical Director, University of Pittsburgh Medical Center - Downtown; Member,
Board of Directors, University of Pittsburgh Medical Center; formerly,
Hematologist, Oncologist, and Internist, Presbyterian and Montefiore Hospitals;
Director, Trustee, or Managing General Partner of the Funds.
Birthdate: June 18, 1924
Trustee
Attorney-at-law; Shareholder, Henny, Kochuba, Meyer and 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.
Edward L. Flaherty, Jr.@
Henny, Kochuba, Meyer and
Flaherty D. Ellis, M.D.*
JamesaE.wDowdenter -uSuite
1111Hayward Mill Road
Pittsburgh, PA
Birthdate: March 16, 1942
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.
Birthdate: October 6, 1926
Trustee
Attorney-at-law; Partner, Henny, Kochuba, Meyer and Flaherty; Chairman,
Meritcare, Inc.; Director, Eat'N Park Restaurants, Inc.; Director, Trustee, or
Managing General Partner of the Funds.
Birthdate: December 20, 1932
Trustee
President, Law Professor, Duquesne University; Consulting Partner, Mollica,
Murray and Hogue; Director, Trustee or Managing General Partner of the Funds.
Gregor F. Meyer
Henny,.Kochuba, MeyerJand,
S.J.D.ty
TwosGatewayDCentere- Suite
674Westcliff Road
Pittsburgh, PA
Birthdate: September 14, 1925
Trustee
Professor, International Politics and Management Consultant; Trustee, Carnegie
Endowment for International Peace, RAND Corporation, Online Computer Library
Center, Inc., and U.S. Space Foundation; Chairman, Czecho Management Center;
Director, Trustee, or Managing General Partner of the Funds; President Emeritus,
University of Pittsburgh; founding Chairman, National Advisory Council for
Environmental Policy and Technology and Federal Emergency Management Advisory
Board.
Birthdate: June 21, 1935
Trustee
Public relations/marketing consultant; Conference Coordinator, Non-profit
entities; Director, Trustee, or Managing General Partner of the Funds.
Birthdate: October 22, 1930
President, Treasurer and Trustee
Chairman, Treasurer, and Trustee, Federated Investors; Vice President, Federated
Advisers, Federated Management, Federated Research, Federated Research Corp.,
Federated Global Research Corp., and Passport Research, Ltd.; Executive Vice
President and Director, Federated Securities Corp.; Trustee, Federated Services
Company; Chairman, Treasurer, and Trustee, Federated Administrative Services;
Trustee or Director of some of the Funds; Executive Vice President and Treasurer
of the Funds.
Wesley W. Posvar
MarjoriehP.rSmutss*earning
4905eBayardoStreetsburghr
Pittsburgh, PA
Birthdate: April 11, 1949
Executive Vice President
President and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; President and Director, Federated Research
Corp. and Federated Global Research Corp.; President, Passport Research, Ltd.;
Trustee, Federated 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.
Birthdate: May 17, 1923
Vice President
Executive Vice President and Trustee, Federated Investors; Chairman and
Director, Federated Securities Corp.; President or Vice President of some of the
Funds; Director or Trustee of some of the Funds.
Birthdate: October 26, 1938
Executive Vice President and Secretary
Vice President, Secretary, General Counsel, and Trustee, Federated Investors;
Trustee, Federated Advisers, Federated Management, and Federated Research;
Director, Federated Research Corp. and Federated Global Research Corp.; Trustee,
Federated Services Company; Executive Vice President, Secretary, and Trustee,
Federated Administrative Services; President and Trustee, Federated Shareholder
Services; Director, Federated Securities Corp.; Executive Vice President and
Secretary of the Funds.
J.cChristopherhDonahue
Federated Investors Tower
Pittsburgh, PA
Birthdate: March 23, 1960
Vice President and Assistant Treasurer
Vice Presdient, 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.
As used in the table above, "The Funds" and "Funds" mean the following
investment companies: American Leaders Fund, Inc.; Annuity Management Series;
Arrow Funds; Automated Government Money Trust; Blanchard Funds; Blanchard
Precious Metals, Inc.; Cash Trust Series II; Cash Trust Series, Inc.; DG
Investor Series; Edward D. Jones & Co. Daily Passport Cash Trust; Federated ARMs
Fund; Federated Equity Funds; Federated Exchange Fund, Ltd.; Federated GNMA
Trust; Federated Government Trust; Federated High Yield Trust; Federated Income
Securities Trust; Federated Income Trust; Federated Index Trust; Federated
Institutional Trust; Federated Master Trust; Federated Municipal Trust;
Federated Short-Term Municipal Trust; Federated Short-Term U.S. Government
Trust; Federated Stock Trust; Federated Tax-Free Trust; Federated Total Return
Series, Inc.; Federated U.S. Government Bond Fund; Federated U.S. Government
Securities Fund: 1-3 Years; Federated U.S, Government Securities Fund: 3-5
Years; First Priority Funds; 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;; 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 Term Trust, Inc. - 1999; Liberty
Utility Fund, Inc.; Liquid Cash Trust; Managed Series Trust; Money Market
Management, Inc.; Money Market Obligations Trust; Money Market Trust; Municipal
Securities Income Trust; Newpoint Funds; 111 Corcoran Funds; Peachtree Funds;
The Planters Funds; RIMCO Monument Funds; The Shawmut Funds; Star Funds; The
Starburst Funds; The Starburst Funds II; Stock and Bond Fund, Inc.; Sunburst
Funds; Targeted Duration Trust; Tax-Free Instruments Trust; Trust for Financial
Institutions; Trust For Government Cash Reserves; Trust for Short-Term U.S.
Government Securities; Trust for U.S. Treasury Obligations; The Virtus Funds;
World Investment Series, Inc.
FUND OWNERSHIP
Officers and Trustees own less than 1% of the Fund's outstanding shares.
As of November 3, 1995, the following shareholder of record owned 5% or more of
the outstanding shares of the Fund: Bank South, Atlanta, Georgia, acting in
various capacities for numerous accounts, owned approximately 65,762,067 shares
(97.73%).
TRUSTEES COMPENSATION
AGGREGATE
NAME , COMPENSATION
POSITION WITH FROM
TRUST TRUST*#
John F. Donahue $0
Chairman and Trustee
Thomas G. Bigley $338
Trustee
John T. Conroy, Jr. $4,862
Trustee
William J. Copeland $4,862
Trustee
James E. Dowd $4,862
Trustee
Lawrence D. Ellis, M.D. $4,681
Trustee
Edward L. Flaherty, Jr. $4,862
Trustee
Edward C. Gonzales $0
Trustee
Peter E. Madden $4,681
Trustee
Gregor F. Meyer $4,681
Trustee
John E. Murray, Jr., $4,681
Trustee
Wesley W. Posvar $4,681
Trustee
Marjorie P. Smuts $4,681
Trustee
*Information is furnished for the fiscal year ended September 30, 1995. The
Trust is the only investment company in the Fund Complex.
#The aggregate compensation is provided for the Trust which is comprised of six
portfolios.
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 (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, and for the fiscal year ended
September 30, 1995, the Adviser earned advisory fees of $131,694 and $356,814,
of which $121,371 and $217,475, respectively, were 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 and the fiscal year ended September 30, 1995, the Fund incurred
administrative service costs of $38,575 and $104,633, of which $7,497 and $0,
respectively, were 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:
o advice as to the advisability of investing in securities;
o security analysis and reports;
o economic studies;
o industry studies;
o receipt of quotations for portfolio evaluations; and
o 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:
o derive at least 90% of its gross income from dividends, interest, and gains
from the sale of securities;
o derive less than 30% of its gross income from the sale of securities held
less than three months;
o invest in securities within certain statutory limits; and
o distribute to its shareholders at least 90% of its net income earned during
the year.
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, 1995 was 5.29%.
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:
o 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;
o 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
o 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, 1995 was
5.43%.
The Fund's effective yield is computed by compounding the unannualized base
period return by:
o adding 1 to the base period return;
o raising the sum of the 365/7th power; and
o subtracting 1 from the result.
PERFORMANCE COMPARISONS
The Fund's performance depends upon such variables as:
o portfolio quality;
o average portfolio maturity;
o type of instruments in which the portfolio is invested;
o changes in interest rates on money market instruments;
o changes in Fund expenses; and
o 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:
o LIPPER ANALYTICAL SERVICES, INC., ranks funds in various fund categories by
making comparative calculations using total return. Total return assumes
the reinvestment of all 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.
o 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.
o 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.
- --------------------------------------------------------------------------------
PEACHTREE EQUITY FUND
(A PORTFOLIO OF PEACHTREE FUNDS)
PROSPECTUS
70467H309
3093003B (11/95)
- --------------------------------------------------------------------------------
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,
1995, 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 (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, 1995
The Investment Adviser to the Peachtree Funds is Bank South, a Georgia
commercial bank, 3350 Cumberland Circle, Atlanta, Georgia 30339 (the "Adviser").
On September 5, 1995, the Adviser's parent corporation, Bank South Corporation,
entered into a definitive agreement pursuant to which the Adviser will be
acquired by NationsBank Corporation, one of the nation's largest banking and
financial services holding companies. The proposed change of control of the
Adviser will legally constitute an assignment of the advisory contract between
the Funds and the Adviser, which is subject to the prior approval of the Funds'
Board of Directors and shareholders. Following the merger of Bank South
Corporation and NationsBank Corporation, it is presently contemplated that the
Adviser will be merged with NationsBank of Georgia, N.A. and that, subject to
the further approval of the Funds' Board of Directors and shareholders, the
Peachtree Funds will be merged with similar portfolios of the Nations Fund,
which currently is advised by NationsBank, N.A. Recently, NationsBank announced
the formation of NationsBanc Advisors, Inc. that will become the advisor to
Nations Fund, and the formation of TradeStreet Investment Associates, Inc. that
will become the investment subadviser for Nations Fund.
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS 2
- ------------------------------------------------------
GENERAL INFORMATION 3
- ------------------------------------------------------
INVESTMENT INFORMATION 3
- ------------------------------------------------------
Investment Objective 3
Investment Policies 3
Certain Borrowing and
Investment Limitations 5
PEACHTREE FUNDS INFORMATION 6
- ------------------------------------------------------
Management of the Trust 6
Distribution of Shares 7
Administration of the Trust 8
Brokerage Transactions 9
NET ASSET VALUE 9
- ------------------------------------------------------
INVESTING IN THE FUND 9
- ------------------------------------------------------
Share Purchases 9
Minimum Investment Required 10
Systematic Investment Program 10
What Shares Cost 10
Reducing or Eliminating the Sales Load 11
Certificates and Confirmations 12
Dividends and Distributions 12
Purchasing Shares of the Fund
with Securities 13
EXCHANGE PRIVILEGE 13
- ------------------------------------------------------
Peachtree Funds 13
REDEEMING SHARES 14
- ------------------------------------------------------
Systematic Withdrawal Program 16
Accounts With Low Balances 16
SHAREHOLDER INFORMATION 16
- ------------------------------------------------------
Voting Rights 16
Massachusetts Partnership Law 16
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
Redemption Fees (as a percentage of amount redeemed, if applicable)................... None
Exchange Fee.......................................................................... None
ANNUAL OPERATING EXPENSES
(As a percentage of 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(4).................................................. 1.00%
</TABLE>
(1) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee 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 this 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 would have been 1.09% absent the voluntary
waiver of a portion of the management fee.
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 ADDITIONAL FEES.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years 5 years 10 years
- ------------------------------------------------------------------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment
assuming (1) 5% annual return and (2) redemption at the end of
each time period. 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, 1996.
PEACHTREE EQUITY FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Ernst & Young LLP, Independent Auditors, on
page 31.
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER
30,
--------------------
1995 1994(A)
------ -------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.92 $10.00
- ---------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------------------------------------------
Net investment income 0.13 0.10
- ---------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 2.05 (0.08)
- --------------------------------------------------------------------- ------ -------
Total from investment operations 2.18 0.02
- --------------------------------------------------------------------- ------ -------
LESS DISTRIBUTIONS
- ---------------------------------------------------------------------
Distributions from net investment income (0.13) (0.10)
- ---------------------------------------------------------------------
Total distributions (0.13) (0.10)
- --------------------------------------------------------------------- ------ -------
NET ASSET VALUE, END OF PERIOD $11.97 $ 9.92
- --------------------------------------------------------------------- ------ -------
TOTAL RETURN (B) 22.19% 0.20%
- ---------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ---------------------------------------------------------------------
Expenses 1.01% 0.96%*
- ---------------------------------------------------------------------
Net investment income 1.26% 1.66%*
- ---------------------------------------------------------------------
Expense waiver/reimbursement (c) 0.09% 0.09%*
- ---------------------------------------------------------------------
SUPPLEMENTAL DATA
- ---------------------------------------------------------------------
Net assets, end of period (000 omitted) $125,031 $96,796
- ---------------------------------------------------------------------
Portfolio turnover 17% 4%
- ---------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from February 14, 1994 (date of initial
public investment) to September 30, 1994.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
GENERAL INFORMATION
- --------------------------------------------------------------------------------
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated 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. There is the risk that when lending portfolio
securities, the securities may not be available to the Fund on a timely basis
and the Fund may, therefore, lose the opportunity to sell the securities at a
desirable price. In addition, in the event that a borrower of securities would
file for bankruptcy or become insolvent, disposition of the securities may be
delayed pending court action.
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. See "Investment Objective and Policies" in the Statement of Additional
Information.
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 commercial bank chartered under the laws of
the State of Georgia and 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 Investment Adviser to the Peachtree Funds is Bank South, a Georgia
commercial bank, 3350 Cumberland Circle, Atlanta, Georgia 30339 (the "Adviser").
On September 5, 1995, the Adviser's parent corporation, Bank South Corporation,
entered into a definitive agreement pursuant to which the Adviser will be
acquired by NationsBank Corporation, one of the nation's largest banking and
financial services holding companies. The proposed change of control of the
Adviser will legally constitute an
assignment of the advisory contract between the Funds and the Adviser, which is
subject to the prior approval of the Funds' Board of Directors and shareholders.
Following the merger of Bank South Corporation and NationsBank Corporation, it
is presently contemplated that the Adviser will be merged with NationsBank of
Georgia, N.A. and that, subject to the further approval of the Funds' Board of
Directors and shareholders, the Peachtree Funds will be merged with similar
portfolios of the Nations Fund, which currently is advised by NationsBank, N.A.
Recently, NationsBank announced the formation of NationsBanc Advisors, Inc. that
will become the advisor to Nations Fund, and the formation of TradeStreet
Investment Associates, Inc. that will become the investment subadviser for
Nations Fund.
The Adviser has managed discretionary assets for its customers since 1931. As of
September 30, 1995, the Adviser managed in excess of $1.3 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, Boston, MA, 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.
INDEPENDENT AUDITORS. The independent auditors for the Fund are Ernst & Young
LLP, Pittsburgh, Pennsylvania.
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, your account number, and 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 as of the close of trading (normally 4:00
p.m., Eastern time) on the New York Stock Exchange, Monday through Friday,
except on: (i) days on which 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 OR ELIMINATING THE SALES LOAD
The sales load can be reduced or eliminated 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 may reduce or eliminate 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 or elimination, 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 or
eliminate 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 or
eliminated 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 or
elimination, 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 a sales load reduction or elimination, 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 or eliminate 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 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 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 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 any amount to be sent to an
address other than that on record with the Fund or a redemption payable other
than to the shareholder of record must have their signatures guaranteed by:
- - a trust company or commercial bank whose deposits are insured by the BIF,
which is administered by the FDIC;
- - a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchanges;
- - a savings bank or savings and loan association whose deposits are insured by
the SAIF, which is administered by the FDIC; 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 3, 1995, Bank South,
Atlanta, Georgia, acting in various capacities for numerous accounts, owned
approximately 9,962,875 shares (95.47%) of the Peachtree Equity 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 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, advertisements for the Fund may refer to ratings, rankings,
and other information in certain financial publications and/or compare the
Fund's performance to certain indices.
PEACHTREE EQUITY FUND
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ------------------------------------------------------------------- ------------
<C> <C> <S> <C>
LONG-TERM INVESTMENTS--95.1%
- ----------------------------------------------------------------------------------
COMMON STOCKS--95.1%
- ----------------------------------------------------------------------------------
AEROSPACE & DEFENSE--2.9%
-------------------------------------------------------------------
20,000 Boeing Co. $ 1,365,000
-------------------------------------------------------------------
40,000 Loral Corp. 2,280,000
------------------------------------------------------------------- ------------
Total 3,645,000
------------------------------------------------------------------- ------------
AUTOMOBILE--7.4%
-------------------------------------------------------------------
30,000 Chrysler Corp. 1,590,000
-------------------------------------------------------------------
30,000 Eaton Corp. 1,590,000
-------------------------------------------------------------------
50,000 Echlin, Inc. 1,787,500
-------------------------------------------------------------------
25,000 General Motors Corp. 1,171,875
-------------------------------------------------------------------
30,000 General Motors Corp. Class H 1,230,000
-------------------------------------------------------------------
70,000 Superior Industries International, Inc. 1,881,250
------------------------------------------------------------------- ------------
Total 9,250,625
------------------------------------------------------------------- ------------
BUILDING MATERIALS--1.3%
-------------------------------------------------------------------
35,000 Masco Corp. 962,500
-------------------------------------------------------------------
45,000 Ryland Group, Inc. 697,500
------------------------------------------------------------------- ------------
Total 1,660,000
------------------------------------------------------------------- ------------
CHEMICALS--2.6%
-------------------------------------------------------------------
20,000 Eastman Chemical Co. 1,280,000
-------------------------------------------------------------------
21,000 Imperial Chemical Industries PLC 1,065,750
-------------------------------------------------------------------
45,000 R. P. M. Inc., Ohio 894,375
------------------------------------------------------------------- ------------
Total 3,240,125
------------------------------------------------------------------- ------------
ELECTRICAL EQUIPMENT--4.6%
-------------------------------------------------------------------
27,000 (a)Andrew Corp. 1,650,375
-------------------------------------------------------------------
23,000 Emerson Electric Co. 1,644,500
-------------------------------------------------------------------
28,000 General Electric Co. 1,785,000
-------------------------------------------------------------------
30,000 Sensormatic Electronics Corp. 690,000
------------------------------------------------------------------- ------------
Total 5,769,875
------------------------------------------------------------------- ------------
</TABLE>
PEACHTREE EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ------------------------------------------------------------------- ------------
<C> <C> <S> <C>
LONG-TERM INVESTMENTS--CONTINUED
- ----------------------------------------------------------------------------------
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
ELECTRONIC OFFICE EQUIPMENT--11.9%
-------------------------------------------------------------------
81,000 American Business Products, Inc. $ 1,670,625
-------------------------------------------------------------------
30,000 Computer Association International, Inc. 1,267,500
-------------------------------------------------------------------
25,000 Hewlett Packard Co. 2,084,375
-------------------------------------------------------------------
34,000 Intel Corp. 2,044,250
-------------------------------------------------------------------
18,000 Microsoft Corp. 1,629,000
-------------------------------------------------------------------
23,000 Motorola, Inc. 1,756,625
-------------------------------------------------------------------
56,000 Texas Instruments, Inc. 4,473,000
------------------------------------------------------------------- ------------
Total 14,925,375
------------------------------------------------------------------- ------------
ENERGY--7.3%
-------------------------------------------------------------------
15,000 Amerada Hess Corp. 729,375
-------------------------------------------------------------------
29,000 Amoco Corp. 1,859,625
-------------------------------------------------------------------
25,000 Anadarko Petroleum Corp. 1,184,375
-------------------------------------------------------------------
35,000 Baker Hughes, Inc. 713,125
-------------------------------------------------------------------
20,000 Equitable Resources, Inc. 590,000
-------------------------------------------------------------------
20,000 Mapco, Inc. 1,030,000
-------------------------------------------------------------------
15,000 Royal Dutch Petroleum Co. 1,841,250
-------------------------------------------------------------------
18,000 Schlumberger Ltd. 1,174,500
------------------------------------------------------------------- ------------
Total 9,122,250
------------------------------------------------------------------- ------------
FINANCE--3.3%
-------------------------------------------------------------------
33,000 Barnett Banks, Inc. 1,868,625
-------------------------------------------------------------------
12,000 Federal National Mortgage Association 1,242,000
-------------------------------------------------------------------
40,000 Signet Banking Corp. 1,050,000
------------------------------------------------------------------- ------------
Total 4,160,625
------------------------------------------------------------------- ------------
FINANCE--COMMERCIAL--4.0%
-------------------------------------------------------------------
18,000 American Express Co. 798,750
-------------------------------------------------------------------
10,000 Chubb Corp. 960,000
-------------------------------------------------------------------
</TABLE>
PEACHTREE EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ------------------------------------------------------------------- ------------
<C> <C> <S> <C>
LONG-TERM INVESTMENTS--CONTINUED
- ----------------------------------------------------------------------------------
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
FINANCE--COMMERCIAL--CONTINUED
-------------------------------------------------------------------
20,000 Morgan (J.P.) & Co., Inc. $ 1,547,500
-------------------------------------------------------------------
25,000 Suntrust Banks, Inc. 1,653,125
------------------------------------------------------------------- ------------
Total 4,959,375
------------------------------------------------------------------- ------------
FOOD & BEVERAGE--8.7%
-------------------------------------------------------------------
125,000 Archer-Daniels-Midland Co. 1,921,875
-------------------------------------------------------------------
65,000 Flowers Industries, Inc. 1,340,625
-------------------------------------------------------------------
34,000 Gillette Co. 1,619,250
-------------------------------------------------------------------
23,000 IBP Inc. 1,227,625
-------------------------------------------------------------------
27,000 Pepsico, Inc. 1,377,000
-------------------------------------------------------------------
18,000 Philip Morris Companies, Inc. 1,503,000
-------------------------------------------------------------------
10,000 Proctor & Gamble Co. 770,000
-------------------------------------------------------------------
37,000 Sara Lee Corp. 1,100,750
------------------------------------------------------------------- ------------
Total 10,860,125
------------------------------------------------------------------- ------------
FOREST PRODUCTS & PAPER--1.5%
-------------------------------------------------------------------
41,000 Weyerhaeuser Co. 1,870,625
------------------------------------------------------------------- ------------
HEALTHCARE--8.4%
-------------------------------------------------------------------
35,000 Abbott Labs 1,491,875
-------------------------------------------------------------------
22,000 Bausch & Lomb, Inc. 910,250
-------------------------------------------------------------------
10,000 Bristol-Myers Squibb Co. 728,750
-------------------------------------------------------------------
20,000 (a)Forest Labs, Inc. 890,000
-------------------------------------------------------------------
25,000 Merck & Co., Inc. 1,400,000
-------------------------------------------------------------------
55,000 Mylan Labs, Inc 1,100,000
-------------------------------------------------------------------
18,000 Pfizer, Inc. 960,750
-------------------------------------------------------------------
33,000 (a)Scherer R.P. Corp. 1,431,375
-------------------------------------------------------------------
30,000 Smithkline Beecham PLC 1,518,750
------------------------------------------------------------------- ------------
Total 10,431,750
------------------------------------------------------------------- ------------
</TABLE>
PEACHTREE EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ------------------------------------------------------------------- ------------
<C> <C> <S> <C>
LONG-TERM INVESTMENTS--CONTINUED
- ----------------------------------------------------------------------------------
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
MACHINERY & EQUIPMENT--3.2%
-------------------------------------------------------------------
38,000 Agco Corp. $ 1,729,000
-------------------------------------------------------------------
40,000 Caterpillar, Inc. 2,275,000
------------------------------------------------------------------- ------------
Total 4,004,000
------------------------------------------------------------------- ------------
MEDIA--2.4%
-------------------------------------------------------------------
18,458 Cox Communications, Inc. 373,775
-------------------------------------------------------------------
38,000 Reuters Holdings PLC 2,009,250
-------------------------------------------------------------------
21,021 Times Mirror Co. 604,354
------------------------------------------------------------------- ------------
Total 2,987,379
------------------------------------------------------------------- ------------
METALS--2.4%
-------------------------------------------------------------------
30,000 Aluminum Co. of America 1,586,250
-------------------------------------------------------------------
32,000 Nucor Corp. 1,432,000
------------------------------------------------------------------- ------------
Total 3,018,250
------------------------------------------------------------------- ------------
MISCELLANEOUS--1.9%
-------------------------------------------------------------------
24,000 Millipore 900,000
-------------------------------------------------------------------
33,000 Tenneco Inc. 1,526,250
------------------------------------------------------------------- ------------
Total 2,426,250
------------------------------------------------------------------- ------------
MOVIES/ENTERTAINMENT--4.4%
-------------------------------------------------------------------
50,000 Harley Davidson Inc. 1,218,750
-------------------------------------------------------------------
20,000 Hilton Hotels Corp. 1,277,500
-------------------------------------------------------------------
52,000 McDonalds Corp. 1,989,000
-------------------------------------------------------------------
20,000 Viacom, Inc. 995,000
------------------------------------------------------------------- ------------
Total 5,480,250
------------------------------------------------------------------- ------------
RETAIL--8.0%
-------------------------------------------------------------------
50,000 (a) Autozone, Inc. 1,275,000
-------------------------------------------------------------------
50,000 Circuit City Stores, Inc. 1,581,250
-------------------------------------------------------------------
30,000 Home Depot, Inc. 1,196,250
-------------------------------------------------------------------
</TABLE>
PEACHTREE EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ------------------------------------------------------------------- ------------
<C> <C> <S> <C>
LONG-TERM INVESTMENTS--CONTINUED
- ----------------------------------------------------------------------------------
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
RETAIL--CONTINUED
-------------------------------------------------------------------
50,000 Limited, Inc. $ 950,000
-------------------------------------------------------------------
30,000 Lowes Cos Inc. 900,000
-------------------------------------------------------------------
40,000 (a) Office Depot, Inc. 1,205,000
-------------------------------------------------------------------
31,000 Penney (J.C.) Co., Inc. 1,538,375
-------------------------------------------------------------------
25,000 (a) Toys R Us, Inc. 675,000
-------------------------------------------------------------------
25,000 Wal-Mart Stores, Inc. 621,875
------------------------------------------------------------------- ------------
Total 9,942,750
------------------------------------------------------------------- ------------
SERVICES--1.1%
-------------------------------------------------------------------
50,000 WMX Technologies, Inc. 1,425,000
------------------------------------------------------------------- ------------
TRANSPORTATION--3.0%
-------------------------------------------------------------------
80,000 Atlantic Southeast Airlines Inc. 1,870,000
-------------------------------------------------------------------
50,000 Southwest Airlines Co. 1,262,500
-------------------------------------------------------------------
35,000 Swift Transportation, Inc. 603,750
------------------------------------------------------------------- ------------
Total 3,736,250
------------------------------------------------------------------- ------------
UTILITIES--4.8%
-------------------------------------------------------------------
20,000 AT&T Corp. 1,315,000
-------------------------------------------------------------------
60,000 MCI Communications, Inc. 1,563,750
-------------------------------------------------------------------
35,000 Telefonos De Mexico S.A. de C.V. 1,111,250
-------------------------------------------------------------------
63,000 Worldcom, Inc. 2,023,875
------------------------------------------------------------------- ------------
Total 6,013,875
------------------------------------------------------------------- ------------
TOTAL COMMON STOCKS (IDENTIFIED COST $100,472,747) $118,929,754
------------------------------------------------------------------- ------------
</TABLE>
PEACHTREE EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT VALUE
- ---------- ---------------------------------------------------------------- ------------
<C> <C> <S> <C>
SHORT-TERM INVESTMENTS--4.7%
- -----------------------------------------------------------------------------------
CASH EQUIVALENT--0.1%
- -----------------------------------------------------------------------------------
$ 128,513 Bank of New York Cash Reserves, 5.00% (AT AMORTIZED COST) $ 128,513
---------------------------------------------------------------- ------------
(B) REPURCHASE AGREEMENTS--4.6%
- -----------------------------------------------------------------------------------
3,900,000 Lehman Brothers, Inc., 6.15%, dated 9/29/1994, due 10/3/1995 3,900,000
----------------------------------------------------------------
1,800,000 Sanwa Brothers, 5.91%, dated 9/28/1995, due 10/2/1995 1,800,000
---------------------------------------------------------------- ------------
TOTAL REPURCHASE AGREEMENTS (AT AMORTIZED COST) 5,700,000
---------------------------------------------------------------- ------------
TOTAL INVESTMENTS (IDENTIFIED COST $106,301,260)(C) $124,758,267
---------------------------------------------------------------- ------------
</TABLE>
(a) Non-income producing security.
