<PAGE> 1
TRUST FOR FEDERAL SECURITIES
FEDCASH AND T-CASH PORTFOLIOS
JULY 1, 1996
Dear Shareholder:
The Board of Trustees of Trust for Federal Securities (the "Company") is
pleased to call a special shareholders meeting concerning matters that are
important to you.
At the meeting shareholders will be asked to consider the combination of
the FedCash and T-Cash portfolios, respectively, with the Company's FedFund and
T-Fund portfolios. The formal Notice of Special Meeting of Shareholders and a
Combined Proxy Statement/Prospectus describing this matter in detail are
enclosed, as is a form of Proxy for your use. IT IS IMPORTANT THAT YOU RETURN
THE PROXY WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING.
The proposed combination provides that the assets and liabilities of the
FedCash and T-Cash portfolios (the "Transferor Funds") will be transferred to
the FedFund and T-Fund portfolios, respectively (the "Surviving Funds"), and
that shareholders will exchange their shares of the Transferor Funds for shares
of the Surviving Funds having the same value.
In connection with its recommendation of the proposed combination to
shareholders, the Board of Trustees of the Company considered that the total
assets of the Surviving Funds are considerably greater than those of the
Transferor Funds. The Board believes that the investment and other operations of
the Transferor Funds can be conducted more efficiently through their combination
with the Surviving Funds, and that the proposed reorganization is in the best
interests of the Funds and their shareholders. The Board has also considered
that the investment objectives, policies and restrictions of each Surviving Fund
are substantially the same as those of its corresponding Transferor Fund; and
that the annualized ordinary operating expense ratios of the Surviving Funds
after fee waivers have been comparable to those of the Transferor Funds.
Because the matters described in the attached materials are important to
you, I urge you to complete and return the enclosed proxy promptly to ensure
that your shares are represented at the meeting. I also urge you to vote "FOR"
the proposed transaction.
Sincerely,
/S/ G. WILLING PEPPER
---------------------
G. Willing Pepper
Chairman
<PAGE> 2
TRUST FOR FEDERAL SECURITIES
BELLEVUE PARK CORPORATE CENTER
400 BELLEVUE PARKWAY, SUITE 100
WILMINGTON, DELAWARE 19809
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
OF FEDCASH AND T-CASH
TO BE HELD ON JULY 31, 1996
TO THE SHAREHOLDERS OF
FedCash and T-Cash,
Investment Portfolios Offered by
Trust for Federal Securities
NOTICE IS HEREBY GIVEN THAT a Special Meeting of Shareholders of FEDCASH
and T-CASH, two investment portfolios offered by Trust for Federal Securities
(the "Company"), will be held at the Company's offices, Bellevue Park Corporate
Center, 400 Bellevue Parkway, Suite 100, Wilmington, Delaware 19809 on July 31,
1996 at 10:00 a.m., local time, for the following purpose, and to transact such
other business as may properly come before the Special Meeting or any
adjournment thereof:
ITEM 1. To approve or disapprove a Plan of Reorganization and the
transactions contemplated thereby, including the transfer of all of the
assets and liabilities of the Company's FedCash and T-Cash investment
portfolios (the "Transferor Funds") to the Company's FedFund and T-Fund
investment portfolios, respectively (the "Surviving Funds"), in exchange
for shares of the Surviving Funds, and a liquidating distribution of such
shares to shareholders of the Transferor Funds.
YOUR TRUSTEES RECOMMEND THAT YOU VOTE IN FAVOR OF ITEM 1.
The proposed reorganization and related matters are described in the
attached Combined Proxy Statement/Prospectus. A copy of the Plan of
Reorganization is appended as Appendix A thereto.
Shareholders of record as of the close of business on June 19, 1996 are
entitled to notice of, and to vote at, the Special Meeting or any adjournment
thereof.
SHAREHOLDERS ARE REQUESTED TO EXECUTE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE THE ACCOMPANYING PROXY CARD WHICH IS BEING SOLICITED BY THE BOARD OF
TRUSTEES OF THE COMPANY. THIS IS IMPORTANT TO ENSURE A QUORUM AT THE MEETING.
PROXIES MAY BE REVOKED AT ANY TIME BEFORE THEY ARE EXERCISED BY SUBMITTING TO
THE COMPANY A WRITTEN NOTICE OF REVOCATION OR A SUBSEQUENTLY EXECUTED PROXY OR
BY ATTENDING THE MEETING AND ELECTING TO VOTE IN PERSON.
By the Order of the
Board of Trustees
W. Bruce McConnel, III
Secretary
July 1, 1996
<PAGE> 3
COMBINED PROXY STATEMENT/PROSPECTUS
DATED JULY 1, 1996
TRUST FOR FEDERAL SECURITIES
BELLEVUE PARK CORPORATE CENTER
400 BELLEVUE PARKWAY, SUITE 100
WILMINGTON, DELAWARE 19809
PHONE (800) 821-7432
This Combined Proxy Statement/Prospectus is furnished in connection with
the solicitation of proxies by the Board of Trustees of Trust for Federal
Securities (the "Company") for use at a Special Meeting of Shareholders of the
Company's FedCash and T-Cash investment portfolios (the "Transferor Funds") to
be held at 10:00 a.m., local time, on July 31, 1996 at the Company's offices,
Bellevue Park Corporate Center, 400 Bellevue Parkway, Suite 100, Wilmington,
Delaware 19809, or any adjournment thereof (the "Meeting"). At the Meeting
shareholders of the Transferor Funds will be asked to consider and approve a
proposed Plan of Reorganization dated as of June 26, 1996 and the transactions
contemplated thereby.
The Transferor Funds and the Company's FedFund and T-Fund investment
portfolios (the "Surviving Funds") are separate money market portfolios of the
Company, which is registered as an open-end management company under the
Investment Company Act of 1940 (the "1940 Act"). The investment objective,
policies and fundamental limitations of each Transferor Fund are substantially
the same as those of the corresponding Surviving Fund. In addition, the purchase
and redemption policies of each Transferor Fund and the corresponding Surviving
Fund are the same and the service providers for each Transferor Fund and the
corresponding Surviving Fund are the same. As discussed in this Combined Proxy
Statement/Prospectus, the original reasons for the separate organization of the
Transferor Funds no longer exist, and management of the Company believes that
because of the potential benefits of the larger asset base that may be achieved
through combining the Transferor and Surviving Funds, coupled with the fact that
the Transferor Funds are relatively smaller than the Surviving Funds, the
investment and other operations of the Transferor Funds would be conducted more
efficiently through their reorganization into the Surviving Funds.
The Plan of Reorganization provides that each Transferor Fund will transfer
all of its assets and liabilities to the corresponding Surviving Fund. In
exchange for the transfer of these assets and liabilities, the Company will
simultaneously issue shares in each of the Surviving Funds to the corresponding
Transferor Fund.
The Transferor Funds will then make a liquidating distribution of the
Surviving Funds' shares to the shareholders of the Transferor Funds, such that
each holder of shares of a Transferor Fund will hold, immediately after the
effective time of the reorganization, a like number of full and fractional
shares in the Surviving Fund. Each of the Transferor Funds has two classes of
shares outstanding. Likewise, the FedFund investment portfolio also has two
classes of shares outstanding, and although the T-Fund investment portfolio has
three classes of shares outstanding, only two of these classes are involved in
the transactions contemplated by the Plan of Reorganization as described herein.
Holders of each class of shares of a Transferor Fund will receive the class of
shares of the corresponding Surviving Fund as set forth in the table on page 7
under "Information Relating to the Proposed Reorganization -- Description of the
Plan of Reorganization."
This Combined Proxy Statement/Prospectus sets forth concisely the
information that a shareholder of the Transferor Funds should know before voting
on the Plan of Reorganization and should be retained for future reference. The
Prospectuses relating to the Surviving Funds and their shares dated February 28,
1996, which describe the operations of the Surviving Funds, accompany this
Combined Proxy Statement/Prospectus. Additional information is set forth in the
Statement of Additional Information dated May 31, 1996 relating to the Surviving
Funds and the Statement of Additional Information dated July 1, 1996 relating to
this Combined Proxy Statement/Prospectus, and in the Prospectuses dated February
28, 1996 and the Statement of Additional Information dated February 28, 1996 (as
revised April 8, 1996) relating to the Transferor Funds. Each of these documents
is on file with the Securities and Exchange Commission (the "SEC") and is
available without charge upon oral or written request by writing or calling the
Company at the
1
<PAGE> 4
address or telephone number indicated above. The information contained in the
aforesaid Prospectuses and Statements of Additional Information is incorporated
herein by reference.
This Combined Proxy Statement/Prospectus constitutes the Transferor Funds'
Proxy Statement for the Meeting, and the Prospectus for the shares of the
Surviving Funds that have been registered with the SEC and are to be issued in
connection with the reorganization.
This Combined Proxy Statement/Prospectus is expected to be sent to
shareholders of the Transferor Funds on or about July 2, 1996.
Shares of the Transferor Funds and Surviving Funds (collectively, the
"Funds") are not deposits or obligations of or guaranteed, endorsed or otherwise
supported by PNC Bank Corp. or its affiliates, or the U.S. Government and are
not federally insured by the Federal Deposit Insurance Corporation, the Federal
Reserve Board or any other agency. An investment in the Funds involves
investment risks, including the possible loss of principal. There can be no
assurance that any Fund will be able to maintain its net asset value of $1.00
per share.
THE SECURITIES OF THE SURVIVING FUNDS 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 COMBINED PROXY
STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS COMBINED PROXY
STATEMENT/PROSPECTUS AND IN THE MATERIALS EXPRESSLY INCORPORATED HEREIN BY
REFERENCE AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY.
2
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SUMMARY............................................................................... 1
Proposed Reorganization............................................................. 1
Reasons for Reorganization.......................................................... 1
Federal Income Tax Consequences..................................................... 1
Comparison of the Funds............................................................. 1
Expense Ratios...................................................................... 3
Comparative Fee Tables.............................................................. 3
Voting Information.................................................................. 6
Risk Factors........................................................................ 6
INFORMATION RELATING TO THE PROPOSED REORGANIZATION................................... 6
Description of the Plan of Reorganization........................................... 6
Board Consideration................................................................. 8
Capitalization...................................................................... 8
Federal Income Tax Consequences..................................................... 9
COMPARISON OF THE FUNDS............................................................... 9
Investment Objectives and Policies.................................................. 9
Other Information................................................................... 9
INFORMATION RELATING TO VOTING MATTERS................................................ 10
General Information................................................................. 10
Shareholder and Board Approval...................................................... 10
Quorum.............................................................................. 15
Annual Meetings..................................................................... 15
ADDITIONAL INFORMATION ABOUT THE FUNDS................................................ 16
FINANCIAL STATEMENTS.................................................................. 16
OTHER BUSINESS........................................................................ 16
SHAREHOLDER INQUIRIES................................................................. 16
Appendix A -- Plan of Reorganization.................................................. A-1
</TABLE>
<PAGE> 6
SUMMARY
The following is a summary of certain information relating to the proposed
reorganization, the parties thereto and the related transactions, and is
qualified by reference to the more complete information contained elsewhere in
this Combined Proxy Statement/Prospectus, including the Plan of Reorganization
attached as Appendix A hereto, and in the Prospectuses and Statements of
Additional Information of the Transferor Funds and Surviving Funds. The
Company's Annual Report to Shareholders may be obtained free of charge by
calling 1-800-821-7432 or by writing the Company at its address given on the
first page of this Combined Proxy Statement/Prospectus.
Proposed Reorganization: The Board of Trustees of the Company has approved
the Plan of Reorganization, which is being recommended to the shareholders of
the Transferor Funds for approval at the Meeting. Subject to such approval, the
Plan of Reorganization provides for the acquisition by each Surviving Fund of
all of the assets and liabilities of the corresponding Transferor Fund (such
assets subject to such liabilities are called the "Assets") in exchange for
shares of the Surviving Fund, and a liquidating distribution of such shares.
As a result of the proposed reorganization, each shareholder of a
Transferor Fund will become a shareholder of the corresponding Surviving Fund
and will hold, immediately after the time the reorganization becomes effective
(the "Effective Time of the Reorganization"), the same number of shares of a
class of shares of the corresponding Surviving Fund, with the same value, as the
number of shares of a class of shares the shareholder held in the particular
Transferor Fund immediately before the Effective Time of the Reorganization.
For further information, see "Information Relating to the Proposed
Reorganization -- Description of the Plan of Reorganization."
