<PAGE> 1
As filed with the Securities and Exchange Commission on April 1, 1996
Registration No. 2-53808
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 43
on
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /x/
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /x/
--------------------
TRUST FOR FEDERAL SECURITIES
(FedFund, T-Fund, FedCash, T-Cash, Federal Trust Fund
and Treasury Trust Fund Portfolios)
(Exact Name of Registrant as Specified in Charter)
Bellevue Park Corporate Center EDWARD J. ROACH
400 Bellevue Parkway, Suite 100 Bellevue Park Corporate Center
Wilmington, Delaware 19809 400 Bellevue Parkway, Suite 100
(Address of Principal Executive Offices) Wilmington, Delaware 19809
Registrant's Telephone Number: (Name and Address of
(302) 792-2555 Agent for Service)
Copy to:
W. BRUCE McCONNEL, III
Drinker Biddle & Reath
Philadelphia National Bank Building
1345 Chestnut Street
Philadelphia, Pennsylvania 19107-3496
It is proposed that this filing will become effective (check appropriate box)
/ / immediately upon filing pursuant to paragraph (b)
/ / on (date) pursuant to paragraph (b)
/X/ 60 days after filing pursuant to paragraph (a)(i)
/ / on (date) pursuant to paragraph (a)(i)
/ / 75 days after filing pursuant to paragraph (a)(ii)
/ / on (date) pursuant to paragraph (a)(ii) of rule 485.
If appropriate, check the following box:
/ / this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
===============================================================================
<PAGE> 2
TRUST FOR FEDERAL SECURITIES
(T-Fund Portfolio - Plus Shares)
Cross Reference Sheet
<TABLE>
<CAPTION>
Form N-1A Item Prospectus Caption
-------------- ------------------
<S> <C> <C>
1. Cover Page . . . . . . . . . . . . . . . . . Cover Page
2. Synopsis . . . . . . . . . . . . . . . . . Background and
Expense Information
3. Condensed Financial Information . . . . . . Yields
4. General Description of
Registrant . . . . . . . . . . . . . . . . Cover Page; Investment
Objective and Policies
5. Management of the Fund . . . . . . . . . . . Management of the Fund;
Dividends
6. Capital Stock and Other
Securities . . . . . . . . . . . . . . . . Cover Page; Dividends;
Taxes; Description of
Shares and
Miscellaneous
7. Purchase of Securities Being
Offered . . . . . . . . . . . . . . . Management of the Fund;
Purchase and Redemption
of Shares
8. Redemption or Repurchase . . . . . . . . . . Purchase and Redemption
of Shares
9. Pending Legal Proceedings . . . . . . . . . Inapplicable
</TABLE>
<PAGE> 3
T-Fund
Plus Shares
An Investment Portfolio Offered By
Trust for Federal Securities
<TABLE>
<S> <C>
Bellevue Park Corporate Center For purchase and redemption orders only call:
400 Bellevue Parkway 800-441-7450 (in Delaware: 302-791-5350).
Suite 100 For yield information call: 800-821-6006
Wilmington, DE 19809 (T-Fund Plus shares code: 32).
For other information call: 800-821-7432.
</TABLE>
Trust for Federal Securities (the "Company") is a no-load, diversified,
open-end investment company that currently offers shares in six separate
investment portfolios. This Prospectus describes one class of shares ("T-Fund
Plus Shares") in the T-Fund portfolio (the "Fund"), a money market portfolio.
The Fund's investment objective is to seek current income with liquidity
and security of principal. The Fund invests in a portfolio consisting of U.S.
Treasury bills, notes and direct obligations of the U.S. Treasury and repurchase
agreements relating to direct Treasury obligations.
Fund shares may not be purchased by individuals directly, but institutional
investors may purchase shares for accounts maintained by individuals. T-Fund
Plus Shares bear fees payable by the Fund to the institutional investors for
certain services they provide to the beneficial owners of those shares. T-Fund
Plus Shares also bear distribution fees payable by the Fund to the distributor
for distribution and sales support services. (See "Management of the
Fund -- Distribution and Service Plan.")
PNC Institutional Management Corporation ("PIMC") and PNC Bank, National
Association ("PNC Bank") serve as the Fund's adviser and sub-adviser,
respectively. PFPC Inc. ("PFPC") and Provident Distributors, Inc. ("PDI") serve
as the Fund's administrators. PDI also serves as the Fund's distributor.
SHARES OF THE FUND 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 FUND INVOLVES INVESTMENT
RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. THERE
CAN BE NO ASSURANCE THAT IT WILL BE ABLE TO
MAINTAIN ITS NET ASSET VALUE OF $1.00 PER
SHARE.
This Prospectus briefly sets forth certain information about the Fund that
investors should know before investing. Investors are advised to read this
Prospectus and retain it for future reference. Additional information about the
Fund, contained in a Statement of Additional Information currently dated
, 1996 has been filed with the Securities and Exchange Commission
and is available to investors without charge by calling the Fund at
800-821-7432. The Statement of Additional Information, as amended from time to
time, is incorporated in its entirety by reference into this Prospectus.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
, 1996
<PAGE> 4
BACKGROUND AND EXPENSE INFORMATION
Three classes of shares are offered by the Fund: T-Fund Plus Shares, T-Fund
Shares and T-Fund Dollar Shares. Shares of each class represent equal, pro rata
interests in the Fund and accrue daily dividends in the same manner, except that
T-Fund Plus Shares (as well as T-Fund Dollar Shares) bear fees payable by the
Fund (at the rate of .25% per annum) to institutional investors for services
they provide to the beneficial owners of such shares, and T-Fund Plus Shares
also bear distribution fees (at the rate of .15% per annum) payable by the Fund
to PDI for distribution and sales support services. (See "Management of the
Fund -- Distribution and Service Plan.")
EXPENSE SUMMARY
<TABLE>
<CAPTION>
T-FUND
PLUS SHARES
--------------
<S> <C> <C>
ANNUAL FUND OPERATING EXPENSES
- -------------------------------------------------------------------------
(as a percentage of average net assets)
Management Fees (net of waivers).................................... .07 %
12b-1 Fees.......................................................... .15 %
Other Expenses...................................................... .38 %
Administration Fees (net of waivers)........................... .07 %
Shareholder Servicing Fees..................................... .25 %
Miscellaneous.................................................. .06 %
----
Total Fund Operating Expenses (net of waivers)...................... .60 %
===
</TABLE>
- ------------
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------------------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000
investment, assuming (1) a 5% annual return and
(2) redemption at the end of each time period with
respect to T-Fund Plus Shares: $6 $19 $33 $ 75
</TABLE>
THE FOREGOING SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES OR RATE OF RETURN. ACTUAL EXPENSES AND RATE OF RETURN MAY BE GREATER OR
LESSER THAN THOSE SHOWN.
The purpose of the foregoing table is to assist an investor in
understanding the various costs and expenses that an investor in the Fund will
bear directly or indirectly. The table is based on expenses incurred by the Fund
during the last fiscal year, restated to reflect the expenses which are expected
to be incurred by T-Fund Plus Shares during the current fiscal year. In
addition, institutional investors may charge fees for providing administrative
services in connection with their customers' investment in T-Fund Plus Shares.
Absent fee waivers, Management and Administration fees for T-Fund Plus Shares
would be .13% and Total Fund Operating Expenses would be .69%. (For more
complete descriptions of the various costs and expenses, see "Management of the
Fund" in this Prospectus and the Statement of Additional Information and the
financial statements and related notes contained in the Statement of Additional
Information.) The investment adviser and administrators may from time to time
waive the advisory and administration fees otherwise payable to them or may
reimburse the Fund for its operating expenses. The foregoing table has not been
audited by the Fund's independent accountants.
2
<PAGE> 5
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is to seek current income with liquidity
and security of principal. The Fund invests solely in direct obligations of the
U.S. Treasury, such as Treasury bills and notes and repurchase agreements
relating to direct Treasury obligations. Portfolio obligations held by the Fund
have remaining maturities of 397 days (thirteen months) or less (with certain
exceptions), subject to the quality, diversification, and other requirements of
Rule 2a-7 under the Investment Company Act of 1940, as amended (the "1940 Act")
and other rules of the Securities and Exchange Commission (the "SEC").
Securities issued or guaranteed by the U.S. Government have historically
involved little risk of loss of principal if held to maturity. However, due to
fluctuations in interest rates, the market value of such securities may vary
during the period a shareholder owns shares of the Fund. To the extent
consistent with its investment objectives, the Fund may invest in Treasury
receipts and other "stripped" securities issued or guaranteed by the U.S.
Government, where the principal and interest components are traded independently
under the Separate Trading of Registered Interest and Principal of Securities
program ("STRIPS"). Under the STRIPS program, the principal and interest
components are individually numbered and separately issued by the U.S. Treasury
at the request of depository financial institutions, which then trade the
component parts independently. Currently, the Fund only invests in "stripped"
securities issued or guaranteed by the U.S. Government which are registered
under the STRIPS program. The principal and interest components may exhibit
greater price volatility than ordinary debt securities because of the manner in
which their principal and interest are returned to investors.
The Fund may purchase government securities from primary dealers of the
Federal Reserve Bank of New York, subject to the seller's agreement to
repurchase them at an agreed upon time and price ("repurchase agreements"). The
securities subject to a repurchase agreement may bear maturities exceeding
thirteen months, provided the repurchase agreement itself matures in one year or
less. The Fund will not invest more than 10% of the value of its net assets in
repurchase agreements which do not provide for settlement within seven days. The
seller under a repurchase agreement will be required to maintain the value of
the underlying securities subject to the agreement at not less than 102% of the
repurchase price. Default by or bankruptcy of the seller would, however, expose
the Fund to possible loss because of adverse market action or delay in
connection with the disposition of the underlying obligations.
The Fund may purchase securities on a "when-issued" basis. When-issued
securities are securities purchased for delivery beyond the normal settlement
date at a stated price and yield. The Fund will generally not pay for such
securities or start earning interest on them until they are received. Securities
purchased on a when-issued basis are recorded as an asset and are subject to
changes in value based upon changes in the general level of interest rates. The
Fund expects that commitments to purchase when-issued securities will not exceed
25% of the value of its total assets absent unusual market conditions. The Fund
does not intend to purchase when-issued securities for speculative purposes or
as a means of leverage, but only in furtherance of its investment objective.
INVESTMENT LIMITATIONS
The Fund's investment objective and policies described above are not
fundamental and may be changed by the Company's Board of Trustees without a vote
of shareholders. If there is a
3
<PAGE> 6
change in the investment objective, shareholders should consider whether the
Fund remains an appropriate investment in light of their then current financial
position and needs. The Fund's investment limitations summarized below may not
be changed without the affirmative vote of the holders of a majority of its
outstanding shares. (A complete list of the investment limitations that cannot
be changed without a vote of shareholders is contained in the Statement of
Additional Information under "Investment Objectives and Policies.")
The Fund may not:
1. Purchase securities other than direct obligations of the U.S. Treasury
such as Treasury bills and notes, some of which may be subject to repurchase
agreements.
2. Borrow money except from banks for temporary purposes and then in an
amount not exceeding 10% of the value of the Fund's total assets, or mortgage,
pledge or hypothecate its assets except in connection with any such borrowing
and in amounts not in excess of the lesser of the dollar amounts borrowed or 10%
of the value of the Fund's total assets at the time of such borrowing.
3. Make loans except that the Fund may purchase or hold debt obligations in
accordance with its investment objective and policies, may enter into repurchase
agreements for securities.
PURCHASE AND REDEMPTION OF SHARES
PURCHASE PROCEDURES
T-Fund Plus Shares are sold exclusively to institutional investors, such as
brokers or dealers, banks and savings and loan associations and other financial
institutions, and other industry professionals ("Service Organizations"), acting
on behalf of themselves or their customers and customers of their affiliates
("customers"). The customers, which may include individuals, trusts,
partnerships and corporations, must maintain accounts (such as demand deposit,
custody, trust or escrow accounts) with the Service Organization. Service
Organizations (or their nominees) will normally be the holders of record of
T-Fund Plus Shares, and will reflect their customers' beneficial ownership of
shares in the account statements provided by them to their customers. The
exercise of voting rights and the delivery to customers of shareholder
communications from the Fund will be governed by the customers' account
agreements with the Service Organizations. Investors wishing to purchase T-Fund
Plus Shares should contact their account representatives.
Purchase orders must be transmitted by a Service Organization directly to
PFPC, the Fund's transfer agent. All such transactions are effected pursuant to
procedures established by the Service Organization in connection with a
customer's account. T-Fund Plus Shares are sold at the net asset value per share
next determined after receipt of a purchase order by PFPC.
Purchase orders for shares are accepted only on days on which both the New
York Stock Exchange and the Federal Reserve Bank of Philadelphia, are open for
business (a "Business Day") and must be transmitted to PFPC in Wilmington,
Delaware, by telephone (800-441-7450; in Delaware: 302-791-5350) or through the
Fund's computer access program. Orders received before 12:00 noon, Eastern time,
for which payment has been received by PNC Bank, the Fund's custodian, will be
executed at 12:00 noon. Orders received after 12:00 noon and before 3:00 P.M.,
Eastern time (or orders received earlier in the same day for which payment has
not been received
4
<PAGE> 7
by 12:00 noon), will be executed at 4:00 P.M., Eastern time, if payment has been
received by PNC Bank by that time. Orders received at other times, and orders
for which payment has not been received by 4:00 P.M., Eastern time, will not be
accepted, and notice thereof will be given to the institution placing the order.
(Payment for orders which are not received or accepted will be returned after
prompt inquiry to the sending institution.) The Fund may in its discretion
reject any order for shares.
Payment for T-Fund Plus Shares may be made only in federal funds or other
funds immediately available to PNC Bank. The minimum initial investment by
Service Organizations is $3 million for T-Fund Plus Shares; however, Service
Organizations may set a higher minimum for their customers. There is no minimum
subsequent investment. The Fund, at its discretion, may reduce the minimum
initial investment for T-Fund Plus Shares for specific Service Organizations
whose aggregate relationship with the Provident Institutional Funds is
substantially equivalent to this $3 million minimum and warrants this reduction.