(b) The repurchase agreements are fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio.
(c) The cost of investments for federal tax purposes amounts to $106,301,260.
The unrealized appreciation of investments on a federal tax basis amounts to
$18,457,007 which is comprised of $22,195,669 appreciation and $3,738,662
depreciation at September 30, 1995.
Note: The categories of investments are shown as a percentage of net assets
($125,031,481) at September 30, 1995.
The following acronym is used throughout this portfolio:
PLC--Public Limited Company
(See Notes which are an integral part of the Financial Statements)
PEACHTREE EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -----------------------------------------------------------------------------
Total investments in securities, at value (identified and tax cost
$106,301,260) $124,758,267
- -----------------------------------------------------------------------------
Cash 37,925
- -----------------------------------------------------------------------------
Income receivable 205,370
- -----------------------------------------------------------------------------
Receivable for investments sold 105,122
- -----------------------------------------------------------------------------
Receivable for shares sold 68,010
- -----------------------------------------------------------------------------
Deferred expenses 25,405
- ----------------------------------------------------------------------------- ------------
Total assets 125,200,099
- -----------------------------------------------------------------------------
LIABILITIES:
- -----------------------------------------------------------------------------
Payable for investments purchased $125,925
- ----------------------------------------------------------------
Payable to Transfer Agent 13,739
- ----------------------------------------------------------------
Accrued expenses 28,954
- ---------------------------------------------------------------- --------
Total liabilities 168,618
- ----------------------------------------------------------------------------- ------------
NET ASSETS for 10,441,727 shares outstanding $125,031,481
- ----------------------------------------------------------------------------- ------------
NET ASSETS CONSIST OF:
- -----------------------------------------------------------------------------
Paid in capital $104,343,671
- -----------------------------------------------------------------------------
Net unrealized appreciation of investments 18,457,007
- -----------------------------------------------------------------------------
Accumulated net realized gain on investments 2,189,098
- -----------------------------------------------------------------------------
Undistributed net investment income 41,705
- ----------------------------------------------------------------------------- ------------
Total Net Assets $125,031,481
- ----------------------------------------------------------------------------- ------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- -----------------------------------------------------------------------------
Net Asset Value Per Share ($125,031,481 / 10,441,727 shares outstanding) $11.97
- ----------------------------------------------------------------------------- ------------
Offering Price Per Share (100/96.25 of $11.97)* $12.44
- ----------------------------------------------------------------------------- ------------
Redemption Proceeds Per Share $11.97
- ----------------------------------------------------------------------------- ------------
</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, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------
Dividends $ 2,062,298
- ---------------------------------------------------------------------------------
Interest 384,991
- --------------------------------------------------------------------------------- -----------
Total income 2,447,289
- ---------------------------------------------------------------------------------
EXPENSES:
- ---------------------------------------------------------------------------------
Investment advisory fee $ 814,121
- -------------------------------------------------------------------
Administrative personnel and services fee 154,038
- -------------------------------------------------------------------
Custodian fees 33,907
- -------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 51,579
- -------------------------------------------------------------------
Directors'/Trustees' fees 3,044
- -------------------------------------------------------------------
Auditing fees 12,050
- -------------------------------------------------------------------
Legal fees 7,323
- -------------------------------------------------------------------
Portfolio accounting fees 49,249
- -------------------------------------------------------------------
Share registration costs 27,733
- -------------------------------------------------------------------
Printing and postage 15,583
- -------------------------------------------------------------------
Insurance premiums 6,379
- -------------------------------------------------------------------
Miscellaneous 6,531
- ------------------------------------------------------------------- ----------
Total expenses 1,181,537
- -------------------------------------------------------------------
Waivers and reimbursements--
- -------------------------------------------------------------------
Waiver of investment advisory fee (94,631)
- ------------------------------------------------------------------- ----------
Net expenses 1,086,906
- --------------------------------------------------------------------------------- -----------
Net investment income 1,360,383
- --------------------------------------------------------------------------------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- ---------------------------------------------------------------------------------
Net realized gain on investments 2,190,081
- ---------------------------------------------------------------------------------
Net change in unrealized appreciation of investments 18,526,466
- --------------------------------------------------------------------------------- -----------
Net realized and unrealized gain on investments 20,716,547
- --------------------------------------------------------------------------------- -----------
Change in net assets resulting from operations $22,076,930
- --------------------------------------------------------------------------------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
PEACHTREE EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
SEPTEMBER 30, SEPTEMBER 30,
1995 1994*
------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -------------------------------------------------------------
OPERATIONS--
- -------------------------------------------------------------
Net investment income $ 1,360,383 $ 849,966
- -------------------------------------------------------------
Net realized gain (loss) on investments ($2,190,081 and
$46,181, respectively, as computed for federal tax
purposes) 2,190,081 46,181
- -------------------------------------------------------------
Net change in unrealized appreciation (depreciation) 18,526,466 (69,459 )
- ------------------------------------------------------------- ------------ ------------
Change in net assets resulting from operations 22,076,930 826,688
- ------------------------------------------------------------- ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -------------------------------------------------------------
Distributions from net investment income (1,334,319 ) (834,325 )
- -------------------------------------------------------------
Distributions from net realized gains (47,164 ) --
- ------------------------------------------------------------- ------------ ------------
Change in net assets resulting from distributions to
shareholders (1,381,483 ) (834,325 )
- ------------------------------------------------------------- ------------ ------------
SHARE TRANSACTIONS--
- -------------------------------------------------------------
Proceeds from sale of shares 34,305,834 105,207,396
- -------------------------------------------------------------
Net asset value of shares issued to shareholders in payment
of distributions declared 1,176,820 809,821
- -------------------------------------------------------------
Cost of shares redeemed (27,943,107 ) (9,213,093 )
- ------------------------------------------------------------- ------------ ------------
Change in net assets resulting from share transactions 7,539,547 96,804,124
- ------------------------------------------------------------- ------------ ------------
Change in net assets 28,234,994 96,796,487
- -------------------------------------------------------------
NET ASSETS:
- -------------------------------------------------------------
Beginning of period 96,796,487 --
- ------------------------------------------------------------- ------------ ------------
End of period (including undistributed net investment income
of $41,705 and $15,641, respectively) $125,031,481 $ 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, 1995
- --------------------------------------------------------------------------------
(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
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.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--Short-term securities with remaining maturities of
sixty days or less at the time of purchase may be valued at amortized cost,
which approximates fair market value. All other securities are valued at
prices provided by an independent pricing service.
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 under repurchase
agreement transactions. Additionally, procedures have been established by
the Fund to monitor, on a daily basis, the market value of each repurchase
agreement's collateral to ensure that the value of collateral at least
equals the repurchase price to be paid under the repurchase agreement
transaction.
The Fund 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 the guidelines and/or
standards reviewed or 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.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--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
- --------------------------------------------------------------------------------
FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering its shares, have been deferred and are being
amortized using the straight-line method over a period of five years from
the Fund's commencement date.
OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
SEPTEMBER 30, SEPTEMBER 30,
1995 1994*
------------- -------------
<S> <C> <C>
- -------------------------------------------------------------
Shares sold 3,273,154 10,619,487
- -------------------------------------------------------------
Shares issued to shareholders in payment of distributions
declared 110,706 82,917
- -------------------------------------------------------------
Shares redeemed (2,696,750) (947,787)
- ------------------------------------------------------------- ------------ ------------
Net change resulting from share transactions 687,110 9,754,617
- ------------------------------------------------------------- ------------ ------------
</TABLE>
*For the period from February 14, 1994 (date of initial public offering) to
September 30, 1994.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Bank South, 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 any portion of its fee and/or
reimburse certain operating expenses of the Fund. The Adviser can modify or
terminate this voluntary waiver and/or reimbursement at any time at its sole
discretion.
PEACHTREE EQUITY FUND
- --------------------------------------------------------------------------------
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
with certain administrative personnel and services. This 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 AGENT FEES--Federated Services Company ("FServ") serves as transfer and
dividend disbursing agent for the Fund. This fee is based on the size, type, and
number of accounts and transactions made by shareholders. Fserv may choose to
voluntarily waive a portion of its fees.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Fund's accounting records for
which it receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses of $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 year ended September 30, 1995, the Fund paid $4,709 pursuant
to this agreement.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors of the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended September 30, 1995, were as follows:
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------
PURCHASES $29,473,846
- ------------------------------------------------------------------------------- ------------
SALES $17,373,815
- ------------------------------------------------------------------------------- ------------
</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, 1995, and the related statement
of operations for the year then ended and the statement of changes in net assets
and financial highlights for the periods presented therein. 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, 1995, 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 Equity Fund at September 30, 1995, the results of its operations for
the year then ended and the changes in its net assets and the financial
highlights for the periods presented therein, in conformity with generally
accepted accounting principles.
ERNST & YOUNG LLP
Pittsburgh, Pennsylvania,
November 7, 1995
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 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 P.O. Box 8600
Boston, MA 02266-8600
- ------------------------------------------------------------------------------------------------
Independent Auditors
Ernst & Young LLP One Oxford Centre
Pittsburgh, Pennsylvania 15219
- ------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
PEACHTREE EQUITY FUND
- --------------------------------------------------------------------------------
PROSPECTUS
A Diversified Portfolio of
Peachtree Funds, An Open-End Management
Investment Company (a Mutual Fund)
November 30, 1995
FEDERATED SECURITIES CORP.
(LOGO)
- ---------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
70467H101
3092102A (11/95)
- --------------------------------------------------------------------------------
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, 1995, 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 OFFERED BY THIS COMBINED PROSPECTUS ARE NOT DEPOSITS OR
OBLIGATIONS OF BANK SOUTH (THE "BANK") OR ANY OF ITS AFFILIATES, OR ANY BANK,
AND ARE NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT
AGENCY. INVESTMENT IN THE SHARES OF THE FUNDS INVOLVE INVESTMENT RISKS,
INCLUDING POSSIBLE LOSS OF PRINCIPAL. 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.
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.
Prospectus dated November 30, 1995
The Investment Adviser to the Peachtree Funds is Bank South, a Georgia
commercial bank, 3350 Cumberland Circle, Atlanta, Georgia 30339 (the "Adviser").
On September 5, 1995, the Adviser's parent corporation, Bank South Corporation,
entered into a definitive agreement pursuant to which the Adviser will be
acquired by NationsBank Corporation, one of the nation's largest banking and
financial services holding companies. The proposed change of control of the
Adviser will legally constitute an assignment of the advisory contract between
the Funds and the Adviser, which is subject to the prior approval of the Funds'
Board of Directors and shareholders. Following the merger of Bank South
Corporation and NationsBank Corporation, it is presently contemplated that the
Adviser will be merged with NationsBank of Georgia, N.A. and that, subject to
the further approval of the Funds' Board of Directors and shareholders, the
Peachtree Funds will be merged with similar portfolios of the Nations Fund,
which currently is advised by NationsBank, N.A. Recently, NationsBank announced
the formation of NationsBanc Advisors, Inc. that will become the advisor to
Nations Fund, and the formation of TradeStreet Investment Associates, Inc. that
will become the investment subadviser for Nations Fund.
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS 2
- ------------------------------------------------------
GENERAL INFORMATION 4
- ------------------------------------------------------
PRIME MONEY FUND
INVESTMENT INFORMATION 4
- ------------------------------------------------------
Investment Objective 4
Investment Policies 4
Investment Risks 7
GOVERNMENT MONEY FUND
INVESTMENT INFORMATION 7
- ------------------------------------------------------
Investment Objective 7
Investment Policies 7
INVESTMENTS AND STRATEGIES
OF THE FUNDS 8
- ------------------------------------------------------
Repurchase Agreements 8
Lending of Portfolio Securities 8
When-Issued and Delayed Delivery
Transactions 8
Investing in Securities of Other
Investment Companies 9
Certain Borrowing and Investment
Limitations 9
Regulatory Compliance 9
PEACHTREE FUNDS INFORMATION 10
- ------------------------------------------------------
Management of the Trust 10
Distribution of Shares 11
Administration of the Trust 12
NET ASSET VALUE 13
- ------------------------------------------------------
INVESTING IN THE FUNDS 13
- ------------------------------------------------------
Share Purchases 13
Minimum Investment Required 14
Systematic Investment Program 14
What Shares Cost 14
Certificates and Confirmations 14
Dividends 14
Purchasing Shares of the Funds
with Securities 15
EXCHANGE PRIVILEGE 15
- ------------------------------------------------------
Peachtree Funds 15
REDEEMING SHARES 16
- ------------------------------------------------------
Systematic Withdrawal Program 18
Accounts with Low Balances 18
SHAREHOLDER INFORMATION 18
- ------------------------------------------------------
Voting Rights 18
Massachusetts Partnership Law 19
EFFECT OF BANKING LAWS 19
- ------------------------------------------------------
TAX INFORMATION 20
- ------------------------------------------------------
Federal Income Tax 20
State and Local Taxes 20
PERFORMANCE INFORMATION 20
- ------------------------------------------------------
FINANCIAL STATEMENTS 21
- ------------------------------------------------------
REPORT OF ERNST & YOUNG LLP,
INDEPENDENT AUDITORS 35
- ------------------------------------------------------
ADDRESSES 36
- ------------------------------------------------------
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRIME GOVERNMENT
MONEY MARKET MONEY MARKET
SHAREHOLDER TRANSACTION EXPENSES FUND FUND
------------- -------------
<S> <C> <C>
Maximum Sales Load Imposed on Purchases (as a percentage of
offering price)................................................ None None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)............................ None None
Contingent Deferred Sales Charge (as a percentage of original
purchase price or redemption proceeds, as applicable).......... None None
Redemption Fees (as a percentage of amount redeemed, if
applicable).................................................... None None
Exchange Fee..................................................... None None
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waiver)(1)................................. 0.19% 0.20%
12b-1 Fee(2)..................................................... 0.00% 0.00%
Total Other Expenses............................................. 0.31% 0.34%
Total Fund Operating Expenses(3)............................. 0.50% 0.54%
</TABLE>
(1) The management fees have been reduced to reflect the voluntary waivers of
portions of the management fees by the investment adviser. The adviser can
terminate these voluntary waivers at any time at its sole discretion. The
maximum management fee is 0.50%.
(2) As of the date of this prospectus, the Funds are not paying or accruing
12b-1 fees. The funds 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) The Total Fund Operating Expenses would have been 0.81% and 0.84% for Prime
Money Market Fund and Government Money Market Fund, respectively, absent the
voluntary waivers of portions of the management fees. The adviser can terminate
these voluntary waivers at any time at its sole discretion.
THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF THE FUNDS 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 ADDITIONAL FEES.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years 5 years 10 years
- ------------------------------------------------------------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment
assuming (1) 5% annual return and (2) redemption at the end
of each time period. The Fund charges no redemption fees.
Prime Money Market Fund.................................. $5 $16 $28 $ 63
Government Money Market Fund............................. $6 $17 $30 $ 68
</TABLE>
THE ABOVE EXAMPLES SHOULD NOT BE CONSIDERED REPRESENTATIONS OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. THESE
EXAMPLES ARE BASED ON ESTIMATED DATA FOR THE FUNDS' FISCAL YEAR ENDING SEPTEMBER
30, 1996.
PEACHTREE PRIME MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Ernst & Young LLP, Independent Auditors, on
page 35.
<TABLE>
<CAPTION>
YEAR ENDED
SEPTEMBER 30,
-----------------
1995 1994(A)
------ ------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00
- --------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------------
Net investment income 0.05 0.02
- --------------------------------------------------------------------------
LESS DISTRIBUTIONS
- --------------------------------------------------------------------------
Distributions from net investment income (0.05) (0.02)
- -------------------------------------------------------------------------- ------ ------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00
- -------------------------------------------------------------------------- ------ ------
TOTAL RETURN (B) 5.45% 2.41%
- --------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- --------------------------------------------------------------------------
Expenses 0.50% 0.38%*
- --------------------------------------------------------------------------
Net investment income 5.38% 3.99%*
- --------------------------------------------------------------------------
Expense waiver/reimbursement (c) 0.31% 0.51%*
- --------------------------------------------------------------------------
SUPPLEMENTAL DATA
- --------------------------------------------------------------------------
Net assets, end of period (000 omitted) $150,428 $84,680
- --------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from February 14, 1994 (date of initial
public investment) to September 30, 1994.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
PEACHTREE GOVERNMENT MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Ernst & Young LLP, Independent Auditors, on
page 35.
<TABLE>
<CAPTION>
YEAR ENDED
SEPTEMBER 30,
----------------------
1995 1994(A)
------ -------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00
- --------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------
Net investment income 0.05 0.02
- --------------------------------------------------------------
LESS DISTRIBUTIONS
- --------------------------------------------------------------
Distributions from net investment income (0.05) (0.02 )
- -------------------------------------------------------------- ------ -------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00
- -------------------------------------------------------------- ------ -------
TOTAL RETURN (B) 5.26% 2.44 %
- --------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- --------------------------------------------------------------
Expenses 0.54% 0.38 %*
- --------------------------------------------------------------
Net investment income 5.05% 4.05 %*
- --------------------------------------------------------------
Expense waiver/reimbursement (c) 0.30% 0.53 %*
- --------------------------------------------------------------
SUPPLEMENTAL DATA
- --------------------------------------------------------------
Net assets, end of period (000 omitted) $59,013 $90,440
- --------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from February 14, 1994 (date of initial
public investment) to September 30, 1994.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
GENERAL INFORMATION
- --------------------------------------------------------------------------------
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated 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
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
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.) There is the risk that when lending
portfolio securities, the securities may not be available to the Fund on a
timely basis and the Fund may, therefore, lose the opportunity to sell the
securities at a desirable price. In addition, in the event that a borrower of
securities would file for bankruptcy or become insolvent, disposition of the
securities may be delayed pending court action.