Reasons for Reorganization: In considering the Plan of Reorganization, the
Company's Board of Trustees observed that the Transferor Funds had been created
to offer investment portfolios with investment objectives and policies similar
to, but expense ratios and minimum investment amounts different from, those
offered by the Surviving Funds, but that over time the differences between the
expense ratios and minimum investment amounts had disappeared, so that there was
little distinction between the Transferor Funds and Surviving Funds. In
connection with its approval of the Plan of Reorganization, the Company's Board
of Trustees noted that the investment objective, policies and fundamental
investment limitations of each Transferor Fund were substantially the same as
those of the corresponding Surviving Fund; that the total assets of the
Surviving Funds were considerably greater than those of the Transferor Funds;
that the greater aggregate assets upon combination of the respective Transferor
and Surviving Funds would potentially allow the Surviving Funds to take
advantage of the possible benefits of a larger asset base such as economies of
scale, lower fixed expense ratios and greater leverage in the market; that the
annualized ordinary operating expense ratios (that is, the ratio of ordinary
operating expenses to average daily net assets) of the Surviving Funds before
fee waivers, have historically been lower than those for the corresponding
Transferor Funds and that, on a net basis, after fee waivers, these ratios have
been comparable; and that the service providers for each of the Transferor Funds
and Surviving Funds were the same. Management of the Company believes that
because of their relatively smaller size, the investment and other operations of
the Transferor Funds would be conducted more efficiently through their
reorganization with the Surviving Funds, and that the proposed reorganization is
in the interests of the Transferor Funds and their shareholders. See
"Information Relating to the Proposed Reorganization -- Board Consideration."
Federal Income Tax Consequences: Consummation of the reorganization will
not give rise to tax liability for federal income tax purposes to any of the
Transferor Funds or Surviving Funds or their respective shareholders. See
"Information Relating to the Proposed Reorganization -- Federal Income Tax
Consequences."
Comparison of the Funds: The Surviving Funds and their shares are
described in the Prospectuses dated February 28, 1996 that accompany this
Combined Proxy Statement/Prospectus. The investment objective and policies of
each Transferor Fund and its corresponding Surviving Fund are substantially the
<PAGE> 7
same. Investment advisory and sub-investment advisory services are provided to
each of the Transferor Funds and Surviving Funds by PNC Institutional Management
Corporation ("PIMC") and PNC Bank, National Association ("PNC Bank"),
respectively. Administration services are provided to each of the Transferor
Funds and Surviving Funds by PFPC Inc. ("PFPC") and Provident Distributors, Inc.
("PDI"). PDI also serves as distributor of the shares of each of the Transferor
Funds and Surviving Funds. In addition, each of the Transferor Funds and
Surviving Funds receive transfer agency services from PFPC and custodial
services from PNC Bank.
The procedures for purchasing and redeeming shares of the Transferor Funds
are the same as those for shares of the Surviving Funds. Additionally, dividends
on net investment income for both the Transferor Funds and Surviving Funds are
declared daily and paid monthly within five business days after the end of the
month. No Transferor Fund or Surviving Fund expects to realize net long-term
capital gains.
For the advisory services provided and expenses assumed by it, PIMC is
entitled to receive a fee from each Transferor Fund and each Surviving Fund
based on the combined average net assets of the Transferor Funds, the Surviving
Funds and the Company's Federal Trust Fund and Treasury Trust Fund, computed
daily and payable monthly, as follows:
<TABLE>
<CAPTION>
ANNUAL FEE COMBINED AVERAGE NET ASSETS
------------------------------------- -------------------------------------
<S> <C> <C>
.175%.............................. of the first $1 billion
.150%.............................. of the next $1 billion
.125%.............................. of the next $1 billion
.100%.............................. of the next $1 billion
.095%.............................. of the next $1 billion
.090%.............................. of the next $1 billion
.085%.............................. of the next $1 billion
.080%.............................. of amounts in excess of $7 billion.
</TABLE>
The advisory fee is allocated between the Transferor Funds, the Surviving
Funds and the Company's Federal Trust Fund and Treasury Trust Fund in proportion
to their relative net assets. For the fiscal year ending October 31, 1995, PIMC
received advisory fees (after fee waivers) from the Transferor Funds and the
Surviving Funds at the following effective rates: .07% of the average net assets
of each of FedFund, FedCash and T-Fund and .06% of the average net assets of
T-Cash.
For the services provided and expenses assumed pursuant to its Sub-Advisory
Agreement, PNC Bank, as sub-adviser, is entitled to receive a fee from PIMC in
an amount equal to 75% of the advisory fee paid by each Transferor Fund and
Surviving Fund to PIMC (subject to adjustment in certain circumstances). The
sub-advisory fees paid by PIMC to PNC Bank have no effect on the advisory fees
payable by each Fund to PIMC.
2
<PAGE> 8
Expense Ratios: The following table sets forth the ratios of operating
expenses to average net assets of each of the classes of shares of the
Transferor Funds and Surviving Funds involved in the reorganization for the
fiscal year ended October 31, 1995 after fee waivers:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
OCTOBER 31, 1995
-------------------
RATIO OF OPERATING
EXPENSES TO AVERAGE
NET ASSETS AFTER
FEE WAIVERS
-------------------
<S> <C>
TRANSFEROR FUNDS
- ------------------
FedCash
FedCash Shares............................................................ .18%
FedCash Dollar Shares..................................................... .43%
T-Cash
T-Cash Shares............................................................. .18%
T-Cash Dollar Shares...................................................... .43%
SURVIVING FUNDS
- -----------------
FedFund
FedFund Shares............................................................ .18%
FedFund Dollar Shares..................................................... .43%
T-Fund
T-Fund Shares............................................................. .18%
T-Fund Dollar Shares...................................................... .43%
</TABLE>
Comparative Fee Tables: The following tables (i) compare the fees and
expenses of each Transferor Fund and its corresponding Surviving Fund based on
expenses incurred during their fiscal year ended October 31, 1995, restated to
reflect the expenses which each such Fund expects to incur during the current
fiscal year, and (ii) show the estimated fees and expenses on a pro forma basis
giving effect to the reorganization. The tables do not reflect any charges that
may be charged by institutional investors for providing administrative services
in connection with their customers' investments in FedCash Dollar Shares, T-Cash
Dollar Shares, FedFund Dollar Shares and T-Fund Dollar Shares.
3
<PAGE> 9
TABLE 1
<TABLE>
<CAPTION>
PRO FORMA
FEDCASH FEDFUND COMBINED FUND
------------------- ------------------- -------------------
(FEDCASH (FEDFUND (FEDFUND
(FEDCASH DOLLAR (FEDFUND DOLLAR (FEDFUND DOLLAR
SHARES) SHARES) SHARES) SHARES) SHARES) SHARES)
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Annual Fund Operating Expenses:
(as a percentage of average net
assets)(1)
Management Fees (net of
waivers)(1)....................... 0.07% 0.07% 0.07% 0.07% 0.07% 0.07%
Other Expenses...................... 0.13% 0.38% 0.13% 0.38% 0.13% 0.38%
---- ---- ---- ---- ---- ----
Administration Fees (net of
waivers)(2).................... .07% .07% .07% .07% .07% .07%
Shareholder Servicing Fees........ 0% .25% 0% .25% 0% .25%
Miscellaneous..................... .06% .06% .06% .06% .06% .06%
---- ---- ---- ---- ---- ----
Total Fund Operating Expenses:
(net of waivers)(3)............... 0.20% 0.45% 0.20% 0.45% 0.20% 0.45%
==== ==== ==== ==== ==== ====
</TABLE>
- ---------------
(1) Management Fees (absent fee waivers) would have been 0.13% and 0.13% for
FedCash Shares and FedCash Dollar Shares, respectively, 0.13% and 0.13% for
FedFund Shares and FedFund Dollar Shares, respectively, and 0.13% and 0.13%
for Pro Forma Combined FedFund Shares and FedFund Dollar Shares,
respectively. Fee waivers reflected in the table are voluntary and may be
terminated at any time, with respect to either Fund without the consent of
the Funds. However, the Adviser has informed the Fund that it intends that
these fee waivers be in effect through the current fiscal year.
(2) Administration Fees (absent fee waivers) would have been 0.13% and 0.13% for
FedCash Shares and FedCash Dollar Shares, respectively, 0.13% and 0.13% for
FedFund Shares and FedFund Dollar Shares, respectively, and 0.13% and 0.13%
for Pro Forma Combined FedFund Shares and FedFund Dollar Shares,
respectively.
(3) Total Fund Operating Expenses (absent fee waivers) would have been 0.30% and
0.55% for FedCash Shares and FedCash Dollar Shares, respectively, 0.29% and
0.54% for FedFund Shares and FedFund Dollar Shares, respectively, and 0.29%
and 0.54% for Pro Forma Combined FedFund Shares and FedFund Dollar Shares,
respectively.
EXAMPLE:
You would pay the following expenses on a $1,000 investment, assuming (1)
5% gross annual return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
FedCash
FedCash Shares........................... $2 $ 6 $11 $26
FedCash Dollar Shares.................... $5 $14 $25 $57
FedFund
FedFund Shares........................... $2 $ 6 $11 $26
FedFund Dollar Shares.................... $5 $14 $25 $57
Pro Forma Combined
FedFund Shares........................... $2 $ 6 $11 $26
FedFund Dollar Shares.................... $5 $14 $25 $57
</TABLE>
4
<PAGE> 10
TABLE 2
<TABLE>
<CAPTION>
PRO FORMA
T-CASH T-FUND COMBINED FUND
------------------- ------------------- -------------------
(T-CASH (T-FUND (T-FUND
(T-CASH DOLLAR (T-FUND DOLLAR (T-FUND DOLLAR
SHARES) SHARES) SHARES) SHARES) SHARES) SHARES)
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Annual Fund Operating Expenses:
(as a percentage of average net
assets)
Management Fees (net of
waivers)(1)....................... 0.06% 0.06% 0.07% 0.07% 0.07% 0.07%
Other Expenses...................... 0.14% 0.39% 0.13% 0.38% 0.13% 0.38%
----- ----- ----- ----- ----- -----
Administration Fees (net of
waivers)(2).................... .06% .06% .07% .07% .07% .07%
Shareholder Servicing Fees........ 0% .25% 0% .25% 0% .25%
Miscellaneous..................... .08% .08% .06% .06% .06% .06%
----- ----- ------ ----- ----- -----
Total Fund Operating Expenses:
(net of waivers)(3)............... 0.20% 0.45% 0.20% 0.45% 0.20% 0.45%
===== ===== ===== ===== ===== =====
</TABLE>
- ---------------
(1) Management Fees (absent fee waivers) would have been 0.13% and 0.13% for
T-Cash Shares and T-Cash Dollar Shares, respectively, 0.13% and 0.13% for
T-Fund Shares and T-Fund Dollar Shares, respectively, and 0.13% and 0.13%
for Pro Forma Combined T-Fund Shares and T-Fund Dollar Shares, respectively.
Fee waivers reflected in the table are voluntary and may be terminated at
any time, with respect to either Fund without the consent of the Funds.
However, the Adviser has informed the Fund that it intends that these fee
waivers be in effect through the current fiscal year.
(2) Administration Fees (absent fee waivers) would have been 0.13% and 0.13% for
T-Cash Shares and T-Cash Dollar Shares, respectively, 0.13% and 0.13% for
T-Fund Shares and T-Fund Dollar Shares, respectively, and 0.13% and 0.13%
for Pro Forma Combined T-Fund Shares and T-Fund Dollar Shares, respectively.
(3) Total Fund Operating Expenses (absent fee waivers) would have been 0.30% and
0.55% for T-Cash Shares and T-Cash Dollar Shares, respectively, 0.29% and
0.54% for T-Fund Shares and T-Fund Dollar Shares, respectively, and 0.29%
and 0.54% for Pro Forma Combined T-Fund Shares and T-Fund Dollar Shares,
respectively.
EXAMPLE:
You would pay the following expenses on a $1,000 investment, assuming (1)
5% gross annual return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
T-Cash
T-Cash Shares............................ $2 $ 6 $11 $26
T-Cash Dollar Shares..................... $5 $14 $25 $57
T-Fund
T-Fund Shares............................ $2 $ 6 $11 $26
T-Fund Dollar Shares..................... $5 $14 $25 $57
Pro Forma Combined
T-Fund Shares............................ $2 $ 6 $11 $26
T-Fund Dollar Shares..................... $5 $14 $25 $57
</TABLE>
5
<PAGE> 11
The ratios of operating expenses to average net assets absent fee waivers
for the fiscal year ended October 31, 1995 for each of the classes of shares of
the Transferor Funds involved in the reorganization were .30% for FedCash
Shares, .55% for FedCash Dollar Shares, .30% for the T-Cash Shares and .55% for
the T-Cash Dollar Shares and of the Surviving Funds involved in the
reorganization were .29% for FedFund Shares, .54% for FedFund Dollar Shares,
.29% for T-Fund Shares and .54% for T-Fund Dollar Shares.