Conflict of interest restrictions may apply to an institution's receipt of
compensation paid by the Fund in connection with the investment of fiduciary
funds in T-Fund Plus Shares. (See also "Management of the Fund -- Distribution
and Service Plan.") Institutions, including banks regulated by the Comptroller
of the Currency and investment advisers and other money managers subject to the
jurisdiction of the SEC, the Department of Labor or state securities
commissions, should consult their legal advisors before investing fiduciary
funds in T-Fund Plus Shares. (See also "Management of the Fund -- Banking
Laws.")
REDEMPTION PROCEDURES
Redemption orders must be transmitted to PFPC in Wilmington, Delaware, in
the manner described under "Purchase Procedures." Shares are redeemed at the net
asset value per share next determined after PFPC's receipt of the redemption
order. While the Fund intends to use its best efforts to maintain its net asset
value per share at $1.00, the proceeds paid to a shareholder upon redemption may
be more or less than the amount invested depending upon a share's net asset
value at the time of redemption.
Payment for redeemed shares for which a redemption order is received by
PFPC by 3:00 P.M., Eastern time, on a Business Day is normally made in federal
funds wired to the redeeming shareholder on the same business day. Payment for
redemption orders which are received between 3:00 P.M. and 4:00 P.M., Eastern
time, or on a day when PNC Bank is closed, is normally wired in federal funds on
the next day following redemption that PNC Bank is open for business.
The Fund shall have the right to redeem shares in any account if the value
of the account is less than $1,000 after sixty-days' prior written notice to the
shareholder. Any such redemption shall be effected at the net asset value per
share next determined after the redemption order is entered. If during the
sixty-day period the shareholder increases the value of its account to $1,000 or
more, no such redemption shall take place. Moreover, if a shareholder's T-Fund
Plus Shares account falls below an average of $100,000 in any particular
calendar month, the account may be charged an account maintenance fee with
respect to that month. In addition, the Fund may also redeem shares
involuntarily or suspend the right of redemption under certain special
circumstances described in the Statement of Additional Information under
"Additional Purchase and Redemption Information."
5
<PAGE> 8
OTHER MATTERS
The Fund's net asset value per share for purposes of pricing purchase and
redemption orders is determined by PIMC as of 12:00 noon and 4:00 P.M., Eastern
time, on each day on which both the Federal Reserve Bank of Philadelphia and the
New York Stock Exchange are open for business. Currently, one or both of these
institutions are closed on the customary national business holidays of New
Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial
Day (observed), Independence Day, Labor Day, Columbus Day (observed), Veteran's
Day, Thanksgiving Day and Christmas Day. The net asset value per share of each
class of the Fund is calculated by adding the value of all securities and other
assets belonging to the Fund, subtracting liabilities attributable to each
class, and dividing the result by the total number of the outstanding shares of
each class. In computing net asset value, the Fund uses the amortized cost
method of valuation as described in the Statement of Additional Information
under "Additional Purchase and Redemption Information." The Fund's net asset
value per share for purposes of pricing purchase and redemption orders is
determined independently of the net asset values of the shares of the Company's
other investment portfolios.
Fund shares are sold and redeemed without charge by the Fund. Service
Organizations purchasing or holding T-Fund Plus Shares for their customer
accounts may charge customer fees for cash management and other services
provided in connection with their accounts. In addition, if a customer has
agreed with a particular Service Organization to maintain a minimum balance in
its account with the Service Organization and the balance in such account falls
below that minimum, the customer may be obliged by the Service Organization to
redeem all or part of its shares in the Fund to the extent necessary to maintain
the required minimum balance in such account. A customer should, therefore,
consider the terms of its account with a Service Organization before purchasing
T-Fund Plus Shares. A Service Organization purchasing or redeeming Fund shares
on behalf of its customers is responsible for transmitting orders to the Fund in
accordance with its customer agreements.
MANAGEMENT OF THE FUND
BOARD OF TRUSTEES
The business and affairs of the Fund are managed under the direction of the
Company's Board of Trustees. The trustees of the Company are as follows:
Philip E. Coldwell is an economic consultant and a former Member of
the Board of Governors of the Federal Reserve System.
Robert R. Fortune is a financial consultant and former Chairman,
President and Chief Executive Officer of Associated Electric & Gas
Insurance Services Limited.
Rodney D. Johnson is President of Fairmount Capital Advisors, Inc.
G. Willing Pepper, Chairman of the Board and President of the Company,
is a retired President of Scott Paper Company.
Mr. Pepper is considered by the Company to be an "interested person" of the
Company as defined in the 1940 Act.
6
<PAGE> 9
The other officers of the Company are as follows:
Edward J. Roach is Vice President and Treasurer of the Company.
W. Bruce McConnel, III, Secretary of the Company, is a partner of the
law firm of Drinker Biddle & Reath, Philadelphia, Pennsylvania.
INVESTMENT ADVISER AND SUB-ADVISER
PIMC, a wholly-owned subsidiary of PNC Bank, serves as the Fund's
investment adviser. PIMC was organized in 1977 by PNC Bank to perform advisory
services for investment companies and has its principal offices at 400 Bellevue
Parkway, Wilmington, Delaware 19809. PNC Bank serves as the Fund's sub-adviser.
PNC Bank is one of the largest bank managers of investments for individuals in
the United States, and together with its predecessors has been in the business
of managing the investments of fiduciary and other accounts since 1847. PNC Bank
is a wholly-owned, indirect subsidiary of PNC Bank Corp. and has its principal
offices at Broad and Chestnut Streets, Philadelphia, Pennsylvania 19102. PNC
Bank Corp. is a multi-bank holding company. PIMC and PNC Bank also serve as
adviser and sub-adviser, respectively, to the Company's FedFund, FedCash,
T-Cash, Federal Trust Fund and Treasury Trust Fund portfolios.
PNC Bank Corp., headquartered in Pittsburgh, Pennsylvania, is one of the
largest financial services organizations in the United States with banking
subsidiaries in Pennsylvania, New Jersey, Delaware, Ohio, Kentucky, Indiana,
Massachusetts and Florida. Its major businesses include corporate banking,
consumer banking, mortgage banking and asset management.
PNC Financial Services Group is PNC Bank Corp.'s mutual fund complex,
headquartered in Wilmington, Delaware. This group includes PIMC, PFPC and PNC
Bank. In 1973, Provident National Bank (predecessor to PNC Bank) commenced
advising the first institutional money market mutual fund -- a U.S.
dollar-denominated constant net asset value fund -- offered in the United
States.
The PNC Financial Services Group is one of the largest U.S. bank managers
of mutual funds with assets currently under management in excess of $30 billion.
This group, through PFPC and PFPC International Ltd, is also a leading mutual
fund service provider having contractual relationships with approximately 370
mutual funds with 3.5 million shareholders and in excess of $101 billion in
assets, including some $2 billion in non-U.S. assets. This group, through its
PNC Institutional Investment Service, provides investment research to some 250
financial institutions located in the United States and abroad. PNC Bank
provides custodial services for approximately $210 billion in assets, including
$160 billion in mutual fund assets.
As adviser, PIMC manages the Fund's portfolio and is responsible for all
purchases and sales of the Fund's portfolio securities. PIMC also maintains
certain of the Fund's financial accounts and records and computes the Fund's net
asset value and net income. For the advisory services provided and expenses
assumed by it, PIMC is entitled to receive a fee, computed daily and payable
monthly, based on the Fund's average net assets. PIMC and the administrators may
from time to time reduce the advisory and administration fees otherwise payable
to them or may reimburse the Fund for its operating expenses. Any fees waived by
PIMC with respect to a particular fiscal year are not recoverable. For the
fiscal year ended October 31, 1995, the Fund paid investment advisory fees
aggregating .07% of its average net assets.
7
<PAGE> 10
As sub-adviser, PNC Bank provides research, credit analysis and
recommendations with respect to the Fund's investments, and supplies PIMC with
certain computer facilities, personnel and other services. For its sub-advisory
services, PNC Bank is entitled to receive from PIMC an amount equal to 75% of
the advisory fee paid by the 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 the Fund to PIMC. PNC Bank also serves as the
Fund's custodian. The services provided by PNC Bank and PIMC and the fees
payable by the Fund for these services are described further in the Statement of
Additional Information under "Management of the Funds."
ADMINISTRATOR
PFPC, whose principal business address is 400 Bellevue Parkway, Wilmington,
Delaware 19809, and PDI whose principal business address is 259 Radnor-Chester
Road, Suite 120, Radnor, Pennsylvania 19087, serve as administrators. PFPC is an
indirect wholly-owned subsidiary of PNC Bank Corp. A majority of the outstanding
stock of PDI is owned by its officers. The administrative services provided by
the administrators, which are described more fully in the Statement of
Additional Information, include providing and supervising the operation of an
automated data processing system to process purchase and redemption orders;
assisting in maintaining the Fund's Wilmington, Delaware office; performing
administrative services in connection with the Fund's computer access program
maintained to facilitate shareholder access to the Fund; accumulating
information for and coordinating the preparation of reports to the Fund's
shareholders and the SEC; and maintaining the registration or qualification of
the Fund's shares for sale under state securities laws. PFPC and PDI are each
responsible for carrying out the duties undertaken pursuant to the
Administration Agreement with the Fund.
For their administrative services, the administrators are entitled jointly
to receive a fee computed daily and payable monthly. (For information regarding
the administrators' waivers and expense reimbursements, see "Investment Adviser
and Sub-Adviser" above.) The Fund also reimburses each administrator for its
reasonable out-of-pocket expenses incurred in connection with the Funds'
computer access program. For the fiscal year ended October 31, 1995, the Fund
paid administration fees aggregating .07% of its average net assets.
PFPC also serves as transfer agent, registrar and dividend disbursing
agent. PFPC's address is P.O. Box 8950, Wilmington, Delaware 19885-9628. The
services provided by PFPC and PDI and the fees payable by the Fund for these
services are described further in the Statement of Additional Information under
"Management of the Funds."
DISTRIBUTOR
PDI serves as distributor of the Fund's shares. Its principal offices are
located at 259 Radnor-Chester Road, Suite 120, Radnor, Pennsylvania 19087. Fund
shares are sold on a continuous basis by the distributor as agent. The
distributor pays the cost of printing and distributing prospectuses to persons
who are not shareholders of the Fund (excluding preparation and printing
expenses necessary for the continued registration of the Fund's shares) and of
printing and distributing all sales literature. No compensation is payable by
the Fund to the distributor for its distribution services.
8
<PAGE> 11
DISTRIBUTION AND SERVICE PLAN
Under the Fund's Distribution and Service Plan (the "Plan"), T-Fund Plus
Shares bear the expense of distribution fees of up to .25% and shareholder
servicing fees of up to .25%, on an annualized basis, of the average daily net
asset value of the outstanding T-Fund Plus Shares.
The distribution fees consist of payments made to PDI for distribution and
sales support services. The distribution fees will be used to compensate PDI for
distribution services and to compensate PDI for sales support services provided
in connection with the offering and sale of T-Fund Plus Shares. The distribution
fees may also be used to reimburse PDI for related expenses, including payments
to Service Organizations for sales support services and related expenses. The
Fund currently intends to limit the distribution fees to no more than .15% (on
an annualized basis) of the average daily net asset value of the outstanding
T-Fund Plus Shares. Payments under the Plan are not tied directly to
out-of-pocket expenses and therefore may be used by the recipients as they
choose (for example, to defray their overhead expenses).
The shareholder servicing fees are paid to PDI, which will compensate
Service Organizations which have entered into service agreements with the Fund
to render certain support services to their customers who are the beneficial
owners of T-Fund Plus Shares. In consideration for a shareholder servicing fee
of up to .25% (annualized) of the average daily net asset value of T-Fund Plus
Shares owned by their customers including: responding to customer inquiries
relating to the services performed by the Service Organization and to customer
inquiries concerning their investments in T-Fund Plus Shares; providing
information periodically to customers showing their positions in T-Fund Plus
Shares; and other similar shareholder liaison services.
Service Organizations may charge their clients additional fees for account
services. As previously noted, customers who are beneficial owners of T-Fund
Plus Shares should read this Prospectus in light of the terms and fees governing
their accounts with Service Organizations.
EXPENSES
Except as noted above and in the Statement of Additional Information, the
Fund's service contractors bear all expenses in connection with the performance
of their services. Similarly, the Fund bears the expenses incurred in its
operations. With regard to fees paid exclusively by T-Fund Plus Shares, see
"Distribution and Service Plan" above.
BANKING LAWS
Banking laws and regulations presently prohibit a bank holding company
registered under the Federal Bank Holding Company Act of 1956 or any bank or
non-bank affiliate thereof from sponsoring, organizing or controlling a
registered, open-end investment company engaged continuously in the issuance of
its shares, and prohibit banks generally from issuing, underwriting, selling or
distributing securities such as Fund shares. Such banking laws and regulations
do not prohibit such a holding company or affiliate or banks generally from
acting as investment adviser, transfer agent or custodian to such an investment
company, or from purchasing shares of such a company for or upon the order of
customers. PNC Bank, PIMC and PFPC, as well as some Service Organizations, are
subject to such banking laws and regulations, but believe they may perform the
services for the Fund contemplated by their respective agreements, this
Prospectus and the Statement of Additional Information without violating
applicable banking laws or regulations.
9
<PAGE> 12
Should future legislative, judicial or administrative action prohibit or
restrict the activities of bank Service Organizations in connection with the
provision of support services to their customers, the Fund might be required to
alter or discontinue its arrangements with Service Organizations and change its
method of operations with respect to T-Fund Plus Shares. It is not anticipated,
however, that any change in the Fund's method of operations would affect its net
asset value per share or result in a financial loss to any customer.
DIVIDENDS
Shareholders of the Fund are entitled to dividends and distributions
arising only from the net investment income and capital gains, if any, earned on
investments held by the Fund. The Fund's net investment income is declared daily
as a dividend to its shareholders of record at the close of business on the day
of declaration. Shares begin accruing dividends on the day the purchase order
for the shares is executed and continue to accrue dividends through the day
before such shares are redeemed. Dividends are paid monthly by check, or by wire
transfer if requested in writing by the shareholder, within five business days
after the end of the month or within five business days after a redemption of
all of a shareholder's shares of a particular class. The Fund does not expect to
realize net long-term capital gains.