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.
See "Investment Objective and Policies" in the Statement of Additional
Information.
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 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 its sole discretion.
ADVISER'S BACKGROUND. The Adviser, a commercial bank chartered under the laws
of the State of Georgia and 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 Investment Adviser to the Peachtree Funds is Bank South, a Georgia
commercial bank, 3350 Cumberland Circle, Atlanta, Georgia 30339 (the "Adviser").
On September 5, 1995, the Adviser's parent corporation, Bank South Corporation,
entered into a definitive agreement pursuant to which the Adviser will be
acquired by NationsBank Corporation, one of the nation's largest banking and
financial services holding companies. The proposed change of control of the
Adviser will legally constitute an assignment of the advisory contract between
the Funds and the Adviser, which is subject to the prior approval of the Funds'
Board of Directors and shareholders. Following the merger of Bank South
Corporation and NationsBank Corporation, it is presently contemplated that the
Adviser will be
merged with NationsBank of Georgia, N.A. and that, subject to the further
approval of the Funds' Board of Directors and shareholders, the Peachtree Funds
will be merged with similar portfolios of the Nations Fund, which currently is
advised by NationsBank, N.A. Recently, NationsBank announced the formation of
NationsBanc Advisors, Inc. that will become the advisor to Nations Fund, and the
formation of TradeStreet Investment Associates, Inc. that will become the
investment subadviser for Nations Fund.
The Adviser has managed discretionary assets for its customers since 1931. As of
September 30, 1995, the Adviser managed in excess of $1.3 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 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 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 TRUSTS
- --------------------- -------------------------------------
<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, Boston, MA, 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.
INDEPENDENT AUDITORS. The independent auditors for the Funds are Ernst & Young
LLP, Pittsburgh, Pennsylvania.
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, your account number, and 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 as of the
close of trading (normally 4:00 p.m., Eastern time) on the New York Stock
Exchange, Monday through Friday, except on New Year's Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and
Christmas Day. Net asset value will not be determined on Martin Luther King 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
- --------------------------------------------------------------------------------
PEACHTREE FUNDS
All shareholders of the Funds are shareholders of Peachtree Funds. 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 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 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 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 any amount to be sent to an
address other than that on record with the Fund or a redemption payable other
than to the shareholder of record must have their signatures guaranteed by:
- a trust company or commercial bank whose deposits are insured by the BIF,
which is administered by the FDIC;
- a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchanges;
- a savings bank or savings and loan association whose deposits are insured
by the SAIF, which is administered by the FDIC; 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 3, 1995, Bank South,
Atlanta, Georgia, acting in various capacities for numerous accounts, owned
approximately 65,762,067 shares (97.73%) of the Peachtree Government Money
Market 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. With respect to the Peachtree Prime Money Market Fund, Bank
South, Atlanta, Georgia, acting in various capacities for numerous accounts,
owned approximately 102,953,975 shares (67.63%) and BHC Securities, Inc.,
Philadelphia, PA, acting in various capacities for numerous accounts, owned
approximately 48,328,101 shares (31.75%), 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 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 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 cannot meet its
obligations to indemnify shareholders and pay judgments against them from 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 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 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 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, advertisements for the Funds may refer to ratings, rankings,
and other information in certain financial publications and/or compare their
performance to certain indices.
PEACHTREE PRIME MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ---------------------------------------------------------------- ------------
<C> <C> <S> <C>
(A) COMMERCIAL PAPER--37.8%
- ------------------------------------------------------------------------------------
AUTOMOBILE & RELATED--7.3%
----------------------------------------------------------------
$ 5,000,000 Ford Motor Credit Co., 5.74%, 10/11/1995 $ 4,992,028
----------------------------------------------------------------
6,000,000 General Motors Corp. 10/19/1995 5,982,810
---------------------------------------------------------------- ------------
Total 10,974,838
---------------------------------------------------------------- ------------
ENERGY--11.3%
----------------------------------------------------------------
6,000,000 Chevron Oil Finance Co., 5.93%, 10/4/1995 5,997,035
----------------------------------------------------------------
4,000,000 Exxon Funding, 5.69%, 10/25/1995 3,984,827
----------------------------------------------------------------
1,000,000 Exxon Capital Corp. 8.00%, 12/1/1995 1,002,150
----------------------------------------------------------------
6,000,000 Texaco, Inc., 5.67%, 11/3/1995 5,968,815
---------------------------------------------------------------- ------------
Total 16,952,827
---------------------------------------------------------------- ------------
FINANCE--13.9%
----------------------------------------------------------------
3,000,000 Associates Corp. 5.68%, 11/6/1995 2,982,960
----------------------------------------------------------------
6,000,000 General Electric Capital Corp., 10/19/1995 5,982,900
----------------------------------------------------------------
2,000,000 Heller Financial, Inc., 5.73%, 10/26/1995 1,992,042
----------------------------------------------------------------
5,000,000 IBM Credit Corp., 5.74%, 10/10/1995 4,992,825
----------------------------------------------------------------
5,000,000 Prudential Funding Corp., 5.78%, 10/3/1995 4,998,394
---------------------------------------------------------------- ------------
Total 20,949,121
---------------------------------------------------------------- ------------
INDUSTRIAL SERVICES--1.3%
----------------------------------------------------------------
2,000,000 Hanson Overseas, 5.50%, 1/15/1996 1,996,304
---------------------------------------------------------------- ------------
MACHINERY & EQUIPMENT--4.0%
----------------------------------------------------------------
6,000,000 Deere & Co., 5.68%, 11/6/1995 5,965,920
---------------------------------------------------------------- ------------
TOTAL COMMERCIAL PAPER 56,839,010
---------------------------------------------------------------- ------------
CORPORATE BONDS--16.7%
- ------------------------------------------------------------------------------------
AEROSPACE & DEFENSE--2.0%
----------------------------------------------------------------
2,950,000 Martin Marietta Corp., 8.50%, 3/1/1996 2,974,446
---------------------------------------------------------------- ------------
</TABLE>
PEACHTREE PRIME MONEY MARKET FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ---------------------------------------------------------------- ------------
<C> <C> <S> <C>
CORPORATE BONDS--CONTINUED
- ------------------------------------------------------------------------------------
BANKING--5.0%
----------------------------------------------------------------
$ 5,000,000 Bank America Corp., 5.77%, 2/15/1996 $ 5,000,000
----------------------------------------------------------------
1,040,000 Continental Bank Corp., 9.875%, 6/15/1996 1,065,017
----------------------------------------------------------------
1,550,000 NationsBank Corp., 5.375%, 12/1/1995 1,545,076
---------------------------------------------------------------- ------------
Total 7,610,093
---------------------------------------------------------------- ------------
FINANCE--1.4%
----------------------------------------------------------------
1,000,000 Associates Corp. North America, 6.00%, 12/1/1995 1,000,000
----------------------------------------------------------------
550,000 CIT Group Holdings, Inc., 8.875%, 6/16/1996 560,546
----------------------------------------------------------------
500,000 Household Finance Corp. 5.46%, 2/1/1996 498,895
---------------------------------------------------------------- ------------
Total 2,059,441
---------------------------------------------------------------- ------------
FOOD, BEVERAGE & HOUSEHOLD PRODUCTS--0.1%
----------------------------------------------------------------
140,000 Philip Morris Cos., Inc., 8.875%, 7/1/1996 142,825
---------------------------------------------------------------- ------------
HEALTH CARE--0.3%
----------------------------------------------------------------
475,000 SmithKline Beecham PLC, 5.25%, 1/26/1996 474,043
---------------------------------------------------------------- ------------
POLLUTION CONTROL--1.3%
----------------------------------------------------------------
1,950,000 Waste Management, Inc., 4.625%, 4/14/1996 1,934,408
---------------------------------------------------------------- ------------
PRODUCER MANUFACTURING--1.7%
----------------------------------------------------------------
2,500,000 Weyerhaeuser Co., 9.25%, 11/15/1995 2,506,508
---------------------------------------------------------------- ------------
SECURITIES--1.0%
----------------------------------------------------------------
750,000 Merrill Lynch & Co., Inc., 6.876%, 3/18/1996 753,300
----------------------------------------------------------------
750,000 Merrill Lynch & Co., Inc., 4.75%, 6/24/1996 742,886
---------------------------------------------------------------- ------------
Total 1,496,186
---------------------------------------------------------------- ------------
TELECOMMUNICATIONS--0.6%
----------------------------------------------------------------
1,000,000 AT&T Corp., 4.50%, 2/15/1996 994,912
---------------------------------------------------------------- ------------
</TABLE>
PEACHTREE PRIME MONEY MARKET FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ---------------------------------------------------------------- ------------
<C> <C> <S> <C>
CORPORATE BONDS--CONTINUED
- ------------------------------------------------------------------------------------
UTILITIES--3.3%
----------------------------------------------------------------
$ 1,500,000 Alabama Power Co., 4.50%, 3/1/1996 $ 1,490,424
----------------------------------------------------------------
1,000,000 Georgia Power Co., 4.75%, 3/1/1996 995,060
----------------------------------------------------------------
2,500,000 Pacific Gas & Electric Co., 4.20%, 10/10/1995 2,498,196
---------------------------------------------------------------- ------------
Total 4,983,680
---------------------------------------------------------------- ------------
TOTAL CORPORATE BONDS 25,176,542
---------------------------------------------------------------- ------------
CORPORATE NOTES--2.0%
- ------------------------------------------------------------------------------------
3,000,000 CoreStates Capital Corp., 5.60%, 11/17/1995 2,993,429
---------------------------------------------------------------- ------------
GOVERNMENT AGENCIES--1.3%
- ------------------------------------------------------------------------------------
FEDERAL FARM CREDIT BANK--0.7%
----------------------------------------------------------------
1,000,000 Federal Farm Credit Bank, 6.39%, 4/17/1996 1,000,000
---------------------------------------------------------------- ------------
FEDERAL HOME LOAN BANK--0.6%
----------------------------------------------------------------
1,000,000 Federal Home Loan Bank, 4.59%, 6/10/1996 990,479
---------------------------------------------------------------- ------------
TOTAL GOVERNMENT AGENCIES 1,990,479
---------------------------------------------------------------- ------------
CASH EQUIVALENT--0.6%
- ------------------------------------------------------------------------------------
925,054 Bank of New York Cash Reserves, 5.00% 925,054
---------------------------------------------------------------- ------------
</TABLE>
PEACHTREE PRIME MONEY MARKET FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ---------------------------------------------------------------- ------------
<C> <C> <S> <C>
(B) REPURCHASE AGREEMENTS--42.1%
- ------------------------------------------------------------------------------------
$32,893,393 Lehman Brothers, Inc., 6.15%, dated 9/29/1995, due 10/3/1995 $ 32,893,393
----------------------------------------------------------------
30,478,404 Sanwa-BGK Securities Co., 5.91%, dated 9/28/1995, due 10/2/1995 30,478,404
---------------------------------------------------------------- ------------
TOTAL REPURCHASE AGREEMENTS 63,371,797
---------------------------------------------------------------- ------------
TOTAL INVESTMENTS (AT AMORTIZED COST)(C) $151,296,311
---------------------------------------------------------------- ------------
</TABLE>
(a) Each issue shows the rate of discount at the time of purchase.
(b) Repurchase agreements are fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio.
(c) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($150,427,875) at September 30, 1995.
The following acronym is used throughout this portfolio:
<TABLE>
<S> <C>
PLC -- Public Limited Company
</TABLE>
(See Notes which are an integral part of the Financial Statements)
PEACHTREE PRIME MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -----------------------------------------------------------------------------
Investments in repurchase agreements $63,371,797
- -------------------------------------------------------------
Investments in securities 87,924,514
- ------------------------------------------------------------- -----------
Total investments in securities, at amortized cost and value $151,296,311
- -----------------------------------------------------------------------------
Income receivable 478,110
- -----------------------------------------------------------------------------
Receivable for shares sold 32,648
- -----------------------------------------------------------------------------
Deferred expenses 24,245
- ----------------------------------------------------------------------------- ------------
Total assets 151,831,314
- -----------------------------------------------------------------------------
LIABILITIES:
- -----------------------------------------------------------------------------
Payable for investments purchased 919,246
- -------------------------------------------------------------
Income distribution payable 457,942
- -------------------------------------------------------------
Accrued expenses 26,251
- ------------------------------------------------------------- -----------
Total liabilities 1,403,439
- ----------------------------------------------------------------------------- ------------
Net Assets for 150,427,875 shares outstanding $150,427,875
- ----------------------------------------------------------------------------- ------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
$150,427,875 / 150,427,875 shares 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, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- -------------------------------------------------------------------------------
Interest $6,061,908
- -------------------------------------------------------------------------------
EXPENSES:
- -------------------------------------------------------------------------------
Investment advisory fee $ 515,302
- -----------------------------------------------------------------
Administrative personnel and services fee 146,063
- -----------------------------------------------------------------
Custodian fees 24,189
- -----------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 30,495
- -----------------------------------------------------------------
Directors'/Trustees' fees 3,023
- -----------------------------------------------------------------
Auditing fees 10,228
- -----------------------------------------------------------------
Legal fees 6,974
- -----------------------------------------------------------------
Portfolio accounting fees 41,699
- -----------------------------------------------------------------
Share registration costs 30,936
- -----------------------------------------------------------------
Printing and postage 14,867
- -----------------------------------------------------------------
Insurance premiums 6,467
- -----------------------------------------------------------------
Miscellaneous 5,720
- ----------------------------------------------------------------- ---------
Total expenses 835,963
- -----------------------------------------------------------------
Waiver of investment advisory fee (321,304)
- ----------------------------------------------------------------- ---------
Net expenses 514,659
- ------------------------------------------------------------------------------- ----------
Net investment income $5,547,249
- ------------------------------------------------------------------------------- ----------
</TABLE>
(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 PERIOD ENDED
SEPTEMBER 30, 1995 SEPTEMBER 30, 1994*
------------------- --------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ------------------------------------------------
OPERATIONS--
- ------------------------------------------------
Net investment income $ 5,547,249 $ 1,308,837
- ------------------------------------------------ ------------------ -----------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ------------------------------------------------
Distributions from net investment income (5,547,249) (1,308,837)
- ------------------------------------------------ ------------------ -----------------
SHARE TRANSACTIONS--
- ------------------------------------------------
Proceeds from sale of shares 269,427,785 159,735,721
- ------------------------------------------------
Net asset value of shares issued to shareholders
in payment of distributions declared 1,227,252 38,293
- ------------------------------------------------
Cost of shares redeemed (204,906,850) (75,094,326)
- ------------------------------------------------ ------------------ -----------------
Change in net assets resulting from share
transactions 65,748,187 84,679,688
- ------------------------------------------------ ------------------ -----------------
Change in net assets 65,748,187 84,679,688
- ------------------------------------------------
NET ASSETS:
- ------------------------------------------------
Beginning of period 84,679,688 --
- ------------------------------------------------ ------------------ -----------------
End of period $ 150,427,875 $ 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, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ----------------------------------------------------------------- -----------
<C> <C> <S> <C>
SHORT-TERM U.S. TREASURY OBLIGATIONS--67.3%
- -------------------------------------------------------------------------------------
$29,000,000 U.S. Treasury Bills, 10/12/1995-1/4/1996 $28,785,797
-----------------------------------------------------------------
11,000,000 U.S. Treasury Notes, 5.125%-7.625%, 11/15/1995-4/30/1996 10,940,276
----------------------------------------------------------------- -----------
TOTAL SHORT-TERM U.S. TREASURY OBLIGATIONS 39,726,073
----------------------------------------------------------------- -----------
(A)REPURCHASE AGREEMENTS--32.8%
- -------------------------------------------------------------------------------------
9,806,207 Lehman Brothers, Inc., 6.15%, dated 9/29/1995, due 10/3/1995 9,806,207
-----------------------------------------------------------------
9,535,497 Sanwa Bank-BGK Securities, Inc., 5.91%, dated 9/28/1995, due
10/2/1995 9,535,497
----------------------------------------------------------------- -----------
TOTAL REPURCHASE AGREEMENTS 19,341,704
----------------------------------------------------------------- -----------
TOTAL INVESTMENTS (AT AMORTIZED COST)(B) $59,067,777
----------------------------------------------------------------- -----------
</TABLE>
(a) Repurchase agreements are fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio.
(b) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($59,013,066) at September 30, 1995.
(See Notes which are an integral part of the Financial Statements)
PEACHTREE GOVERNMENT MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ------------------------------------------------------------------------------
Investments in repurchase agreements $19,341,704
- --------------------------------------------------------------
Investments in securities 39,726,073
- -------------------------------------------------------------- -----------
Total investments in securities, at amortized cost and value $59,067,777
- ------------------------------------------------------------------------------
Income receivable 186,950
- ------------------------------------------------------------------------------
Deferred expenses 22,803
- ------------------------------------------------------------------------------ -----------
Total assets 59,277,530
- ------------------------------------------------------------------------------
LIABILITIES:
- ------------------------------------------------------------------------------
Income distribution payable 262,537
- --------------------------------------------------------------
Accrued expenses 1,927
- -------------------------------------------------------------- -----------
Total liabilities 264,464
- ------------------------------------------------------------------------------ -----------
NET ASSETS for 59,013,066 shares outstanding $59,013,066
- ------------------------------------------------------------------------------ -----------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
$59,013,066 / 59,013,066 shares 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, 1995
<TABLE>
<S> <C> <C>
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
- --------------------------------------------------------------------------------
Interest $3,987,506
- --------------------------------------------------------------------------------
EXPENSES:
- --------------------------------------------------------------------------------
Investment advisory fee $ 356,814
- --------------------------------------------------------------------
Administrative personnel and services fee 104,633
- --------------------------------------------------------------------
Custodian fees 14,529
- --------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 26,384
- --------------------------------------------------------------------
Directors'/Trustees' fees 1,735
- --------------------------------------------------------------------
Auditing fees 7,850
- --------------------------------------------------------------------
Legal fees 5,569
- --------------------------------------------------------------------
Portfolio accounting fees 31,962
- --------------------------------------------------------------------
Share registration costs 29,404
- --------------------------------------------------------------------
Printing and postage 11,526
- --------------------------------------------------------------------
Insurance premiums 4,519
- --------------------------------------------------------------------
Miscellaneous 5,335
- -------------------------------------------------------------------- ---------
Total expenses 600,260
- --------------------------------------------------------------------
Waiver of investment advisory fee (217,475)
- -------------------------------------------------------------------- ---------
Net expenses 382,785
- -------------------------------------------------------------------------------- ----------
Net investment income $3,604,721
- -------------------------------------------------------------------------------- ----------
</TABLE>
(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 PERIOD ENDED
SEPTEMBER 30, 1995 SEPTEMBER 30, 1994*
------------------- --------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ------------------------------------------------
OPERATIONS--
- ------------------------------------------------
Net investment income $ 3,604,721 $ 1,067,196
- ------------------------------------------------ ------------------ -----------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ------------------------------------------------
Distributions from net investment income (3,604,721) (1,067,196)
- ------------------------------------------------ ------------------ -----------------
SHARE TRANSACTIONS--
- ------------------------------------------------
Proceeds from sale of shares 180,164,804 130,044,343
- ------------------------------------------------
Net asset value of shares issued to shareholders
in payment of distributions declared 29,187 834
- ------------------------------------------------
Cost of shares redeemed (211,621,111) (39,704,991)
- ------------------------------------------------ ------------------ -----------------
Change in net assets resulting from share
transactions (31,427,120) 90,340,186
- ------------------------------------------------ ------------------ -----------------
Change in net assets (31,427,120) 90,340,186
- ------------------------------------------------
NET ASSETS:
- ------------------------------------------------
Beginning of period 90,440,186 100,000
- ------------------------------------------------ ------------------ -----------------
End of period $ 59,013,066 $ 90,440,186
- ------------------------------------------------ ------------------ -----------------
</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 MONEY MARKET FUNDS
COMBINED NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
(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 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")
are presented herein. 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.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--The Funds' use of the amortized cost method to value
their portfolio securities is in accordance with Rule 2a-7 under the Act.
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 under repurchase
agreement transactions. Additionally, procedures have been established by
the Funds to monitor, on a daily basis, the market value of each repurchase
agreement's collateral to ensure that the value of collateral at least
equals the repurchase price to be paid under the repurchase agreement
transaction.
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 the guidelines and/or
standards reviewed or 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.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--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 MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
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 income. Accordingly, no
provisions for federal tax are necessary.
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.
DEFERRED EXPENSES--The costs incurred by each Fund 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 over a period of five years
from each Funds' commencement date.
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 was $150,427,875 and $59,013,066, respectively. Transactions in shares were
as follows:
<TABLE>
<CAPTION>
PRIME MONEY FUND GOVERNMENT MONEY FUND
----------------------------------------- -----------------------------------------
YEAR ENDED PERIOD ENDED YEAR ENDED PERIOD ENDED
SEPTEMBER 30, 1995 SEPTEMBER 30, 1994* SEPTEMBER 30, 1995 SEPTEMBER 30, 1994*
- -------------------------- ------------------ ------------------- ------------------ -------------------
<S> <C> <C> <C> <C>
Shares sold 269,427,785 159,735,721 180,164,804 130,044,343
- --------------------------
Shares issued to
shareholders in payment
of distributions
declared 1,227,252 38,293 29,187 834
- --------------------------
Shares redeemed (204,906,850) (75,094,326) (211,621,111) (39,704,991)
- -------------------------- ---------------- ---------------- ---------------- ---------------
Net change resulting
from share
transactions 65,748,187 84,679,688 (31,427,120) 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, the Funds' investment adviser (the
"Adviser"), receives for its services an annual investment fee equal to 0.50 of
1% of each Fund's average daily net assets. The Adviser may voluntarily choose
to waive any portion of its fee. The Adviser can modify or terminate this
voluntary waiver at any time at its sole discretion.
PEACHTREE MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Funds
with certain administrative personnel and services. This 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 AGENT FEES--Federated Services Company("FServ") serves as transfer and
dividend disbursing agent for the Funds. This 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 fees.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Funds' accounting records for
which it receives a fee. The fee is based on the level of each Fund's average
daily 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 year ended September 30, 1995, the Funds paid $4,532 and
$4,484, respectively, pursuant to this agreement.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors 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, 1995, and the related statements of
operations for the year then ended and the statements of changes in net assets
and financial highlights for the periods presented therein. 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, 1995, 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, 1995, the results of their operations for the year then ended and
the changes in their net assets and the financial highlights for the periods
presented therein, in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Pittsburgh, Pennsylvania
November 7, 1995
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 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 P.O. Box 8600
Boston, Massachusetts 02266-8600
- -----------------------------------------------------------------------------------------------
Independent Auditors
Ernst & Young LLP One Oxford Centre
Pittsburgh, Pennsylvania 15219
- -----------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
PRIME MONEY MARKET FUND
AND
GOVERNMENT MONEY
MARKET FUND
COMBINED PROSPECTUS
- --------------------------------------------------------------------------------
Portfolios of
Peachtree Funds,
an Open-End Management
Investment Company
(a Mutual Fund)
Prospectus dated November 30, 1995
FEDERATED SECURITIES CORP.