Voting Information: This Combined Proxy Statement/Prospectus is being
furnished in connection with the solicitation of proxies by the Company's Board
of Trustees for use at the Meeting. Only shareholders of record of the
Transferor Funds at the close of business on June 19, 1996 will be entitled to
vote. Each share or fraction thereof is entitled to one whole or fractional
vote. Shares represented by a properly executed proxy will be voted in
accordance with the instructions thereon, or if no specification is made, the
persons named as proxies will vote in favor of the proposal set forth in the
Notice of Special Meeting of Shareholders. Proxies may be revoked at any time
before they are exercised by the subsequent execution and submission of a
revised proxy, by written notice of revocation to the Company, or by voting in
person at the Meeting. For additional information, including a description of
the shareholder vote required for approval of the Plan of Reorganization and the
transactions contemplated therein, see "Information Relating to Voting Matters."
Risk Factors: Because of the similarities of the investment objectives and
policies of the Funds, management believes that an investment in a Surviving
Fund involves investment risks that are substantially the same as those of the
corresponding Transferor Fund. These investment risks, in general, are those
typically associated with investing in a portfolio of money market instruments.
Although each Transferor Fund and Surviving Fund seeks to maintain a stable
net asset value of $1.00 per share, there is no assurance that it will be able
to do so. Generally, the market value of debt securities will vary inversely to
changes in prevailing interest rates. The Funds may invest in stripped U.S.
Government Securities which may exhibit greater price volatility than ordinary
debt securities. The Funds may also enter into repurchase agreements and
purchase securities on a "when-issued" basis.
There are some differences, however, between the Transferor Funds and the
Surviving Funds which can result in different risks. For example, T-Cash may
enter into reverse purchase agreements which involve the risk that the market
value of the portfolio securities sold by a Fund may decline below the price of
the securities the Fund is obligated to repurchase. T-Cash may lend its
portfolio securities to financial institutions against specified collateral
which is equal at all times to 100% of the value of the securities. Such loans
involve risks of delay in receiving additional collateral or in recovering the
securities loaned or even loss of rights in the collateral should the borrower
of the securities fail financially. In contrast, T-Fund does not currently
engage in these somewhat riskier activities.
PIMC and PNC Bank evaluate the rewards and risks presented by all
securities purchased by the Transferor Funds and Surviving Funds, and determine,
in connection with the management of the Funds, how these securities will be
used in furtherance of the Funds' investment objectives. It is possible,
however, that these evaluations will prove to be inaccurate or incomplete and,
even when accurate and complete, it is possible that a Fund will incur loss.
INFORMATION RELATING TO THE PROPOSED REORGANIZATION
The terms and conditions under which the reorganization may be consummated
are set forth in the Plan of Reorganization. Significant provisions of the Plan
of Reorganization are summarized below; however, this summary is qualified in
its entirety by reference to the Plan of Reorganization, a copy of which is
attached as Appendix A to this Combined Proxy Statement/Prospectus.
Description of the Plan of Reorganization: The Plan of Reorganization
provides that at the Effective Time of the Reorganization, all of the Assets of
each Transferor Fund will be transferred to its corresponding Surviving Fund,
such that at and after the Effective Time of the Reorganization the Assets
(including liabilities) of the Transferor Fund will become and be the Assets
(including liabilities) of the Surviving Fund. In exchange for the transfer of
Assets, the Company will issue to each Transferor Fund full and fractional
shares of the corresponding Surviving Fund, and the Transferor Fund will make a
liquidating distribution of
6
<PAGE> 12
such shares. The holders of each class of shares of a Transferor Fund will
receive the class of shares of the corresponding Surviving Fund identified in
the table below. In the table, (a) opposite the name of each Transferor Fund is
the name of the Surviving Fund which will issue shares to such Transferor Fund,
and (b) opposite the name of each class of shares of a Transferor Fund is the
name of the class of shares of the corresponding Surviving Fund to be
distributed to holders of such class of shares of the Transferor Fund. The
number of shares of each class of shares of a Surviving Fund so issued will be
equal in number to the number of full and fractional shares of the corresponding
class of shares representing interests in the corresponding Transferor Fund that
are outstanding immediately prior to the Effective Time of the Reorganization.
All of the shares of each Transferor Fund and Surviving Fund have a net asset
value of $1.00. At and after the Effective Time of the Reorganization, all
debts, liabilities and obligations of each Transferor Fund will attach to its
corresponding Surviving Fund and may thereafter be enforced against the
Surviving Fund to the same extent as if they had been incurred by it.
<TABLE>
<CAPTION>
TRANSFEROR FUNDS AND CLASSES SURVIVING FUNDS AND CLASSES
---------------------------------- ----------------------------------
<S> <C>
FedCash FedFund
FedCash Shares FedFund Shares
FedCash Dollar Shares FedFund Dollar Shares
T-Cash T-Fund
T-Cash Shares T-Fund Shares
T-Cash Dollar Shares T-Fund Dollar Shares
</TABLE>
To facilitate the foregoing, the Company will establish open accounts in
the name of each shareholder of a Transferor Fund representing the number of
FedFund Shares, FedFund Dollar Shares, T-Fund Shares or T-Fund Dollar Shares of
the corresponding Surviving Fund owned by the shareholder as a result of the
reorganization. The stock transfer books of the Company for the Transferor Funds
will be permanently closed as of the close of business on the day immediately
preceding the Effective Time of the Reorganization. Redemption requests received
thereafter by the Company with respect to the Transferor Funds will be deemed to
be redemption requests for the corresponding classes of shares of the Surviving
Funds issued in the reorganization. If any Transferor Fund shares held by a
Transferor Fund shareholder are represented by a share certificate, the
certificate must be surrendered to the Company's transfer agent for cancellation
before the Surviving Fund shares issued to the shareholder in the reorganization
will be redeemed.
The reorganization is subject to a number of conditions, including approval
of the Plan of Reorganization and the transactions contemplated therein by the
shareholders of the respective Transferor Funds, and the receipt of the legal
opinion of Drinker Biddle & Reath that shares of the Surviving Funds issued to
shareholders of the Transferor Funds in accordance with the terms of the Plan of
Reorganization will be validly issued, fully paid and nonassessable.
Each shareholder of the Transferor Funds will have the right to receive any
unpaid dividends or other distributions that were declared before the Effective
Time of the Reorganization with respect to the shares representing interests in
the Transferor Funds held by the shareholder immediately prior to the Effective
Time of the Reorganization. Assuming satisfaction of the conditions in the Plan
of Reorganization, the Effective Time of the Reorganization will be on July 31,
1996, or such other date as is scheduled by the Company.
The Plan of Reorganization and the reorganization described therein may be
abandoned at any time for any reason prior to the Effective Time of the
Reorganization upon the vote of a majority of the Board of Trustees of the
Company. The Plan of Reorganization provides further that at any time prior to
or (to the fullest extent permitted by law) after approval of the Plan of
Reorganization by the shareholders of the Transferor Funds the Company may, upon
authorization by the Board of Trustees of the Company, and with or without the
approval of the shareholders, amend any of the provisions of the Plan of
Reorganization. The Plan of Reorganization provides that in the event the Plan
is approved with respect to one but not both of the Transferor Funds, the Board
of Trustees may, in the exercise of its reasonable business judgment, either
abandon the reorganization with respect to both of the Transferor Funds or
direct that the reorganization be consummated to the extent it deems advisable.
7
<PAGE> 13
Board Consideration: The Board of Trustees of the Company considered the
proposed reorganization at a meeting held on May 24, 1996. At the meeting, the
trustees observed that the original reasons for the organization of the
Transferor Funds as separate portfolios of the Company no longer existed as
discussed under "Summary -- Reasons for Reorganization." In addition, the
Surviving Funds had substantially greater assets (as of October 31, 1995 FedFund
had net assets of $1.6 billion and T-Fund had net assets of $1.3 billion) than
the Transferor Funds (as of the same date FedCash had $358 million and T-Cash
had $314 million). The Board was advised that because of their greater size, the
investment and other operations of the Surviving Funds were believed to be more
efficient than those of the Transferor Funds, and that management believed that
the proposed reorganization would benefit the Transferor Funds, the Surviving
Funds and their shareholders. These benefits included greater potential
portfolio trading efficiencies, such as quantity discounts, better securities
execution and reduced portfolio volatility resulting from shareholder purchase
and redemption activity, and potentially broader portfolio diversification.
The Board of Trustees reviewed the terms of the proposed reorganization,
and considered the similarity of the investment objectives, policies and
restrictions of the Transferor Funds and Surviving Funds. The Trustees also
considered the federal tax consequences of the reorganization. The Board of
Trustees reviewed the expected costs of the reorganization, estimated to be
approximately $23,000.
Based upon their evaluation of the relevant information presented to them,
and in light of their fiduciary duties under federal and state law, the
Company's Board of Trustees unanimously determined that the proposed
reorganization was in the best interests of each of the Transferor Funds and
Surviving Funds, that the interests of shareholders of the Company would not be
diluted as a result of the transaction, and that the Board should recommend
approval of the Plan of Reorganization by shareholders of the Transferor Funds
at the Meeting. The Plan of Reorganization in the form attached hereto as
Appendix A was approved by the Board of Trustees on May 24, 1996.
Capitalization: Because the Transferor Funds will be combined with the
Surviving Funds in the reorganization, the total capitalization of each
Surviving Fund after the reorganization is expected to be greater than the
current capitalization of the corresponding Transferor Fund. The following table
sets forth as of October 31, 1995 (i) the capitalization of each Transferor
Fund; (ii) the capitalization of each Surviving Fund; and (iii) the pro forma
capitalization of each Surviving Fund as adjusted to give effect to the proposed
reorganization of the corresponding Transferor Fund. There is, of course, no
assurance that the reorganization will be consummated. Moreover, if consummated,
the capitalization of each Fund is likely to be different at the Effective Time
of the Reorganization as a result of daily share purchase and redemption
activity in the Funds.
<TABLE>
<CAPTION>
PRO FORMA
FEDCASH FEDFUND COMBINED
------------ -------------- --------------
<S> <C> <C> <C>
Total Net Assets
FedCash/FedFund Shares...................... $356,602,000 $1,377,175,000 $1,733,777,000
FedCash/FedFund Dollar Shares............... $ 2,003,000 $ 213,177,000 $ 215,180,000
Shares Outstanding
FedCash/FedFund Shares...................... 356,679,113 1,377,353,815 1,734,032,928
FedCash/FedFund Dollar Shares............... 2,006,078 213,207,736 215,213,814
Net Asset Value Per Share
FedCash/FedFund Shares...................... $1.00 $1.00 $1.00
FedCash/FedFund Dollar Shares............... $1.00 $1.00 $1.00
</TABLE>
8
<PAGE> 14
<TABLE>
<CAPTION>
PRO FORMA
T-CASH T-FUND COMBINED
------------ -------------- --------------
<S> <C> <C> <C>
Total Net Assets
T-Cash/T-Fund Shares........................ $250,041,000 $1,211,220,000 $1,461,261,000
T-Cash/T-Fund Dollar Shares................. $ 63,537,000 $ 82,502,000 $ 146,039,000
Shares Outstanding
T-Cash/T-Fund Shares........................ 250,036,829 1,211,196,665 1,461,233,494
T-Cash/T-Fund Dollar Shares................. 63,535,883 82,499,343 146,035,226
Net Asset Value Per Share
T-Cash/T-Fund Shares........................ $1.00 $1.00 $1.00
T-Cash/T-Fund Dollar Shares................. $1.00 $1.00 $1.00
</TABLE>
Federal Income Tax Consequences: Consummation of the transaction is
subject to the condition that the respective parties receive an opinion from
Drinker Biddle & Reath, subject to appropriate factual assumptions, to the
effect, among other things, that for federal income tax purposes (1) the
transaction will constitute a tax-free transaction under Section 368(a)(1)(C) or
Section 368(a)(1)(D) of the Internal Revenue Code of 1986, as amended, (the
"Code") (2) no gain or loss will be recognized by the Transferor Funds or
Surviving Funds or the shareholders of the Transferor Funds, in accordance with
Sections 361(a), 361(c)(1), 357(a), 1032(a) and 354(a)(1) of the Code, and (3)
the basis and holding period of FedFund Shares, FedFund Dollar Shares, T-Fund
Shares or T-Fund Dollar Shares received by the Shareholders of the Transferor
Funds generally will be the same as the basis and holding period of the
corresponding shares of the Transferor Funds exchanged therefor, in accordance
with Sections 358(a)(1), 1223(1) and 1223(2) of the Code.