Dividends are determined in the same manner for each class of shares of the
Fund but may differ in amount because of the difference in the expenses paid by
the different classes.
Institutional shareholders may elect to have their dividends reinvested in
additional full and fractional shares of T-Fund Plus Shares with respect to
which such dividends are declared at the net asset value of such shares on the
payment date. Reinvested dividends receive the same tax treatment as dividends
paid in cash. Such election, or any revocation thereof, must be made in writing
to PFPC at P.O. Box 8950, Wilmington, Delaware 19885-9628, and will become
effective after its receipt by PFPC with respect to dividends paid.
PFPC, as transfer agent, will send each Fund shareholder or its authorized
representative an annual statement designating the amount, if any, of any
dividends and distributions made during each year and their federal tax
qualification.
TAXES
The Fund qualified in its last taxable year and intends to qualify in
future years as a "regulated investment company" under the Internal Revenue Code
of 1986, as amended (the "Code"). A regulated investment company is generally
exempt from federal income tax on amounts distributed to its shareholders.
Qualification as a regulated investment company under the Code for a
taxable year requires, among other things, that the Fund distribute to its
shareholders at least 90% of its investment company taxable income for such
year. In general, the Fund's investment company taxable income will be its
taxable income (including interest and short-term capital gains, if any),
subject to certain adjustments and excluding the excess of any net long-term
capital gain for the taxable year over the net short-term capital loss, if any,
for such year. The Fund intends to distribute substantially all of its
investment company taxable income each year. Such distributions will be taxable
as ordinary income to the Fund's shareholders that are not currently exempt from
federal
10
<PAGE> 13
income taxes, whether such income is received in cash or reinvested in
additional shares. (Federal income taxes for distributions to an IRA or a
qualified retirement plan are deferred under the Code.) It is anticipated that
none of the Fund's distributions will be eligible for the dividends received
deduction for corporations. The Fund does not expect to realize long-term
capital gains and, therefore, does not contemplate payment of any "capital gain
dividends," as described in the Code.
Dividends declared in October, November or December of any year payable to
shareholders of record on a specified date in such months will be deemed to have
been received by the shareholders and paid by the Fund on December 31 of such
year, in the event such dividends are actually paid during January of the
following year.
The foregoing discussion is only a brief summary of some of the important
federal tax considerations generally affecting the Fund and its shareholders. As
indicated above, IRAs receive special tax treatment. No attempt is made to
present a detailed explanation of the federal, state or local income tax
treatment of the Fund or its shareholders, and this discussion is not intended
as a substitute for careful tax planning. Accordingly, potential investors in
the Fund should consult their tax advisors with specific reference to their own
tax situations.
YIELDS
From time to time, in advertisements or reports to shareholders, "yields"
and "effective yields" for T-Fund Plus Shares may be quoted. Yield quotations
are computed separately for T-Fund Plus Shares, T-Fund Shares and T-Fund Dollar
Shares. The "yield" for T-Fund Plus Shares, refers to the income generated by an
investment in such shares over a specified period (such as a seven-day period).
This income is then "annualized"; that is, the amount of income generated by the
investment during that period is assumed to be generated for each such period
over a 52-week or one year period and is shown as a percentage of the
investment. The "effective yield" is calculated similarly but, when annualized,
the income earned by an investment in T-Fund Plus Shares, is assumed to be
reinvested. The "effective yield" will be slightly higher than the "yield"
because of the compounding effect of this assumed reinvestment.
The Fund's yields may be compared to those of other mutual funds with
similar objectives, to stock or other relevant indices, or to rankings prepared
by independent services or other financial or industry publications that monitor
the performance of mutual funds. For example, such data are reported in national
financial publications such as IBC/Donoghue's Money Fund Report(R), The Wall
Street Journal, and The New York Times, reports prepared by Lipper Analytical
Services, Inc., and publications of a local or regional nature.
The Fund's yield figures for T-Fund Plus Shares represent the Fund's past
performance, will fluctuate, and should not be considered as representative of
future results. The yield of any investment is generally a function of portfolio
quality and maturity, type of investment and operating expenses. Any fees
charged by Service Organizations directly to their customers in connection with
investments in T-Fund Plus Shares are not reflected in the Fund's yield for
those shares; and, such fees, if charged, would reduce the actual return
received by customers on their investments. The methods used to compute the
Fund's yields are described in more detail in the Statement of Additional
Information. Investors may call 800-821-6006 (T-Fund Plus Shares code: 32) to
obtain current yield information.
11
<PAGE> 14
DESCRIPTION OF SHARES AND MISCELLANEOUS
The Company is a Pennsylvania business trust established on May 14, 1975.
Effective March 2, 1987, the Company's name was changed from Trust for
Short-Term Federal Securities to Trust for Federal Securities. The Company
commenced operations of the Fund in March, 1980.
The Company's 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 of shares. Pursuant to such authority, the Board of
Trustees has authorized the issuance of thirteen classes of shares designated as
FedFund, FedFund Dollar, T-Fund, T-Fund Dollar, T-Fund Plus, FedCash, FedCash
Dollar, T-Cash, T-Cash Dollar, Federal Trust, Federal Trust Dollar, Treasury
Trust and Treasury Trust Dollar. The Declaration of Trust further authorizes the
trustees to classify or reclassify any class of shares into one or more
sub-classes.
THIS PROSPECTUS AND THE STATEMENT OF ADDITIONAL INFORMATION INCORPORATED
HEREIN RELATE PRIMARILY TO THE FUND AND DESCRIBE ONLY THE INVESTMENT OBJECTIVE
AND POLICIES, OPERATIONS, CONTRACTS AND OTHER MATTERS RELATING TO T-FUND PLUS
SHARES OF THE FUND. INVESTORS WISHING TO OBTAIN SIMILAR INFORMATION REGARDING
THE FUND'S OTHER CLASSES OF SHARES OR THE COMPANY'S FEDFUND, FEDCASH, T-CASH,
FEDERAL TRUST FUND AND TREASURY TRUST FUND PORTFOLIOS MAY OBTAIN SEPARATE
PROSPECTUSES DESCRIBING THOSE PORTFOLIOS BY CALLING THE DISTRIBUTOR AT
800-998-7633.
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.
Each Fund Share represents an equal proportionate interest in the assets
belonging to the Fund. Each share is without par value and has no preemptive or
conversion rights. When issued for payment as described in this Prospectus,
shares will be fully paid and non-assessable.
Holders of the Company's T-Fund Plus Shares, T-Fund Shares and T-Fund
Dollar Shares will vote in the aggregate and not by class or sub-class on all
matters, except (i) where otherwise required by law, (ii) only T-Fund Dollar
Shares will be entitled to vote on matters submitted to a vote of shareholders
pertaining to certain organizations providing services to those shares, (iii)
only T-Fund Plus Shares will be entitled to vote on matters submitted to a vote
of shareholders pertaining to the Fund's arrangements with Service Organizations
and (iv) only T-Fund Plus Shares will be entitled to vote on matters submitted
to a vote of shareholders pertaining to distribution fees. Further, shareholders
of all of the Company's portfolios will vote in the aggregate and not by
portfolio except as otherwise required by law or when the Board of Trustees
determines that the matter to be voted upon affects only the interests of the
shareholders of a particular portfolio. (See the Statement of Additional
Information under "Additional Description Concerning Fund Shares" for examples
where the 1940 Act requires voting by portfolio.) Shareholders of the Company
are entitled to one vote for each full share held (irrespective of class,
sub-class, or portfolio) and fractional votes for fractional shares held.
12
<PAGE> 15
Voting rights are not cumulative and, accordingly, the holders of more than 50%
of the aggregate shares of the Company may elect all of the trustees.
For information concerning the redemption of Fund shares and possible
restrictions on their transferability, see "Purchase and Redemption of Shares."
As stated above, the Company is organized as a trust under the laws of the
Commonwealth of Pennsylvania. Shareholders of such a trust may, under certain
circumstances, be held personally liable (as if they were partners) for the
obligations of the trust. The Company's Declaration of Trust provides for
indemnification out of the trust property of any shareholder of the Fund held
personally liable solely by reason of being or having been a shareholder and not
because of any acts or omissions or some other reason.
13
<PAGE> 16
NO PERSON HAS BEEN AUTHORIZED
TO GIVE ANY INFORMATION OR TO
MAKE ANY REPRESENTATIONS NOT
CONTAINED IN THIS PROSPECTUS,
OR IN THE FUND'S STATEMENT OF
ADDITIONAL INFORMATION
INCORPORATED HEREIN BY
REFERENCE, IN CONNECTION WITH
THE OFFERING MADE BY THIS
PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR
ITS DISTRIBUTOR. THIS
PROSPECTUS DOES NOT
CONSTITUTE AN OFFERING BY THE
COMPANY OR BY THE DISTRIBUTOR
IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT
LAWFULLY BE MADE.
---------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
------
<S> <C>
Background and Expense
Information................... 2
Investment Objective and
Policies...................... 3
Purchase and Redemption of
Shares........................ 4
Management of the Fund.......... 6
Dividends....................... 10
Taxes........................... 10
Yields.......................... 11
Description of Shares and
Miscellaneous................. 12
</TABLE>
PIF-P-
T-FUND
PLUS SHARES
AN INVESTMENT PORTFOLIO
OFFERED BY
TRUST FOR FEDERAL SECURITIES
[PROVIDENT INSTITUTIONAL FUNDS LOGO]
Prospectus
, 1996
<PAGE> 17
FEDFUND AND T-FUND
Investment Portfolios Offered By
Trust for Federal Securities
Statement of Additional Information
___________, 1996
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
INVESTMENT OBJECTIVES AND POLICIES . . . . . . . . . . . . . . . . . . . 2
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION . . . . . . . . . . . . . 6
MANAGEMENT OF THE FUNDS . . . . . . . . . . . . . . . . . . . . . . . . . 9
ADDITIONAL INFORMATION CONCERNING TAXES . . . . . . . . . . . . . . . . . 20
DIVIDENDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ADDITIONAL YIELD INFORMATION . . . . . . . . . . . . . . . . . . . . . . 22
ADDITIONAL DESCRIPTION CONCERNING FUND SHARES . . . . . . . . . . . . . . 24
COUNSEL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
AUDITORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . 27
APPENDIX A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
This Statement of Additional Information is meant to be read in
conjunction with the Prospectuses for FedFund dated February 28, 1996 and
T-Fund dated February 28, 1996 and ___________, 1996 and is incorporated by
reference in its entirety into those Prospectuses. Because this Statement of
Additional Information is not itself a prospectus, no investment in shares of
FedFund or T-Fund should be made solely upon the information contained herein.
Copies of the Prospectuses for FedFund and T-Fund may be obtained by calling
800-821-7432. Capitalized terms used but not defined herein have the same
meanings as in the Prospectuses.
<PAGE> 18
THE COMPANY
Trust for Federal Securities (Trust for Short-Term Federal Securities
prior to March 2, 1987) is a no-load, diversified, open-end investment company
designed primarily as a vehicle by which institutional investors can invest
cash reserves in a choice of portfolios consisting of government securities.
Trust for Federal Securities (the "Company") consists of six separate
investment portfolios--FedFund, T-Fund, FedCash, T-Cash, Federal Trust Fund and
Treasury Trust Fund. This Statement of Additional Information relates
primarily to the Company's FedFund and T-Fund portfolios (the "Funds").
The securities held by FedFund consist of obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities and
repurchase agreements relating to such obligations. Securities held by T-Fund
are limited to U.S. Treasury bills, notes and other direct obligations of the
U.S. Treasury and repurchase agreements relating to direct Treasury
obligations. Although both Funds have the same investment adviser and have
comparable investment objectives, their yields normally will differ due to
their differing cash flows and differences in the specific portfolio securities
held.
THIS STATEMENT OF ADDITIONAL INFORMATION AND THE FUNDS' PROSPECTUSES
RELATE PRIMARILY TO THE FUNDS AND DESCRIBE ONLY THE INVESTMENT OBJECTIVE AND
POLICIES, OPERATIONS, CONTRACTS, AND OTHER MATTERS RELATING TO THE FUNDS.
INVESTORS WISHING TO OBTAIN SIMILAR INFORMATION REGARDING THE COMPANY'S
FEDCASH, T-CASH, FEDERAL TRUST FUND OR TREASURY TRUST FUND PORTFOLIOS MAY
OBTAIN SEPARATE PROSPECTUSES DESCRIBING THOSE PORTFOLIOS BY CALLING THE
DISTRIBUTOR AT 800-998-7633.
INVESTMENT OBJECTIVES AND POLICIES
As stated in the Funds' Prospectuses, the investment objective of
each Fund is to seek current income with liquidity and security of principal.
The following policies supplement the description in the Prospectuses of the
investment objectives and policies of the Funds.
PORTFOLIO TRANSACTIONS
Subject to the general control of the Company's Board of Trustees,
PNC Institutional Management Corporation ("PIMC"), the Funds' investment
adviser, is responsible for, makes decisions with respect to and places orders
for all purchases and sales of portfolio securities for the Funds. Purchases
and sales of portfolio securities are usually principal transactions
-2-
<PAGE> 19
without brokerage commissions. In making portfolio investments, PIMC seeks to
obtain the best net price and the most favorable execution of orders. To the
extent that the execution and price offered by more than one dealer are
comparable, PIMC may, in its discretion, effect transactions in portfolio
securities with dealers who provide the Company with research advice or other
services. Although the Funds will not seek profits through short-term trading,
PIMC may, on behalf of the Funds, dispose of any portfolio security prior to
its maturity if it believes such disposition is advisable.
Investment decisions for the Funds are made independently from those
for other investment company portfolios or accounts advised or managed by PIMC.
Such other portfolios may invest in the same securities as the Funds. When
purchases or sales of the same security are made at substantially the same time
on behalf of such other portfolios, transactions are averaged as to price, and
available investments allocated as to amount, in a manner which PIMC believes
to be equitable to each portfolio, including either Fund. In some instances,
this investment procedure may adversely affect the price paid or received by a
Fund or the size of the position obtained for a Fund. To the extent permitted
by law, PIMC may aggregate the securities to be sold or purchased for a Fund
with those to be sold or purchased for such other investment company portfolios
in order to obtain best execution.