(LOGO)
- ---------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
70467H408
40667H309
3092207A (11/95)
- --------------------------------------------------------------------------------
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,
1995, 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 (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.
(SEE INSIDE COVER)
November 30, 1995
The Investment Adviser to the Peachtree Funds is Bank South, a Georgia
commercial bank, 3350 Cumberland Circle, Atlanta, Georgia 30339 (the "Adviser").
On September 5, 1995, the Adviser's parent corporation, Bank South Corporation,
entered into a definitive agreement pursuant to which the Adviser will be
acquired by NationsBank Corporation, one of the nation's largest banking and
financial services holding companies. The proposed change of control of the
Adviser will legally constitute an assignment of the advisory contract between
the Funds and the Adviser, which is subject to the prior approval of the Funds'
Board of Directors and shareholders. Following the merger of Bank South
Corporation and NationsBank Corporation, it is presently contemplated that the
Adviser will be merged with NationsBank of Georgia, N.A. and that, subject to
the further approval of the Funds' Board of Directors and shareholders, the
Peachtree Funds will be merged with similar portfolios of the Nations Fund,
which currently is advised by NationsBank, N.A. Recently, NationsBank announced
the formation of NationsBanc Advisors, Inc. that will become the advisor to
Nations Fund, and the formation of TradeStreet Investment Associates, Inc. that
will become the investment subadviser for Nations Fund.
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS 2
- ------------------------------------------------------
GENERAL INFORMATION 3
- ------------------------------------------------------
INVESTMENT INFORMATION 3
- ------------------------------------------------------
Investment Objective 3
Investment Policies 3
Certain Borrowing and Investment
Limitations 9
PEACHTREE FUNDS INFORMATION 9
- ------------------------------------------------------
Management of the Trust 9
Distribution of Shares 10
Administration of the Trust 11
NET ASSET VALUE 12
- ------------------------------------------------------
INVESTING IN THE FUND 12
- ------------------------------------------------------
Share Purchases 12
Minimum Investment Required 13
Systematic Investment Program 13
What Shares Cost 13
Reducing or Eliminating the Sales Load 14
Certificates and Confirmations 15
Dividends and Distributions 15
Purchasing Shares of the Fund with
Securities 16
EXCHANGE PRIVILEGE 16
- ------------------------------------------------------
Peachtree Funds 16
REDEEMING SHARES 17
- ------------------------------------------------------
Systematic Withdrawal Program 19
Accounts With Low Balances 19
SHAREHOLDER INFORMATION 19
- ------------------------------------------------------
Voting Rights 19
Massachusetts Partnership Law 19
EFFECT OF BANKING LAWS 20
- ------------------------------------------------------
TAX INFORMATION 20
- ------------------------------------------------------
Federal Income Tax 20
State and Local Taxes 21
PERFORMANCE INFORMATION 21
- ------------------------------------------------------
FINANCIAL STATEMENTS 22
- ------------------------------------------------------
REPORT OF ERNST & YOUNG LLP,
INDEPENDENT AUDITORS 34
- ------------------------------------------------------
ADDRESSES 35
- ------------------------------------------------------
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
Redemption Fees (as a percentage of amount redeemed, if applicable)................... None
Exchange Fee.......................................................................... None
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waiver)(1)...................................................... 0.60%
12b-1 Fee(2).......................................................................... 0.00%
Total Other Expenses.................................................................. 0.42%
Shareholder Services Fees(3)........................................................ 0.00%
Total Fund Operating Expenses(4).................................................. 1.02%
</TABLE>
(1) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee 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 this 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 would have been 1.17% absent the voluntary
waiver of a portion of the management fee.
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 ADDITIONAL FEES.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years 5 years 10 years
- ------------------------------------------------------------------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment
assuming (1) 5% annual return and (2) redemption at the end of
each time period. 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, 1996.
PEACHTREE BOND FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Ernst & Young LLP, Independent Auditors, on
page 34.
<TABLE>
<CAPTION>
YEAR ENDED
SEPTEMBER 30,
-------------------
1995 1994(A)
------- -------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.34 $10.00
- ------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------------
Net investment income 0.57 0.35
- ------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 0.27 (0.66 )
- ------------------------------------------------------------------------ ------- ------
Total from investment operations 0.84 (0.31 )
- ------------------------------------------------------------------------
LESS DISTRIBUTIONS
- ------------------------------------------------------------------------
Distributions from net investment income (0.57) (0.35 )
- ------------------------------------------------------------------------ ------- ------
NET ASSET VALUE, END OF PERIOD $ 9.61 $ 9.34
- ------------------------------------------------------------------------ ------- ------
TOTAL RETURN (B) 9.30% (3.08%)
- ------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------------------------------------
Expenses 1.02% 0.97%*
- ------------------------------------------------------------------------
Net investment income 6.11% 5.92%*
- ------------------------------------------------------------------------
Expense waiver/reimbursement (c) 0.15% 0.10%*
- ------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------------------------------
Net assets, end of period (000 omitted) $93,524 $81,594
- ------------------------------------------------------------------------
Portfolio turnover 76% 21%
- ------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from February 14, 1994 (date of initial
public investment) to September 30, 1994.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
GENERAL INFORMATION
- --------------------------------------------------------------------------------
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated 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 (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 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 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. There is the risk that when lending portfolio
securities, the securities may not be available to the Fund on a timely basis
and the Fund may, therefore, lose the opportunity to sell the securities at a
desirable price. In addition, in the event that a borrower of securities would
file for bankruptcy or become insolvent, disposition of the securities may be
delayed pending court action.
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 may be 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.
See "Investment Objective and Policies" in the Statement of Additional
Information.
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 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 commercial bank chartered under the laws
of the State of Georgia and 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 Investment Adviser to the Peachtree Funds is Bank South, a Georgia
commercial bank, 3350 Cumberland Circle, Atlanta, Georgia 30339 (the "Adviser").
On September 5, 1995, the Adviser's parent corporation, Bank South Corporation,
entered into a definitive agreement pursuant to which the Adviser will be
acquired by NationsBank Corporation, one of the nation's largest banking and
financial services holding companies. The proposed change of control of the
Adviser will legally constitute an assignment of the advisory contract between
the Funds and the Adviser, which is subject to the prior approval of the Funds'
Board of Directors and shareholders. Following the merger of Bank South
Corporation and NationsBank Corporation, it is presently contemplated that the
Adviser will be merged with NationsBank of Georgia, N.A. and that, subject to
the further approval of the Funds' Board of Directors and shareholders, the
Peachtree Funds will be merged with similar portfolios of the Nations Fund,
which currently is advised by NationsBank, N.A. Recently, NationsBank announced
the formation of NationsBanc Advisors, Inc. that will become the advisor to
Nations Fund, and the formation of TradeStreet Investment Associates, Inc. that
will become the investment subadviser for Nations Fund.
The Adviser has managed discretionary assets for its customers since 1931. As of
September 30, 1995, the Adviser managed in excess of $1.3 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. Jan A. Koenig assumed responsibility for the day-to-day
management of the Fund portfolios in September, 1995. He joined the Adviser in
July of 1995 as a Senior Portfolio Adviser and head of the Investment Management
Division of the Wealth Management Group.
Mr. Koenig served as a Senior Portfolio Manager/Manager of the Investment
Services Group at Texas Commerce Investment Management Company in Houston, Texas
from 1987 to 1995.
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, Boston, MA, 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.
INDEPENDENT AUDITORS. The independent auditors for the Fund are Ernst & Young
LLP, Pittsburgh, Pennsylvania.
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, your account number, and 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 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 CHARGE AS A SALES CHARGE AS A
PERCENTAGE OF PERCENTAGE OF NET
AMOUNT OF TRANSACTION PUBLIC OFFERING PRICE AMOUNT INVESTED
-------------------------------------- ----------------------- ------------------
<S> <C> <C>
Less than $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 or more 0.00% 0.00%
</TABLE>
The net asset value is determined as of the close of trading (normally 4:00
p.m., Eastern time) on the New York Stock Exchange, Monday through Friday,
except on: (i) days on which 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 OR ELIMINATING THE SALES LOAD
The sales load can be reduced or eliminated 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 may reduce or eliminate 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 or elimination, 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 or
eliminate 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 or
eliminated 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 or
elimination, 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 a sales load reduction or elimination, 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 or eliminate 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 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 any amount to be sent to an
address other than that on record with the Fund or a redemption payable other
than to the shareholder of record must have their signatures guaranteed by:
- a trust company or commercial bank whose deposits are insured by the BIF,
which is administered by the FDIC;
- a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchanges;
- a savings bank or savings and loan association whose deposits are insured
by the SAIF, which is administered by the FDIC; 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 3, 1995, Bank South,
Atlanta, Georgia, acting in various capacities for numerous accounts, owned
approximately 9,404,352 shares (96.76%) of the Peachtree Bond 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 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, advertisements for the Fund may refer to ratings, rankings,
and other information in certain financial publications and/or compare the
Fund's performance to certain indices.
PEACHTREE BOND FUND
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ---------------------------------------------------------------- ------------
<C> <C> <S> <C>
LONG-TERM INVESTMENTS--97.0%
- ------------------------------------------------------------------------------------
CORPORATE BONDS--56.8%
- ------------------------------------------------------------------------------------
AEROSPACE & DEFENSE--4.4%
----------------------------------------------------------------
$ 1,000,000 Boeing Co., 6.35%, 6/15/2003 $ 988,340
----------------------------------------------------------------
1,000,000 Rockwell International Corp., 6.625%, 6/1/2005 1,002,190
----------------------------------------------------------------
1,000,000 Rockwell International Corp., 6.750%, 9/15/2002 1,014,060
----------------------------------------------------------------
1,000,000 Rockwell International Corp., 8.375%, 2/15/2001 1,089,230
---------------------------------------------------------------- ------------
Total 4,093,820
---------------------------------------------------------------- ------------
BANKING--11.4%
----------------------------------------------------------------
2,000,000 Bank of New York Medium Term Notes, 7.00%, 8/15/2005 2,032,700
----------------------------------------------------------------
3,000,000 Chase Manhattan Corp., 8.00%, 5/1/2005 3,082,860
----------------------------------------------------------------
1,000,000 Fleet Norstar Financial Group, 7.25%, 9/1/1999 1,024,940
----------------------------------------------------------------
1,000,000 Norwest Corp., 6.50%, 6/1/2005 981,530
----------------------------------------------------------------
1,000,000 Norwest Corp., 7.125%, 4/1/2000 1,026,550
----------------------------------------------------------------
2,000,000 Norwest Corp., 7.68%, 5/10/2002 2,060,860
----------------------------------------------------------------
500,000 SunTrust Banks Inc., 8.875%, 2/1/1998 527,100
---------------------------------------------------------------- ------------
Total 10,736,540
---------------------------------------------------------------- ------------
BEVERAGE--4.0%
----------------------------------------------------------------
3,500,000 Coca Cola Enterprises, Inc., 7.875%, 2/1/2002 3,745,385
---------------------------------------------------------------- ------------
ELECTRONIC TECHNOLOGY--1.1%
----------------------------------------------------------------
1,000,000 Motorola, Inc., 6.50%, 3/1/2008 988,000
---------------------------------------------------------------- ------------
ENERGY--0.6%
----------------------------------------------------------------
500,000 BP America, Inc., 9.375%, 11/1/2000 564,805
---------------------------------------------------------------- ------------
FINANCE--12.5%
----------------------------------------------------------------
1,000,000 Exxon Capital Corp., 7.875%, 8/15/1997 1,030,920
----------------------------------------------------------------
450,000 Ford Motor Credit Co., 6.98%, 6/28/2010 441,725
----------------------------------------------------------------
1,500,000 Ford Motor Credit Co., 7.75%, 10/1/1999 1,568,220
----------------------------------------------------------------
</TABLE>
PEACHTREE BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ---------------------------------------------------------------- ------------
<C> <C> <S> <C>
LONG-TERM INVESTMENTS--CONTINUED
- ------------------------------------------------------------------------------------
CORPORATE BONDS--CONTINUED
- ------------------------------------------------------------------------------------
FINANCE--CONTINUED
----------------------------------------------------------------
$ 500,000 General Electric Capital Corp., 8.75%, 1/26/1996 $ 514,555
----------------------------------------------------------------
500,000 Heller Financial, Inc., 7.00%, 5/15/2002 507,915
----------------------------------------------------------------
3,000,000 Household Finance Corp., 7.65%, 5/15/2007 3,176,250
----------------------------------------------------------------
3,000,000 Nationwide Life Insurance Co., 6.50%, 2/15/2004* 2,903,460
----------------------------------------------------------------
500,000 Norwest Financial Inc., 8.37%, 1/15/2000 525,755
----------------------------------------------------------------
1,000,000 Potomac Capital Medium Term Notes, 8.65%, 10/3/1998 1,055,870
---------------------------------------------------------------- ------------
Total 11,724,670
---------------------------------------------------------------- ------------
FOOD & BEVERAGE--1.1%
----------------------------------------------------------------
1,000,000 Heinz H.J. Co., 6.75%, 10/15/1999 1,014,320
---------------------------------------------------------------- ------------
HEALTHCARE--1.1%
----------------------------------------------------------------
1,000,000 Lilly (Eli) & Co., 6.75%, 11/15/1999 1,014,400
---------------------------------------------------------------- ------------
INDUSTRIAL SERVICES--6.5%
----------------------------------------------------------------
4,000,000 Raytheon Co., 6.50%, 7/15/2005 3,957,440
----------------------------------------------------------------
2,000,000 Smithkline Beecham Corp., 7.50%, 5/1/2002 2,104,780
---------------------------------------------------------------- ------------
Total 6,062,220
---------------------------------------------------------------- ------------
PHARMACEUTICALS--2.7%
----------------------------------------------------------------
2,500,000 Abbott Labs, 6.80%, 5/15/2005 2,549,925
---------------------------------------------------------------- ------------
PROCESS INDUSTRIES--1.1%
----------------------------------------------------------------
1,000,000 International Business Machines, 6.375%, 6/15/2000 999,350
---------------------------------------------------------------- ------------
RETAIL TRADE--2.9%
----------------------------------------------------------------
1,500,000 Wal-Mart Stores, Inc., 7.50%, 5/15/2004 1,588,770
----------------------------------------------------------------
500,000 Wal-Mart Stores, Inc., 8.625%, 4/1/2001 550,625
----------------------------------------------------------------
500,000 Wal-Mart Stores, Inc., 9.10%, 7/15/2000 555,360
---------------------------------------------------------------- ------------
Total 2,694,755
---------------------------------------------------------------- ------------
</TABLE>
PEACHTREE BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ---------------------------------------------------------------- ------------
<C> <C> <S> <C>
LONG-TERM INVESTMENTS--CONTINUED
- ------------------------------------------------------------------------------------
CORPORATE BONDS--CONTINUED
- ------------------------------------------------------------------------------------
SECURITIES--6.4%
----------------------------------------------------------------
$ 2,000,000 Lehman Brothers Holdings, Inc., 8.875%, 11/1/1998 $ 2,114,080
----------------------------------------------------------------
1,000,000 Merrill Lynch & Co., Inc., 6.25%, 10/15/2008 931,370
----------------------------------------------------------------
3,000,000 Merrill Lynch & Co., Inc., 7.00%, 4/27/2008 2,983,830
---------------------------------------------------------------- ------------
Total 6,029,280
---------------------------------------------------------------- ------------
TELECOMMUNICATIONS--1.0%
----------------------------------------------------------------
1,000,000 BellSouth Telecommunications, 5.875%, 1/15/2009 923,110
---------------------------------------------------------------- ------------
TOTAL CORPORATE BONDS (IDENTIFIED COST $53,028,405) 53,140,580
---------------------------------------------------------------- ------------
U.S. GOVERNMENT AGENCY OBLIGATIONS--29.9%
- ------------------------------------------------------------------------------------
FEDERAL FARM CREDIT BANK--1.6%
----------------------------------------------------------------
1,000,000 5.95%, 9/16/1996 995,500
----------------------------------------------------------------
500,000 8.25%, 5/1/2007 511,100
---------------------------------------------------------------- ------------
Total 1,506,600
---------------------------------------------------------------- ------------
FEDERAL HOME LOAN BANK--3.8%
----------------------------------------------------------------
1,000,000 5.98%, 7/3/1996 1,000,680
----------------------------------------------------------------
1,000,000 7.20%, 4/29/2004 1,003,950
----------------------------------------------------------------
1,500,000 7.34%, 4/4/2005 1,590,420
---------------------------------------------------------------- ------------
Total 3,595,050
---------------------------------------------------------------- ------------
FEDERAL HOME LOAN MORTGAGE CORPORATION--13.4%
----------------------------------------------------------------
1,000,000 6.19%, 1/21/2004 961,300
----------------------------------------------------------------
3,000,000 6.615%, 3/3/2004 2,938,350
----------------------------------------------------------------
3,500,000 7.65%, 5/10/2005 3,611,405
----------------------------------------------------------------
2,000,000 7.09%, 6/1/2005 2,007,440
----------------------------------------------------------------
3,000,000 7.37%, 6/16/2005 3,011,760
---------------------------------------------------------------- ------------
Total 12,530,255
---------------------------------------------------------------- ------------
</TABLE>
PEACHTREE BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ---------------------------------------------------------------- ------------
<C> <C> <S> <C>
LONG-TERM INVESTMENTS--CONTINUED
- ------------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS--CONTINUED
- ------------------------------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--8.6%
----------------------------------------------------------------
$ 500,000 6.27%, 4/1/1999 $ 496,765
----------------------------------------------------------------
1,000,000 9.05%, 4/10/2000 1,111,610
----------------------------------------------------------------
1,000,000 7.30%, 10/28/2002 1,011,600
----------------------------------------------------------------
1,000,000 6.40%, 1/13/2004 970,260
----------------------------------------------------------------
2,000,000 6.14%, 1/21/2004 1,918,740
----------------------------------------------------------------
2,500,000 7.27%, 8/24/2005 2,553,125
---------------------------------------------------------------- ------------
Total 8,062,100
---------------------------------------------------------------- ------------
STUDENT LOAN MARKETING ASSOCIATION--0.8%
----------------------------------------------------------------
700,000 5.55%, 3/7/2001 701,974
---------------------------------------------------------------- ------------
TENNESSEE VALLEY AUTHORITY--1.7%
----------------------------------------------------------------
1,000,000 7.318%, 5/31/1999 1,009,770
----------------------------------------------------------------
500,000 8.375%, 10/1/1999 538,965
---------------------------------------------------------------- ------------
Total 1,548,735
---------------------------------------------------------------- ------------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(IDENTIFIED COST $27,955,091) 27,944,714
---------------------------------------------------------------- ------------
U.S. TREASURY OBLIGATIONS--10.3%
- ------------------------------------------------------------------------------------
U.S. TREASURY NOTES--10.3%
----------------------------------------------------------------
2,000,000 7.875%, 4/15/1998 2,092,420
----------------------------------------------------------------
3,000,000 8.00%, 8/15/1999 3,206,640
----------------------------------------------------------------
1,000,000 8.50%, 2/15/2000 1,094,420
----------------------------------------------------------------
3,000,000 9.00%, 5/15/1998 3,223,440
---------------------------------------------------------------- ------------
TOTAL U.S. TREASURY OBLIGATIONS (IDENTIFIED COST $10,155,158) 9,616,920
---------------------------------------------------------------- ------------
TOTAL LONG-TERM INVESTMENTS (IDENTIFIED COST $91,138,654) 90,702,214
---------------------------------------------------------------- ------------
</TABLE>
PEACHTREE BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ---------------------------------------------------------------- ------------
<C> <C> <S> <C>
SHORT-TERM INVESTMENTS--1.0%
- ------------------------------------------------------------------------------------
CASH EQUIVALENT--1.0%
- ------------------------------------------------------------------------------------
$ 929,852 Bank of New York Cash Reserves, 5.00% (at amortized cost) $ 929,852
---------------------------------------------------------------- ------------
TOTAL INVESTMENTS (IDENTIFIED COST $92,068,506)(A) $ 91,632,066
---------------------------------------------------------------- ------------
</TABLE>
(a) The cost of investments for federal tax purposes amounts to $92,068,506. The
unrealized depreciation of investments on a federal tax basis amounts to
$436,440 which is comprised of $985,617 appreciation and $1,422,057
depreciation at September 30, 1995.
* Restricted securities are investments in securities not registered under the
Securities Act of 1933. At the end of the period, this security amounted to
3.1% of net assets.
Note: The categories of investments are shown as a percentage of net assets
($93,524,323) at September 30, 1995.