The Company has not sought a tax ruling from the Internal Revenue Service
("IRS"). The tax opinion described in the preceding paragraph will not be
binding on the IRS and will not preclude the IRS from adopting a contrary
position. Shareholders should consult their own advisors concerning the
potential tax consequences to them, including state and local income tax
consequences.
COMPARISON OF THE FUNDS
Investment Objectives and Policies: Each of the Funds is classified as a
"diversified" portfolio under the 1940 Act. The investment objective and
fundamental limitations of each Transferor Fund and corresponding Surviving Fund
are the same.
The investment policies of each Transferor Fund and Surviving Fund are
substantially the same, except as follows: FedFund and FedCash each invest in
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities. The agencies or instrumentalities of the U.S. Government the
obligations of which may be purchased by FedCash are limited, however, to those
obligations in which national banks may invest directly without limitation.
T-Fund and T-Cash may each enter into repurchase agreement transactions with
financial institutions. T-Fund, however, may only enter into such transactions
with primary dealers of the Federal Reserve Bank of New York and such
transactions must be collateralized at not less than 102% of the repurchase
price (as opposed to not less than 100% of the repurchase price for T-Cash).
T-Cash, unlike T-Fund, may invest in U.S. Government securities with remaining
maturities exceeding thirteen months if such securities provide for adjustments
in their interest rates not less frequently than every thirteen months, and may
enter into reverse repurchase agreements and lend its portfolio securities.
Other Information: The Company was organized as a Pennsylvania business
trust on May 14, 1975 and is registered with the SEC as an open-end management
investment company. Effective March 2, 1987, the Company's name was changed from
Trust for Short-Term Federal Securities to Trust for Federal Securities. The
Company's Amended and Restated Declaration of Trust authorizes the Board of
Trustees to issue an unlimited number of full and fractional shares of
beneficial interest in the Company and to classify or reclassify any unissued
shares into one or more additional classes or sub-classes of shares. Pursuant to
such authority, the Board of Trustees has authorized the issuance of an
unlimited number of shares in two classes of
9
<PAGE> 15
shares in each of FedFund, FedCash and T-Cash and three classes of shares in
T-Fund. The Board of Trustees has also authorized the issuance of additional
classes of shares representing interests in other investment portfolios of the
Company. Information regarding other portfolios offered by the Company may be
obtained by calling PDI at 1-800-998-7633.
Shares of each of the Surviving Funds' share classes bear a pro rata
portion of all operating expenses paid by a Fund except as follows. Holders of a
Fund's Dollar Shares bear the fees set forth in the prospectus describing such
shares that are paid under the Fund's Shareholder Services Plan for such shares,
and holders of T-Fund's Plus Shares bear the fees set forth in the prospectus
describing such shares that are paid under the Fund's Distribution and Service
Plan for such shares. Because of the Shareholder Services Plan and Distribution
and Service Plan, the performance of the FedFund Shares or T-Fund Shares of a
particular Surviving Fund is expected to be higher than the performance of the
Fund's Dollar Shares, and the performance of T-Fund's Dollar Shares is expected
to be higher than the performance of T-Fund's Plus Shares.
Shareholders are entitled to one vote for each full share held and
proportionate fractional votes for fractional shares held. Shares of all
portfolios of the Company vote together and not by class, unless otherwise
required by law or permitted by the Board of Trustees. All shareholders of a
Surviving Fund will vote together as a single class on matters pertaining to the
Fund's investment advisory agreement and fundamental investment policies. Only
holders of Dollar Shares will vote on matters pertaining to the Funds'
Shareholder Services Plan for those shares, and only holders of T-Fund's Plus
Shares will vote on matters pertaining to T-Fund's Distribution and Service Plan
for those shares.
For information concerning the procedures for purchasing and redeeming
shares of the respective Funds, and for the advisory and other fees payable by
the Funds, see "Summary -- Comparison of the Funds."
The foregoing is only a summary of certain material attributes of the Funds
and their shares. Shareholders may obtain copies of the Company's Amended and
Restated Declaration of Trust and By-Laws from the Company upon written request
at its principal office.
INFORMATION RELATING TO VOTING MATTERS
General Information: This Combined Proxy Statement/Prospectus is being
furnished in connection with the solicitation of proxies by the Board of
Trustees of the Company for use at the Meeting. It is expected that the
solicitation of proxies will be primarily by mail. The Company's officers may
also solicit proxies by telephone, telegraph or personal interview. In addition,
the Company may retain the services of one or more outside organizations to aid
in the solicitation of proxies. Such organizations normally charge a fee plus
out-of-pocket charges.
Only shareholders of record at the close of business on June 19, 1996 will
be entitled to vote at the Meeting. On that date, there were outstanding and
entitled to be voted 276,783,014 FedCash Shares and 13,727 FedCash Dollar
Shares, representing interests in FedCash, and 276,818,548 T-Cash Shares and
46,564,138 T-Cash Dollar Shares, representing interests in T-Cash. Each share or
fraction thereof is entitled to one vote or fraction thereof.
If the accompanying proxy is executed and returned in time for the Meeting,
the shares covered thereby will be voted in accordance with the proxy on all
matters that may properly come before the Meeting. Any shareholder giving a
proxy may revoke it at any time before it is exercised by submitting to the
Company a written notice of revocation or a subsequently executed proxy or by
attending the Meeting and electing to vote in person.
Shareholder and Board Approval: The Plan of Reorganization and the
transactions contemplated therein are being submitted for approval at the
Meeting by the holders of a majority of the outstanding shares of each
Transferor Fund in accordance with the terms of the Plan. Under those terms, a
"majority of the outstanding shares" means (a) 67% or more of the outstanding
shares of a Transferor Fund (irrespective of class) present at the meeting, if
the holders of more than 50% of the outstanding shares of the Transferor Fund
10
<PAGE> 16
are present or represented by proxy, or (b) more than 50% of the outstanding
shares of the Transferor Fund (irrespective of class), whichever is less.
The vote of the shareholders of the Surviving Funds is not being solicited,
because their approval or consent is not required for the reorganization.
The approval of the Plan of Reorganization by the Board of Trustees of the
Company is discussed above under "Information Relating to the Proposed
Reorganization -- Board Consideration."
At June 26, 1996, the name, address and share ownership of each person who
owned of record 5% or more of the outstanding shares of the Transferor Funds'
and Surviving Funds' respective share classes are listed in the following
tables. The tables also show the percentage of the Funds' respective share
classes that would be owned by these persons upon the consummation of the
reorganization based on their holdings at that date.
<TABLE>
<CAPTION>
PERCENTAGE OF
PERCENTAGE OF CLASS OF
PERCENTAGE OF PORTFOLIO FEDFUND
CLASS AND CLASS OWNED SHARES OWNED PORTFOLIO
AMOUNT OF ON RECORD ON RECORD OWNED ON
PORTFOLIO NAME AND ADDRESS SHARES OWNED DATE DATE CONSUMMATION
- --------- ------------------------------ --------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
FedCash Albany Trusco Company FedCash shares 6.346% 6.346% 1.322%
First State Bank & 17,565,924.300
Trust Co.
Attn: Randy Merchant
P.O. Box 8
Albany, GA 31703
ACCOUNT #2790
TAX ID #58-6087465
Saxon & Company FedCash shares 43.049% 43.046% 8.971%
PNC Bank 119,152,455.300
Attn: Income Collect 76-A-260
Airport Bus Ctr/Intl Court 2
200 Stevens Drive
Lester, PA 19113
ACCOUNT #2990
TAX ID #23-6200005
Transco & Company FedCash shares 12.679% 2.678% 2.642%
Intrust Bank NA 35,094,836.170
Attn: Trust Operations
P.O. Box 1
Wichita, KS 67201
ACCOUNT #9352
TAX ID #48-6102551
Mase & Co. FedCash shares 8.485% 8.484% 1.768%
Community First Natl 23,486,167.930
Bank Fargo
Attn: Trust Department
Main At Broadway
Fargo, ND 58124
ACCOUNT #10821
TAX ID #45-6017433
Linden Owner Partnership FedCash shares 6.128% 6.128% 1.277%
Attn: GECC Corp Investments 16,962,333.940
201 High Ridge Road
Stamford, CT 06927
ACCOUNT #14371
TAX ID #06-1318116
</TABLE>
11
<PAGE> 17
<TABLE>
<CAPTION>
PERCENTAGE OF
PERCENTAGE OF CLASS OF
PERCENTAGE OF PORTFOLIO FEDFUND
CLASS AND CLASS OWNED SHARES OWNED PORTFOLIO
AMOUNT OF ON RECORD ON RECORD OWNED ON
PORTFOLIO NAME AND ADDRESS SHARES OWNED DATE DATE CONSUMMATION
- --------- ------------------------------ --------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Hare & Co. FedCash Dollar 100% 0.004% 0.001%
Bank of New York shares
Attn: Paul Rasmussen, 2d F1 13,727.080
Short Term Investment Funds
One Wall Street
New York, NY 10286
ACCOUNT #1142
TAX ID #13-4941102
FedFund Mercantile Bank NA FedFund shares 7.240% 6.589% 6.589%
Trust Securities Unit 17-1 87,526,859.030
Attn: Cash Management
P.O. Box 387 Main Post Office
St. Louis, MO 63166
ACCOUNT #8429
TAX ID #43-0297830
Saxon & Company/Custody FedFund shares 8.859% 8.063% 8.063%
PNC Bank 107,093,341.740
Income Collections 76-A-260
Airport Bus Ctr/Intl Court 2
200 Stevens Drive
Lester, PA 19113
ACCOUNT #10966
TAX ID #23-6200005
Bank of America NT & SA FedFund shares 5.310% 4.833% 4.833%
The private Bank # 8329 64,197,084.000
Common Trust Funds Unit 8329
P.O. Box 3577 Terminal Annex
Los Angeles, CA 90051
ACCOUNT #11609
TAX ID # PENDING
Harris Trust & Savings Bank FedFund shares 5.510% 5.014% 5.014%
Attn: CIF Unit 66,604,133.680
12th Floor
200 W. Monroe
Chicago, IL 60690
ACCOUNT #11727
TAX ID #36-1194448
Administrative Services FedFund shares 5.590% 5.088% 5.088%
(IFG) 67,580,119.130
Chemical Bank
Attn: Seven Marinos
AIS Section 31-270
270 Park Avenue
New York, NY 10017
ACCOUNT #12993
TAX ID #13-5227302
Corporate Cash Management FedFund Dollar 19.449% 1.748% 1.748%
Mercantile Bank NA shares
Cash Mgmt/Tr Custody Tram 23,225,258.320
16-2
P.O. Box 135
St. Louis, MO 63166
ACCOUNT #12045
TAX ID #43-0299783
</TABLE>
12
<PAGE> 18
<TABLE>
<CAPTION>
PERCENTAGE OF
PERCENTAGE OF CLASS OF
PERCENTAGE OF PORTFOLIO FEDFUND
CLASS AND CLASS OWNED SHARES OWNED PORTFOLIO
AMOUNT OF ON RECORD ON RECORD OWNED ON
PORTFOLIO NAME AND ADDRESS SHARES OWNED DATE DATE CONSUMMATION
- --------- ------------------------------ --------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Investment Account FedFund Dollar 7.161% 0.643% 0.643%
Mercantile Bank NA shares
Cash Mgmt/Tr Custody Tram 8,551,983.600
16-2
P.O. Box 135
St. Louis, MO 63166
ACCOUNT #12046
TAX ID #43-6020909
PNC Securities Corp. FedFund Dollar 10.105% 0.908% 0.908%
Agent For Customers shares
Pittsburgh National Bank 12,067,422.930
Securities Operations, 9th Fl.
Fifth & Wood Streets
Pittsburgh, PA 15265
ACCOUNT #12173
TAX ID #25-1471636
Norwest Investment Service FedFund Dollar 43.831% 3.940% 3.940%
Peter Maczko/NISI shares
Accounting 52,339,094.360
608 2nd Avenue S.
Suite 800 MS/0153
Minneapolis, MN 55402
ACCOUNT #13490
TAX ID #41-1508325
Norwest Investment Service FedFund Dollar 5.451% 4.710% 4.710%
Peter Maczko/NISI shares
Accounting 6,509,976.030
608 2nd Avenue S.