Portfolio securities will not be purchased from or sold to and the
Funds will not enter into repurchase agreements or reverse repurchase
agreements with PIMC, PNC Bank, National Association ("PNC Bank"), PFPC Inc.
("PFPC"), Provident Distributors, Inc. ("PDI") or any affiliated person (as
such term is defined in the Investment Company Act of 1940 (the "1940 Act"))
of any of them, except to the extent permitted by the Securities and Exchange
Commission (the "SEC"). Furthermore, with respect to such transactions,
securities and repurchase agreements, the Funds will not give preference to
Service Organizations with whom the Funds enter into agreements concerning the
provision of support services to their customers. (See the Prospectuses,
"Management of the Fund--Service Organizations" and "Distribution and Service
Plan.")
The Funds do not intend to seek profits through short-term trading.
The Funds' annual portfolio turnover rates will be relatively high but the
Funds' portfolio turnover is not expected to have a material effect on its net
incomes. The portfolio turnover rate for each of the Funds is expected to be
zero for regulatory reporting purposes.
-3-
<PAGE> 20
ADDITIONAL INFORMATION ON INVESTMENT PRACTICES
The repurchase price under the repurchase agreements described in the
Funds' Prospectuses generally equals the price paid by a Fund plus interest
negotiated on the basis of current short-term rates (which may be more or less
than the rate on the securities underlying the repurchase agreement).
Securities subject to repurchase agreements will be held by the Funds'
custodian, sub-custodian or in the Federal Reserve/Treasury book-entry system.
Repurchase agreements are considered to be loans by the Funds under the 1940
Act.
Whenever FedFund enters into reverse repurchase agreements as
described in its Prospectus, it will place in a segregated custodial
account liquid assets having a value equal to the repurchase price (including
accrued interest) and will subsequently monitor the account to ensure such
equivalent value is maintained. Reverse repurchase agreements are considered
to be borrowings by FedFund under the 1940 Act.
As stated in the Funds' Prospectuses, the Funds may purchase
securities on a "when-issued" basis (i.e., for delivery beyond the normal
settlement date at a stated price and yield). When a Fund agrees to purchase
when-issued securities, its custodian will set aside cash or liquid portfolio
securities equal to the amount of the commitment in a separate account.
Normally, the custodian will set aside portfolio securities to satisfy a
purchase commitment, and in such a case such Fund may be required subsequently
to place additional assets in the separate account in order to ensure that the
value of the account remains equal to the amount of such Fund's commitment. It
may be expected that a Fund's net assets will fluctuate to a greater degree
when it sets aside portfolio securities to cover such purchase commitments than
when it sets aside cash. Because the Funds will set aside cash or liquid
assets to satisfy their respective purchase commitments in the manner
described, such a Fund's liquidity and ability to manage its portfolio might be
affected in the event its commitments to purchase when-issued securities ever
exceeded 25% of the value of its assets. Neither Fund intends to purchase
when-issued securities for speculative purposes but only in furtherance of its
investment objectives. The Funds reserve the right to sell the securities
before the settlement date if it is deemed advisable.
When a Fund engages in when-issued transactions, it relies on the
seller to consummate the trade. Failure of the seller to do so may result in a
Fund's incurring a loss or missing an opportunity to obtain a price considered
to be advantageous.
-4-
<PAGE> 21
With respect to loans by FedFund of its portfolio securities as
described in its Prospectus, FedFund would continue to accrue interest on
loaned securities and would also earn income on loans. Any cash collateral
received by FedFund in connection with such loans would be invested in
short-term U.S. government obligations to the extent permitted by FedFund's
investment limitations, below.
Neither Fund will invest more than 10% of the value of its assets in
investments which are not readily marketable at the time of purchase of a not
readily marketable security. Securities for purposes of this limitation do not
include securities which have been determined to be liquid by the Fund's Board
of Trustees based upon the trading markets for such securities.
INVESTMENT LIMITATIONS
The Funds' Prospectuses summarize certain investment limitations that
may not be changed without the affirmative vote of the holders of a "majority
of the outstanding shares" of the respective Fund (as defined below under
"Miscellaneous"). Below is a complete list of the Funds' investment
limitations that may not be changed without such a vote of shareholders.
1. FedFund may not purchase securities other than U.S. Treasury
bills, notes and other obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities, some of which may be subject to
repurchase agreements. There is no limit on the amount of FedFund's assets
which may be invested in the securities of any one issuer of such obligations.
2. T-Fund may not purchase securities other than direct obligations
of the U.S. Treasury such as Treasury bills and notes, some of which may be
subject to repurchase agreements. There is no limit on the amount of T-Fund's
assets which may be invested in securities of any one issuer of such
obligations.
FedFund and T-Fund may not:
3. Borrow money except from banks for temporary purposes and then in
an amount not exceeding 10% of the value of the particular Fund's total assets,
or mortgage, pledge or hypothecate its assets except in connection with any
such borrowing and in amounts not in excess of the lesser of the dollar amounts
borrowed or 10% of the value of the particular Fund's total assets at the time
of such borrowing. (This borrowing provision is not for investment leverage,
but solely to facilitate management of each Fund by enabling the Company to
-5-
<PAGE> 22
meet redemption requests where the liquidation of portfolio securities is
deemed to be inconvenient or disadvantageous.) Borrowing may take the form of
a sale of portfolio securities accompanied by a simultaneous agreement as to
their repurchase. Interest paid on borrowed funds will not be available for
investment.
4. Act as an underwriter.
5. Make loans except that the Funds may purchase or hold debt
obligations in accordance with their respective investment objective and
policies, may enter into repurchase agreements for securities. The FedFund, but
not the T-Fund, may lend portfolio securities against collateral consisting of
cash or securities which are consistent with the lending Fund's permitted
investments, which is equal at all times to at least 100% of the value of the
securities loaned. There is no investment restriction on the amount of
securities that may be loaned, except that payments received on such loans,
including amounts received during the loan on account of interest on the
securities loaned, may not (together with all non-qualifying income) exceed 10%
of the Fund's annual gross income (without offset for realized capital gains)
unless, in the opinion of counsel to the Company, such amounts are qualifying
income under federal income tax provisions applicable to regulated investment
companies.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
IN GENERAL
Information on how to purchase and redeem a Fund's shares is included
in its Prospectus. The issuance of shares is recorded on the books of the
Funds, and share certificates are not issued unless expressly requested in
writing. Certificates are not issued for fractional shares.
The regulations of the Comptroller of the Currency provide that funds
held in a fiduciary capacity by a national bank approved by the Comptroller to
exercise fiduciary powers must be invested in accordance with the instrument
establishing the fiduciary relationship and local law. The Company believes
that the purchase of FedFund shares and T-Fund shares by such national banks
acting on behalf of their fiduciary accounts is not contrary to applicable
regulations if consistent with the particular account and proper under the law
governing the administration of the account.
-6-
<PAGE> 23
Prior to effecting a redemption of shares represented by
certificates, PFPC, the Funds' transfer agent, must have received such
certificates at its principal office. All such certificates must be endorsed
by the redeeming shareholder or accompanied by a signed stock power, in each
instance with the signature guaranteed by a commercial bank, a member of a
major stock exchange or other eligible guarantor institution, unless other
arrangements satisfactory to the Funds have previously been made. The Funds
may require any additional information reasonably necessary to evidence that a
redemption has been duly authorized.
Under the 1940 Act, the Funds may suspend the right of redemption or
postpone the date of payment upon redemption for any period during which the
New York Stock Exchange is closed, other than customary weekend and holiday
closings, or during which trading on said Exchange is restricted, or during
which (as determined by the SEC by rule or regulation) an emergency exists as a
result of which disposal or valuation of portfolio securities is not reasonably
practicable, or for such other periods as the SEC may permit. (The Funds may
also suspend or postpone the recordation of the transfer of their shares upon
the occurrence of any of the foregoing conditions.)
In addition, the Funds may redeem shares involuntarily in certain
other instances if the Board of Trustees determines that failure to redeem may
have material adverse consequences to a Fund's shareholders in general. Each
Fund is obligated to redeem shares solely in cash up to $250,000 or 1% of the
Fund's net asset value, whichever is less, for any one shareholder within a
90-day period. Any redemption beyond this amount will also be in cash unless
the Board of Trustees determines that conditions exist which make payment of
redemption proceeds wholly in cash unwise or undesirable. In such a case, the
Fund may make payment wholly or partly in securities or other property, valued
in the same way as the Fund determines net asset value. (See "Net Asset Value"
below for an example of when such redemption or form of payment might be
appropriate.) Redemption in kind is not as liquid as a cash redemption.
Shareholders who receive a redemption in kind may incur transaction costs if
they sell such
-7-
<PAGE> 24
securities or property, and may receive less than the redemption value of such
securities or property upon sale, particularly where such securities are sold
prior to maturity.
Any institution purchasing shares on behalf of separate accounts will
be required to hold the shares in a single nominee name (a "Master Account").
Institutions investing in more than one of the Company's portfolios or classes
of shares must maintain a separate Master Account for each portfolio and class
of shares. Sub-accounts may be established by name or number either when the
Master Account is opened or later.
NET ASSET VALUE
The manner in which each Fund's net asset value per share is
calculated is stated in each Fund's Prospectus. "Assets belonging to" a Fund
consist of the consideration received upon the issuance of shares together with
all income, earnings, profits and proceeds derived from the investment thereof,
including any proceeds from the sale, exchange or liquidation of such
investments, any funds or payments derived from any reinvestment of such
proceeds, and a portion of any general assets of the Company not belonging to a
particular portfolio. Assets belonging to a particular Fund are charged with
the direct liabilities of that Fund and with a share of the general liabilities
of the Company allocated in proportion to the relative net assets of such Fund
and the Company's other portfolios. Determinations made in good faith and in
accordance with generally accepted accounting principles by the Board of
Trustees as to the allocations of any assets or liabilities with respect to a
Fund are conclusive.
As stated in the Funds' Prospectuses, in computing the net asset
value of shares of the Funds for purposes of sales and redemptions, the Funds
use the amortized cost method of valuation. Under this method, the Funds value
each of their portfolio securities at cost on the date of purchase and
thereafter assume a constant proportionate amortization of any discount or
premium until maturity of the security. As a result, the value of a portfolio
security for purposes of determining net asset value normally does not change
in response to fluctuating interest rates. While the amortized cost method
provides certainty in portfolio valuation, it may result in valuations for the
Funds' securities which are higher or lower than the market value of such
securities.
-8-
<PAGE> 25
In connection with their use of amortized cost valuation, each of the
Funds limits the dollar-weighted average maturity of its portfolio to not more
than 90 days and does not purchase any instrument with a remaining maturity of
more than thirteen months (with certain exceptions). In determining the
average weighted portfolio maturity of each Fund, a variable rate obligation
that is issued or guaranteed by the U.S. Government, or an agency or
instrumentality thereof, is deemed to have a maturity equal to the period
remaining until the obligation's next interest rate adjustment. The Company's
Board of Trustees has also established procedures, pursuant to rules
promulgated by the SEC, that are intended to stabilize the net asset value per
share of each Fund for purposes of sales and redemptions at $1.00. Such
procedures include the determination at such intervals as the Board deems
appropriate, of the extent, if any, to which each Fund's net asset value per
share calculated by using available market quotations or a matrix believed to
provide reliable values deviates from $1.00 per share. In the event such
deviation exceeds 1/2 of 1% with respect to either Fund, the Board will
promptly consider what action, if any, should be initiated. If the Board
believes that the amount of any deviation from the $1.00 amortized cost price
per share of a Fund may result in material dilution or other unfair results to
investors or existing shareholders, it will take such steps as it considers
appropriate to eliminate or reduce to the extent reasonably practicable any
such dilution or unfair results. These steps may include selling portfolio
instruments prior to maturity; shortening the Fund's average portfolio
maturity; withholding or reducing dividends; redeeming shares in kind; or
utilizing a net asset value per share determined by using available market
quotations.
MANAGEMENT OF THE FUNDS
TRUSTEES AND OFFICERS
The Company's trustees and executive officers, their addresses,
principal occupations during the past five years and other affiliations are
provided below. In addition to the information set forth below, the trustees
serve in the following capacities:
Each trustee of the Company serves as a director of Temporary
Investment Fund, Inc. ("Temp") and as a trustee of Municipal Fund for Temporary
Investment ("Muni"). In addition, Messrs. Fortune and Pepper are directors of
Independence Square Income Securities, Inc. ("ISIS") and Managing General
Partners of Chestnut Street Exchange Fund ("Chestnut"); Messrs. Pepper and
Johnson are directors of Municipal Fund for
-9-
<PAGE> 26
California Investors, Inc. ("Cal Muni"); and Mr. Johnson is a director of
Municipal Fund for New York Investors, Inc. ("New York Muni") and a director of
the International Dollar Reserve Fund ("IDR").
Each of the Company's officers, with the exception of Mr. McConnel,
holds like offices with Temp and Muni. In addition, Mr. McConnel is
Secretary of Temp. Mr. Roach is Treasurer of Chestnut, President and
Treasurer of The RBB Fund, Inc. and New York Muni, and Vice President and
Treasurer of ISIS and Cal Muni; and Mr. Pepper is President and Chairman of
the Board of Muni and Cal Muni; and Mr. Fortune is President and Chairman
of the Board of ISIS and Chestnut.
<TABLE>
<CAPTION>
Principal Occupations
Position with the During Past 5 Years
Name and Address Company and Other Affiliations
- ---------------- --------------- ----------------------
<S> <C> <C>
PHILIP E. COLDWELL(3),(4) Trustee Economic Consultant;
Coldwell Financial Chairman, Coldwell
Consultants Financial Consultants,
3330 Southwestern Blvd. Member of the Board of
Dallas, Texas 75225 Governors of the
Age 73 Federal Reserve
System, 1974 to 1980;
President, Federal
Reserve Bank of
Dallas, 1968 to 1974;
Director, Maxus Energy
Corporation (energy
products) (1989
-1993); Director,
Diamond Shamrock Corp.