(See Notes which are an integral part of the Financial Statements)
PEACHTREE BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ------------------------------------------------------------------------------
Investments in securities, at value (identified and tax cost $92,068,506) $91,632,066
- ------------------------------------------------------------------------------
Income receivable 1,905,888
- ------------------------------------------------------------------------------
Receivable for shares sold 135,232
- ------------------------------------------------------------------------------
Deferred expenses 22,367
- ------------------------------------------------------------------------------ -----------
Total assets 93,695,553
- ------------------------------------------------------------------------------
LIABILITIES:
- ------------------------------------------------------------------------------
Income distribution payable $133,676
- -----------------------------------------------------------------
Payable to Portfolio Accountant 10,354
- -----------------------------------------------------------------
Accrued expenses 27,200
- ----------------------------------------------------------------- --------
Total liabilities 171,230
- ------------------------------------------------------------------------------ -----------
NET ASSETS for 9,729,563 shares outstanding $93,524,323
- ------------------------------------------------------------------------------ -----------
NET ASSETS CONSIST OF:
- ------------------------------------------------------------------------------
Paid in capital $96,352,618
- ------------------------------------------------------------------------------
Net unrealized depreciation of investments (436,440)
- ------------------------------------------------------------------------------
Accumulated net realized loss on investments (2,391,855)
- ------------------------------------------------------------------------------ -----------
Total Net Assets $93,524,323
- ------------------------------------------------------------------------------ -----------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
Net Asset Value Per Share ($93,524,323 / 9,729,563 shares outstanding) $ 9.61
- ------------------------------------------------------------------------------ -----------
Offering Price Per Share (100/97.50 of $9.61)* $ 9.86
- ------------------------------------------------------------------------------ -----------
Redemption Proceeds Per Share $ 9.61
- ------------------------------------------------------------------------------ -----------
</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, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------
Interest $6,040,290
- ----------------------------------------------------------------------------------
EXPENSES:
- ----------------------------------------------------------------------------------
Investment advisory fee $ 635,619
- ----------------------------------------------------------------------
Administrative personnel and services fee 120,318
- ----------------------------------------------------------------------
Custodian fees 25,154
- ----------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 81,357
- ----------------------------------------------------------------------
Directors'/Trustees' fees 2,028
- ----------------------------------------------------------------------
Auditing fees 12,120
- ----------------------------------------------------------------------
Legal fees 7,276
- ----------------------------------------------------------------------
Portfolio accounting fees 52,918
- ----------------------------------------------------------------------
Share registration costs 27,832
- ----------------------------------------------------------------------
Printing and postage 15,921
- ----------------------------------------------------------------------
Insurance premiums 6,521
- ----------------------------------------------------------------------
Miscellaneous 7,615
- ---------------------------------------------------------------------- ---------
Total expenses 994,679
- ----------------------------------------------------------------------
Waivers and reimbursements --
- ----------------------------------------------------------------------
Waiver of investment advisory fee (129,744)
- ---------------------------------------------------------------------- ---------
Net expenses 864,935
- ---------------------------------------------------------------------------------- ----------
Net investment income 5,175,355
- ---------------------------------------------------------------------------------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- ----------------------------------------------------------------------------------
Net realized loss on investments (1,437,698)
- ----------------------------------------------------------------------------------
Net change in unrealized depreciation of investments 3,816,330
- ---------------------------------------------------------------------------------- ----------
Net realized and unrealized gain on investments 2,378,632
- ---------------------------------------------------------------------------------- ----------
Change in net assets resulting from operations $7,553,987
- ---------------------------------------------------------------------------------- ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
PEACHTREE BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
SEPTEMBER 30, SEPTEMBER 30,
1995 1994*
------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- --------------------------------------------------------------
OPERATIONS--
- --------------------------------------------------------------
Net investment income $ 5,175,355 $ 2,781,233
- --------------------------------------------------------------
Net realized gain (loss) on investments ($(1,054,686) and $0,
respectively, as computed for federal tax purposes) (1,437,698) (954,157)
- --------------------------------------------------------------
Net change in unrealized appreciation (depreciation) 3,816,330 (4,252,770)
- -------------------------------------------------------------- ------------ ------------
Change in net assets resulting from operations 7,553,987 (2,425,694)
- -------------------------------------------------------------- ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS--
- --------------------------------------------------------------
Distributions from net investment income (5,175,355) (2,781,233)
- -------------------------------------------------------------- ------------ ------------
SHARE TRANSACTIONS--
- --------------------------------------------------------------
Proceeds from sale of shares 26,590,444 100,463,066
- --------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of
distributions declared 4,346,372 2,745,421
- --------------------------------------------------------------
Cost of shares redeemed (21,385,393) (16,407,292)
- -------------------------------------------------------------- ------------ ------------
Change in net assets resulting from share transactions 9,551,423 86,801,195
- -------------------------------------------------------------- ------------ ------------
Change in net assets 11,930,055 81,594,268
- --------------------------------------------------------------
NET ASSETS:
- --------------------------------------------------------------
Beginning of period 81,594,268 --
- -------------------------------------------------------------- ------------ ------------
End of period $ 93,524,323 $ 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, 1995
- --------------------------------------------------------------------------------
(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
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.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--Short-term securities with remaining maturities of
sixty days or less at the time of purchase may be valued at amortized cost,
which approximates fair market value. All other securities are valued at
prices provided by an independent pricing service.
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 under repurchase
agreement transactions. Additionally, procedures have been established by
the Fund to monitor, on a daily basis, the market value of each repurchase
agreement's collateral to ensure that the value of collateral at least
equals the repurchase price to be paid under the repurchase agreement
transaction.
The Fund 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 the guidelines and/or
standards reviewed or 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.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--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 BOND FUND
- --------------------------------------------------------------------------------
FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
At September 30, 1995, the Fund, for federal tax purposes, had a capital
loss carryforward of $1,054,686, which will reduce the Fund's taxable
income arising from future net realized gain on investments, if any, to the
extent permitted by the Code, and thus will reduce the amount of the
distributions to shareholders which would otherwise be necessary to relieve
the Fund of any liability for federal tax. Pursuant to the Code, such
capital loss carryforward will expire in 2003.
Additionally, net capital losses of $(1,337,168) attributable to security
transactions incurred after October 31, 1994 are treated as arising on the
first day of the Fund's next taxable year.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering its shares, have been deferred and are being
amortized using the straight-line method over a period of five years from
the Fund's commencement date.
OTHER--Investment transactions are accounted for on the trade date.
RESTRICTED SECURITIES--Restricted securities are securities that may only
be resold upon registration under federal securities laws or in
transactions exempt from such registration. In some cases, the issuer of
restricted securities has agreed to register such securities for resale, at
the issuer's expense either upon demand by the Fund or in connection with
another registered offering of the securities. Many restricted securities
may be resold in the secondary market in transactions exempt from
registration. Such restricted securities may be determined to be liquid
under criteria established by the Trustees. The Fund will not incur any
registration costs upon such resales. The Fund's restricted securities are
valued at the prices provided by dealers in the secondary market or, if not
market prices are available, at the fair value as determined by the Fund's
pricing committee.
<TABLE>
<CAPTION>
ACQUISITION ACQUISITION
SECURITY DATE COST
-------- ----------- -----------
<S> <C> <C>
Nationwide Life Insurance Co. 6/7/95 3,069,807
</TABLE>
(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).
PEACHTREE BOND FUND
- --------------------------------------------------------------------------------
Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
SEPTEMBER 30, 1995 SEPTEMBER 30, 1994*
------------------ -------------------
<S> <C> <C>
- --------------------------------------------------
Shares sold 2,831,857 10,178,415
- --------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 461,339 288,542
- --------------------------------------------------
Shares redeemed (2,298,869) (1,731,721)
- -------------------------------------------------- --------------- ---------------
Net change resulting from share transactions 994,327 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, 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 any portion of its fee and/or
reimburse certain operating expenses of the Fund. The Adviser can modify or
terminate this voluntary waiver and/or reimbursement at any time at its sole
discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
with certain administrative personnel and services. This fee is based on the
level of average aggregate net assets of theTrust for the period. FAS may
voluntarily choose to waive a portion of its fee.
TRANSFER AGENT FEES--Federated Services Company ("FServ") serves as transfer and
dividend disbursing agent for the Fund. This 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.
PORTFOLIO ACCOUNTING FEES--FServe maintains the Fund's accounting records for
which it receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses of $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 year ended September 30, 1995, the Fund paid $5,047 pursuant
to this agreement.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors of the above companies.
PEACHTREE BOND FUND
- --------------------------------------------------------------------------------
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities for the
period ended September 30, 1995, were as follows:
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------
PURCHASES $78,862,028
- ------------------------------------------------------------------------------- ------------
SALES $59,780,129
- ------------------------------------------------------------------------------- ------------
</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, 1995, and the related statement
of operations for the year ended ended and the statement of changes in net
assets and financial highlights for the periods presented therein. 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, 1995, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Peachtree Bond Fund at September 30 1995, the results of its operations for the
year then ended and the changes in its net assets and the financial highlights
for the periods presented therein, in conformity with generally accepted
accounting principles.
ERNST & YOUNG LLP
Pittsburgh, Pennsylvania,
November 7, 1995
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 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 P.O. Box 8600
Boston, MA 02266-8600
- ------------------------------------------------------------------------------------------------
Independent Auditors
Ernst & Young LLP One Oxford Centre
Pittsburgh, Pennsylvania 15219
- ------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
PEACHTREE BOND FUND
- --------------------------------------------------------------------------------
PROSPECTUS
A Diversified Portfolio of
Peachtree Funds, An Open-End Management
Investment Company (a Mutual Fund)
November 30, 1995
FEDERATED SECURITIES CORP.
(LOGO)
- ---------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
3092205A (11/95)
- --------------------------------------------------------------------------------
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,
1995, 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 (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.
(SEE INSIDE COVER)
November 30, 1995
The Investment Adviser to the Peachtree Funds is Bank South, a Georgia
commercial bank, 3350 Cumberland Circle, Atlanta, Georgia 30339 (the "Adviser").
On September 5, 1995, the Adviser's parent corporation, Bank South Corporation,
entered into a definitive agreement pursuant to which the Adviser will be
acquired by NationsBank Corporation, one of the nation's largest banking and
financial services holding companies. The proposed change of control of the
Adviser will legally constitute an assignment of the advisory contract between
the Funds and the Adviser, which is subject to the prior approval of the Funds'
Board of Directors and shareholders. Following the merger of Bank South
Corporation and NationsBank Corporation, it is presently contemplated that the
Adviser will be merged with NationsBank of Georgia, N.A. and that, subject to
the further approval of the Funds' Board of Directors and shareholders, the
Peachtree Funds will be merged with similar portfolios of the Nations Fund,
which currently is advised by NationsBank, N.A. Recently, NationsBank announced
the formation of NationsBanc Advisors, Inc. that will become the advisor to
Nations Fund, and the formation of TradeStreet Investment Associates, Inc. that
will become the investment subadviser for Nations Fund.
TABLE OF CONTENTS
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SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS 2
- ------------------------------------------------------
GENERAL INFORMATION 3
- ------------------------------------------------------
INVESTMENT INFORMATION 3
- ------------------------------------------------------
Investment Objective 3
Investment Policies 3
Portfolio Turnover 6
Georgia Municipal Securities 6
Investment Risks 7
Non-Diversification 7
Certain Borrowing and Investment
Limitations 7
PEACHTREE FUNDS INFORMATION 8
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Management of the Trust 8
Distribution of Shares 9
Administration of the Trust 10
NET ASSET VALUE 11
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INVESTING IN THE FUND 11
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Share Purchases 11
Minimum Investment Required 11
Systematic Investment Program 11
What Shares Cost 12
Reducing or Eliminating the Sales Load 13
Certificates and Confirmations 14
Dividends and Distributions 14
Purchasing Shares of the Fund with
Securities 14
EXCHANGE PRIVILEGE 14
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Peachtree Funds 14
REDEEMING SHARES 16
- ------------------------------------------------------
Systematic Withdrawal Program 17
Accounts With Low Balances 17
SHAREHOLDER INFORMATION 18
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Voting Rights 18
Massachusetts Partnership Law 18
EFFECT OF BANKING LAWS 18
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TAX INFORMATION 19
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Federal Income Tax 19
State of Georgia Income and Intangibles
Taxes 20
Other State and Local Taxes 20
PERFORMANCE INFORMATION 21
- ------------------------------------------------------
FINANCIAL STATEMENTS 22
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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
Redemption Fees (as a percentage of amount redeemed, if applicable)................... None
Exchange Fee.......................................................................... None
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waiver)(1)...................................................... 0.00%
12b-1 Fee(2).......................................................................... 0.00%
Total Other Expenses (after waiver and expense reimbursement)(3)...................... 0.00%
Shareholder Services Fees(4)........................................................ 0.00%
Total Fund Operating Expenses(5).................................................. 0.00%
</TABLE>
(1) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee 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) Total Other Expenses have been reduced to reflect the voluntary waiver of a
portion of the administrative fee and assumption by the adviser. The
administrator and adviser can terminate the voluntary waiver and assumption,
respectively, at any time at their sole discretion.
(4) As of the date of this 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.
(5) The Total Fund Operating Expenses would have been 11.60% absent the
voluntary waiver of the management fee, a portion of the administrative fee, and
the voluntary assumption of other operating expenses by the adviser.
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 additional fees.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years 5 years 10 years
- ------------------------------------------------------------------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment
assuming (1) 5% annual return and (2) redemption at the end of
each time period. 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, 1996.
PEACHTREE GEORGIA TAX-FREE INCOME 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>
PERIOD ENDED
SEPTEMBER 30,
1995 (A)
-------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
- -----------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------
Net investment income 0.42
- -----------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 0.12
- ----------------------------------------------------------------------------- ---------
Total from investment operations 0.54
- ----------------------------------------------------------------------------- ---------
LESS DISTRIBUTIONS
- -----------------------------------------------------------------------------
Distributions from net investment income (0.42)
- ----------------------------------------------------------------------------- ---------
NET ASSET VALUE, END OF PERIOD $ 10.12
- ----------------------------------------------------------------------------- ---------
TOTAL RETURN (B) 5.56%
- -----------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -----------------------------------------------------------------------------
Expenses 0.00%*
- -----------------------------------------------------------------------------
Net investment income 4.80%*
- -----------------------------------------------------------------------------
Expense waiver/reimbursement (c) 11.59%*
- -----------------------------------------------------------------------------
SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------
Net assets, end of period (000 omitted) $ 3,203
- -----------------------------------------------------------------------------
Portfolio turnover 58%
- -----------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from October 6, 1994 (date of initial
public investment) to September 30, 1995.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
GENERAL INFORMATION
- --------------------------------------------------------------------------------
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated 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.
See "Investment Objective and Policies" in the Statement of Additional
Information.
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 commercial bank chartered under the laws
of the State of Georgia and 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 customers 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 Investment Adviser to the Peachtree Funds is Bank South, a Georgia
commercial bank, 3350 Cumberland Circle, Atlanta, Georgia 30339 (the "Adviser").
On September 5, 1995, the Adviser's parent corporation, Bank South Corporation,
entered into a definitive agreement pursuant to which the Adviser will be
acquired by NationsBank Corporation, one of the nation's largest banking and
financial services holding companies. The proposed change of control of the
Adviser will legally constitute an assignment of the advisory contract between
the Funds and the Adviser, which is subject to the prior approval of the Funds'
Board of Directors and shareholders. Following the merger of Bank South
Corporation and NationsBank Corporation, it is presently contemplated that the
Adviser will be merged with NationsBank of Georgia, N.A. and that, subject to
the further approval of the Funds' Board of Directors and shareholders, the
Peachtree Funds will be merged with similar portfolios of the Nations Fund,
which currently is advised by NationsBank, N.A. Recently, NationsBank announced
the formation of NationsBanc Advisors, Inc. that will become the advisor to
Nations Fund, and the formation of TradeStreet Investment Associates, Inc. that
will become the investment subadviser for Nations Fund.
The Adviser has managed discretionary assets for its consumers since 1931. As of
September 30, 1995, the Adviser managed in excess of $1.3 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. Jan A. Koenig assumed responsibility for the day-to-day
management of the Fund in September, 1995. He joined the Adviser in July, 1995
as a Senior Portfolio Adviser and head of the Investment Management Division of
the Wealth Management Group. Mr. Koenig served as a Senior Portfolio
Manager/Manager of the Investment Services Group at Texas Commerce Investment
Management Company in Houston, Texas from 1987 to 1995.
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, Boston, MA, 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.
INDEPENDENT AUDITORS. The independent auditors for the Fund are Ernst & Young
LLP, Pittsburgh, Pennsylvania.
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, your account number, and 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 or more 0.00% 0.00%
</TABLE>
The net asset value is determined as of the close of trading (normally 4:00
p.m., Eastern time) on the New York Stock Exchange, Monday through Friday,
except on: (i) days on which 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 OR ELIMINATING THE SALES LOAD
The sales load can be reduced or eliminated 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 may reduce or eliminate 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 or elimination, 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 or
eliminate 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 or
eliminated 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 or
elimination, 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 a sales load reduction or elimination, 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 or eliminate 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 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 any amount to be sent to an
address other than that on record with the Fund or a redemption payable other
than to the shareholder of record must have their signatures guaranteed by:
- a trust company or commercial bank whose deposits are insured by the BIF,
which is administered by the FDIC;
- a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchanges;
- a savings bank or savings and loan association whose deposits are insured
by the SAIF, which is administered by the FDIC; 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 3, 1995, BHC Securities,
Inc., Philadelphia, PA, acting in various capacities for numerous accounts,
owned approximately 170,615 shares (53.56%) and Bank South, Atlanta, Georgia,
acting in various capacities for numerous accounts, owned approximately 147,941
shares (46.44%) of the Peachtree Georgia Tax-Free Income 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 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. For
purposes of the Georgia intangibles tax, shareholders may exclude from the share
value of the Fund that portion of the total share value which is attributable to
the value of United States obligations held in the Fund. To the extent that the
Fund is comprised of other types of obligations, shares of the Fund will be
taxable at the rate of $0.10 per $1,000 in value of the shares held on January
1st of each year.
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, advertisements for the Fund may refer to ratings, rankings,
and other information in certain financial publications and/or compare the
Fund's performance to certain indices.
PEACHTREE GEORGIA TAX-FREE INCOME FUND
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ----------- -------------------------------------------------------- ------- ----------
<C> <C> <S> <C> <C>
LONG-TERM MUNICIPALS--96.5%
- ----------------------------------------------------------------------------
$ 20,000 Albany, GA, Sewer System, Revenue Bonds, 6.30%
(MBIA Insured), 7/1/2003 AAA $ 22,085
--------------------------------------------------------
60,000 Alpharetta, GA, (Series A), 4.85%, 5/1/2002 AA 60,875
--------------------------------------------------------
85,000 Alpharetta, GA, (Series B), 5.15%, 11/1/2005 AA- 87,285
--------------------------------------------------------
100,000 Atlanta, GA, 4.70%, 12/1/2010 AA 89,645
--------------------------------------------------------
15,000 Atlanta, GA, Water & Sewer Refunding Revenue Bonds,
4.20% (Original Issue Yield: 4.25%), 1/1/2001 AA 14,722
--------------------------------------------------------
25,000 Bibb County, GA, GO UT Bonds, 4.95%, 1/1/2002 AA 25,361
--------------------------------------------------------
100,000 Brunswick, GA, Water & Sewer Improvements Refunding
Revenue Bonds, 6.00% (MBIA Insured)/(Original Issue
Yield: 6.20%), 10/1/2011 AAA 105,603
--------------------------------------------------------
15,000 Carroll City-County Hospital Authority, GA, Refunding
RANs, 7.10% (Tanner Medical Center)/(MBIA Insured),
7/1/2000 (Partially Prefunded) AAA 15,652
--------------------------------------------------------
50,000 Chatham County, GA, School District, GO UT Bonds (Series
A), 6.25% (MBIA Insured), 8/1/2004 AAA 52,731
--------------------------------------------------------
15,000 Cherokee County, GA, School System GO UT Bonds,
7.10%, 6/1/1997 A1 15,699
--------------------------------------------------------
100,000 Cherokee County, GA, School System GO UT Bonds,
4.60%, 2/1/2001 A1 99,994
--------------------------------------------------------
40,000 Cherokee County, GA, School System GO UT Bonds,
4.80%, 2/1/2003 A1 39,973
--------------------------------------------------------
</TABLE>
<TABLE>
<C> <C> <S> <C> <C>
50,000 Clarke County, GA, Hospital Authority, Revenue Bonds,
5.50% (Regional Medical Center Project)/(MBIA Insured),
1/1/2004 AAA 52,099
--------------------------------------------------------
40,000 Clayton County, GA, Hospital Authority RANs, 6.50%
(Southern Regional Medical Center)/(MBIA Insured),
8/1/2000 AAA 43,423
--------------------------------------------------------
</TABLE>
PEACHTREE GEORGIA TAX-FREE INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ----------- -------------------------------------------------------- ------- ----------
<C> <C> <S> <C> <C>
LONG-TERM MUNICIPALS--CONTINUED
- ----------------------------------------------------------------------------
$ 20,000 Cobb County, GA, School District Refunding GO UT Bonds,
4.50% (State Aid Withholding)/(Original Issue Yield:
4.60%), 2/1/2000 AA $ 20,148
--------------------------------------------------------
70,000 Cobb County, GA, Water & Sewer Revenue Bonds (Series A),
4.90%, 7/1/2003 AA 71,033
--------------------------------------------------------
25,000 Cobb County, GA, Water & Sewer Revenue Bonds (Series B),
6.10%, 7/1/1997 AA 25,884
--------------------------------------------------------
25,000 Cobb-Marietta, GA, Coliseum & Exhibit Hall Authority
Revenue Bonds, 6.75% (MBIA Insured)/(Original Issue
Yield: 6.778%), 10/1/2026 (Prefunded) AAA 28,286
--------------------------------------------------------
15,000 Columbus, GA, GO UT Bonds, 4.20%, (Sales Tax)/
(Original Issue Yield: 4.30%), 9/1/2001 AA 14,722
--------------------------------------------------------
15,000 Columbus, GA, Water & Sewer, Revenue Bonds, 6.875%
(Original Issue Yield: 6.93%), 5/1/2020 (Prerefunded) NR 17,047
--------------------------------------------------------
10,000 Conyers, GA, Water & Sewer Refunding Revenue Bonds,
5.10% (AMBAC Insured), 7/1/2000 AAA 10,258
--------------------------------------------------------
10,000 De Kalb County, GA, Development Authority GO Refunding
Revenue Bonds (Series A), 5.00% (Emroy University
Project)/(Original Issue Yield: 4.90%), 10/1/2000 Aa1 10,253
--------------------------------------------------------
100,000 De Kalb County, GA, Hospital Authority, Refunding RANs
(Series A), 5.00% (De Kalb Medical Center Project)/
(MBIA Insured)/(Original Issue Yield: 5.42%), 9/1/2014 AAA 90,557
--------------------------------------------------------
100,000 De Kalb County, GA, Water & Sewer Refunding Revenue
Bonds, 5.125% (Original Issue Yield: 5.324%), 10/1/2014 AA 92,504
--------------------------------------------------------
20,000 Douglas County, GA, School District GO UT Refunding
Bonds, 6.60%, 1/1/2000 A+ 20,533
--------------------------------------------------------
25,000 Downtown Savannah Authority, GA, GO UT Bonds (Series A),
6.625% (Stormwater Capital Improvement Project),
8/1/2003 AA 26,646
--------------------------------------------------------
25,000 Fulton County, GA, Building Authority Refunding Revenue
Bonds, 5.70% (Judical Center Facilities Project),
1/1/2004 AA 26,412
--------------------------------------------------------
</TABLE>
PEACHTREE GEORGIA TAX-FREE INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ----------- -------------------------------------------------------- ------- ----------
<C> <C> <S> <C> <C>
LONG-TERM MUNICIPALS--CONTINUED
- ----------------------------------------------------------------------------
$ 100,000 Fulton County, GA, GO UT Bonds, 6.00% (Callable 1/1/1996
@ 102), 1/1/2005 AA $ 102,668
--------------------------------------------------------
50,000 Fulton County, GA, School District GO UT Bonds, 5.625%
(Original Issue Yield: 5.85%), 1/1/2021 AA 48,328
--------------------------------------------------------
25,000 Fulton County, GA, School District GO UT Refunding
Bonds, 6.00%, 5/1/2002 AA 26,969
--------------------------------------------------------
50,000 Gainesville, GA, Water & Sewer Revenue Bonds (Series B),
7.20%, 11/15/2010 AAA 57,037
--------------------------------------------------------
65,000 Gainsville & Hall County, GA, Hospital Authority Revenue
Bonds, 5.30% (Northeast Georgia Healthcare Project)/
(MBIA Support), 10/1/2005 AAA 66,366
--------------------------------------------------------
10,000 Georgia State Municipal Electric Power Authority,
GO Refunding Revenue Bonds (Series Z), 4.40%
(Original Issue Yield: 4.50%), 1/1/1999 A 9,916
--------------------------------------------------------
10,000 Georgia State Tollway Authority, Revenue Bonds, 6.25%
(Georgia 400 Project)/(State Guaranteed), 7/1/1998 AAA 10,538
--------------------------------------------------------
75,000 Georgia State, (Series B), 5.90%, 3/1/2003 AAA 81,215
--------------------------------------------------------
60,000 Georgia State, GO UT Bonds (Series B), 4.75%, 3/1/2003 AAA 59,626
--------------------------------------------------------
50,000 Georgia State, GO UT Bonds (Series C), 6.50%, 7/1/1996 AAA 50,985
--------------------------------------------------------
15,000 Georgia State, GO UT Bonds (Series C), 6.50%, 7/1/1998 AAA 15,932
--------------------------------------------------------
25,000 Georgia State, GO UT Bonds (Series D), 7.40%, 8/1/1997 AAA 26,477
--------------------------------------------------------
350,000 Georgia State, GO UT Refunding Bonds (Series E),
4.875%, 7/1/2006 AA+ 349,538
--------------------------------------------------------
40,000 Georgia State, GO UT Refunding Bonds (Series E),
5.50%, 7/1/2003 AAA 42,403
--------------------------------------------------------
35,000 Georgia State, GO UT Refunding Bonds, (Series E),
4.50%, 7/1/2002 AAA 34,957
--------------------------------------------------------
10,000 Gwinnett County, GA, School District GO UT Refunding
Bonds, 4.40%, 2/1/1999 AA 10,039
--------------------------------------------------------
10,000 Gwinnett County, GA, School District GO UT Refunding
Bonds, 4.50%, 2/1/2003 AA 9,858
--------------------------------------------------------
</TABLE>
PEACHTREE GEORGIA TAX-FREE INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ----------- -------------------------------------------------------- ------- ----------
<C> <C> <S> <C> <C>
LONG-TERM MUNICIPALS--CONTINUED
- ----------------------------------------------------------------------------
$ 40,000 Gwinnett County, GA, Water & Sewer Refunding Revenue
Bonds, 4.60% (Original Issue Yield: 4.699%), 8/1/2000 AA+ $ 40,360
--------------------------------------------------------
135,000 Gwinnett County, GA, Water & Sewer Refunding Revenue
Bonds, 4.60%, 8/1/2001 AA+ 135,678
--------------------------------------------------------
10,000 La Grange, GA, Water & Sewer Refunding Revenue Bonds,
4.70% (Original Issue Yield: 4.80%, 1/1/2003 A 9,926
--------------------------------------------------------
15,000 Macon Bibb County, GA IDR, Refunding Bonds (Series B),
5.05%, 9/1/2000 AA 15,327
--------------------------------------------------------
35,000 Macon Bibb County, GA IDR, Refunding Bonds, 6.95%
(Parking Facilities Project), 8/1/2003 AA 38,648
--------------------------------------------------------
100,000 Macon, GA, Water & Sewer Revenue Bonds, 4.20%, 10/1/1995 A+ 100,000
--------------------------------------------------------
15,000 Marietta, GA, GO UT Refunding Bonds, 5.00%, 1/1/2001 A+ 15,290
--------------------------------------------------------
40,000 Metro Atlanta Rapid Transit Authority, GA, Sales Tax
Revenue Bonds, 7.00% (Original Issue Yield: 9.75%),
7/1/2011 Escrowed to Maturity AAA 46,845
--------------------------------------------------------
10,000 Metro Atlanta Rapid Transit Authority, GA, Sales Tax
Refunding Revenue Bonds (Series M), 6.05% (Original
Issue Yield: 6.15%), 7/1/2001 AA- 10,678
--------------------------------------------------------
50,000 Metro Atlanta Rapid Transit Authority, GA, Sales Tax
Refunding Revenue Bonds, 4.90% (Second Indenture
Series)/(Series A)/(AMBAC Insured), 7/1/2001 AAA 50,798
--------------------------------------------------------
25,000 Private Colleges & University Authority, GA, Refunding
Revenue Bonds 4.65% (Agnes Scott College
Project)/(Original Issue Yield: 4.75%), 6/1/2002 AA 25,069
--------------------------------------------------------
85,000 Private Colleges & University Facilities Authority, GA,
GO Refunding Revenue Bonds (Series C), 4.60% (Emory
University Project), 10/1/1995 Aa1 85,000
--------------------------------------------------------
50,000 Richmond County, GA Hospital Authority GO UT Bonds,
5.90%, 1/1/2008 AAA 53,560
--------------------------------------------------------
100,000 Rome, GA, New Public Housing Authority Revenue Bonds,
5.00% (U.S. Government Guaranteed), 8/1/2004 AAA 102,798
--------------------------------------------------------
</TABLE>
PEACHTREE GEORGIA TAX-FREE INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ----------- -------------------------------------------------------- ------- ----------
<C> <C> <S> <C> <C>
LONG-TERM MUNICIPALS--CONTINUED
- ----------------------------------------------------------------------------
$ 85,000 Roswell, GA, GO UT Bonds, 5.15%, 2/1/2005 AA $ 86,730
--------------------------------------------------------
50,000 Valdosta & Lowndes County, GA, Hospital Authority
Refunding Revenue Bonds, 5.50% (South Georgia Medical
Center Project)/(MBIA Insured)/(Original Issue Yield:
5.60%), 10/1/2006 AAA 51,668
--------------------------------------------------------
15,000 Valdosta & Lowndes County, GA, Hospital Authority
Refunding Revenue Bonds, 5.70% (South Georgia Medical
Center Project)/(MBIA Insured)/(Original Issue Yield:
5.80%), 10/1/2008 AAA 15,487
--------------------------------------------------------
25,000 Valdosta, GA, Water & Sewer Revenue Bonds, 5.80%,
9/1/2000 A+ 25,594
-------------------------------------------------------- ----------
TOTAL INVESTMENTS (IDENTIFIED COST $3,027,833)(A) $3,091,738
-------------------------------------------------------- ----------
</TABLE>
(a) The cost of investments for federal tax purposes amounts to $3,027,833. The
unrealized appreciation of investments on a federal tax basis amounts to
$63,905 which is comprised of $64,922 appreciation and $1,017 depreciation
at September 30, 1995.