Suite 800 MS/0153
Minneapolis, MN 5540 ACCOUNT
#13516
TAX ID #41-1508325
</TABLE>
<TABLE>
<CAPTION>
PERCENTAGE OF
PERCENTAGE OF CLASS OF
PERCENTAGE OF PORTFOLIO T-FUND
CLASS AND CLASS OWNED SHARES OWNED PORTFOLIO
AMOUNT OF ON RECORD ON RECORD OWNED ON
PORTFOLIO NAME AND ADDRESS SHARES OWNED DATE DATE CONSUMMATION
- --------- ------------------------------ --------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
T-Cash Cando & Co. T-Cash shares 7.457% 6.383% 1.379%
1st Citizens Bank 20,643,317.380
South Carolina
P.O. Box 29
Columbia, SC 29202
ACCOUNT #9011
TAX ID #57-0549377
JATO & Co. T-Cash shares 19.038% 16.296% 3.522%
National City 52,700,732.390
Bank/Minneapolis
P.O. Box E 1919
Minneapolis, MN 55480
ACCOUNT #9663
TAX ID #41-6083982
</TABLE>
13
<PAGE> 19
<TABLE>
<CAPTION>
PERCENTAGE OF
PERCENTAGE OF CLASS OF
PERCENTAGE OF PORTFOLIO T-FUND
CLASS AND CLASS OWNED SHARES OWNED PORTFOLIO
AMOUNT OF ON RECORD ON RECORD OWNED ON
PORTFOLIO NAME AND ADDRESS SHARES OWNED DATE DATE CONSUMMATION
- --------- ------------------------------ --------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Overton & Co. T-Cash shares 13.425% 11.492% 2.484%
Overton Bank & Trust NA 37,164,695.000
Attn: John May
P.O. Box 16509
Ft. Worth, TX 76162
ACCOUNT #11005
TAX ID #75-1930342
OLTRUST & Co. T-Cash shares 25.251% 21.615% 4.672%
Old National Bank In 69,901,383.730
Evansville
Attn: Trust Division
P.O. Box 207
Evansville, IN 47702
ACCOUNT #11910
TAX ID #35-6014566
CAP-Bank T-Cash shares 8.380% 8.380% 1.811%
First National Bank 27,102,601.950
Attn: Trust Department
P.O. Box 900
Tallahassee, FL 32303
ACCOUNT #12433
TAX ID #59-6133758
Corporate Cash Sweep T-Cash Dollar 82.285% 11.848% 2.561%
PNC Bank Kentucky Inc. shares
Cash Management Dept. 38,315,331.780
539 S 4th Avenue
Louisville, KY 40202
ACCOUNT #14139
TAX ID #61-0191580
T-Fund GSS As Agent T-Fund shares 7.050% 6.137% 6.137%
The Chase Manhattan Bank NA 91,817,924.000
Stuart Freeman/SEC Code
Dept.
One Chase Manhattan Plaza- 4B
New York, NY 10081
ACCOUNT #2924
TAX ID #13-6065575
Saxon & Company T-Fund shares 8.860% 7.714% 7.714%
PNC Bank 115,405,720.800
Income Collections 76-A-260
Airport Bus Ctr/Intl Court 2
200 Stevens Drive
Lester, PA 19113
ACCOUNT #2990
TAX ID #23-6200005
PNC Mortgage Securities T-Fund shares 6.377% 5.551% 5.551%
Corp. 83,051,965.270
Attn: Trust Dept.
700 Deerpath Drive
Vernon Hills, IL 60061
ACCOUNT #15016
TAX ID #94-2528990
</TABLE>
14
<PAGE> 20
<TABLE>
<CAPTION>
PERCENTAGE OF
PERCENTAGE OF CLASS OF
PERCENTAGE OF PORTFOLIO T-FUND
CLASS AND CLASS OWNED SHARES OWNED PORTFOLIO
AMOUNT OF ON RECORD ON RECORD OWNED ON
PORTFOLIO NAME AND ADDRESS SHARES OWNED DATE DATE CONSUMMATION
- --------- ------------------------------ --------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Union Bank T-Fund shares 7.857% 6.839% 6.839%
Jeanne Chizek/Tr Fund 102,328,060.000
Acctg.
P.O. Box 85602
San Diego, CA 92186
ACCOUNT #15701
TAX ID #95-1314170
Saxon & Company T-Fund Dollar 33.450% 4.331% 4,331%
PNC Bank shares
Income Collections 76-A-260 64,797,942.930
Airport Bus Ctr/Intl Court 2
200 Stevens Drive
Lester, PA 19113
ACCOUNT #2990
TAX ID #23-6200005
PNC Securities Corp. T-Fund Dollar 50.630% 6.555% 6.555%
Agent For Customers shares
Pittsburgh National Bank 98,079,696.660
Securities Operations,
9th Floor
Fifth & Wood Streets
Pittsburgh, PA 15265
ACCOUNT #12173
TAX ID #25-1471636
</TABLE>
For purposes of the 1940 Act, any person who owns directly or though one or
more controlled companies more than 25 percent of the voting securities of a
company is presumed to "control" such company. Under this definition no one will
be deemed to be a controlling person of the Company upon consummation of the
reorganization.
At the record date for the Meeting, the trustees and officers of the
Company as a group owned beneficially less than 1% of the outstanding shares of
the Transferor Funds and the Surviving Funds.
Quorum: In the event that a quorum is not present at the Meeting, or in
the event that a quorum is present at the Meeting but sufficient votes to
approve the Plan of Reorganization are not received, the persons named as
proxies, or their substitutes, may propose one or more adjournments of the
Meeting to permit further solicitation of proxies. Any such adjournment will
require the affirmative vote of a majority of those shares represented at the
Meeting in person or by proxy. If a quorum is not present, the persons named as
proxies will vote those proxies FOR adjournment. If a quorum is present, the
persons named as proxies will vote those proxies which they are entitled to vote
FOR the Plan of Reorganization in favor of such adjournments, and will vote
those proxies required to be voted AGAINST such proposal against any
adjournment. A shareholder vote may be taken with respect to one Transferor Fund
(but not the other Transferor Fund) before any such adjournment if sufficient
votes have been received for approval. A quorum is constituted with respect to a
Fund by the presence in person or by proxy of the holders of more than 50% of
the outstanding shares of the Fund entitled to vote at the Meeting. Shares
represented by broker non-votes, are treated as being present for purposes of
determining a quorum. A vote cast does not include an abstention or the failure
to vote for or against a proposal. Therefore, for purposes of determining the
affirmative vote of a "majority of the outstanding shares," an abstention or the
failure to vote, including a broker non-vote, will be the equivalent of voting
against approval of the Plan of Reorganization.
Annual Meetings: The Company does not presently intend to hold annual
meetings of shareholders except as required by the 1940 Act or other applicable
law. The Company will call a meeting of shareholders for the purpose of voting
upon the question of removal of a member of the Board of Trustees upon written
request of shareholders owning at least 10% of the outstanding shares of the
Company entitled to vote.
15
<PAGE> 21
ADDITIONAL INFORMATION ABOUT THE FUNDS
Information about the Surviving Funds and their FedFund Shares, T-Fund
Shares, FedFund Dollar Shares and T-Fund Dollar Shares is included in the
Prospectuses dated February 28, 1996 accompanying this Combined Proxy
Statement/Prospectus, which are incorporated by reference herein, and
information about the Transferor Funds is included in their Prospectuses dated
February 28, 1996, which are also incorporated herein by reference. Additional
information about the Surviving Funds and Transferor Funds is included in the
Transferor Funds' and Surviving Funds' Statements of Additional Information
dated February 28, 1996 (as revised April 8, 1996) and May 31, 1996,
respectively, which have been filed with the SEC. Copies of the Transferor
Funds' Prospectuses and the Transferor Funds' and Surviving Funds' Statements of
Additional Information may be obtained without charge by calling PDI at
1-800-998-7633. The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 and the 1940 Act, as applicable, and, in
accordance with such requirements, files proxy materials, reports and other
information with the SEC. These materials can be inspected and copied at the
Public Reference Facilities maintained by the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and by calling PDI at the telephone number listed above.
In addition, these materials can be inspected and copied at the SEC's Regional
Offices at 77 Park Place, New York, New York 10007, and Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60621-2511.
Copies of such material can also be obtained from the Public Reference Branch,
Office of Consumer Affairs and Information Services, Securities and Exchange
Commission, Washington, D.C. 20549, at prescribed rates.
FINANCIAL STATEMENTS
The financial highlights for the Transferor Funds and Surviving Funds for
the fiscal year ended October 31, 1995 and included in such Funds' Prospectuses
dated February 28, 1996 and the financial statements for the Transferor Funds
and Surviving Funds for the fiscal year ended October 31, 1995 are included in
the Company's Annual Report to Shareholders dated December 11, 1995 and are
incorporated by reference in such Funds' Statements of Additional Information
dated February 28, 1996 (as revised April 8, 1996) and May 31, 1996,
respectively, which Prospectuses and Statements of Additional Information are
incorporated by reference in this Combined Proxy Statement/Prospectus. Such
financial highlights and financial statements have been incorporated herein in
reliance on the report of Coopers & Lybrand L.L.P., independent accountants,
given on the authority of that firm as experts in accounting and auditing.
OTHER BUSINESS
The Company's Board of Trustees knows of no other business to be brought
before the Meeting. However, if any other matters come before the Meeting, it is
the intention of the Board that proxies that do not contain specific
restrictions to the contrary will be voted on such matters in accordance with
the judgment of the persons named in the enclosed form of proxy.
SHAREHOLDER INQUIRIES
Shareholder inquiries may be addressed to the Company in writing at the
address on the cover page of this Combined Proxy Statement/Prospectus or by
telephoning 1-800-821-7432.
* * *
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING ARE REQUESTED
TO DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE. NO
POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
16
<PAGE> 22
APPENDIX A
PLAN OF REORGANIZATION
THIS PLAN OF REORGANIZATION made this 26th day of June, 1996, by Trust for
Federal Securities (the "Company"), a Pennsylvania business trust established
under an Amended and Restated Declaration of Trust dated August 9, 1993, acting
on behalf of its FedCash and T-Cash investment portfolios (the "Transferor
Funds") and its FedFund and T-Fund investment portfolios (the "Surviving
Funds").
WHEREAS, the Board of Trustees of the Company has determined that the
transfer of all of the assets and liabilities of FedCash and T-Cash to FedFund
and T-Fund, respectively, is in the best interests of each of the Transferor
Funds and Surviving Funds, respectively, and would provide more efficient
management and administration of those assets, and has further determined that
the interests of the shareholders of the said Funds would not be diluted as a
result of this transaction; and
WHEREAS, the Company intends to provide for the reorganization of each of
the Transferor Funds through the acquisition by the Surviving Funds of all of
the assets, subject to all of the liabilities, of the Transferor Funds in
exchange for shares of beneficial interest of the Surviving Funds of the share
classes known as "FedFund Shares," "FedFund Dollar Shares," "T-Fund Shares," and
"T-Fund Dollar Shares," respectively, the termination of the Transferor Funds
and the distribution to their shareholders of such Shares, all pursuant to the
provisions of Section 368(a)(1)(C) or Section 368(a)(1)(D) of the Internal
Revenue Code of 1986, as amended (the "Code");
NOW THEREFORE, the Company has adopted this Plan of Reorganization as
follows:
1. Plan of Reorganization and Liquidation
(a) The Company, on behalf of FedCash, shall assign, sell, convey,
transfer and deliver to FedFund at the closing provided for in Section 2
(hereinafter called the "Closing") all of the then existing assets of FedCash of
every kind and nature. In consideration therefor, FedFund shall at the Closing
(i) assume all of FedCash's obligations and liabilities then existing, whether
absolute, accrued, contingent or otherwise except for all fees and expenses in
connection with the transactions contemplated hereby and (ii) deliver to FedCash
a number of full and fractional FedFund Shares and FedFund Dollar Shares of
FedFund equal to the number of FedCash Shares and FedCash Dollar Shares,
respectively, then outstanding, all such Shares having a net asset value of
$1.00 per share. The number of FedCash Shares and FedCash Dollars Shares of
FedCash issued and outstanding and the number of FedFund Shares and FedFund
Dollar Shares of FedFund to be issued to FedCash shall in each case be
determined by PFPC Inc. ("PFPC"), the Company's Co-Administrator, as of 4:30
p.m., Eastern time, on the Closing Date (as defined in Section 2). The
determination of PFPC shall be conclusive and binding on FedCash and FedFund and
their respective shareholders.