(energy and chemical
products) until 1987.
ROBERT R. FORTUNE(2),(3),(4) Trustee Financial Consultant;
2920 Ritter Lane Chairman, President
Allentown, PA 18104 and Chief Executive
Age 79 Officer of Associated
Electric & Gas
Insurance Services
Limited, 1984-1993;
Member of the
Financial Executives
Institute and American
Institute of Certified
Public Accountants;
Director, Prudential
Utility Fund, Inc. and
Prudential Structured
Maturity Fund, Inc.
</TABLE>
-10-
<PAGE> 27
<TABLE>
<CAPTION>
Principal Occupations
Position with the During the Past 5 Years
Name and Address Company and Other Affiliations
- ---------------- ----------------- ---------------------
<S> <C> <C>
RODNEY D. JOHNSON Trustee President, Fairmount
Fairmount Capital Capital Advisors, Inc.
Advisors, Inc. (financial advising)
1435 Walnut Street since 1987; Treasurer,
Drexel Building North Philadelphia
Philadelphia, PA 19102 Health System
Age 54 (formerly Girard
Medical Center), 1988
to 1992; Member, Board
of Education, School
District of
Philadelphia, 1983 to
1988; Treasurer,
Cascade Aphasia
Center, 1984 to 1988.
G. WILLING PEPPER(1),(2) Chairman of Retired; Chairman of
128 Springton Lake Road the Board, the Board, The
Media, PA 19063 President and Institute for Cancer
Age 87 Trustee Research until 1979;
Director, Philadelphia
National Bank until
1978; President, Scott
Paper Company, 1971 to
1973; Chairman of the
Board, Specialty
Composites Corp. until
May 1984.
EDWARD J. ROACH President Certified Public
Bellevue Park Corporate and Treasurer Accountant; Partner of
Center the accounting firm of
400 Bellevue Parkway Main Hurdman until
Suite 100 1981; Vice Chairman of
Wilmington, DE 19809 the Board, Fox Chase
Age 71 Cancer Center; Trustee
Emeritus, Pennsylvania
School for the Deaf;
Trustee, Immaculata
College, 1983-1984;
Director, The Bradford
Funds, Inc.
W. BRUCE McCONNEL, III Secretary Partner of the law
1345 Chestnut Street firm of Drinker Biddle
Philadelphia, PA & Reath Philadelphia,
19107-3496 Pennsylvania.
Age 53
</TABLE>
- -----------------------
(1) This trustee is considered by the Company to be an "interested person"
of the Company as defined in the 1940 Act.
(2) Executive Committee Member.
(3) Audit Committee Member.
(4) Nominating Committee Member.
-11-
<PAGE> 28
During intervals between meetings of the Board, the Executive
Committee may exercise the authority of the Board of Trustees in the management
of the Company's business to the extent permitted by law.
Each of the investment companies named above receives various
advisory and other services from PIMC and PNC. Of the above-mentioned funds,
PDI provides distribution services to Temp, Muni, Cal Muni and New York Muni.
Of the above-mentioned funds, the administrators provide administration
services to Temp, Muni, Cal Muni and New York Muni.
For the fiscal year ended October 31, 1995, the Company paid a total
of $100,887 to its officers and trustees in all capacities of which $53,147 was
allocated to the Funds. In addition, the Company contributed $2,715 during its
last fiscal year to its retirement plan for employees (which included Mr.
Roach) of which $1,452 was allocated to the Funds. Drinker Biddle & Reath, of
which Mr. McConnel is a partner, receives legal fees as counsel to the
Company. No employee of PDI, PIMC, PFPC or PNC Bank receives any compensation
from the Company for acting as an officer or trustee of the Company. The
trustees and officers of the Company as a group beneficially own less than 1%
of the shares of the Company's FedFund, T-Fund, FedCash, T-Cash, Federal Trust
Fund and Treasury Trust Fund portfolios.
By virtue of the responsibilities assumed by PDI, PIMC, PFPC and PNC
Bank under their respective agreements with the Company, the Company itself
requires only one part-time employee in addition to its officers.
The table below sets forth the compensation actually received from
the Fund Complex of which the Fund is a part by the trustees for the fiscal
year ended October 31, 1995:
-12-
<PAGE> 29
<TABLE>
<CAPTION>
Total
Pension or Compensation
Retirement from Registrant
Aggregate Benefits Accrued Estimated Annual and Fund
Compensation as Part of Fund Benefits Upon Complex(1) Paid to
Name of Person, Position from Registrant Expenses Retirement Trustees
<S> <C> <C> <C> <C>
Philip E. Coldwell, Trustee $ 10,800.00 0 N/A (3)(2)$ 43,600.00
Robert R. Fortune, Trustee 10,800.00 0 N/A (5)(2) 63,600.00
Rodney D. Johnson, Trustee 10,800.00 0 N/A (5)(2) 55,850.00
G. Willing Pepper, Trustee and Chairman 19,100.00 0 N/A (6)(2) 96,250.00
David R. Wilmerding, Jr.,(3) Trustee 12,466.68 0 N/A (5)(2) 60,600.04
Anthony M. Santomero,(4) Trustee 10,800.00 0 N/A (4)(2) 49,900.00
---------- ---------
$74,766.68 $369,800.04
</TABLE>
- --------------------
1. A Fund Complex means two or more investment companies that hold themselves
out to investors as related companies for purposes of investment and
investor services, or have a common investment adviser or have an
investment adviser that is an affiliated person of the investment adviser
of any of the other investment companies.
2. Total number of such other investment companies trustee serves on within
the Fund Complex.
3. Mr. Wilmerding resigned as trustee of the Company on January 4, 1996.
4. Mr. Santomero resigned as trustee of the Company on January 4, 1996.
-13-
<PAGE> 30
INVESTMENT ADVISER AND SUB-ADVISER
The advisory and sub-advisory services provided by PIMC and PNC Bank
are described in the Funds' Prospectuses. For the advisory services provided
and expenses assumed by it, PIMC is entitled to receive a fee, computed daily
and payable monthly, based on the combined average net assets of the Funds as
follows:
<TABLE>
<CAPTION>
Annual Fee The Funds' Combined
---------- Average Net Assets
-------------------
<S> <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 these Funds in proportion to their
relative net assets.
PIMC and the administrators have each agreed that if, in any fiscal
year, the expenses borne by a Fund exceed the applicable expense limitations
imposed by the securities regulations of any state in which shares of the
particular Fund are registered or qualified for sale to the public, they will
each reimburse such Fund for one-half of any excess to the extent required by
such regulations. Unless otherwise required by law, such reimbursement would
be accrued and paid on the same basis that the advisory and administration fees
are accrued and paid by such Fund. To the Funds' knowledge, of the expense
limitations in effect on the date of this Statement of Additional Information,
none is more restrictive than two and one-half percent (2-1/2%) of the first
$30 million of a Fund's average annual net assets, two percent (2%) of the next
$70 million of the average annual net assets and one and one-half percent
(1-1/2%) of the remaining average annual net assets.
For the fiscal years ended October 31, 1993, 1994 and 1995, the
Company paid fees (net of waivers) for advisory services aggregating
$1,488,938, $924,760 and $1,136,719 with respect to FedFund, and $1,081,025,
$819,525 and $911,096 with respect to T-Fund, respectively. For the same
fiscal years, PIMC voluntarily waived advisory fees aggregating $630,847,
$807,814 and $855,806 with respect to FedFund, and, $526,120, $655,034 and
$709,383 with respect to T-Fund, respectively. Any fees waived by PIMC are not
recoverable. PIMC and PNC Bank also serve as the adviser and sub-adviser,
respectively, to the
-14-
<PAGE> 31
Company's FedCash, T-Cash, Federal Trust Fund and Treasury Trust Fund
portfolios.
BANKING LAWS
Certain banking laws and regulations with respect to investment
companies are discussed in the Funds' Prospectuses. PIMC, PNC Bank and PFPC
believe that they may perform the services for the Funds contemplated by their
respective agreements, Prospectuses and this Statement of Additional
Information without violation of applicable banking laws or regulations. It
should be noted, however, that future changes in legal requirements relating to
the permissible activities of banks and their affiliates, as well as further
interpretations of present requirements, could prevent PIMC and PFPC from
continuing to perform such services for the Funds and PNC Bank from continuing
to perform such services for PIMC and the Funds. If PIMC, PFPC, or PNC Bank
were prohibited from continuing to perform such services, it is expected that
the Company's Board of Trustees would recommend that the Funds enter into new
agreements with other qualified firms. Any new advisory agreement would be
subject to shareholder approval.
In addition, state securities laws on this issue may differ from the
interpretations of federal law expressed herein and banks and financial
institutions may be required to register as dealers pursuant to state law.
ADMINISTRATOR
As the Funds' administrators, PFPC and PDI have agreed to provide the
following services: (i) assist generally in supervising the Funds' operations,
including providing a Wilmington, Delaware order-taking facility with toll-free
IN-WATS telephone lines, providing for the preparing, supervising and mailing
of purchase and redemption order confirmations to shareholders of record,
providing and supervising the operation of an automated data processing system
to process purchase and redemption orders, maintaining a back-up procedure to
reconstruct lost purchase and redemption data, providing information concerning
the Funds to their shareholders of record, handling shareholder problems,
supervising the services of employees, provided by PDI, whose principal
responsibility and function is to preserve and strengthen shareholder
relations, and monitoring the arrangements pertaining to the Funds' agreements
with Service Organizations; (ii) assure that persons are available to receive
and transmit purchase and redemption orders; (iii) participate in the periodic
updating of the Funds' Prospectuses and Registration Statements; (iv) assist in
maintaining the Funds' Wilmington, Delaware office; (v) perform administrative
services in connection with the Fund's computer access program maintained to
-15-
<PAGE> 32
facilitate shareholder access to the Funds; (vi) accumulate information for and
coordinate the preparation of reports to the Funds' shareholders and the SEC;
(vii) maintain the registration or qualification of the Funds' shares for sale
under state securities laws; (viii) prepare or review, and provide advice with
respect to, all sales literature (advertisements, brochures and shareholder
communications) for each of the Funds and any class or sub-class thereof; and
(ix) assist in the monitoring of regulatory and legislative developments which
may affect the Company, participate in counseling and assisting the Company in
relation to routine regulatory examinations and investigations, and work with
the Company's counsel in connection with regulatory matters and litigation.
For their administrative services, the administrators are entitled
jointly to receive fees from the six Funds referred to above determined and
allocated in the same manner as PIMC's advisory fee set forth above. As stated
in their Prospectuses, each administrator is also reimbursed for its reasonable
out-of-pocket expenses incurred in connection with the Fund's computer access
program. For the period from October 1, 1992 through January 17, 1993 the
Company paid fees (net of waivers) to its former administrator, The Boston
Company Advisors totalling $99,699 with respect to FedFund and $65,982 with
respect to T-Fund. Administration fees payable by FedFund and T-Fund of $2,554
and $494, respectively, were voluntarily waived by Boston Advisors during this
period. For the period from January 18, 1993 through October 31, 1993, the
Company paid fees (net of waivers) for administrative services to PFPC and PDI
(formerly called MFD Group, Inc.), its administrators, aggregating $1,488,938
with respect to FedFund and $1,081,025 with respect to T-Fund. For the same
period, administration fees of $630,847 with respect to FedFund and $526,120
with respect to T-Fund were voluntarily waived. For the fiscal year ended
October 31, 1994, the Company paid fees (net of waivers) for administration
fees aggregating $924,760 with respect to FedFund and $807,814 with respect to
T-Fund. For the same fiscal year, PFPC and PDI voluntarily waived
administration fees aggregating $819,525 with respect to FedFund and $655,034
with respect to T-Fund, respectively. For the Fiscal year ended October 31,
1995, the Company paid fees (not of waivers) for administration fees
aggregating $1,136,718 with respect to FedFund and $911,096 with respect to
T-Fund. For the same fiscal year, PFPC and PDI voluntarily waived
administration fees aggregating $855,806 with respect to FedFund and $709,383
with respect to T-Fund.
PFPC, a wholly owned, indirect subsidiary of PNC Bank provides
administrative or and/or sub-administrative services to investment companies
which are distributed by PDI. PFPC and PDI also serve as co-administrators of
the Company's FedCash, T-Cash, Federal Trust Fund and Treasury Trust Fund
portfolios.
-16-
<PAGE> 33
DISTRIBUTOR
PDI acts as the distributor of the Funds' shares. Each Fund's shares
are sold on a continuous basis by the distributor as agent, although it is not
obliged to sell any particular amount of shares. PDI will prepare or review,
provide advice with respect to, and file with the federal and state agencies or
other organization as required by federal, state, or other applicable laws and
regulations, all sales literature (advertisements, brochures and shareholder
communications) for each of the Funds and any class or sub-class thereof. The
distributor pays the cost of printing and distributing prospectuses to persons
who are not shareholders of the Funds (excluding preparation and printing
expenses necessary for the continued registration of Fund shares) and of
preparing, printing and distributing all sales literature. No compensation is
payable by the Funds to the distributor for its distribution services. PDI
also serves as the distributor for the Company's FedCash, T-Cash, Federal
Trust Fund and Treasury Trust Fund portfolios. PDI is a Delaware corporation,
with its principal place of business located at 259 Radnor-Chester Road, Suite
120, Radnor, Pennsylvania l9087.
CUSTODIAN AND TRANSFER AGENT
Pursuant to a Custodian Agreement, PNC Bank serves as the Funds'
custodian. Under the Agreement, PNC Bank has agreed to provide the following
services: (i) maintain a separate account or accounts in the name of the
Funds; (ii) hold and disburse portfolio securities on account of the Funds;
(iii) collect and make disbursements of money on behalf of the Funds; (iv)
collect and receive all income and other payments and distributions on account
of the Funds' portfolio securities; and (v) make periodic reports to the Board
of Trustees concerning the Funds' operations. The Custodian Agreement permits
PNC Bank, on 30 days' notice, to assign its rights and delegate its duties
thereunder to any other affiliate of PNC Bank or PNC Bank Corp., provided that
PNC Bank remains responsible for the performance of the delegate under the
Custodian Agreement.