* Please refer to the Appendix of the Statement of Additional Information for
an explanation of the credit ratings. Current credit ratings are unaudited.
Note: The categories of investments are shown as a percentage of net assets
($3,202,988) at September 30, 1995.
The following acronyms are used throughout this portfolio:
<TABLE>
<S> <C>
AMBAC --American Municipal Bond Assurance Corporation
GO --General Obligation
IDR --Industrial Development Revenue
MBIA --Municipal Bond Investors Assurance
RANs --Revenue Anticipation Notes
UT --Unlimited Tax
</TABLE>
(See Notes which are an integral part of the Financial Statements)
PEACHTREE GEORGIA TAX-FREE INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -------------------------------------------------------------------------------
Investments in securities, at value (identified and tax cost $3,027,833) $3,091,738
- -------------------------------------------------------------------------------
Cash 73,282
- -------------------------------------------------------------------------------
Income receivable 45,314
- -------------------------------------------------------------------------------
Deferred expenses 3,067
- ------------------------------------------------------------------------------- ----------
Total assets 3,213,401
- -------------------------------------------------------------------------------
LIABILITIES:
- -------------------------------------------------------------------------------
Income distribution payable $9,385
- --------------------------------------------------------------------
Accrued expenses 1,028
- -------------------------------------------------------------------- ------
Total liabilities 10,413
- ------------------------------------------------------------------------------- ----------
Net Assets for 316,647 shares outstanding $3,202,988
- ------------------------------------------------------------------------------- ----------
NET ASSETS CONSIST OF:
- -------------------------------------------------------------------------------
Paid in capital $3,129,761
- -------------------------------------------------------------------------------
Net unrealized appreciation of investments 63,905
- -------------------------------------------------------------------------------
Accumulated net realized gain on investments 9,322
- ------------------------------------------------------------------------------- ----------
Total Net Assets $3,202,988
- ------------------------------------------------------------------------------- ----------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- -------------------------------------------------------------------------------
Net Asset Value Per Share ($3,202,988 / 316,647 shares outstanding) $10.12
- ------------------------------------------------------------------------------- ----------
Offering Price Per Share (100/97.50 of $10.12)* $10.38
- ------------------------------------------------------------------------------- ----------
Redemption Proceeds Per Share $10.12
- ------------------------------------------------------------------------------- ----------
</TABLE>
*See "What Shares Cost" in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
PEACHTREE GEORGIA TAX-FREE INCOME FUND
STATEMENT OF OPERATIONS
PERIOD ENDED SEPTEMBER 30, 1995*
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- -------------------------------------------------------------------------------------
Interest $ 91,981
- -------------------------------------------------------------------------------------
EXPENSES:
- -------------------------------------------------------------------------------------
Investment advisory fee $ 14,375
- -----------------------------------------------------------------------
Administrative personnel and services fee 100,003
- -----------------------------------------------------------------------
Custodian fees 5,241
- -----------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 19,852
- -----------------------------------------------------------------------
Directors'/Trustees' fees 1,004
- -----------------------------------------------------------------------
Auditing fees 1,204
- -----------------------------------------------------------------------
Legal fees 2,610
- -----------------------------------------------------------------------
Portfolio accounting fees 36,609
- -----------------------------------------------------------------------
Share registration costs 25,809
- -----------------------------------------------------------------------
Printing and postage 6,004
- -----------------------------------------------------------------------
Insurance premiums 3,504
- -----------------------------------------------------------------------
Miscellaneous 6,005
- ----------------------------------------------------------------------- ---------
Total expenses 222,220
- -----------------------------------------------------------------------
Waivers and reimbursements--
- -----------------------------------------------------------------------
Waiver of investment advisory fee $ (14,375)
- -----------------------------------------------------------
Waiver of administrative personnel and services fee (50,002)
- -----------------------------------------------------------
Reimbursement of other operating expenses (157,843)
- ----------------------------------------------------------- ---------
Total waivers and reimbursements (222,220)
- ----------------------------------------------------------------------- ---------
Net expenses 0
- ------------------------------------------------------------------------------------- --------
Net investment income 91,981
- ------------------------------------------------------------------------------------- --------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- -------------------------------------------------------------------------------------
Net realized gain on investments 9,322
- -------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments 63,905
- ------------------------------------------------------------------------------------- --------
Net realized and unrealized gain on investments 73,227
- ------------------------------------------------------------------------------------- --------
Change in net assets resulting from operations $165,208
- ------------------------------------------------------------------------------------- --------
</TABLE>
*For the period from October 6, 1994 (date of initial public investment) to
September 30, 1995.
(See Notes which are an integral part of the Financial Statements)
PEACHTREE GEORGIA TAX-FREE INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD ENDED
SEPTEMBER 30,
1995*
-------------
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -----------------------------------------------------------------------------
OPERATIONS--
- -----------------------------------------------------------------------------
Net investment income $ 91,981
- -----------------------------------------------------------------------------
Net realized gain (loss) on investments
($9,322, as computed for federal tax purposes) 9,322
- -----------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) 63,905
- ----------------------------------------------------------------------------- -------------
Change in net assets resulting from operations 165,208
- ----------------------------------------------------------------------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -----------------------------------------------------------------------------
Distributions from net investment income (91,981)
- ----------------------------------------------------------------------------- -------------
SHARE TRANSACTIONS--
- -----------------------------------------------------------------------------
Proceeds from sale of shares 4,095,522
- -----------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of distributions
declared 42,572
- -----------------------------------------------------------------------------
Cost of shares redeemed (1,008,333)
- ----------------------------------------------------------------------------- -------------
Change in net assets resulting from share transactions 3,129,761
- ----------------------------------------------------------------------------- -------------
Change in net assets 3,202,988
- -----------------------------------------------------------------------------
NET ASSETS:
- -----------------------------------------------------------------------------
Beginning of period 0
- ----------------------------------------------------------------------------- -------------
End of period $ 3,202,988
- ----------------------------------------------------------------------------- -------------
</TABLE>
*For the period from October 6, 1994 (date of initial public investment) to
September 30, 1995.
(See Notes which are an integral part of the Financial Statements)
PEACHTREE GEORGIA TAX-FREE INCOME FUND
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
(1) ORGANIZATION
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 Georgia
Tax-Free Income 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.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--Short-term securities with remaining maturities of
sixty days or less at the time of purchase may be valued at amortized cost,
which approximates fair market value. All other securities are valued at
prices provided by an independent pricing service.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--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").
FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering its shares, have been deferred and are being
amortized using the straight-line method over a period of five years from
the Fund's commencement date.
OTHER--Investment transactions are accounted for on the trade date.
PEACHTREE GEORGIA TAX-FREE INCOME FUND
- --------------------------------------------------------------------------------
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in shares were as follows:
<TABLE>
<CAPTION>
PERIOD ENDED
SEPTEMBER 30,
1995*
-------------
<S> <C>
- -----------------------------------------------------------------------------
Shares sold 412,731
- -----------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 4,236
- -----------------------------------------------------------------------------
Shares redeemed (100,320)
- ----------------------------------------------------------------------------- -----------
Net change resulting from share transactions 316,647
- ----------------------------------------------------------------------------- -----------
</TABLE>
*For the period from October 6, 1994 (date of initial public investment) to
September 30, 1995.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Bank South, 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 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 Trust
with certain administrative personnel and services. This 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 AGENT FEES--Federated Services Company ("FServ") serves as transfer and
dividend disbursing agent for the Fund. This fee is based on the size, type, and
number of accounts and transactions made by shareholders. Fserv may choose to
voluntarily waive a portion of its fee.
PORTFOLIO ACCOUNTING FEES-- FServ maintains the Fund's accounting records for
which it receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses of $42,447 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 Funds first became
effective). For the year ended September 30, 1995, the Fund paid $4,667 pursuant
to this agreement.
PEACHTREE GEORGIA TAX-FREE INCOME FUND
- --------------------------------------------------------------------------------
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors of the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended September 30, 1995, were as follows:
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------
PURCHASES $4,035,785
- ------------------------------------------------------------------------------- -----------
SALES $1,015,079
- ------------------------------------------------------------------------------- -----------
</TABLE>
(6) CONCENTRATION OF CREDIT RISK
Since the Fund invests a substantial portion of its assets in issuers located in
one state, it will be more susceptible to factors adversely affecting issuers of
that state than would be a comparable general tax-exempt mutual fund. In order
to reduce the credit risk associated with such factors, at September 30, 1995,
23.2% of the securities in the portfolio of investments are backed by letters of
credit or bond insurance of various financial institutions and financial
guaranty assurance agencies. The value of investments insured by or supported
(backed) by a letter of credit from any one institution or agency did not exceed
17.6% of total investments.
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 Georgia Tax-Free Income Fund (one of
the portfolios comprising Peachtree Funds) as of September 30, 1995, and the
related statement of operations, the statements 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 audit.
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, 1995,
by correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
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 Georgia Tax-Free Income Fund at September 30, 1995, 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 7, 1995
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Peachtree Georgia Tax-Free Income Fund Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ------------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ------------------------------------------------------------------------------------------------
Investment Adviser
Bank South 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 P.O. Box 8600
Boston, MA 02266-8600
- ------------------------------------------------------------------------------------------------
Independent Auditors
Ernst & Young LLP One Oxford Centre
Pittsburgh, Pennsylvania 15219
- ------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
PEACHTREE GEORGIA TAX-FREE
INCOME FUND
PROSPECTUS
- --------------------------------------------------------------------------------
A Diversified Portfolio of Peachtree Funds,
an Open-End Management Investment Company
(a Mutual Fund)
November 30, 1995
FEDERATED SECURITIES CORP.
(LOGO)
- ---------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
70467H507
3100503A (11/95)
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, 1995.
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 OBLIGATIONS OF BANK SOUTH (THE
"BANK") OR ANY OF ITS AFFILIATES, OR ANY BANK, AND ARE NOT INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY.
INVESTMENT IN THE SHARES OF THIS FUND INVOLVE INVESTMENT RISKS, INCLUDING
POSSIBLE LOSS OF PRINCIPAL. THE FUND ATTEMPTS TO MAINTAIN A STABLE NET ASSET
VALUE OF $1.00 PER SHARE; THERE CAN BE NO ASSURANCE THAT IT WILL BE ABLE TO
DO SO.
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, 1995
FEDERATED SECURITIES
CORP.
Distributor
GENERAL INFORMATION ABOUT THE FUND2 PURCHASING SHARES 21
INVESTMENT OBJECTIVE AND POLICIES2 Administrative Arrangements 21
Distribution Plan 21
Types of Investments 2
Purchasing Fund Shares with
U.S. Government Obligations 2
Securities 22
Bank Instruments 3
DETERMINING NET ASSET VALUE 22
When-Issued and Delayed Delivery
Transactions 3 Use of the Amortized Cost Method22
Repurchase Agreements 4 EXCHANGE PRIVILEGE 24
Reverse Repurchase Agreements 4
Requirements for Exchange 24
Investment Limitations 5
Making an Exchange 25
PEACHTREE FUNDS MANAGEMENT 8
REDEEMING SHARES 25
Fund Ownership 16
Redemption in Kind 25
Trustees Compensation 16
TAX STATUS 26
Trustee Liability 18
INVESTMENT ADVISORY SERVICES 18 The Fund's Tax Status 26
Shareholders' Tax Status 26
Adviser to the Fund 18
YIELD 26
Advisory Fees 18
ADMINISTRATIVE SERVICES 19 EFFECTIVE YIELD 27
TRANSFER AGENT AND DIVIDEND PERFORMANCE COMPARISONS 27
DISBURSING AGENT 19
APPENDIX 29
BROKERAGE TRANSACTIONS 20
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:
o the full faith and credit of the U.S. Treasury;
o the issuer's right to borrow from the U.S. Treasury;
o the discretionary authority of the U.S. government to purchase certain
obligations of agencies or instrumentalities; or
o 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:
o Federal Farm Credit Banks;
o Federal Home Loan Banks;
o Federal National Mortgage Association;
o Student Loan Marketing Association; and
o 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:
o Eurodollar Certificates of Deposit issued by foreign branches of U.S. or
foreign banks;
o Eurodollar Time Deposits, which are U.S. dollar-denominated deposits in
foreign branches of U.S. or foreign banks;
o Canadian Time Deposits, which are U.S. dollar-denominated deposits issued
by branches of major Canadian banks located in the United States; and
o 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, birthdates, present
positions Peachtree Funds, and principal occupations.
Pittsburgh, PA
Birthdate: July 28, 1924
Chairman and Trustee
Chairman and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; Chairman and Director, Federated Research
Corp. and Federated Global Research Corp.; Chairman, Passport Research, Ltd.;
Chief Executive Officer and Director, Trustee, or Managing General Partner of
the Funds. Mr. Donahue is the father of J. Christopher Donahue, President and
Trustee of the Trust.
Birthdate: February 3, 1934
Trustee
Director, Oberg Manufacturing Co.; Chairman of the Board, Children's Hospital of
Pittsburgh; Director, Trustee, or Managing General Partner of the Funds;
formerly, Senior Partner, Ernst & Young LLP.
Thomas G. Bigley
28th Floor, One Oxford
Centre. Donahue@*
Pittsburgh,nPAstors Tower
Birthdate: June 23, 1937
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.
Birthdate: July 4, 1918
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.
Birthdate: May 18, 1922
Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director, Trustee,
or Managing General Partner of the Funds.
John T. Conroy, Jr.
Wood/IPC Commercial
Department
John R. Wood and
JamesiE.eDowdnc.,nRealtors
3255HTamiamiMTrailoNorthor
Naples,,FLA PA
Birthdate: October 11, 1932
Trustee
Professor of Medicine and Member, Board of Trustees, University of Pittsburgh;
Medical Director, University of Pittsburgh Medical Center - Downtown; Member,
Board of Directors, University of Pittsburgh Medical Center; formerly,
Hematologist, Oncologist, and Internist, Presbyterian and Montefiore Hospitals;
Director, Trustee, or Managing General Partner of the Funds.
Birthdate: June 18, 1924
Trustee
Attorney-at-law; Shareholder, Henny, Kochuba, Meyer and 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.
Birthdate: March 16, 1942
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.
Edward L. Flaherty, Jr.@
Henny, Kochuba, Meyer and
Lawrence D. Ellis, M.D.*
PeterFE.tMaddenue, -uSuite
674Westcliff Road
Westin,rMA, PA
Birthdate: October 6, 1926
Trustee
Attorney-at-law; Partner, Henny, Kochuba, Meyer and Flaherty; Chairman,
Meritcare, Inc.; Director, Eat'N Park Restaurants, Inc.; Director, Trustee, or
Managing General Partner of the Funds.
Birthdate: December 20, 1932
Trustee
President, Law Professor, Duquesne University; Consulting Partner, Mollica,
Murray and Hogue; Director, Trustee or Managing General Partner of the Funds.
Birthdate: September 14, 1925
Trustee
Professor, International Politics and Management Consultant; Trustee, Carnegie
Endowment for International Peace, RAND Corporation, Online Computer Library
Center, Inc., and U.S. Space Foundation; Chairman, Czecho Management Center;
Director, Trustee, or Managing General Partner of the Funds; President Emeritus,
University of Pittsburgh; founding Chairman, National Advisory Council for
Environmental Policy and Technology and Federal Emergency Management Advisory
Board.
Gregor F. Meyer
Henny,.Kochuba, MeyerJand,
WesleytW. Posvar
President,dDuquesne-aSuite
University of Pittsburgh
Pittsburgh, PA
Birthdate: June 21, 1935
Trustee
Public relations/marketing consultant; Conference Coordinator, Non-profit
entities; Director, Trustee, or Managing General Partner of the Funds.
Birthdate: October 22, 1930
President, Treasurer and Trustee
Chairman, Treasurer, and Trustee, Federated Investors; Vice President, Federated
Advisers, Federated Management, Federated Research, Federated Research Corp.,
Federated Global Research Corp., and Passport Research, Ltd.; Executive Vice
President and Director, Federated Securities Corp.; Trustee, Federated Services
Company; Chairman, Treasurer, and Trustee, Federated Administrative Services;
Trustee or Director of some of the Funds; Executive Vice President and Treasurer
of the Funds.
Birthdate: April 11, 1949
Executive Vice President
President and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; President and Director, Federated Research
Corp. and Federated Global Research Corp.; President, Passport Research, Ltd.;
Trustee, Federated 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.
EdwardiC.PGonzales*hue
FederatedrInvestors Tower
Pittsburgh, PA
Birthdate: May 17, 1923
Vice President
Executive Vice President and Trustee, Federated Investors; Chairman and
Director, Federated Securities Corp.; President or Vice President of some of the
Funds; Director or Trustee of some of the Funds.
Birthdate: October 26, 1938
Executive Vice President and Secretary
Vice President, Secretary, General Counsel, and Trustee, Federated Investors;
Trustee, Federated Advisers, Federated Management, and Federated Research;
Director, Federated Research Corp. and Federated Global Research Corp.; Trustee,
Federated Services Company; Executive Vice President, Secretary, and Trustee,
Federated Administrative Services; President and Trustee, Federated Shareholder
Services; Director, Federated Securities Corp.; Executive Vice President and
Secretary of the Funds.
Birthdate: March 23, 1960
Vice President and Assistant Treasurer
Vice Presdient, 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.
Charles L.GDavis, Jr.
Federated Investors Tower
Pittsburgh, PA
* 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.