(b) The Company, on behalf of T-Cash, shall assign, sell, convey,
transfer and deliver to T-Fund at the Closing all of the then existing assets of
T-Cash of every kind and nature. In consideration therefor, T-Fund shall at the
Closing (i) assume all of T-Cash's obligations and liabilities then existing,
whether absolute, accrued, contingent or otherwise except for all fees and
expenses in connection with the transactions contemplated hereby and (ii)
deliver to T-Cash a number of full and fractional T-Fund Shares and T-Fund
Dollar Shares of T-Fund equal to the number of T-Cash Shares and T-Cash Dollar
Shares, respectively, then outstanding, all such Shares having a net asset value
of $1.00 per share. The number of T-Cash Shares and T-Cash Dollar Shares of
T-Cash issued and outstanding and the number of T-Fund Shares and T-Fund Dollar
Shares of T-Fund to be issued to T-Cash shall in each case be determined by PFPC
as of 4:30 p.m., Eastern time, on the Closing Date. The determination of PFPC
shall be conclusive and binding on T-Cash and T-Fund and their respective
shareholders.
(c) Upon consummation of the transactions described in paragraphs (a) and
(b) of this Section 1, each Transferor Fund shall distribute in complete
liquidation pro rata to its shareholders of record as of the Closing Date the
FedFund Shares and FedFund Dollar Shares or T-Fund Shares and T-Fund Dollar
Shares, as the case may be, received by the Transferor Fund. Such distribution
shall be accomplished by the
A-1
<PAGE> 23
establishment of an open account on the share records of each Surviving Fund in
the name of each shareholder of the corresponding Transferor Fund representing a
number of FedFund Shares and FedFund Dollar Shares or T-Fund Shares and T-Fund
Dollar Shares, as the case may be, equal to the number of shares of the
Transferor Fund owned of record by the shareholder at the Closing Date.
Certificates for shares of the Transferor Funds issued prior to the
reorganization, if any, shall represent outstanding shares of the corresponding
Surviving Funds following the reorganization. In the interest of economy and
convenience, certificates representing FedFund Shares and FedFund Dollar Shares
and T-Fund Shares and T-Fund Dollar Shares of the Surviving Funds will not be
physically issued. After the Closing Date, neither of the Transferor Funds shall
conduct any business except in connection with its liquidation.
2. Closing and Closing Date. The Closing shall occur at the offices of
PFPC at 4:30 p.m., Eastern time, on July 31, 1996 or at such other time and
date, or at such other location, as the Trust may determine (the "Closing
Date"). All acts taking place at the Closing shall be deemed to take place
simultaneously on the Closing Date unless otherwise provided.
3. Conditions Precedent. The obligations of the Transferor Funds and
Surviving Funds to effect the transactions contemplated hereunder shall be
subject to the satisfaction of each of the following conditions:
(a) All filings shall have been made with, and all authority and orders
shall have been received from, the Securities and Exchange Commission (the
"SEC") and state securities commissions as may be necessary to permit the
parties to carry out the transactions contemplated by this Plan.
(b) The Company shall have received an opinion of Drinker Biddle & Reath,
subject to appropriate factual assumptions, substantially to the effect that for
federal income tax purposes: (i) the acquisition of the assets and assumption of
the liabilities of the Transferor Funds by the Surviving Funds in return for
FedFund Shares, FedFund Dollar Shares, T-Fund Shares or T-Fund Dollar Shares of
the Surviving Funds followed by the distribution of such shares to the
shareholders of the Transferor Funds will constitute a "reorganization" within
the meaning of Section 368(a)(1)(C) or Section 368(a)(1)(D) of the Code and each
of the Surviving Funds and the Transferor Funds will be "a party to the
reorganization" within the meaning of Section 368(b) of the Code; (ii) no gain
or loss will be recognized by any corresponding Transferor Fund upon the
transfer of their assets and liabilities to the corresponding Surviving Fund;
(iii) no gain or loss will be recognized by any Surviving Fund upon the receipt
of the assets of the corresponding Transferor Fund in exchange for FedFund
Shares, FedFund Dollar Shares, T-Fund Shares or T-Fund Dollar Shares of the
Surviving Funds and the assumption by the Surviving Funds of the liabilities of
the Transferor Funds; (iv) no gain or loss will be recognized by the
shareholders of any Transferor Funds upon the receipt of said FedFund Shares,
FedFund Dollar Shares, T-Fund Shares or T-Fund Dollar Shares in exchange for
their shares in the Transferor Funds; (v) the aggregate basis of said FedFund
Shares, FedFund Dollar Shares, T-Fund Shares or T-Fund Dollar Shares received by
the shareholders of the Transferor Funds will be the same as the basis of the
shares of the Transferor Funds exchanged therefor; (vi) the tax basis of the
assets of the Transferor Funds in the hands of the Surviving Funds will be the
same as the tax basis of such assets in the hands of the Transferor Funds
immediately prior to the transfer; (vii) the holding period of said FedFund
Shares, FedFund Dollar Shares, T-Fund Shares or T-Fund Dollar Shares received by
the shareholders of the Transferor Funds will include the holding period of the
shares of the Transferor Funds exchanged therefor, provided that at the time of
the exchange the shares of the Transferor Funds were held as capital assets; and
(viii) the holding period of the Surviving Funds for the assets of the
Transferor Funds transferred to them will include the period during which such
assets were held by the Transferor Funds.
(c) The Company shall have received an opinion of Drinker Biddle & Reath
to the effect that the FedFund Shares, FedFund Dollar Shares, T-Fund Shares or
T-Fund Dollar Shares of the Surviving Funds issued pursuant to this Plan will,
when issued in accordance with the provisions hereof, be legally issued, fully
paid and non-assessable;
(d) This Plan and the reorganization contemplated hereby shall have been
approved by the affirmative vote of the holders of a majority of the outstanding
shares of beneficial interest of the Transferor Funds (as defined in the
Company's Amended and Restated Declaration of Trust) entitled to vote thereon,
voting separately on a Fund-by-Fund basis;
A-2
<PAGE> 24
(e) A Registration Statement on Form N-14 which shall include a combined
proxy statement/prospectus complying in all material respects with the
requirement of the federal securities laws relating to a meeting of shareholders
of the Transferor Funds to be called to consider and act upon the transactions
contemplated herein shall have been effective under the Securities Act of 1933.
4. Amendment. This Plan may be amended at any time by action of the
Trustees of the Company notwithstanding approval thereof by the shareholders of
the Transferor Funds, provided that no amendment shall have a material adverse
effect on the interests of the shareholders of the Transferor Funds and
Surviving Funds.
5. Termination. The Trustees of the Company may terminate this Plan and
abandon the reorganization contemplated hereby, notwithstanding approval thereof
by the shareholders of the Transferor Funds, at any time prior to the Closing,
if circumstances should develop that, in their judgment, make proceeding with
the Plan inadvisable.
6. No Survival of Representations, etc. The representations, warranties,
covenants and agreements contained herein shall not survive the Closing Date.
7. Waiver. The Company, after consultation with its counsel and by
consent of its Board of Trustees, Executive Committee or an officer authorized
by such Board of Trustees, may waive any condition to the obligations of any
Transferor Fund or Surviving Fund hereunder if, in its or such officer's
judgment, such waiver will not have a material adverse effect on the interests
of the shareholders of the Transferor Funds and Surviving Funds. In the event
shareholder approval of the reorganization is obtained with respect to one
Transferor Fund but not with respect to the other Transferor Fund, with the
result that the transactions contemplated by this Plan may be consummated with
respect to one but not both of the Transferor Funds, the Board of Trustees of
the Company may, in the exercise of its reasonable business judgment, either
abandon this Plan with respect to both of the Transferor Funds or direct that
the reorganization be consummated to the degree the Board deems advisable.
8. Miscellaneous Provisions. This Plan shall bind and inure to the
benefit of the Transferor Funds and Surviving Funds and their respective
successors and assigns. It shall be governed by and carried out in accordance
with the laws of the Commonwealth of Pennsylvania.
The names "Trust for Federal Securities" and "Trustees of Trust for Federal
Securities" refer respectively to the Trust created and the Trustees, as
trustees but not individually or personally, acting from time to time under an
Amended and Restated Declaration of Trust dated August 9, 1993, which is hereby
referred to and a copy of which is on file at the office of the Department of
State of the Commonwealth of Pennsylvania and the principal office of the Trust.
The obligations of "Trust for Federal Securities" entered into in the name or on
behalf thereof by any of the Trustees, representatives or agents are not made
individually, but in such capacities, and are not binding upon any of the
Trustees, shareholders or representatives of the Trust personally, but bind only
the Trust Property, and all persons dealing with any class or sub-class of
shares of the Trust must look solely to the Trust Property belonging to such
class or sub-class for the enforcement of any claims against the Trust.
A-3
<PAGE> 25
IN WITNESS WHEREOF, the Company has caused this Plan of Reorganization to
be executed by a duly authorized officer as of the day and year first written.
TRUST FOR FEDERAL SECURITIES,
on behalf of its FedCash and T-Cash
investment portfolios
By: /s/ Edward J. Roach
--------------------------------------
Title: Vice President and Treasurer
--------------------------------------
TRUST FOR FEDERAL SECURITIES,
on behalf of its FedFund and T-Fund
investment portfolios
By: /s/ Edward J. Roach
--------------------------------------
Title: Vice President and Treasurer
--------------------------------------
A-4
<PAGE> 26
TRUST FOR FEDERAL SECURITIES
BELLEVUE PARK CORPORATE CENTER
400 BELLEVUE PARKWAY, SUITE 100
WILMINGTON, DELAWARE 19809
STATEMENT OF ADDITIONAL INFORMATION
(1996 SPECIAL MEETING OF
SHAREHOLDERS OF FEDCASH AND T-CASH INVESTMENT PORTFOLIOS)
This Statement of Additional Information is not a prospectus but should
be read in conjunction with the Combined Proxy Statement/Prospectus dated July
1, 1996 ("Combined Proxy Statement/Prospectus") for the Special Meeting of
Shareholders of FedCash and T-Cash (the "Transferor Funds"), two investment
portfolios offered by Trust for Federal Securities, to be held on July 31, 1996.
Copies of the Combined Proxy Statement/Prospectus may be obtained at no charge
by calling Provident Distributors, Inc. at 1-800-998-7633.
Unless otherwise indicated, capitalized terms used herein and not
otherwise defined have the same meanings as are given to them in the Combined
Proxy Statement/Prospectus.
Further information about FedCash Shares, FedCash Dollar Shares, T-Cash
Shares and T-Cash Dollar Shares of the Transferor Funds and FedFund Shares,
FedFund Dollar Shares, T-Fund Shares and T-Fund Dollar Shares of FedFund and
T-Fund (the "Surviving Funds") is contained in and incorporated by reference to
said Funds' Statements of Additional Information dated February 28, 1996 (as
revised April 8, 1996) and May 31, 1996, respectively, copies of which also
accompany this document. The audited financial statements and related
independent accountant's report for the Transferor Funds and Surviving Funds
contained in the Company's Annual Report to Shareholders dated October 31, 1995
are hereby incorporated herein by reference. No other parts of the Annual Report
are incorporated herein by reference.
The date of this Statement of Additional Information is July 1, 1996.
B-1
<PAGE> 27
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
General Information........................................................................................ B-3
Pro Forma Financial Statements............................................................................. PF-1
</TABLE>
B-2
<PAGE> 28
GENERAL INFORMATION
The shareholders of the Transferor Funds are being asked to approve or
disapprove a Plan of Reorganization dated as of June 26, 1996 and the
transactions contemplated thereby. The Plan contemplates the transfer of all of
the assets and liabilities of the Company's FedCash to the Company's FedFund and
all of the assets and liabilities of the Company's T-Cash to the Company's
T-Fund. In exchange therefor, each Transferor Fund will receive FedFund Shares,
FedFund Dollar Shares, T-Fund Shares or T-Fund Dollar Shares, respectively, of
the corresponding Surviving Fund, which will be distributed to the shareholders
of the Transferor Fund in connection with the Transferor Fund's liquidation,
such that each holder of shares in a Transferor Fund at the Effective Time of
the Reorganization will receive a like number of full and fractional FedFund
Shares, FedFund Dollar Shares, T-Fund Shares or T-Fund Dollar Shares in the
corresponding Surviving Fund.
A Special Meeting of Shareholders of the Transferor Funds to consider
the Plan of Reorganization and the related transactions, will be held at the
Company's offices, Bellevue Park Corporate Center, 400 Bellevue Parkway, Suite
100, Wilmington, Delaware 19809 at 10:00 a.m. local time on July 31, 1996. For
further information about the transaction, see the Combined Proxy
Statement/Prospectus.