The Funds reimburse PNC Bank for its direct and indirect costs and
expenses incurred in rendering custodial services. Under the Custodian
Agreement, each Fund pays PNC Bank an annual fee equal to $.25 for each $1,000
of such Fund's average daily gross assets, which fee declines as such Fund's
average daily gross assets increase. In addition, each Fund pays the custodian
a fee for each purchase, sale or delivery of a security, interest collection or
claim item, and reimburses PFPC for out-of-pocket expenses incurred on behalf
of the Fund. For
-17-
<PAGE> 34
the fiscal years ended October 31, 1993, 1994 and 1995 FedFund paid fees for
custodian services aggregating $254,450, $220,443 and $238,805, respectively.
For the same fiscal years, T-Fund paid fees for custodian services aggregating,
$216,000, $202,087 and $212,601 respectively. PNC Bank also serves as
custodian for the Company's FedCash, T-Cash, Federal Trust Fund and Treasury
Trust Fund portfolios. PNC Bank's principal business address is Broad and
Chestnut Streets, Philadelphia, Pennsylvania 19102.
PFPC also serves as the Funds' transfer agent, registrar and dividend
disbursing agent pursuant to a Transfer Agency Agreement. Under the Agreement,
PFPC has agreed to provide the following services: (i) maintain a separate
account or accounts in the name of the Funds; (ii) issue, transfer and redeem
shares of the Funds; (iii) disburse dividends and distributions, in the manner
described in each Fund's Prospectus, to shareholders of the Fund; (iv) transmit
all communications by the Funds to their shareholders or their authorized
representatives, including reports to shareholders, distribution and dividend
notices and proxy materials for meetings of shareholders; (v) prepare and file
with the appropriate taxing authorities reports or notices relating to
dividends and distributions made by the Funds; (vi) respond to correspondence
by shareholders, security brokers and others relating to its duties; (vii)
maintain shareholder accounts; and (viii) make periodic reports to the
Company's Board of Trustees concerning the Funds' operations. The Transfer
Agency Agreement permits PFPC, on 30-days' notice, to assign its rights and
duties thereunder to any other affiliate of PNC Bank or PNC Bank Corp.,
provided that PFPC remains responsible for the performance of the delegate
under the Transfer Agency Agreement.
Under the Transfer Agency Agreement, each Fund pays PFPC fees at an
annual rate of $12.00 per account and sub-account maintained by PFPC plus $1.00
for each purchase or redemption transaction by an account (other than a
purchase transaction made in connection with the automatic reinvestment of
dividends). Payments to PFPC for sub-accounting services provided by others
are limited to the amount which PFPC pays to others for such services. In
addition, the Funds reimburse PFPC for out-of-pocket expenses related to such
services. For the fiscal years ended October 31, 1993, 1994 and 1995 FedFund
paid fees for transfer agency services aggregating, $147,259, $189,439 and
$99,287 respectively. For the same fiscal years, T-Fund paid fees for transfer
agency services aggregating, $98,116, $81,291 and $65,092 respectively. PFPC
also serves as transfer agent, registrar and dividend disbursing agent for the
Company's FedCash, T-Cash, Federal Trust Fund and Treasury Trust Fund.
-18-
<PAGE> 35
DOLLAR SHARE SERVICE ORGANIZATIONS
FedFund and T-Fund each currently offer a series of shares, Dollar
shares, which as stated in the Funds' Prospectuses, the Funds will enter into
an agreement with each Service Organization which purchases Dollar shares
("Dollar Share Service Organizations") requiring it to provide support services
to its customers who beneficially own Dollar shares in consideration of the
Funds' payment of .25% (on an annualized basis) of the average daily net asset
value of the Dollar shares held by the Dollar Share Service Organization for
the benefit of customers. Such services include: (i) aggregating and
processing purchase and redemption requests from customers and placing net
purchase and redemption orders with the transfer agent; (ii) providing
customers with a service that invests the assets of their accounts in Dollar
shares; (iii) processing dividend payments from the Funds on behalf of
customers; (iv) providing information periodically to customers showing their
positions in Dollar shares; (v) arranging for bank wires; (vi) responding to
customer inquiries relating to the services performed by the Dollar Share
Service Organization; (vii) providing sub-accounting with respect to Dollar
shares beneficially owned by customers or the information necessary for
sub-accounting; (viii) forwarding shareholder communications from the Funds
(such as proxies, shareholder reports, annual and semi-annual financial
statements and dividend, distribution and tax notices) to customers, if
required by law; and (ix) other similar services if requested by the Funds.
For the fiscal year ended October 31, 1995, the Company paid $256,849 in
servicing fees to an affiliate of the Company's adviser (representing 50.2% of
the aggregate servicing fees) of which $70,358 and $186,491 was allocated to
FedFund and T-Fund, respectively, pursuant to the service agreements discussed
above in effect during such period.
Each Fund's agreements with Dollar Share Service Organizations are
governed by a Shareholder Services Plan (the "Plan") that has been adopted by
the Company's Board of Trustees. Pursuant to each Plan, the Board of Trustees
reviews, at least quarterly, a written report of the amounts expended under the
Fund's agreements with Service Organizations and the purposes for which the
expenditures were made. In addition, the Funds' arrangements with Service
Organizations must be approved annually by a majority of the Company's
trustees, including a majority of the trustees who are not "interested persons"
of the Company as defined in the 1940 Act and have no direct or indirect
financial interest in such arrangements.
The Board of Trustees has approved the Funds' arrangements with
Dollar Share Service Organizations based on information provided by the Funds'
service contractors that there is a reasonable likelihood that the arrangements
will benefit the
-19-
<PAGE> 36
Funds and their shareholders by affording the Funds greater flexibility in
connection with the servicing of the accounts of the beneficial owners of their
shares in an efficient manner. Any material amendment to the Funds'
arrangements with Dollar Share Service Organizations must be approved by a
majority of the Company's Board of Trustees (including a majority of the
non-interested Trustees). So long as the Funds' arrangements with Dollar Share
Service Organizations are in effect, the selection and nomination of the
members of the Company's Board of Trustees who are not "interested persons" (as
defined in the 1940 Act) of the Company will be committed to the discretion of
such non-interested trustees.
DISTRIBUTION AND SERVICE PLAN
Pursuant to the Fund's Distribution and Service Plan (the "Plus
Shares Plan"), the Fund may pay PDI fees for distribution and sales support
services. Currently, as described further below, only T-Fund Plus Shares bear
the expense of distribution fees under the Plus Shares Plan. In addition, the
Fund may pay PDI fees for the provision of personal services to shareholders
and the processing and administration of shareholder accounts. PDI, in turn,
determines the amount of the service fee to be paid to other Service
Organizations that purchase Plus Shares ("Plus Share Service Organizations").
The Plus Shares Plan provides, among other things, that: (i) the Board of
Trustees shall receive quarterly reports regarding the amounts expended under
the Plus Shares Plan and the purposes for which such expenditures were made;
(ii) the Plus Shares Plan will continue in effect for so long as its
continuance is approved at least annually by the Board of Trustees in
accordance with Rule 12b-1 under the 1940 Act; (iii) any material amendment
thereto must be approved by the Board of Trustees, including the trustees who
are not "interested persons" of the Fund (as defined in the 1940 Act) and who
have no direct or indirect financial interest in the operation of the Plus
Shares Plan or any agreement entered into in connection with the Plus Shares
Plan (the "12b-1 Trustees"), acting in person at a meeting called for said
purpose; (iv) any amendment to increase materially the costs which T-Fund Plus
Shares may bear for distribution services pursuant to the Plus Shares Plan
shall be effective only upon approval by a vote of a majority of the
outstanding shares of such class and by a majority of the 12b-1 Trustees; and
(v) while the Plus Shares Plan remains in effect, the selection and nomination
of the Fund's trustees who are not "interested persons" of the Fund shall be
committed to the discretion of such non-interested trustees.
The Plus Shares Plan is terminable without penalty at any time by a
vote of a majority of the 12b-1 Trustees, or by vote of the holders of a
majority of T-Fund Plus Shares. Similarly, any agreement entered into pursuant
to the Plus Shares Plan with a Plus Share Service Organization is terminable
without penalty, at any time, by the Fund or by the Plus Share Service
Organization upon written notice to the other. Each such agreement will
terminate automatically in the event of its assignment.
The distribution fee payable under the Plus Shares Plan (at an annual
rate of .15% of the average daily net asset value of the outstanding T-Fund
Plus Shares) is used, among other things, to pay for sales support services and
related expenses to Plus Share Service Organizations.
The Fund intends to enter into service agreements with Plus Share
Service Organizations pursuant to which they will render certain support
services to their customers ("Customers") who are the beneficial owners of
T-Fund Plus Shares. Such services will be provided to Customers who are the
beneficial owners of T-Fund Plus Shares and are intended to supplement the
services provided by the Fund's Administrators and transfer agent to the Fund's
shareholders of record. In consideration for payment of up to .25% (on an
annualized basis) of the average daily net asset value of the T-Fund Plus
Shares owned beneficially by their Customers, Plus Share Service Organizations
may provide general shareholder liaison services, including, but not limited to
(i) answering shareholder inquiries regarding account status and history, the
manner in which purchases, exchanges and redemptions of shares may be effected
and certain other matters pertaining to the shareholders' investments; and (ii)
assisting shareholders in designating and changing dividend options, account
designations and addresses.
EXPENSES
The Funds' expenses include taxes, interest, fees and salaries of the
Company's trustees and officers, SEC fees, state securities qualification fees,
Standard & Poor's rating fees (cost incurred by T-Fund only), Moody's rating
fees, costs of preparing and printing prospectuses for regulatory purposes and
for distribution to shareholders, advisory and administration fees, charges of
the custodian, transfer agent and dividend disbursing agent, shareholder
servicing fees, certain insurance premiums, outside auditing and legal
expenses, costs of the Funds' computer access program, costs of shareholder
reports and shareholder meetings and any extraordinary expenses. The Funds
also pay for brokerage fees and commissions (if any) in connection with the
purchase of portfolio securities.
ADDITIONAL INFORMATION CONCERNING TAXES
The following summarizes certain additional tax considerations
generally affecting each Fund and its shareholders that are not described in
each Fund's Prospectus. No attempt is made to present a detailed explanation
of the tax treatment of the Funds or their shareholders or possible legislative
changes, and the discussion here and in each Fund's Prospectus is not intended
as a substitute for careful tax planning. Investors should consult their tax
advisors with specific reference to their own tax situations.
Each Fund of the Company is treated as a separate corporate entity
under the Code and intends to qualify each year as a regulated investment
company under the Code. In order to so qualify for a taxable year, each Fund
must satisfy the distribution requirement described in its Prospectus, derive
at least 90% of its gross income for the year from certain qualifying sources,
comply with certain diversification requirements and derive less than 30% of
its gross income from
-20-
<PAGE> 37
the sale or other disposition of securities and certain other investments held
for less than three months. Interest (including original issue discount and
accrued market discount) received by a Fund upon maturity or disposition of a
security held for less than three months will not be treated as gross income
derived from the sale or other disposition of such security within the meaning
of this requirement. However, any other income that is attributable to
realized market appreciation will be treated as gross income from the sale or
other disposition of securities for this purpose.
A 4% nondeductible excise tax is imposed on regulated investment
companies that fail to distribute currently an amount equal to specified
percentages of their ordinary taxable income and capital gain net income
(excess of capital gains over capital losses). Each Fund intends to make
sufficient distributions or deemed distributions of its ordinary taxable income
and any capital gain net income each calendar year to avoid liability for this
excise tax.
If for any taxable year a Fund does not qualify for tax treatment as
a regulated investment company, all of its taxable income will be subject to
federal income tax at regular corporate rates, without any deduction for
distributions to Fund shareholders. In such event, dividend distributions
would be taxable as ordinary income to Fund shareholders to the extent of that
Fund's current and accumulated earnings and profits and would be eligible for
the dividends received deduction in the case of corporate shareholders.
Each Fund will be required in certain cases to withhold and remit to
the U.S. Treasury 31% of taxable dividends or gross sale proceeds paid to any
shareholder who has failed to provide a correct tax identification number in
the manner required, who is subject to withholding by the Internal Revenue
Service for failure to properly include on his return payments of taxable
interest or dividends, or who has failed to certify to the Fund when required
to do so that he is not subject to backup withholding or that he is an "exempt
recipient."
Depending upon the extent of the Funds' activities in states and
localities in which their offices are maintained, in which their agents or
independent contractors are located or in which they are otherwise deemed to be
conducting business, the Funds may be subject to the tax laws of such states or
localities. In addition, in those states and localities which have income tax
laws, the treatment of the Funds and their shareholders under such laws may
differ from their treatment under federal income tax laws. Shareholders are
advised to consult their tax advisors concerning the application of state and
local taxes.
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<PAGE> 38
The foregoing discussion is based on federal tax laws and regulations
which are in effect on the date of this Statement of Additional Information;
such laws and regulations may be changed by legislative or administrative
action.
DIVIDENDS
Net income of each of the Funds for dividend purposes consists of (i)
interest accrued and original issue discount earned on the Fund's assets, (ii)
plus the amortization of market discount and minus the amortization of market
premium on such assets, (iii) less accrued expenses directly attributable to
the Fund and thegeneral expenses (e.g., legal, accounting and trustees' fees)
of the Company prorated to the Fund on the basis of its relative net assets. In
addition, Dollar shares bear exclusively the expense of fees paid to Dollar
Share Service Organizations and T-Fund Plus Shares bear exclusively the
expenses of fees paid to PDI and Plus Share Service Organizations. (See
"Management of the Funds--Dollar Share Service Organizations" and "Distribution
and Service Plan.")
As stated, the Company uses its best efforts to maintain the net
asset value per share of FedFund and T-Fund at $1.00. As a result of a
significant expense or realized or unrealized loss incurred by either Fund, it
is possible that the Fund's net asset value per share may fall below $1.00.