As used in the table above, "The Funds" and "Funds" mean the following
investment companies: American Leaders Fund, Inc.; Annuity Management Series;
Arrow Funds; Automated Government Money Trust; Blanchard Funds; Blanchard
Precious Metals, Inc.; Cash Trust Series II; Cash Trust Series, Inc.; DG
Investor Series; Edward D. Jones & Co. Daily Passport Cash Trust; Federated ARMs
Fund; Federated Equity Funds; Federated Exchange Fund, Ltd.; Federated GNMA
Trust; Federated Government Trust; Federated High Yield Trust; Federated Income
Securities Trust; Federated Income Trust; Federated Index Trust; Federated
Institutional Trust; Federated Master Trust; Federated Municipal Trust;
Federated Short-Term Municipal Trust; Federated Short-Term U.S. Government
Trust; Federated Stock Trust; Federated Tax-Free Trust; Federated Total Return
Series, Inc.; Federated U.S. Government Bond Fund; Federated U.S. Government
Securities Fund: 1-3 Years; Federated U.S, Government Securities Fund: 3-5
Years; First Priority Funds; 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;; 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 Term Trust, Inc. - 1999; Liberty
Utility Fund, Inc.; Liquid Cash Trust; Managed Series Trust; Money Market
Management, Inc.; Money Market Obligations Trust; Money Market Trust; Municipal
Securities Income Trust; Newpoint Funds; 111 Corcoran Funds; Peachtree Funds;
The Planters Funds; RIMCO Monument Funds; The Shawmut Funds; Star Funds; The
Starburst Funds; The Starburst Funds II; Stock and Bond Fund, Inc.; Sunburst
Funds; Targeted Duration Trust; Tax-Free Instruments Trust; Trust for Financial
Institutions; Trust For Government Cash Reserves; Trust for Short-Term U.S.
Government Securities; Trust for U.S. Treasury Obligations; The Virtus Funds;
World Investment Series, Inc.
FUND OWNERSHIP
Officers and Trustees own less than 1% of the Fund's outstanding shares.
As of November 3, 1995, the following shareholder of record owned 5% or more of
the outstanding shares of the Fund: Bank South, Atlanta, Georgia, acting in
various capacities for numerous accounts, owned approximately 102,953,975 shares
(67.63%) and BHC Securities, Inc., Philadelpia, PA, acting in various capacities
for numerous accounts, owned approximately 48,328,101 shares (31.75%).
TRUSTEES COMPENSATION
AGGREGATE
NAME , COMPENSATION
POSITION WITH FROM
TRUST TRUST*#
John F. Donahue $0
Chairman and Trustee
Thomas G. Bigley $338
Trustee
John T. Conroy, Jr. $4,862
Trustee
William J. Copeland $4,862
Trustee
James E. Dowd $4,862
Trustee
Lawrence D. Ellis, M.D. $4,681
Trustee
Edward L. Flaherty, Jr. $4,862
Trustee
Edward C. Gonzales $0
Trustee
Peter E. Madden $4,681
Trustee
Gregor F. Meyer $4,681
Trustee
John E. Murray, Jr., $4,681
Trustee
Wesley W. Posvar $4,681
Trustee
Marjorie P. Smuts $4,681
Trustee
*Information is furnished for the fiscal year ended September 30, 1995. The
Trust is the only investment company in the Fund Complex.
#The aggregate compensation is provided for the Trust which is comprised of six
portfolios.
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 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 and the fiscal year ended September 30, 1995, the
Adviser earned $164,020 and $515,302, of which $138,469 and $321,304,
respectively, were 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 and the fiscal year ended September 30, 1995,
Federated Administrative Services earned $48,187 and $146,063 for administrative
services, of which $18,184 and $0, respectively, were 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:
o advice as to the advisability of investing in securities;
o security analysis and reports;
o economic studies;
o industry studies;
o receipt of quotations for portfolio evaluations; and
o 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:
o derive at least 90% of its gross income from dividends, interest, and gains
from the sale of securities;
o derive less than 30% of its gross income from the sale of securities held
less than three months;
o invest in securities within certain statutory limits; and
o distribute to its shareholders at least 90% of its net income earned during
the year.
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, 1995 was 5.52%.
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:
o 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;
o 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
o 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, 1995 was
5.67%.
The Fund's effective yield is computed by compounding the unannualized base
period return by:
o adding 1 to the base period return;
o raising the sum of the 365/7th power; and
o subtracting 1 from the result.
PERFORMANCE COMPARISONS
The Fund's performance depends upon such variables as:
o portfolio quality;
o average portfolio maturity;
o type of instruments in which the portfolio is invested;
o changes in interest rates on money market instruments;
o changes in Fund expenses; and
o 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:
o LIPPER ANALYTICAL SERVICES, INC., ranks funds in various fund categories by
making comparative calculations using total return. Total return assumes
the reinvestment of all 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.
o 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.
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, 1995. This
70467H408
3092207B (11/95)
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 (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, 1995
FEDERATED SECURITIES
CORP.
Distributor
GENERAL INFORMATION ABOUT THE FUND2 TRANSFER AGENT AND DIVIDEND
DISBURSING AGENT 29
INVESTMENT OBJECTIVE AND POLICIES2
BROKERAGE TRANSACTIONS 29
Types of Investments 2
Other Permitted Investments 2 PURCHASING SHARES 30
Futures and Options Transactions3
Administrative Arrangements 30
Temporary Investments 8
Distribution Plan 31
When-Issued and Delayed Delivery
Purchasing Fund Shares with
Transactions 9
Securities 31
Restricted and Illiquid Securities
DETERMINING NET ASSET VALUE 32
10
Repurchase Agreements 10 Determining Market Value of
Reverse Repurchase Agreements 11 Securities 32
Lending of Portfolio Securities12 EXCHANGE PRIVILEGE 32
Portfolio Turnover 12
REDEEMING SHARES 33
Investment Limitations 12
PEACHTREE FUNDS MANAGEMENT 18 Redemption in Kind 33
TAX STATUS 33
Fund Ownership 25
Trustees Compensation 25 The Fund's Tax Status 33
Trustee Liability 27 Shareholders' Tax Status 34
INVESTMENT ADVISORY SERVICES 27 TOTAL RETURN 34
Adviser to the Fund 27 YIELD 35
Advisory Fees 27
PERFORMANCE COMPARISONS 35
ADMINISTRATIVE SERVICES 28
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:
oprime 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;
oinstruments 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;
oobligations of the U.S. government or its agencies or instrumentalities;
orepurchase agreements; and
oother 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:
othe full faith and credit of the U.S. Treasury;
othe issuer's right to borrow an amount limited to a specific line of
credit from the U.S. Treasury;
othe discretionary authority of the U.S. government to purchase certain
obligations of agencies or instrumentalities; or
othe 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:
oFederal Farm Credit Banks;
oFederal Home Loan Banks;
oFederal National Mortgage Association;
oStudent Loan Marketing Association; and
oFederal 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:
o the frequency of trades and quotes for the security;
o the number of dealers willing to purchase or sell the security and the
number of other potential buyers;
o dealer undertakings to make a market in the security; and
o 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 and the
fiscal year ended September 30, 1995, the Fund's portfolio turnover rates were
4% and 17%, respectively.
INVESTMENT LIMITATIONS
SELLING SHORT AND BUYING ON MARGIN
The Fund will not sell any securities short or purchase any securities on
margin, but may obtain such short-term credits as 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
Officers and Trustees are listed with their addresses, birthdates, present
positions Peachtree Funds, and principal occupations.
Pittsburgh, PA
Birthdate: July 28, 1924
Chairman and Trustee
Chairman and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; Chairman and Director, Federated Research
Corp. and Federated Global Research Corp.; Chairman, Passport Research, Ltd.;
Chief Executive Officer and Director, Trustee, or Managing General Partner of
the Funds. Mr. Donahue is the father of J. Christopher Donahue, President and
Trustee of the Trust.
John F. Donahue@*
Federated Investors Tower
Birthdate: February 3, 1934
Trustee
Director, Oberg Manufacturing Co.; Chairman of the Board, Children's Hospital of
Pittsburgh; Director, Trustee, or Managing General Partner of the Funds;
formerly, Senior Partner, Ernst & Young LLP.
Birthdate: June 23, 1937
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.
Birthdate: July 4, 1918
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.
John T. Conroy, Jr.
Wood/IPC Commercial
Department
JohnaR.GWoodgand
WilliamtJ.,Copelandealtors
OnetPNCmPlazaT-a23rdoFloor
Naples,rFL, PA
Birthdate: May 18, 1922
Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director, Trustee,
or Managing General Partner of the Funds.
Birthdate: October 11, 1932
Trustee
Professor of Medicine and Member, Board of Trustees, University of Pittsburgh;
Medical Director, University of Pittsburgh Medical Center - Downtown; Member,
Board of Directors, University of Pittsburgh Medical Center; formerly,
Hematologist, Oncologist, and Internist, Presbyterian and Montefiore Hospitals;
Director, Trustee, or Managing General Partner of the Funds.
Birthdate: June 18, 1924
Trustee
Attorney-at-law; Shareholder, Henny, Kochuba, Meyer and 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.
Edward L. Flaherty, Jr.@
Henny, Kochuba, Meyer and
Flaherty D. Ellis, M.D.*
JamesaE.wDowdenter -uSuite
1111Hayward Mill Road
Pittsburgh, PA
Birthdate: March 16, 1942
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.
Birthdate: October 6, 1926
Trustee
Attorney-at-law; Partner, Henny, Kochuba, Meyer and Flaherty; Chairman,
Meritcare, Inc.; Director, Eat'N Park Restaurants, Inc.; Director, Trustee, or
Managing General Partner of the Funds.
Birthdate: December 20, 1932
Trustee
President, Law Professor, Duquesne University; Consulting Partner, Mollica,
Murray and Hogue; Director, Trustee or Managing General Partner of the Funds.
Gregor F. Meyer
Henny,.Kochuba, MeyerJand,
S.J.D.ty
TwosGatewayDCentere- Suite
674Westcliff Road
Pittsburgh, PA
Birthdate: September 14, 1925
Trustee
Professor, International Politics and Management Consultant; Trustee, Carnegie
Endowment for International Peace, RAND Corporation, Online Computer Library
Center, Inc., and U.S. Space Foundation; Chairman, Czecho Management Center;
Director, Trustee, or Managing General Partner of the Funds; President Emeritus,
University of Pittsburgh; founding Chairman, National Advisory Council for
Environmental Policy and Technology and Federal Emergency Management Advisory
Board.
Birthdate: June 21, 1935
Trustee
Public relations/marketing consultant; Conference Coordinator, Non-profit
entities; Director, Trustee, or Managing General Partner of the Funds.
Birthdate: October 22, 1930
President, Treasurer and Trustee
Chairman, Treasurer, and Trustee, Federated Investors; Vice President, Federated
Advisers, Federated Management, Federated Research, Federated Research Corp.,
Federated Global Research Corp., and Passport Research, Ltd.; Executive Vice
President and Director, Federated Securities Corp.; Trustee, Federated Services
Company; Chairman, Treasurer, and Trustee, Federated Administrative Services;
Trustee or Director of some of the Funds; Executive Vice President and Treasurer
of the Funds.
Wesley W. Posvar
MarjoriehP.rSmutss*earning
4905eBayardoStreetsburghr
Pittsburgh, PA
Birthdate: April 11, 1949
Executive Vice President
President and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; President and Director, Federated Research
Corp. and Federated Global Research Corp.; President, Passport Research, Ltd.;
Trustee, Federated 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.
Birthdate: May 17, 1923
Vice President
Executive Vice President and Trustee, Federated Investors; Chairman and
Director, Federated Securities Corp.; President or Vice President of some of the
Funds; Director or Trustee of some of the Funds.
Birthdate: October 26, 1938
Executive Vice President and Secretary
Vice President, Secretary, General Counsel, and Trustee, Federated Investors;
Trustee, Federated Advisers, Federated Management, and Federated Research;
Director, Federated Research Corp. and Federated Global Research Corp.; Trustee,
Federated Services Company; Executive Vice President, Secretary, and Trustee,
Federated Administrative Services; President and Trustee, Federated Shareholder
Services; Director, Federated Securities Corp.; Executive Vice President and
Secretary of the Funds.
J.cChristopherhDonahue
Federated Investors Tower
Pittsburgh, PA
Birthdate: March 23, 1960
Vice President and Assistant Treasurer
Vice Presdient, 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.
As used in the table above, "The Funds" and "Funds" mean the following
investment companies: American Leaders Fund, Inc.; Annuity Management Series;
Arrow Funds; Automated Government Money Trust; Blanchard Funds; Blanchard
Precious Metals, Inc.; Cash Trust Series II; Cash Trust Series, Inc.; DG
Investor Series; Edward D. Jones & Co. Daily Passport Cash Trust; Federated ARMs
Fund; Federated Equity Funds; Federated Exchange Fund, Ltd.; Federated GNMA
Trust; Federated Government Trust; Federated High Yield Trust; Federated Income
Securities Trust; Federated Income Trust; Federated Index Trust; Federated
Institutional Trust; Federated Master Trust; Federated Municipal Trust;
Federated Short-Term Municipal Trust; Federated Short-Term U.S. Government
Trust; Federated Stock Trust; Federated Tax-Free Trust; Federated Total Return
Series, Inc.; Federated U.S. Government Bond Fund; Federated U.S. Government
Securities Fund: 1-3 Years; Federated U.S, Government Securities Fund: 3-5
Years; First Priority Funds; 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;; 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 Term Trust, Inc. - 1999; Liberty
Utility Fund, Inc.; Liquid Cash Trust; Managed Series Trust; Money Market
Management, Inc.; Money Market Obligations Trust; Money Market Trust; Municipal
Securities Income Trust; Newpoint Funds; 111 Corcoran Funds; Peachtree Funds;
The Planters Funds; RIMCO Monument Funds; The Shawmut Funds; Star Funds; The
Starburst Funds; The Starburst Funds II; Stock and Bond Fund, Inc.; Sunburst
Funds; Targeted Duration Trust; Tax-Free Instruments Trust; Trust for Financial
Institutions; Trust For Government Cash Reserves; Trust for Short-Term U.S.
Government Securities; Trust for U.S. Treasury Obligations; The Virtus Funds;
World Investment Series, Inc.
FUND OWNERSHIP
Officers and Trustees own less than 1% of the Fund's outstanding shares.
As of November 3, 1995, the following shareholder of record owned 5% or more of
the outstanding shares of the Fund: Bank South, Atlanta, Georgia, acting in
various capacities for numerous accounts, owned approximately 9,962,875 shares
(95.47%).
TRUSTEES COMPENSATION
AGGREGATE
NAME , COMPENSATION
POSITION WITH FROM
TRUST TRUST*#
John F. Donahue $0
Chairman and Trustee
Thomas G. Bigley $338
Trustee
John T. Conroy, Jr. $4,862
Trustee
William J. Copeland $4,862
Trustee
James E. Dowd $4,862
Trustee
Lawrence D. Ellis, M.D. $4,681
Trustee
Edward L. Flaherty, Jr. $4,862
Trustee
Edward C. Gonzales $0
Trustee
Peter E. Madden $4,681
Trustee
Gregor F. Meyer $4,681
Trustee
John E. Murray, Jr., $4,681
Trustee
Wesley W. Posvar $4,681
Trustee
Marjorie P. Smuts $4,681
Trustee
*Information is furnished for the fiscal year ended September 30, 1995. The
Trust is the only investment company in the Fund Complex.
#The aggregate compensation is provided for the Trust which is comprised of six
portfolios.
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 (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 and the fiscal year ended September 30, 1995, the Adviser
earned advisory fees of $385,127 and $814,121, of which $36,781 and $94,631,
respectively, were 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 and the fiscal year ended September 30, 1995,
the Fund incurred administrative service fees of $75,896 and $154,038,
respectively.
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:
o advice as to the advisability of investing in securities;
o security analysis and reports;
o economic studies;
o industry studies;
o receipt of quotations for portfolio evaluations; and
o 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.
For the period from February 14, 1994 (date of initial public investment) to
September 30, 1994 and the fiscal year ended September 30, 1995, the Fund paid
$58,000 and $89,312, respectively, in brokerage commissions on brokerage
transactions.
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 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
Market values of the Fund's portfolio securities, other than options, are
determined as follows:
o for equity securities, according to the last sale price on a national
securities exchange, if available;
o in the absence of recorded sales for listed equity securities, according to
the mean between the last closing bid and asked prices;
o for unlisted equity securities, the latest bid prices;
o for bonds and other fixed income securities, as determined by an
independent pricing service;
o 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;
o 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
o 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 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:
o derive at least 90% of its gross income from dividends, interest, and gains
from the sale of securities;
o derive less than 30% of its gross income from the sale of securities held
less than three months;
o invest in securities within certain statutory limits; and
o distribute to its shareholders at least 90% of its net income earned during
the year.
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 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.
For the one year period ended September 30, 1995 and for the period from
February 14, 1994 (date of initial public investment) to September 30, 1995, the
Fund's average annual total returns were 17.57% and 10.55%, respectively.
YIELD
The Fund's yield for the 30-day period ended September 30, 1995 was 0.86%.
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:
o portfolio quality;
o average portfolio maturity;
o type of instruments in which the portfolio is invested;
o changes in interest rates and market value of portfolio securities;
o changes in the Fund's expenses; and
o various other factors.
The Fund's performance fluctuates on a daily basis largely because net earnings
and offering price per share fluctuate daily. Both net earnings and offering
price per share are factors in the computation of yield and total return.
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:
o 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.
o 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.
o LIPPER ANALYTICAL SERVICES, INC., ranks funds in various fund categories by
making comparative calculations using total return. Total return assumes
the reinvestment of all capital gains distributions and income dividends
and takes into account any change in 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.
o MORNINGSTAR, INC. an independent rating service, is the publisher of the
bi-weekly Mutual Fund Values. Mutual Fund Values rates more than 1,000
NASDAQ-listed mutual funds of all types, according to their risk-adjusted
returns. The maximum rating is five stars, and ratings are effective for
two weeks.
Advertisements and other sales literature for the Fund may quote total returns
which are calculated on non-standardized base periods. 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.
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,
1995. 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 (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
70467H101
3092102B (11/95)
FEDERATED SECURITIES CORP., WHICH IS NOT AFFILIATED WITH THE BANK.
Statement dated November 30, 1995
FEDERATED SECURITIES
CORP.
Distributor
GENERAL INFORMATION 2 BROKERAGE TRANSACTIONS 23
INVESTMENT OBJECTIVE AND POLICIES2 PURCHASING SHARES 24
Types of Investments 2 Administrative Arrangements 24
Types of Acceptable Investments 3 Distribution Plan 24
Participation Interests 3 Purchasing Fund Shares with
Variable Rate Municipal Securities Securities 25
3 DETERMINING NET ASSET VALUE 25
Municipal Leases 4
Valuing Municipal Bonds 25
When-Issued and Delayed Delivery
EXCHANGE PRIVILEGE 26
Transactions 5
Temporary Investments 5 REDEEMING SHARES 26
Reverse Repurchase Agreements 6
Redemption in Kind 26
Investment Limitations 7
TAX STATUS 26
Georgia Investment Risks 10
Portfolio Turnover 11 The Fund's Tax Status 26
PEACHTREE FUNDS MANAGEMENT 12 Shareholders' Tax Status 27
TOTAL RETURN 27
Fund Ownership 19
Trustees Compensation 19 YIELD 28
Trustee Liability 21
TAX-EQUIVALENT YIELD 29
INVESTMENT ADVISORY SERVICES 21
Tax-Equivalency Table 29
Adviser to the Fund 21
PERFORMANCE COMPARISONS 31
Advisory Fees 21
ADMINISTRATIVE SERVICES 22 APPENDIX 32
TRANSFER AGENT AND DIVIDEND
DISBURSING AGENT 22
GENERAL INFORMATION
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 as of 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:
o general obligation bonds;
o 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.);
o municipal notes and tax-exempt commercial paper;
o serial bonds;
o tax anticipation notes sold to finance working capital needs of
municipalities in anticipation of receiving taxes;
o bond anticipation notes sold in anticipation of the issuance of long-term
bonds;
o pre-refunded municipal bonds whose timely payment of interest and principal
is ensured by an escrow of U.S. government obligations; and
o 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:
o whether the lease can be terminated by the lessee;
o the potential recovery, if any, from a sale of the leased property upon
termination of the lease;
o the lessee's general credit strength (e.g., its debt, administrative,
economic, and financial characteristics and prospects);
o 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
o 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 fiscal years 1993 and 1994 ended with a surplus. Georgia's strong economic
performance, driven by rapid population growth has helped the State to
outperform budget expectations. Year-ended revenue collections for fiscal 1995
were up 8.2% over the prior year. Budgeted revenues for fiscal 1995 anticipated
a conservative 6.6% increase over the prior year. Sales and individual income,
inclusive of a reduction in personal income taxes of $100 million for fiscal
1995, were up 8.3% and 7.1, respectively, showing the strength of the State's
economy. Job growth, among the fastest in the nation, has been mainly centered
in business and health services, while manufacturing employment grew slightly.
Total non-farm employment grew 5% in 1994 over the prior year, well above the
U.S. rate of 2.6% and the State's unemployment rate of 4.4%, as of April, 1995,
was below the national rate of 5.5%.
The tax revenue growth is estimated at 6.8% for fiscal 1996 while spending is
proposed to increase at 4.6%, with the largest increase in spending for
education. A large portion of spending for education is funded from the net
proceeds of the state lottery, which has generated revenues exceeding
expectations since its approval in November, 1992. The State economy is expected
to receive a boost from the 1996 Olympics which should temporarily offset the
effect of any potential slowing of the national economy.
PORTFOLIO TURNOVER
The Fund may trade or dispose of portfolio securities as considered necessary to
meet its investment objective. For the period from October 6, 1994 (date of
initial public investment) to September 30, 1995, the Fund's portfolio turnover
rate was 58%.
PEACHTREE FUNDS MANAGEMENT
Officers and Trustees are listed with their addresses, birthdates, present
positions Peachtree Funds, and principal occupations.
Pittsburgh, PA
Birthdate: July 28, 1924
Chairman and Trustee
Chairman and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; Chairman and Director, Federated Research
Corp. and Federated Global Research Corp.; Chairman, Passport Research, Ltd.;
Chief Executive Officer and Director, Trustee, or Managing General Partner of
the Funds. Mr. Donahue is the father of J. Christopher Donahue, President and
Trustee of the Trust.
Birthdate: February 3, 1934
Trustee
Director, Oberg Manufacturing Co.; Chairman of the Board, Children's Hospital of
Pittsburgh; Director, Trustee, or Managing General Partner of the Funds;
formerly, Senior Partner, Ernst & Young LLP.
Thomas G. Bigley
28th Floor, One Oxford
JohnrF. Donahue@*
Pittsburgh,nPAstors Tower
Birthdate: June 23, 1937
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.
Birthdate: July 4, 1918
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.
Birthdate: May 18, 1922
Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director, Trustee,
or Managing General Partner of the Funds.
John T. Conroy, Jr.