B-3
<PAGE> 29
FedFund Portfolio
FedCash Portfolio
Pro-Forma Combined Portfolios of Investments
<TABLE>
<CAPTION>
October 31, 1995 Shares/Par(000) Value at October 31, 1995
(Unaudited) ------------------------------- -----------------------------------
FedFund FedCash Pro-Forma FedFund FedCash Pro-Forma
Rate Maturity Portfolio Portfolio Combined Portfolio Portfolio Combined
------ -------- --------- --------- --------- ------------ --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. AGENCY & INSTRUMENTALITY
OBLIGATIONS:
Federal Farm Credit Bank Bonds 6.33 % 11/01/95 $ 990 $ 0 $ 990 $ 990,000 $ 0 $ 990,000
6.38 05/01/96 10,000 0 10,000 10,028,685 0 10,028,685
5.75 08/01/96 5,000 0 5,000 4,993,728 0 4,993,728
Federal Farm Credit Bank
Discount Notes 5.55 11/03/95 5,000 5,000 10,000 4,998,458 4,998,458 9,996,916
5.55 11/20/95 12,000 12,000 11,964,850 0 11,964,850
5.52 12/18/95 10,000 10,000 9,927,933 0 9,927,933
5.58 12/18/95 15,000 15,000 14,890,725 0 14,890,725
5.59 02/12/96 0 8,000 8,000 0 7,872,051 7,872,051
5.55 02/15/96 9,000 2,000 11,000 8,852,925 1,967,317 10,820,242
Federal Farm Credit Bank Notes 5.75 08/01/96 0 5,000 5,000 0 4,993,728 4,993,728
Federal Farm Credit Bank
Variable Rate Notes 5.65 11/01/95 40,000 0 40,000 39,956,877 0 39,956,877
5.71 11/01/95 50,000 35,000 85,000 49,971,195 34,978,776 84,949,971
Federal Home Loan Bank Bonds 6.41 11/22/95 3,900 0 3,900 3,901,395 0 3,901,395
9.50 12/26/95 10,000 0 10,000 10,042,061 0 10,042,061
7.305 01/19/96 10,000 0 10,000 10,031,286 0 10,031,286
7.145 01/26/96 15,000 0 15,000 14,999,431 0 14,999,431
6.787 02/15/96 4,855 0 4,855 4,863,808 0 4,863,808
6.85 02/28/96 17,400 0 17,400 17,439,348 0 17,439,348
8.10 03/25/96 2,000 0 2,000 2,017,599 0 2,017,599
9.80 03/25/96 5,400 0 5,400 5,482,366 0 5,482,366
6.01 05/23/96 10,715 0 10,715 10,726,643 0 10,726,643
6.17 06/05/96 10,000 0 10,000 9,993,201 0 9,993,201
Federal Home Loan Bank
Discount Notes 6.00 12/22/95 0 5,000 5,000 0 4,957,500 4,957,500
5.48 04/12/96 2,000 0 2,000 1,950,376 0 1,950,376
Federal Home Loan Bank Notes 9.75 02/09/96 0 1,140 1,140 0 1,151,576 1,151,576
Federal Home Loan Bank
Variable Rate Notes 5.53 11/01/95 17,000 0 17,000 17,000,000 0 17,000,000
5.725 11/01/95 25,000 0 25,000 24,987,738 0 24,987,738
5.655 11/02/95 0 5,000 5,000 0 4,998,470 4,998,470
Federal Home Loan Mortgage
Corporation Bonds 7.24 02/05/96 3,150 0 3,150 3,160,056 0 3,160,056
6.84 02/28/96 14,115 0 14,115 14,147,200 0 14,147,200
6.005 05/13/96 20,000 0 20,000 20,010,002 0 20,010,002
Federal Home Loan Mortgage
Corporation Discount Notes 0
5.55 11/30/95 13,150 0 13,150 13,091,209 0 13,091,209
5.60 01/05/96 13,500 0 13,500 13,363,500 0 13,363,500
</TABLE>
<PAGE> 30
<TABLE>
<CAPTION>
Shares/Par(000)
---------------------------------
FedFund FedCash Pro-Forma
Rate Maturity Portfolio Portfolio Combined
----- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
5.60 % 02/09/96 $ 5,000 $ 5,000 $ 10,000
5.60 05/10/96 5,000 5,000 10,000
5.43 06/12/96 0 2,955 2,955
Federal Home Loan Mortgage Corporation Notes 6.005 05/13/96 0 5,000 5,000
Federal National Mortgage Association Bonds 6.48 03/27/96 22,000 0 22,000
5.97 05/16/96 5,000 0 5,000
8.00 07/10/96 5,000 0 5,000
6.00 08/15/96 3,000 0 3,000
5.8125 09/27/96 25,000 0 25,000
Federal National Mortgage Association
Discount Notes 5.56 11/13/95 8,800 0 8,800
5.81 11/13/95 20,000 0 20,000
5.85 12/11/95 5,000 5,000 10,000
5.52 12/13/95 16,220 0 16,220
5.58 01/09/96 0 5,000 5,000
5.58 01/25/96 0 10,000 10,000
5.60 02/12/96 10,700 0 10,700
5.50 02/20/96 10,000 0 10,000
5.62 04/12/96 20,000 0 20,000
Federal National Mortgage Association
Medium Term Notes 6.37 11/14/95 5,750 2,375 8,125
6.72 02/28/96 0 3,210 3,210
6.67 03/15/96 9,900 0 9,900
6.48 03/27/96 0 5,000 5,000
8.00 07/10/96 0 5,000 5,000
5.8125 09/27/96 0 10,000 10,000
0
Federal National Mortgage Association 0
Variable Rate Notes 5.66 11/01/95 15,000 0 15,000
5.68 11/01/95 40,000 0 40,000
5.71 11/01/95 20,000 0 20,000
5.78 11/01/95 40,000 10,000 50,000
5.83 11/01/95 0 10,000 10,000
5.55 11/07/95 40,000 18,000 58,000
Private Export Funding Corporation Bonds 9.00 01/31/96 17,375 0 17,375
Student Loan Marketing Association Bonds 6.831 02/21/96 2,190 0 2,190
5.90 10/04/96 8,000 0 8,000
Student Loan Marketing Association Notes 4.53 11/09/95 0 10,225 10,225
<CAPTION>
Value at October 31, 1995
--------------------------------------
FedFund FedCash Pro-Forma
Portfolio Portfolio Combined
--------- --------- ---------
<S> <C> <C> <C>
$ 4,922,222 $4,922,222 $ 9,844,444
4,851,444 4,851,444 9,702,888
0 2,855,160 2,855,160
Federal Home Loan Mortgage Corporation Notes 0 5,009,104 5,009,104
Federal National Mortgage Association Bonds 22,065,725 0 22,065,725
5,005,477 0 5,005,477
5,072,242 0 5,072,242
3,000,643 0 3,000,643
24,993,217 0 24,993,217
Federal National Mortgage Association
Discount Notes 8,783,691 0 8,783,691
19,961,267 0 19,961,267
4,967,500 4,967,500 9,935,000
16,115,543 0 16,115,543
0 4,946,525 4,946,525
0 9,868,250 9,868,250
10,528,562 0 10,528,562
9,830,417 0 9,830,417
19,491,078 0 19,491,078
Federal National Mortgage Association
Medium Term Notes 5,751,089 2,375,422 8,126,511
0 3,213,781 3,213,781
9,933,056 0 9,933,056
0 5,012,625 5,012,625
0 5,072,242 5,072,242
0 9,997,287 9,997,287
0
Federal National Mortgage Association 0
Variable Rate Notes 14,995,393 0 14,995,393
39,985,691 0 39,985,691
19,990,438 0 19,990,438
39,967,483 9,991,871 49,959,354
0 10,000,000 10,000,000
40,000,000 18,000,000 58,000,000
Private Export Funding Corporation Bonds 17,504,150 0 17,504,150
Student Loan Marketing Association Bonds 2,196,861 0 2,196,861
8,000,000 0 8,000,000
Student Loan Marketing Association Notes 0 10,221,712 10,221,712
</TABLE>
<PAGE> 31
<TABLE>
<CAPTION>
Shares/Par(000)
------------------------------------
FedFund FedCash Pro-Forma
Rate Maturity Portfolio Portfolio Combined
---- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Student Loan Marketing
Association Variable
Rate Notes 5.60 % 11/07/95 $ 4,000 $ 0 $ 4,000
5.62 11/07/95 47,850 25,000 72,850
5.64 11/07/95 38,545 10,000 48,545
5.65 11/07/95 35,000 0 35,000
5.66 11/07/95 10,000 10,000 20,000
5.67 11/07/95 0 7,545 7,545
5.78 11/07/95 11,600 0 11,600
5.80 11/07/95 4,475 10,000 14,475
5.825 11/07/95 71,520 8,000 79,520
5.85 11/07/95 18,700 5,000 23,700
Repurchase Agreements
Donaldson, Lufkin & Jenrette
Securities Corp. 5.95 11/01/95 50,000 50,000 100,000
Goldman, Sachs & Co. 5.95 11/01/95 150,000 0 150,000
Lehman Government
Securities, Inc. 5.80 11/01/95 75,000 0 75,000
Merrill Lynch & Co., Inc. 5.85 11/01/95 60,000 0 60,000
Merrill Lynch & Co., Inc. 5.90 11/01/95 70,000 30,000 100,000
Morgan Stanley & Co. 5.95 11/01/95 150,000 0 150,000
PaineWebber Incorporated 5.93 11/01/95 80,900 25,500 106,400
<CAPTION>
Value at October 31, 1995
-------------------------------------------
FedFund FedCash Pro-Forma
Portfolio Portfolio Combined
--------- --------- ---------
<S> <C> <C> <C>
Student Loan Marketing
Association Variable
Rate Notes $ 4,001,402 $ 0 $ 4,001,402
47,841,348 25,006,536 72,847,884
38,471,957 10,000,000 48,471,957
35,000,000 0 35,000,000
10,005,795 10,000,000 20,005,795
0 7,547,045 7,547,045
11,604,041 0 11,604,041
4,473,759 10,037,435 14,511,194
71,612,994 8,013,978 79,626,972
18,743,611 5,005,742 23,749,353
Repurchase Agreements
Donaldson, Lufkin & Jenrette
Securities Corp. 50,000,000 50,000,000 100,000,000
Goldman, Sachs & Co. 150,000,000 0 150,000,000
Lehman Government
Securities, Inc. 75,000,000 0 75,000,000
Merrill Lynch & Co., Inc. 60,000,000 0 60,000,000
Merrill Lynch & Co., Inc. 70,000,000 30,000,000 100,000,000
Morgan Stanley & Co. 150,000,000 0 150,000,000
PaineWebber Incorporated 80,900,000 25,500,000 106,400,000
0
0
$1,589,350,691 $358,333,757 $1,947,684,448
</TABLE>
See accompanying notes to pro forma financial statments.
<PAGE> 32
FedFund Portfolio
FedCash Portfolio
Pro-Forma Combined Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
October 31, 1995
--------------------------------------------
FedFund FedCash Pro-Forma
Portfolio Portfolio Combined
----------- ----------- ------------
<S> <C> <C> <C>
INVESTMENT INCOME
Interest $92,288,610 $27,553,298 $119,841,908
----------- ----------- ------------
TOTAL INVESTMENT INCOME 92,288,610 27,553,298 $119,841,908
----------- ----------- ------------
EXPENSES
Investment Advisory Fees 1,992,524 599,169 2,591,693
Administration Fees 1,992,524 599,169 2,591,693
Custodian Fees 238,805 105,672 344,477
Transfer Agent Fees 99,287 21,630 120,917
Service Organization Fees-Dollar Shares 250,609 47,937 298,546
Legal and Audit 50,621 15,326 65,947
Printing 4,737 5,559 10,296
Registration Fees 24,576 21,331 45,907
Organization 0 5,161 5,161
Trustees' Fees and Officers' Salaries 29,305 8,880 38,185
Shareholder computer access program 38,827 0 38,827
Other 61,328 12,591 73,919
----------- ----------- ------------
4,783,143 1,442,425 6,225,568
Less: Fees waived (1,711,611) (551,341) (2,262,952)
----------- ----------- ------------
TOTAL EXPENSES 3,071,532 891,084 3,962,616
----------- ----------- ------------
NET INVESTMENT INCOME 89,217,078 26,662,214 115,879,292
----------- ----------- ------------
REALIZED GAIN (LOSS) ON
INVESTMENTS TRANSACTIONS
Net realized loss on investment
transactions (45,794) (22,449) (68,243)
----------- ----------- ------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $89,171,284 $26,639,765 $115,811,049
=========== =========== ============
</TABLE>
See accompanying notes to pro forma financial statments.