ADDITIONAL YIELD INFORMATION
The "yields" and "effective yields" are calculated separately for
each class of shares of each Fund and in accordance with the formulas
prescribed by the SEC. The seven-day yield for each class of shares is
calculated by determining the net change in the value of a hypothetical
pre-existing account in the particular Fund which has a balance of one share of
the class involved at the beginning of the period, dividing the net change by
the value of the account at the beginning of the period to obtain the base
period return, and multiplying the base period return by 365/7. The net change
in the value of an account in a Fund includes the value of additional shares
purchased with dividends from the original share and dividends declared on the
original share and any such additional shares, net of all fees charged to all
shareholder accounts in proportion to the length of the base period and the
Fund's average account size, but does not include gains and losses or
unrealized appreciation and depreciation. In addition, an effective annualized
yield quotation may be computed on a compounded basis with respect to each
class of its shares by adding 1 to the base period return for the class
involved (calculated as described above), raising that sum to a power equal to
365/7, and subtracting 1 from the result. Similarly, based on the
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<PAGE> 39
calculations described above, the Funds' 30-day (or one-month) yields and
effective yields may also be calculated.
For the seven-day period ended October 31, 1995, the yields on
FedFund shares and T-Fund shares were 5.66% and 5.67%, respectively, and the
compounded effective yields on FedFund shares and T-Fund shares were 5.82% and
5.83%, respectively; the yields on FedFund Dollar shares and T-Fund Dollar
shares were 5.41% and 5.42%, respectively, and the compounded effective yields
on FedFund Dollar shares and T-Fund Dollar shares were 5.56% and 5.57%,
respectively. During this seven-day period, the Funds' adviser and
administrator voluntarily waived a portion of its advisory and administration
fees payable by the Funds. Without these waivers, for the same period the
yields on FedFund shares and T-Fund shares would have been 5.55% and 5.56%,
respectively, and the compounded effective yields on FedFund shares and T-Fund
shares would have been 5.70% and 5.71%, respectively, the yield on FedFund
Dollar Shares and T-Fund Dollar Shares would have been 5.30% and 5.31%,
respectively, and the compounded effective yields on FedFund Dollar Shares and
T-Fund Dollar Shares would have been 5.44% and 5.45%, respectively. As of
October 31, 1995, T-Fund Plus Shares had not yet been offered.
For the 30-day period ended October 31, 1995, the yields on FedFund
shares and T-Fund shares were 5.64% and 5.65%, respectively, and the compounded
effective yields on FedFund shares and T-Fund shares were 5.80% and 5.81%,
respectively; the yields on FedFund Dollar shares and T-Fund Dollar shares were
5.39% and 5.40%, respectively, and the compounded effective yields on FedFund
Dollar shares and T-Fund Dollar shares were 5.53% and 5.55%, respectively.
During this 30-day period, the Funds' adviser and administrator voluntarily
waived a portion of the advisory and administration fees payable by the Funds.
Without these waivers, for the same period the yields on FedFund shares and
T-Fund shares would have been 5.53% and 5.54%, respectively, and the compounded
effective yields on FedFund shares and T-Fund shares would have been 5.68% and
5.69%, respectively, the yield on FedFund Dollar Shares and T-Fund Dollar
Shares would have been 5.28% and 5.29%, respectively, and the compounded
effective yields on FedFund Dollar Shares and T-Fund Dollar Shares would have
been 5.42% and 5.43%, respectively. As of October 31, 1995, T-Fund Plus Shares
had not yet been offered.
From time to time, in advertisements or in reports to shareholders,
the performance of the Funds may be quoted and compared to that of other money
market funds or accounts with similar investment objectives and to stock or
other relevant indices. For example, the yields of the Funds may be compared
to the Donoghue's Money Fund Average, which is an average compiled by
IBC/Donoghue's MONEY FUND REPORT(R) of Holliston, MA 01746, a widely recognized
independent publication that monitors the
-23-
<PAGE> 40
performance of money market funds, or to the average yields reported by the
Bank Rate Monitor from money market deposit accounts offered by the 50 leading
banks and thrift institutions in the top five standard metropolitan statistical
areas.
THE FUNDS' YIELDS WILL FLUCTUATE, AND ANY QUOTATION OF YIELD SHOULD
NOT BE CONSIDERED AS REPRESENTATIVE OF THE FUTURE PERFORMANCE OF THE FUNDS.
Since yields fluctuate, yield data cannot necessarily be used to compare an
investment in the Funds' shares with bank deposits, savings accounts, and
similar investment alternatives which often provide an agreed or guaranteed
fixed yield for a stated period of time. Shareholders should remember that
performance and yield are generally functions of the kind and quality of the
investments held in a Fund, portfolio maturity, operating expenses net of
waivers and expense reimbursements, and market conditions. Any fees charged by
Dollar Share or Plus Share Service Organizations or other institutional
investors with respect to customer accounts in investing in shares of
the Funds will not be included in calculations of yield and performance; such
fees, if charged, would reduce the actual performance and yield from that
quoted.
The Funds may also from time to time include in advertisements, sales
literature, communications to shareholders and other materials ("Materials"),
discussions or illustrations of the effects of compounding. "Compounding"
refers to the fact that, if dividends or other distributions on a Fund
investment are reinvested by being paid in additional Fund shares, any future
income or capital appreciation of a Fund would increase the value, not only of
the original Fund investment, but also of the additional Fund shares received
through reinvestment. As a result, the value of the Fund investment would
increase more quickly than if dividends or other distributions had been paid in
cash.
In addition, the Funds may also include in Materials discussions
and/or illustrations of the potential investment goals of a prospective
investor, investment management strategies, techniques, policies or investment
suitability of a Fund, economic conditions, the relationship between sectors of
the economy and the economy as a whole, various securities markets, the effects
of inflation and historical performance of various asset classes, including
but not limited to, stocks, bonds and Treasury securities. From time to
time, Materials may summarize the substance of information contained in
shareholder reports (including the investment composition of a Fund), as well
as the views of the advisers as to current market, economic, trade and interest
rate trends, legislative, regulatory and monetary developments, investment
strategies and related matters believed to be of relevance to a Fund. The
Funds may also include in Materials charts, graphs or drawings which compare
the investment objective, return potential, relative stability and/or growth
possibilities of the Funds and/or other mutual funds, or illustrate the
potential risks and rewards of investment in various investment vehicles,
including but not limited to, stocks, bonds, Treasury securities and shares of
a Fund and/or other mutual funds. Materials may include a discussion of
certain attributes or benefits to be derived by an investment in a Fund and/or
other mutual funds (such as value investing, market timing, dollar cost
averaging, asset allocation, constant ratio transfer, automatic accounting
rebalancing, the advantages and disadvantages of investing in tax-deferred and
taxable investments), shareholder profiles and hypothetical investor scenarios,
timely information on financial management, designations assigned a Fund by
various rating or ranking organizations, Fund identifiers (such as CUSIP
numbers or NASDAQ symbols), tax and retirement planning and investment
alternatives to certificates of deposit and other financial instruments. Such
Materials may include symbols, headlines or other material which highlight or
summarize the information discussed in more detail therein.
ADDITIONAL DESCRIPTION CONCERNING FUND SHARES
The Company does not presently intend to hold annual meetings of
shareholders except as required by the 1940 Act or other applicable law. Upon
the written request of shareholders owning at least twenty percent of the
Company's shares, the Company will call for a meeting of shareholders to
consider the removal of one or more trustees and other certain matters. To the
extent required by law, the Company will assist in shareholder communication in
such matters.
As stated in the Prospectuses for the Funds, holders of the Company's
FedFund and FedFund Dollar shares will vote in the aggregate and not by class
on all matters, except where otherwise required by law and except that only
FedFund Dollar shares will be entitled to vote on matters submitted to a vote
of shareholders pertaining to the Fund's arrangements with Service
Organizations. Holders of the Company's T-Fund, T-Fund Dollar and T-Fund Plus
shares will also vote in the aggregate and not by class except as described
above, except that only T-Fund Plus Shares will be entitled to vote on
matters submitted to a vote of shareholders pertaining to distribution and
certain sales support fees. (See "Management of the Funds--Dollar Share
Service Organizations" and "Distribution and Service Plan.") Further,
shareholders of all of the Company's portfolios will vote in the aggregate and
not by portfolio except as otherwise required by law or when the Board of
Trustees determines that the matter to be voted upon affects only the interests
of the shareholders of a particular portfolio. Rule 18f-2 under the 1940 Act
provides that any matter required to be submitted by the provisions of such Act
or applicable state law, or otherwise, to the holders of the outstanding
securities
-24-
<PAGE> 41
of an investment company such as the Company shall not be deemed to have been
effectively acted upon unless approved by the holders of a majority of the
outstanding shares of each portfolio affected by the matter. Rule 18f-2
further provides that a portfolio shall be deemed to be affected by a matter
unless it is clear that the interests of each portfolio in the matter are
identical or that the matter does not affect any interest of the portfolio.
Under the Rule the approval of an investment advisory agreement or any change
in a fundamental investment policy would be effectively acted upon with respect
to a portfolio only if approved by the holders of a majority of the outstanding
voting securities of such portfolio. However, the Rule also provides that the
ratification of the selection of independent accountants, the approval of
principal underwriting contracts and the election of trustees are not subject
to the separate voting requirements and may be effectively acted upon by
shareholders of the investment company voting without regard to portfolio.
COUNSEL
Drinker Biddle & Reath, Philadelphia National Bank Building, 1345
Chestnut Street, Philadelphia, Pennsylvania 19107-3496, of which W. Bruce
McConnel, III, Secretary of the Company, is a partner, serves as counsel to the
Company and will pass upon the legality of the shares offered hereby.
AUDITORS
The financial statements and financial highlights of the Funds
incorporated by reference into this Statement of Additional Information have
been audited by Coopers & Lybrand L.L.P., independent accountants, whose report
thereon is incorporated by reference herein. Coopers & Lybrand L.L.P. has
offices at 2400 Eleven Penn Center, Philadelphia, Pennsylvania 19103.
MISCELLANEOUS
SHAREHOLDER VOTE
As used in this Statement of Additional Information and the
Prospectuses for the Funds, a "majority of the outstanding shares" of a Fund or
of any other portfolio means, with respect to the approval of an investment
advisory agreement, a distribution plan or a change in a fundamental investment
policy,
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<PAGE> 42
the vote of the lesser of (1) 67% of the shares of such Fund (irrespective of
class) or of the portfolio represented at a meeting at which the holders of
more than 50% of the outstanding shares of such Fund or portfolio are present
in person or by proxy, or (2) more than 50% of the outstanding shares of such
Fund (irrespective of class) or of the portfolio.
CERTAIN RECORD HOLDERS
On March 26, 1996, the name, address and percentage of ownership of each
institutional investor that owned of record 5% or more of the outstanding
shares of the Company's FedFund and T-Fund portfolio were as follows:
<TABLE>
<S> <C>
FedFund
-------
Mercantile Bank N.A. 6.35%
Trust Securities Unit
P.O. Box 387 Main Post Office
St. Louis, MO 63166
Harris Trust & Savings Bank 5.27%
200 W. Monroe, 12th Floor
Chicago, IL 60690
State Street Bank & Trust Co. 5.48%
Securities Lending
2 International Plaza, 31st Floor
Boston, MA 02110
T-Fund
------
The Chase Manhattan Bank NA 8.37%
GSS As Agent
2 Chase Plaza, 4th Floor
New York, NY 10081
PNC Mortgage Securities Corp 7.46%
Attn: Trust Department
700 Deerpath Drive
Vernon Hills, IL 60061
PNC Bank/Saxon & Co. 6.70%
Attn: Income Collections
Airport Business Center/Intl Court 2
200 Stearns Drive
Lester, PA 19113
</TABLE>
SHAREHOLDER AND TRUSTEE LIABILITY
The Company is organized as a "business trust" under the laws of the
Commonwealth of Pennsylvania. Shareholders of
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<PAGE> 43
such a trust may, under certain circumstances, be held personally liable (as if
they were partners) for the obligations of the trust. The Declaration of Trust
of the Company provides that shareholders of the Funds shall not be subject to
any personal liability for the acts or obligations of the Company and that
every note, bond, contract, order or other undertaking made by the Company
shall contain a provision to the effect that the shareholders are not
personally liable thereunder. The Declaration of Trust provides for
indemnification out of the trust property of any shareholder held personally
liable solely by reason of being or having been a shareholder and not because
of any acts or omissions or some other reason. The Declaration of Trust also
provides that the Company shall, upon request, assume the defense of any claim
made against any shareholder for any act or obligation of the Company and
satisfy any judgment thereon. Thus, the risk of a shareholder's incurring
financial loss beyond its investment on account of shareholder liability is
limited to circumstances in which the Company itself would be unable to meet
its obligations.
The Company's Declaration of Trust provides further that no trustee,
officer or agent of the Company shall be personally liable for or on account of
any contract, debt, tort, claim, damage, judgment or decree arising out of or
connected with the administration or preservation of the trust estate or the
conduct of any business of the Company, nor shall any trustee be personally
liable to any person for any action or failure to act except by reason of bad
faith, willful misfeasance, gross negligence in the performance of any duties
or by reason of reckless disregard of the obligations and duties as trustee.
It also provides that all persons having any claim against the trustees or the
Company shall look solely to the trust property for payment. With the
exceptions stated, the Declaration of Trust provides that a trustee is entitled
to be indemnified against all liabilities and expenses reasonably incurred by
him or her in connection with the defense or disposition of any proceeding in
which the trustee may be involved or with which the trustee may be threatened
by reason of being or having been a trustee, and that the trustees have the
power, but not the duty, to indemnify officers and employees of the Company
unless such person would not be entitled to indemnification had he or she been
a trustee.
[/R]
FINANCIAL STATEMENTS
[/R]
The Company's Annual Report to Shareholders for the fiscal year ended
October 31, 1995 has been filed with the Securities and Exchange Commission.