Wood/IPC Commercial
Department
John R. Wood and
JamesiE.eDowdnc.,nRealtors
3255HTamiamiMTrailoNorthor
Naples,,FLA PA
Birthdate: October 11, 1932
Trustee
Professor of Medicine and Member, Board of Trustees, University of Pittsburgh;
Medical Director, University of Pittsburgh Medical Center - Downtown; Member,
Board of Directors, University of Pittsburgh Medical Center; formerly,
Hematologist, Oncologist, and Internist, Presbyterian and Montefiore Hospitals;
Director, Trustee, or Managing General Partner of the Funds.
Birthdate: June 18, 1924
Trustee
Attorney-at-law; Shareholder, Henny, Kochuba, Meyer and 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.
Birthdate: March 16, 1942
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.
Edward L. Flaherty, Jr.@
Henny, Kochuba, Meyer and
Lawrence D. Ellis, M.D.*
PeterFE.tMaddenue, -uSuite
674Westcliff Road
Westin,rMA, PA
Birthdate: October 6, 1926
Trustee
Attorney-at-law; Partner, Henny, Kochuba, Meyer and Flaherty; Chairman,
Meritcare, Inc.; Director, Eat'N Park Restaurants, Inc.; Director, Trustee, or
Managing General Partner of the Funds.
Birthdate: December 20, 1932
Trustee
President, Law Professor, Duquesne University; Consulting Partner, Mollica,
Murray and Hogue; Director, Trustee or Managing General Partner of the Funds.
Birthdate: September 14, 1925
Trustee
Professor, International Politics and Management Consultant; Trustee, Carnegie
Endowment for International Peace, RAND Corporation, Online Computer Library
Center, Inc., and U.S. Space Foundation; Chairman, Czecho Management Center;
Director, Trustee, or Managing General Partner of the Funds; President Emeritus,
University of Pittsburgh; founding Chairman, National Advisory Council for
Environmental Policy and Technology and Federal Emergency Management Advisory
Board.
Gregor F. Meyer
Henny,.Kochuba, MeyerJand,
WesleytW. Posvar
President,dDuquesne-aSuite
University of Pittsburgh
Pittsburgh, PA
Birthdate: June 21, 1935
Trustee
Public relations/marketing consultant; Conference Coordinator, Non-profit
entities; Director, Trustee, or Managing General Partner of the Funds.
Birthdate: October 22, 1930
President, Treasurer and Trustee
Chairman, Treasurer, and Trustee, Federated Investors; Vice President, Federated
Advisers, Federated Management, Federated Research, Federated Research Corp.,
Federated Global Research Corp., and Passport Research, Ltd.; Executive Vice
President and Director, Federated Securities Corp.; Trustee, Federated Services
Company; Chairman, Treasurer, and Trustee, Federated Administrative Services;
Trustee or Director of some of the Funds; Executive Vice President and Treasurer
of the Funds.
Birthdate: April 11, 1949
Executive Vice President
President and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; President and Director, Federated Research
Corp. and Federated Global Research Corp.; President, Passport Research, Ltd.;
Trustee, Federated 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.
EdwardiC.PGonzales*hue
FederatedrInvestors Tower
Pittsburgh, PA
Birthdate: May 17, 1923
Vice President
Executive Vice President and Trustee, Federated Investors; Chairman and
Director, Federated Securities Corp.; President or Vice President of some of the
Funds; Director or Trustee of some of the Funds.
Birthdate: October 26, 1938
Executive Vice President and Secretary
Vice President, Secretary, General Counsel, and Trustee, Federated Investors;
Trustee, Federated Advisers, Federated Management, and Federated Research;
Director, Federated Research Corp. and Federated Global Research Corp.; Trustee,
Federated Services Company; Executive Vice President, Secretary, and Trustee,
Federated Administrative Services; President and Trustee, Federated Shareholder
Services; Director, Federated Securities Corp.; Executive Vice President and
Secretary of the Funds.
Birthdate: March 23, 1960
Vice President and Assistant Treasurer
Vice Presdient, 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.
Charles L.GDavis, Jr.
Federated Investors Tower
Pittsburgh, PA
* 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.
As used in the table above, "The Funds" and "Funds" mean the following
investment companies: American Leaders Fund, Inc.; Annuity Management Series;
Arrow Funds; Automated Government Money Trust; Blanchard Funds; Blanchard
Precious Metals, Inc.; Cash Trust Series II; Cash Trust Series, Inc.; DG
Investor Series; Edward D. Jones & Co. Daily Passport Cash Trust; Federated ARMs
Fund; Federated Equity Funds; Federated Exchange Fund, Ltd.; Federated GNMA
Trust; Federated Government Trust; Federated High Yield Trust; Federated Income
Securities Trust; Federated Income Trust; Federated Index Trust; Federated
Institutional Trust; Federated Master Trust; Federated Municipal Trust;
Federated Short-Term Municipal Trust; Federated Short-Term U.S. Government
Trust; Federated Stock Trust; Federated Tax-Free Trust; Federated Total Return
Series, Inc.; Federated U.S. Government Bond Fund; Federated U.S. Government
Securities Fund: 1-3 Years; Federated U.S, Government Securities Fund: 3-5
Years; First Priority Funds; 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;; 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 Term Trust, Inc. - 1999; Liberty
Utility Fund, Inc.; Liquid Cash Trust; Managed Series Trust; Money Market
Management, Inc.; Money Market Obligations Trust; Money Market Trust; Municipal
Securities Income Trust; Newpoint Funds; 111 Corcoran Funds; Peachtree Funds;
The Planters Funds; RIMCO Monument Funds; The Shawmut Funds; Star Funds; The
Starburst Funds; The Starburst Funds II; Stock and Bond Fund, Inc.; Sunburst
Funds; Targeted Duration Trust; Tax-Free Instruments Trust; Trust for Financial
Institutions; Trust For Government Cash Reserves; Trust for Short-Term U.S.
Government Securities; Trust for U.S. Treasury Obligations; The Virtus Funds;
World Investment Series, Inc.
FUND OWNERSHIP
Officers and Trustees own less than 1% of the Fund's outstanding shares.
As of November 3, 1995, the following shareholders of record owned 5% or more of
the outstanding shares of the Fund: BHC Securities, Inc., Philadelphia, PA,
acting in various capacities for numerous accounts, owned approximately 170,615
shares (53.56%) and Bank South, Atlanta, Georgia, acting in various capacities
for numerous accounts, owned approximately 147,941 shares (46.44%).
TRUSTEES COMPENSATION
AGGREGATE
NAME , COMPENSATION
POSITION WITH FROM
TRUST TRUST*#
John F. Donahue $0
Chairman and Trustee
Thomas G. Bigley $338
Trustee
John T. Conroy, Jr. $4,862
Trustee
William J. Copeland $4,862
Trustee
James E. Dowd $4,862
Trustee
Lawrence D. Ellis, M.D. $4,681
Trustee
Edward L. Flaherty, Jr. $4,862
Trustee
Edward C. Gonzales $0
Trustee
Peter E. Madden $4,681
Trustee
Gregor F. Meyer $4,681
Trustee
John E. Murray, Jr., $4,681
Trustee
Wesley W. Posvar $4,681
Trustee
Marjorie P. Smuts $4,681
Trustee
*Information is furnished for the fiscal year ended September 30, 1995. The
Trust is the only investment company in the Fund Complex.
#The aggregate compensation is provided for the Trust which is comprised of six
portfolios.
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.
For the period from October 6, 1994 (date of initial public investment) to
September 30, 1995, the Adviser earned advisory fees of $14,375, all of which
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 October 6, 1994 (date of initial public
investment) to September 30, 1995, the Fund incurred administrative service fees
of $100,003, of which $50,002 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:
o advice as to the advisability of investing in securities;
o security analysis and reports;
o economic studies;
o industry studies;
o receipt of quotations for portfolio evaluations; and
o 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.
For the period from October 6, 1994 (date of initial public investment) to
September 30, 1995, brokers and administrators (financial institutions) received
no fees, pursuant to the Distribution Plan.
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 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:
o derive at least 90% of its gross income from dividends, interest, and gains
from the sale of securities;
o derive less than 30% of its gross income from the sale of securities held
less than three months;
o invest in securities within certain statutory limits; and
o distribute to its shareholders at least 90% of its net income earned during
the year.
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:
othe availability of higher relative yields;
odifferentials in market values;
onew investment opportunities;
ochanges in creditworthiness of an issuer; or
oan attempt to preserve gains or limit losses.
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 Fund's cumulative total return for the period from October 6, 1994 (date of
initial public investment) to September 30, 1995, was 2.88%. 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 eleven 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 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.
The Fund's yield for the 30-day period ended September 30, 1995 was 4.69%.
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.
The Fund's tax-equivalent yield for the 30-day period ended September 30, 1995
was 7.76%.
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 1995
State of Georgia
TAX BRACKET:
Federal: 15.00% 28.00% 31.00% 36.00% 39.60%
Combined
Federal
and State:21.00% 34.00% 37.00% 42.00% 45.60%
Joint Return$1-39,000$39,001-94,250 $94,251-143,600$143,601-$256,500
OVER $256,500
Single Return$1-23,350 $23,351-56, 550$56,551-117,950$117,951-256,500
OVER $256,500
Tax-Exempt
Yield
Taxable Yield Equivalent
---
1.50% 1.90% 2.27% 2.38% 2.59% 2.76%
2.00 2.53 3.03 3.17 3.45 3.68
2.50 3.16 3.79 3.97 4.31 4.60
3.00 3.80 4.55 4.76 5.17 5.51
3.50 4.43 5.30 5.56 6.03 6.43
4.00 5.06 6.06 6.35 6.90 7.35
4.50 5.70 6.82 7.14 7.76 8.27
5.00 6.33 7.58 7.94 8.62 9.19
5.50 6.96 8.33 8.73 9.48 10.11
6.00 7.59 9.09 9.52 10.34 11.03
6.50 8.23 9.85
10.32 11.21 11.95
7.00 8.86 10.61
11.11 12.07 12.87
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 Fund shares.
* Some portion of the Fund's income may be subject to the federal
alternative minimum tax and state and local income taxes.
PERFORMANCE COMPARISONS
The performance of the Fund depends upon such variables as:
o portfolio quality;
o average portfolio maturity;
o type of instruments in which the portfolio is invested;
o changes in interest rates and market value of portfolio securities;
o changes in the Fund's expenses; and
o various other factors.
The Fund's performance fluctuates on a daily basis largely because net earnings
and offering price per share fluctuate daily. Both net earnings and offering
price per share are factors in the computation of yield and total return.
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:
o 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.
o MORNINGSTAR, INC. an independent rating service, is the publisher of the
bi-weekly Mutual Fund Values. Mutual Fund Values rates more than 1,000
NASDAQ-listed mutual funds of all types, according to their risk-adjusted
returns. The maximum rating is five stars, and ratings are effective for
two weeks.
Advertisements and other sales literature for the Fund may quote total returns
which are calculated on non-standardized base periods. 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.
PART C. OTHER INFORMATION.
Item 24. Financial Statements and Exhibits:
(a) Financial Statements: Filed in Part A.
(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(5);
(i) Peachtree Bond Fund(5);
(ii) Peachtree Equity Fund(5);
704674507
3100503B (11/95)
(iii)Peachtree Georgia Tax-Free Income Fund(5);
(iv) Peachtree Government Money Market Fund(5);
(v) Peachtree Prime Money Market Fund(5);
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;(6)
(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;+
+ 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).
5. Response is incorporated by reference to Registrant's Registration
Statement on Form N-1A filed November 27, 1994.
(File Nos. 33-50635 and 811-3432).
6. Response is incorporated by reference to Registrant's Registration
Statement on Form N-1A filed May 24, 1995.
(File Nos. 33-50635 and 811-3432).
(12) Not applicable;
(13) Conformed Copy of Initial Capital Understanding (2);
(14) Not applicable;
(15) (i)Conformed Copy of Distribution Plan (2);
(ii)Copy of Form of 12b-1 Agreement (2);
(16) Copy of 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);
(v) Peachtree Georgia Tax-Free Income Fund; (6)
(17) Copy of Financial Data Schedules; +
(19) Conformed Copy of Power of Attorney; (6)
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 6, 1995
Shares of
Beneficial Interest
(no par value)
Peachtree Bond Fund 22
Peachtree Government Money Market Fund 11
Peachtree Georgia Tax-Free Income Fund 7
Peachtree Prime Money Market Fund 25
Peachtree Equity Fund 60
Item 27. Indemnification: (1)
+ 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).
5. Response is incorporated by reference to Registrant's Registration
Statement on Form N-1A filed November 22, 1994.
(File Nos. 33-50635 and 811-3432).
6. Response is incorporated by reference to Registrant's Registration
Statement on Form N-1A filed May 24, 1995.
(File Nos. 33-50635 and 811-3432).
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
September, 1995, the Bank managed in excess of $1.3 billion of
discretionary assets. Prior to the date hereof, the Bank has not
served as an investment adviser to mutual funds. The principal
executive officers 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.
(1) (2) (3)
Other Substantial
Position with Business Profession,
Name the Adviser Vocation or Employment
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
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: American Leaders Fund, Inc.; Annuity Management
Series; Arrow Funds; Automated Government Money Trust; BayFunds; The
Biltmore Funds; The Biltmore Municipal Funds; Blanchard Funds;
Blanchard Precious Metals, Inc.; Cash Trust Series, Inc.; Cash Trust
Series II; DG Investor Series; Edward D. Jones & Co. Daily Passport
Cash Trust; Federated ARMs Fund; Federated Equity Funds; Federated
Exchange Fund, Ltd.; Federated GNMA Trust; Federated Government Trust;
Federated High Yield Trust; Federated Income Securities Trust;
Federated Income Trust; Federated Index Trust; Federated Institutional
Trust; Federated Master Trust; Federated Municipal Trust; Federated
Short-Term Municipal Trust; Federated Short-Term U.S. Government
Trust; Federated Stock Trust; Federated Tax-Free Trust; Federated
Total Return Series, Inc.; Federated U.S. Government Bond Fund;
Federated U.S. Government Securities Fund: 1-3 Years; Federated
U.S. Government Securities Fund: 3-5 Years;First Priority Funds; First
Union Funds; Fixed Income Securities, Inc.; Fortress Adjustable Rate
U.S. Government Fund, Inc.; Fortress Municipal Income Fund, Inc.;
Fortress Utility Fund, Inc.; Fountain Square Funds; Fund for U.S.
Government Securities, Inc.; Government Income Securities, Inc.; High
Yield Cash Trust; Independence One Mutual Funds; Insurance Management
Series; Intermediate Municipal Trust; International Series Inc.;
Investment Series Funds, Inc.; Investment Series Trust; Liberty Equity
Income Fund, Inc.; Liberty High Income Bond Fund, Inc.; Liberty
Municipal Securities Fund, Inc.; Liberty U.S. Government Money Market
Trust; Liberty Utility Fund, Inc.; Liquid Cash Trust; Managed Series
Trust; Marshall Funds, Inc.; Money Market Management, Inc.; Money
Market Obligations Trust; Money Market Trust; The Monitor Funds;
Municipal Securities Income Trust; Newpoint Funds; 111 Corcoran Funds;
Peachtree Funds; The Planters Funds; RIMCO Monument Funds; The Shawmut
Funds; SouthTrust Vulcan Funds; Star Funds; The Starburst Funds; The
Starburst Funds II; Stock and Bond Fund, Inc.; Sunburst Funds;
Targeted Duration Trust; Tax-Free Instruments Trust; Tower Mutual
Funds; Trademark Funds; Trust for Financial Institutions; Trust for
Government Cash Reserves; Trust for Short-Term U.S. Government
Securities; Trust for U.S. Treasury Obligations; The Virtus Funds;
Vision Fiduciary Funds, Inc.; Vision Group of Funds, Inc.; and World
Investment Series, Inc.
Federated Securities Corp. also acts as principal underwriter for the
following closed-end investment company: Liberty Term Trust, Inc.-
1999.
(b)
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Richard B. Fisher Director, Chairman, Chief Vice President Federated
Investors Tower Executive Officer, Chief
Pittsburgh, PA 15222-3779 Operating Officer, Asst.
Secretary, and Asst.
Treasurer, Federated
Securities Corp.
Edward C. Gonzales Director, Executive ViceExecutive Vice
Federated Investors Tower President, Federated, President
Pittsburgh, PA 15222-3779 Securities Corp.
John W. McGonigle Director, Federated President and
Federated Investors Tower Securities Corp. Treasurer
Pittsburgh, PA 15222-3779
John B. Fisher President-Institutional Sales, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James F. Getz President-Broker/Dealer, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark R. Gensheimer Executive Vice President of --
Federated Investors Tower Bank/Trust, Federated
Pittsburgh, PA 15222-3779 Securities Corp.
Mark W. Bloss Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard W. Boyd Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Theodore Fadool, Jr. Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Bryant R. Fisher Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Christopher T. Fives Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James S. Hamilton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James M. Heaton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Keith Nixon Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Solon A. Person, IV Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Timothy C. Pillion Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Thomas E. Territ Senior Vice President, --
Federated Investors Tower Federated Securities Corp
Pittsburgh, PA 15222-3779
John B. Bohnet Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Byron F. Bowman Vice President, Secretary, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jane E. Broeren-Lambesis Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mary J. Combs Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
R. Edmond Connell, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Kevin J. Crenny Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Daniel T. Culbertson Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
G. Michael Cullen Vice President, --
Federated Investors Tower Federated Securites Corp.
Pittsburgh, PA 15222-3779
Laura M. Deger Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jill Ehrenfeld Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark D. Fisher Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Michael D. Fitzgerald Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Joseph D. Gibbons Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Craig S. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard C. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Scott A. Hutton Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
H. Joeseph Kenedy Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William E. Kugler Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Steven A. La Versa Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark J. Miehl Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard C. Mihm Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
J. Michael Miller Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Michael P. O'Brien Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Robert D. Oehlschlager Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Robert F. Phillips Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Eugene B. Reed Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Paul V. Riordan Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
John C. Shelar, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
David W. Spears Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jeffrey A. Stewart Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jamie M. Teschner Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William C. Tustin Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Paul A. Uhlman Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard B. Watts Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Michael P. Wolff Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Charlene H. Jennings Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
J. Timothy Radcliff Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Denis McAuley Treasurer, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Thomas R. Donahue Asstistant Secretary, --
Federated Investors Tower Assistant Treasurer,
Pittsburgh, PA 15222-3779 Federated Securities Corp.
Joseph M. Huber Assistant Secretary, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
David M. Taylor Assistant Secretary, Assistant
Federated Investors Tower Federated Securities Corp. Treasurer
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
Pittsburgh, PA 15222-3779
Federated Services Company Federated Investors Tower
("Administrator") Pittsburgh, PA 15222-3779
Federated Administrative Services Federated Investors Tower
("Transfer Agent, Dividend Disbursing Pittsburgh, PA 15222-3779
Agent and Portfolio Recordkeeper")
The Bank of New York 48 Wall Street
("Custodian") New York, New York 10286
Bank South 3350 Cumberland Circle
("Adviser") 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.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, PEACHTREE FUNDS, certifies that
it meets all of the requirements for effectiveness of this Amendment to its
Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933
and has duly caused this Amendment to its Registration Statement to be signed on
its behalf by the undersigned, thereto duly authorized, in the City of
Pittsburgh and Commonwealth of Pennsylvania, on the 22nd day of November, 1995.
PEACHTREE FUNDS
BY: /s/ C. Grant Anderson
C. Grant Anderson, Assistant Secretary
Attorney in Fact for John F. Donahue
November 22, 1995
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to its Registration Statement has been signed below by the following person in
the capacity and on the date indicated:
NAME TITLE DATE
By:/s/ C. Grant Anderson
C. Grant Anderson Attorney In Fact November 22, 1995
ASSISTANT SECRETARY For the Persons
Listed Below
NAME TITLE
John F. Donahue* Chairman and Trustee
(Chief Executive Officer)
Edward C. Gonzales* President, President, Treasurer and Trustee
(Principal Financial and
Accounting Officer)
Thomas G. Bigley* Trustee
John T. Conroy, Jr.* Trustee
William J. Copeland* Trustee
James E. Dowd* Trustee
Lawrence D. Ellis, M.D.* Trustee
Edward L. Flaherty, Jr.* Trustee
Peter E. Madden* Trustee
Gregor F. Meyer* Trustee
John E. Murray, Jr. Trustee
Wesley W. Posvar* Trustee
Marjorie P. Smuts* Trustee
* By Power of Attorney
Exhibit (11) under N-1A
Exhibit 23 under Item 601/Reg SK
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Independent Auditors"
and to the use of our report dated November 22, 1995, in Post-Effective
Amendment Number 4 to the Registration Statement (Form N-1A No. 33-50635) of
Peachtree Funds dated November 30, 1995.
By:ERNST & YOUNG LLP
Ernst & Young LLP
Boston, Massachusetts
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
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<NUMBER> 1
<NAME> PEACHTREE BOND FUND
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-END> SEP-30-1994
<INVESTMENTS-AT-COST> 84,126,445
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<NET-ASSETS> 81,594,268
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<INTEREST-INCOME> 3,239,288
<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
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<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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<OVERDISTRIB-NII-PRIOR> 0
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<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 503,626
<AVERAGE-NET-ASSETS> 75,479,834
<PER-SHARE-NAV-BEGIN> 10.000
<PER-SHARE-NII> .350
<PER-SHARE-GAIN-APPREC> (.660)
<PER-SHARE-DIVIDEND> .350
<PER-SHARE-DISTRIBUTIONS> .000
<RETURNS-OF-CAPITAL> .000
<PER-SHARE-NAV-END> 9.340
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<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> .000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> PEACHTREE EQUITY FUND
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> SEP-30-1994
<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)
<PER-SHARE-DIVIDEND> .100
<PER-SHARE-DISTRIBUTIONS> .000
<RETURNS-OF-CAPITAL> .000
<PER-SHARE-NAV-END> 9.920
<EXPENSE-RATIO> 96
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> .000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> PEACHTREE GEORGIA TAX-FREE INCOME FUND
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-END> SEP-30-1994
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
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<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
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<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
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<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
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<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
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<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> .000
<PER-SHARE-NII> .000
<PER-SHARE-GAIN-APPREC> .000
<PER-SHARE-DIVIDEND> .000
<PER-SHARE-DISTRIBUTIONS> .000
<RETURNS-OF-CAPITAL> .000
<PER-SHARE-NAV-END> .000
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> .000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 4
<NAME> PEACHTREE GOVERNMENT MONEY MARKET FUND
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-END> SEP-30-1994
<INVESTMENTS-AT-COST> 89,081,506
<INVESTMENTS-AT-VALUE> 89,081,506
<RECEIVABLES> 1,714,646
<ASSETS-OTHER> 43,164
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 90,839,316
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<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 399,130
<TOTAL-LIABILITIES> 399,130
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 90,440,186
<SHARES-COMMON-STOCK> 90,440,186
<SHARES-COMMON-PRIOR> 100,000
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 90,440,186
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,166,311
<OTHER-INCOME> 0
<EXPENSES-NET> 99,115
<NET-INVESTMENT-INCOME> 1,067,196
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 1,067,196
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,067,196
<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
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