<PAGE> 33
FedFund Portfolio
FedCash Portfolio
Pro-Forma Combined Statement of Assets and Liabilities
(Unaudited)
<TABLE>
<CAPTION>
October 31, 1995
------------------------------------------------------
Pro-Forma
FedFund FedCash Combined
-------------- ------------- ----------------
<S> <C> <C> <C>
ASSETS
Investments, @ value (Cost $1,589,350,691
and $358,333,757 and $ 1,947,684,448
respectively) $1,589,350,691 $358,333,757 $1,947,684,448
Cash (38,856) 64,088 25,232
Interest receivable 9,032,721 2,059,137 11,091,858
Prepaid expenses 1,820 3,383 5,203
-------------- ------------ -------------
TOTAL ASSETS 1,598,346,376 360,460,365 1,958,806,741
-------------- ------------ --------------
LIABILITIES
Dividends payable 7,676,345 1,776,844 9,453,189
Accrued expenses payable 318,070 78,362 396,432
-------------- ------------ --------------
TOTAL LIABILITIES 7,994,415 1,855,206 9,849,621
-------------- ------------ --------------
TOTAL NET ASSETS $1,590,351,961 $358,605,159 $1,948,957,120
============== ============ ==============
TOTAL NET ASSETS BY CLASS OF SHARES
Institutional Class $1,377,174,916 $356,601,828 $1,733,776,744
Service Class 213,177,045 2,003,331 215,180,376
$1,590,351,961 $358,605,159 $1,948,957,120
SHARES OUTSTANDING
FedFund/FedCash Shares
Pre-merger 1,377,353,815 356,679,113
Post-merger 1,734,032,928 1,734,032,928
FedFund Dollar/FedCash Dollar Shares
Pre-merger 213,207,736 2,006,078
Post-merger 215,213,814 215,213,814
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
(total net assets / shares outstanding)
FedFund/FedCash Shares
Pre-merger $1.00 $1.00
Post-merger $1.00 $1.00
FedFund Dollar/FedCash Dollar Shares
Pre-merger $1.00 $1.00
Post-merger $1.00 $1.00
</TABLE>
See accompanying notes to pro forma financial statements.
<PAGE> 34
T-Fund Portfolio
T-Cash Portfolio
Pro-Forma Combined Portfolios of Investments
<TABLE>
<CAPTION>
October 31, 1995 Shares/Par(000) Value at October 31, 1995
(Unaudited) ------------------------------ --------------------------------------
T-Fund T-Cash Pro-Forma T-Fund T-Cash Pro-Forma
Rate Maturity Portfolio Portfolio Combined Portfolio Portfolio Combined
---- -------- --------- ---------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. GOVERNMENT SECURITIES
U.S. Treasury Bills 5.29% 05/30/96 $ 10,000 $ 0 $10,000 $ 9,689,947 $ 0 $ 9,689,947
U.S. Treasury Notes 4.625 02/29/96 20,000 0 20,000 19,895,695 0 19,895,695
5.125 03/31/96 50,000 10,000 60,000 49,748,121 9,949,624 59,697,745
9.375 04/15/96 20,000 0 20,000 20,320,302 0 20,320,302
5.50 04/30/96 30,000 10,000 40,000 29,972,399 9,988,050 39,960,449
7.625 04/30/96 20,000 10,000 30,000 20,150,502 10,075,251 30,225,753
4.25 05/15/96 10,000 0 10,000 9,925,919 0 9,925,919
7.375 05/15/96 40,000 20,000 60,000 40,347,265 20,171,289 60,518,554
7.25 08/31/96 20,000 10,000 30,000 20,205,709 10,114,761 30,320,470
6.50 09/30/96 30,000 0 30,000 30,180,104 0 30,180,104
REPURCHASE AGREEMENTS
Aubrey G. Lanston & Co., Inc. 5.90 11/01/95 60,000 15,000 75,000 60,000,000 15,000,000 75,000,000
Donaldson, Lufkin & Jenrette 5.71 11/16/95 135,000 30,000 165,000 135,000,000 30,000,000 165,000,000
Securities Corp.
First (The) Boston Corp. 5.70 11/16/95 40,000 0 40,000 40,000,000 0 40,000,000
Goldman, Sachs & Co. 5.88 11/01/95 240,000 60,000 300,000 240,000,000 60,000,000 300,000,000
Hong Kong Shanghai Bank Corp. 5.85 11/01/95 0 15,000 15,000 0 15,000,000 15,000,000
Lehman Government Securities, 5.92 11/01/95 60,000 15,000 75,000 60,000,000 15,000,000 75,000,000
Inc.
Merrill Lynch & Co., Inc. 5.85 11/01/95 60,000 30,000 90,000 60,000,000 30,000,000 90,000,000
Morgan (J.P.) Securities, Inc. 5.70 11/09/95 40,000 0 40,000 40,000,000 0 40,000,000
Morgan (J.P.) Securities, Inc. 5.875 11/01/95 0 15,000 15,000 0 15,000,000 15,000,000
Morgan Stanley & Co. 5.835 11/01/95 247,600 28,900 276,500 247,600,000 28,900,000 276,500,000
Smith Barney, Inc. 5.80 11/01/95 60,000 15,000 75,000 60,000,000 15,000,000 75,000,000
Swiss Bank Corp. 5.85 11/01/95 0 15,000 15,000 0 15,000,000 15,000,000
Swiss Bank Corp. 5.90 11/01/95 50,000 0 50,000 50,000,000 0 50,000,000
UBS Securities, Inc. 5.87 11/01/95 60,000 15,000 75,000 60,000,000 15,000,000 75,000,000
$1,303,035,963 $314,198,975 $1,617,234,938
</TABLE>
See accompanying notes to pro forma financial statments.
<PAGE> 35
T-Fund Portfolio
T-Cash Portfolio
Pro-Forma Combined Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
October 31, 1995
---------------------------------------------
T-Fund T-Cash Pro-Forma
Portfolio Portfolio Combined
----------- ----------- -----------
<S> <C> <C> <C>
INVESTMENT INCOME
Interest $74,450,769 $19,647,085 $94,097,854
----------- ----------- -----------
TOTAL INVESTMENT INCOME 74,450,769 19,647,085 $94,097,854
----------- ----------- -----------
EXPENSES
Investment Advisory Fees 1,620,479 428,287 2,048,766
Administration Fees 1,620,479 428,287 2,048,766
Custodian Fees 212,601 80,119 292,720
Transfer Agent Fees 65,092 24,604 89,696
Service Organization Fees-Dollar Shares 193,182 165,288 358,470
Legal and Audit 41,129 10,881 52,010
Printing 4,641 5,934 10,575
Registration Fees 20,069 15,907 35,976
Organization 0 5,208 5,208
Trustees' Fees and Officers' Salaries 23,784 6,892 30,676
Shareholder computer access program 30,809 0 30,809
Other 74,054 18,156 92,210
----------- ----------- -----------
3,906,319 1,189,563 5,095,882
Less: Fees waived (1,418,766) (420,331) (1,839,097)
----------- ----------- -----------
TOTAL EXPENSES 2,487,553 769,232 3,256,785
----------- ----------- -----------
NET INVESTMENT INCOME 71,963,216 18,877,853 90,841,069
----------- ----------- -----------
REALIZED GAIN (LOSS) ON
INVESTMENTS TRANSACTIONS
Net realized gain on investment
transactions 82,827 8,562 91,389
----------- ----------- -----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $72,046,043 $18,886,415 $90,932,458
=========== =========== ===========
</TABLE>
See accompanying notes to pro forma financial statments.
<PAGE> 36
T-Fund Portfolio
T-Cash Portfolio
Pro-Forma Combined Statement of Assets and Liabilities
(Unaudited)
<TABLE>
<CAPTION>
October 31, 1995
-----------------------------------------------------
Pro-Forma
T-Fund T-Cash Combined
-------------- ------------ --------------
<S> <C> <C> <C>
ASSETS
Investments, @ value (Cost $1,303,035,963
and $314,198,975 and $ 1,617,234,938
respectively) $1,303,035,963 $314,198,975 $1,617,234,938
Cash 96,090 78,402 174,492
Interest receivable 2,986,170 960,875 3,947,045
Prepaid expenses 7,010 7,828 14,838
-------------- ------------ --------------
TOTAL ASSETS 1,306,125,233 315,246,080 1,621,371,313
-------------- ------------ --------------
LIABILITIES
Capital shares redeemed payable 6,000,000 0 6,000,000
Dividends payable 6,162,069 1,588,702 7,750,771
Accrued expenses payable 241,239 79,214 320,453
-------------- ------------ --------------
TOTAL LIABILITIES 12,403,308 1,667,916 14,071,224
-------------- ------------ --------------
TOTAL NET ASSETS $1,293,721,925 $313,578,164 $1,607,300,089
============== ============ ==============
TOTAL NET ASSETS BY CLASS OF SHARES
Institutional Class $1,211,219,919 $250,041,391 $1,461,261,310
Service Class 82,502,006 63,536,773 146,038,779
-------------- ------------ --------------
$1,293,721,925 $313,578,164 $1,607,300,089
============== ============ ==============
SHARES OUTSTANDING
T-Fund/T-Cash Shares
Pre-merger 1,211,196,665 250,036,829
Post-merger 1,461,233,494 1,461,233,494
T-Fund Dollar/T-Cash Dollar Shares
Pre-merger 82,499,343 63,535,883
Post-merger 146,035,226 146,035,226
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
(total net assets / shares outstanding)
T-Fund/T-Cash Shares
Pre-merger $1.00 $1.00
Post-merger $1.00 $1.00
T-Fund Dollar/T-Cash Dollar Shares
Pre-merger $1.00 $1.00
Post-merger $1.00 $1.00
</TABLE>
See accompanying notes to pro forma financial statements.
<PAGE> 37
NOTES TO PRO-FORMA STATEMENTS OF THE
FEDFUND, T-FUND, FEDCASH AND T-CASH PORTFOLIOS
October 31, 1995
(Unaudited)
1. BASIS OF COMBINATION
The pro forma combined portfolio of investments and pro forma combined
statements of assets and liabilities reflect the accounts of the FedFund
Portfolio and the FedCash Portfolio at October 31, 1995. The pro forma combined
statements of operation reflect the accounts of the FedFund Portfolio and the
FedCash Portfolio for the twelve months ended October 31, 1995. The pro forma
combined portfolio of investments and pro forma combined statements of assets
and liabilities reflect the accounts of the T-Fund Portfolio and the T-Cash
Portfolio at October 31, 1995. The pro forma combined statements of operation
reflect the accounts of the T-Fund Portfolio and the T-Cash Portfolio for the
twelve months ended October 31, 1995. These pro forma financial statements have
been derived from the annual report for Trust for Federal Securities as of
October 31, 1995.
The pro forma statements give effect to the proposed transfer of the
assets and liabilities of the FedCash Portfolio into the FedFund Portfolio and
the proposed transfer of the assets and liabilities of the T-Cash Portfolio
into the T-Fund Portfolio assuming the transfer took place on November 1,
1994. The historical cost of investment securities will be carried forward to
the surviving portfolios and the results of operations of the surviving
portfolios for pre-combining periods will not be restated. The fiscal year end
of the surviving funds will still be October 31.
The accompanying pro forma financial statements should be read in
conjunction with the historical financial statements of the FedFund Portfolio,
T-Fund Portfolio, FedCash Portfolio, and T-Cash Portfolio.
2. SHARES OF BENEFICIAL INTEREST
The pro forma net asset value per share assumes the aquisition of the
assets and liabilities of existing FedCash and T-Cash and the issuance of
shares of FedFund and T-Fund, respectively, having net asset value equal to the
value of the assets acquired on the date of the proposed Transactions.
3. PRO-FORMA OPERATIONS
The pro forma statement of operations assumes the historical gross
investment income of the FedFund Portfolio, the T-Fund Portfolio, the FedCash
Portfolio, and the T-Cash Portfolio. Accordingly, the combined gross
investment income is equal to the sum of each funds' gross investment income.
The pro forma expenses reflect the historical expenses for the FedFund
Portfolio, the T-Fund Portfolio, the FedCash Portfolio and the T-Cash
Portfolio. Accordingly the combined operating expenses are equal to the sum of
each fund's actual expenses.