The financial statements in such Annual Report (the "Financial Statements") are
incorporated into this Statement of Additional Information by reference. The
Financial Statements included in the Annual Report for the fiscal year ended
October 31, 1995 have been audited by the Company's independent accountants,
Coopers & Lybrand L.L.P., whose report thereon also appears in such Annual
Report and is incorporated herein by reference. The Financial Statements in
such Annual Report have been incorporated herein in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
-27-
<PAGE> 44
APPENDIX A
COMMERCIAL PAPER RATINGS
A Standard & Poor's commercial paper rating is a current
assessment of the likelihood of timely payment of debt considered short-term in
the relevant market. The following summarizes the rating categories used by
Standard and Poor's for commercial paper:
"A-1" - Issue's degree of safety regarding timely payment is
strong. Those issues determined to possess extremely strong safety
characteristics are denoted "A-1+."
"A-2" - Issue's capacity for timely payment is satisfactory.
However, the relative degree of safety is not as high as for issues designated
"A-1."
"A-3" - Issue has an adequate capacity for timely payment. It
is, however, somewhat more vulnerable to the adverse effects of changes and
circumstances than an obligation carrying a higher designation.
"B" - Issue has only a speculative capacity for timely
payment.
"C" - Issue has a doubtful capacity for payment.
"D" - Issue is in payment default.
Moody's commercial paper ratings are opinions of the ability
of issuers to repay punctually promissory obligations not having an original
maturity in excess of 9 months. The following summarizes the rating categories
used by Moody's for commercial paper:
"Prime-1" - Issuer or related supporting institutions are
considered to have a superior capacity for repayment of short-term promissory
obligations. Prime-1 repayment capacity will normally be evidenced by the
following characteristics: leading market positions in well established
industries; high rates of return on funds employed; conservative capitalization
structures with moderate reliance on debt and ample asset protection; broad
margins in earning coverage of fixed financial
A-1
<PAGE> 45
charges and high internal cash generation; and well established access to a
range of financial markets and assured sources of alternate liquidity.
"Prime-2" - Issuer or related supporting institutions are
considered to have a strong capacity for repayment of short-term promissory
obligations. This will normally be evidenced by many of the characteristics
cited above but to a lesser degree. Earnings trends and coverage ratios, while
sound, will be more subject to variation. Capitalization characteristics,
while still appropriate, may be more affected by external conditions. Ample
alternative liquidity is maintained.
"Prime-3" - Issuer or related supporting institutions have an
acceptable capacity for repayment of short-term promissory obligations. The
effects of industry characteristics and market composition may be more
pronounced. Variability in earnings and profitability may result in changes in
the level of debt protection measurements and the requirement for relatively
high financial leverage. Adequate alternate liquidity is maintained.
"Not Prime" - Issuer does not fall within any of the Prime
rating categories.
The three rating categories of Duff & Phelps for investment
grade commercial paper and short-term debt are "D-1," "D-2" and "D-3." Duff &
Phelps employs three designations, "D-1+," "D-1" and "D-1-," within the highest
rating category. The following summarizes the rating categories used by Duff &
Phelps for commercial paper:
"D-1+" - Debt possesses highest certainty of timely payment.
Short-term liquidity, including internal operating factors and/or access to
alternative sources of funds, is outstanding, and safety is just below
risk-free U.S. Treasury short-term obligations.
"D-1" - Debt possesses very high certainty of timely payment.
Liquidity factors are excellent and supported by good fundamental protection
factors. Risk factors are minor.
"D-1-" - Debt possesses high certainty of timely payment.
Liquidity factors are strong and supported by good fundamental protection
factors. Risk factors are very small.
"D-2" - Debt possesses good certainty of timely payment.
Liquidity factors and company fundamentals are sound. Although ongoing funding
needs may enlarge total financing requirements, access to capital markets is
good. Risk factors are small.
A-2
<PAGE> 46
"D-3" - Debt possesses satisfactory liquidity, and other
protection factors qualify issue as investment grade. Risk factors are larger
and subject to more variation. Nevertheless, timely payment is expected.
"D-4" - Debt possesses speculative investment characteristics.
Liquidity is not sufficient to ensure against disruption in debt service.
Operating factors and market access may be subject to a high degree of
variation.
"D-5" - Issuer has failed to meet scheduled principal and/or
interest payments.
Fitch short-term ratings apply to debt obligations that are
payable on demand or have original maturities of up to three years. The
following summarizes the rating categories used by Fitch for short-term
obligations:
"F-1+" - Securities possess exceptionally strong credit
quality. Issues assigned this rating are regarded as having the strongest
degree of assurance for timely payment.
"F-1" - Securities possess very strong credit quality. Issues
assigned this rating reflect an assurance of timely payment only slightly less
in degree than issues rated "F-1+."
"F-2" - Securities possess good credit quality. Issues
assigned this rating have a satisfactory degree of assurance for timely
payment, but the margin of safety is not as great as the "F-1+" and "F-1"
categories.
"F-3" - Securities possess fair credit quality. Issues
assigned this rating have characteristics suggesting that the degree of
assurance for timely payment is adequate; however, near-term adverse changes
could cause these securities to be rated below investment grade.
"F-S" - Securities possess weak credit quality. Issues
assigned this rating have characteristics suggesting a minimal degree of
assurance for timely payment and are vulnerable to near-term adverse changes in
financial and economic conditions.
"D" - Securities are in actual or imminent payment default.
Fitch may also use the symbol "LOC" with its short-term
ratings to indicate that the rating is based upon a letter of credit issued by
a commercial bank.
A-3
<PAGE> 47
Thomson BankWatch short-term ratings assess the likelihood of
an untimely or incomplete payment of principal or interest of unsubordinated
instruments having a maturity of one year or less which is issued by United
States commercial banks, thrifts and non-bank banks; non-United States banks;
and broker-dealers. The following summarizes the ratings used by Thomson
BankWatch:
"TBW-1" - This designation represents Thomson BankWatch's
highest rating category and indicates a very high degree of likelihood that
principal and interest will be paid on a timely basis.
"TBW-2" - This designation indicates that while the degree of
safety regarding timely payment of principal and interest is strong, the
relative degree of safety is not as high as for issues rated "TBW-1."
"TBW-3" - This designation represents the lowest investment
grade category and indicates that while the debt is more susceptible to adverse
developments (both internal and external) than obligations with higher ratings,
capacity to service principal and interest in a timely fashion is considered
adequate.
"TBW-4" - This designation indicates that the debt is regarded
as non-investment grade and therefore speculative.
IBCA assesses the investment quality of unsecured debt with an
original maturity of less than one year which is issued by bank holding
companies and their principal bank subsidiaries. The following summarizes the
rating categories used by IBCA for short-term debt ratings:
"A1+" - Obligations supported by the highest capacity for
timely repayment.
"A1" - Obligations are supported by a strong capacity for
timely repayment.
"A2" - Obligations are supported by a satisfactory capacity
for timely repayment, although such capacity may be susceptible to adverse
changes in business, economic or financial conditions.
"A3" - Obligations are supported by a satisfactory capacity
for timely repayment. Such capacity is more susceptible to adverse changes in
business, economic or financial conditions than for obligations in higher
categories.
A-4
<PAGE> 48
"B" - Obligations for which the capacity for timely repayment
is susceptible to adverse changes in business, economic or financial
conditions.
"C" - Obligations for which there is an inadequate capacity to
ensure timely repayment.
"D" - Obligations which have a high risk of default or which
are currently in default.
CORPORATE AND MUNICIPAL LONG-TERM DEBT RATINGS
The following summarizes the ratings used by Standard & Poor's
for corporate and municipal debt:
"AAA" - This designation represents the highest rating
assigned by Standard & Poor's to a debt obligation and indicates an extremely
strong capacity to pay interest and repay principal.
"AA" - Debt is considered to have a very strong capacity to
pay interest and repay principal and differs from AAA issues only in small
degree.
"A" - Debt is considered to have a strong capacity to pay
interest and repay principal although such issues are somewhat more susceptible
to the adverse effects of changes in circumstances and economic conditions than
debt in higher-rated categories.
"BBB" - Debt is regarded as having an adequate capacity to pay
interest and repay principal. Whereas such issues normally exhibit adequate
protection parameters, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to pay interest and repay
principal for debt in this category than in higher-rated categories.
"BB," "B," "CCC," "CC" and "C" - Debt is regarded, on balance,
as predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. "BB" indicates the
lowest degree of speculation and "C" the highest degree of speculation. While
such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.
"BB" - Debt has less near-term vulnerability to default than
other speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial or economic conditions which could lead
to inadequate capacity to meet timely interest and principal payments. The
"BB" rating
A-5
<PAGE> 49
category is also used for debt subordinated to senior debt that is assigned an
actual or implied "BBB-" rating.
"B" - Debt has a greater vulnerability to default but
currently has the capacity to meet interest payments and principal repayments.
Adverse business, financial or economic conditions will likely impair capacity
or willingness to pay interest and repay principal. The "B" rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied "BB" or "BB-" rating.
"CCC" - Debt has a currently identifiable vulnerability to
default, and is dependent upon favorable business, financial and economic
conditions to meet timely payment of interest and repayment of principal. In
the event of adverse business, financial or economic conditions, it is not
likely to have the capacity to pay interest and repay principal. The "CCC"
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied "B" or "B-" rating.
"CC" - This rating is typically applied to debt subordinated
to senior debt that is assigned an actual or implied "CCC" rating.
"C" - This rating is typically applied to debt subordinated to
senior debt which is assigned an actual or implied "CCC-" debt rating. The "C"
rating may be used to cover a situation where a bankruptcy petition has been
filed, but debt service payments are continued.
"CI" - This rating is reserved for income bonds on which no
interest is being paid.
"D" - Debt is in payment default. This rating is used when
interest payments or principal payments are not made on the date due, even if
the applicable grace period has not expired, unless S & P believes such
payments will be made during such grace period. "D" rating is also used upon
the filing of a bankruptcy petition if debt service payments are jeopardized.
PLUS (+) OR MINUS (-) - The ratings from "AA" through "CCC"
may be modified by the addition of a plus or minus sign to show relative
standing within the major rating categories.
"r" - This rating is attached to highlight derivative, hybrid,
and certain other obligations that S & P believes may experience high
volatility or high variability in expected returns due to non-credit risks.
Examples of such obligations are: securities whose principal or interest return
is indexed to equities, commodities, or currencies; certain swaps and options;
and interest only and principal only mortgage securities.
A-6
<PAGE> 50
The following summarizes the ratings used by Moody's for corporate and
municipal long-term debt:
"Aaa" - Bonds are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edged." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
"Aa" - Bonds are judged to be of high quality by all
standards. Together with the "Aaa" group they comprise what are generally
known as high-grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in "Aaa" securities or fluctuation
of protective elements may be of greater amplitude or there may be other
elements present which make the long-term risks appear somewhat larger than in
"Aaa" securities.
"A" - Bonds possess many favorable investment attributes and
are to be considered as upper medium-grade obligations. Factors giving
security to principal and interest are considered adequate but elements may be
present which suggest a susceptibility to impairment sometime in the future.
"Baa" - Bonds considered medium-grade obligations, i.e., they
are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
"Ba," "B," "Caa," "Ca," and "C" - Bonds that possess one of
these ratings provide questionable protection of interest and principal ("Ba"
indicates some speculative elements; "B" indicates a general lack of
characteristics of desirable investment; "Caa" represents a poor standing; "Ca"
represents obligations which are speculative in a high degree; and "C"
represents the lowest rated class of bonds). "Caa," "Ca" and "C" bonds may be
in default.
Con. (---) - Bonds for which the security depends upon the
completion of some act or the fulfillment of some condition are rated
conditionally. These are bonds secured by (a) earnings of projects under
construction, (b) earnings of projects unseasoned in operation experience, (c)
rentals which begin when facilities are completed, or (d) payments to which
some other limiting condition attaches. Parenthetical rating denotes
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<PAGE> 51
probable credit stature upon completion of construction or elimination of basis
of condition.
Moody's applies numerical modifiers 1, 2 and 3 in each generic
classification from "Aa" to "B" in its bond rating system. The modifier 1
indicates that the issuer ranks in the higher end of its generic rating
category; the modifier 2 indicates a mid-range ranking; and the modifier 3
indicates that the issuer ranks at the lower end of its generic rating
category.
The following summarizes the long-term debt ratings used by
Duff & Phelps for corporate and municipal long-term debt:
"AAA" - Debt is considered to be of the highest credit
quality. The risk factors are negligible, being only slightly more than for
risk-free U.S. Treasury debt.
"AA" - Debt is considered of high credit quality. Protection
factors are strong. Risk is modest but may vary slightly from time to time
because of economic conditions.
"A" - Debt possesses protection factors which are average but
adequate. However, risk factors are more variable and greater in periods of
economic stress.
"BBB" - Debt possesses below average protection factors but
such protection factors are still considered sufficient for prudent investment.
Considerable variability in risk is present during economic cycles.
"BB," "B," "CCC," "DD," and "DP" - Debt that possesses one of
these ratings is considered to be below investment grade. Although below
investment grade, debt rated "BB" is deemed likely to meet obligations when
due. Debt rated "B" possesses the risk that obligations will not be met when
due. Debt rated "CCC" is well below investment grade and has considerable
uncertainty as to timely payment of principal, interest or preferred dividends.
Debt rated "DD" is a defaulted debt obligation, and the rating "DP" represents
preferred stock with dividend arrearages.
To provide more detailed indications of credit quality, the
"AA," "A," "BBB," "BB" and "B" ratings may be modified by the addition of a
plus (+) or minus (-) sign to show relative standing within these major
categories.
The following summarizes the highest four ratings used by
Fitch for corporate and municipal bonds:
"AAA" - Bonds considered to be investment grade and of the
highest credit quality. The obligor has an exceptionally
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strong ability to pay interest and repay principal, which is unlikely to be
affected by reasonably foreseeable events.
"AA" - Bonds considered to be investment grade and of very
high credit quality. The obligor's ability to pay interest and repay principal
is very strong, although not quite as strong as bonds rated "AAA." Because
bonds rated in the "AAA" and "AA" categories are not significantly vulnerable
to foreseeable future developments, short-term debt of these issuers is
generally rated "F-1+."
"A" - Bonds considered to be investment grade and of high
credit quality. The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than bonds with higher ratings.
"BBB" - Bonds considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest and repay
principal is considered to be adequate. Adverse changes in economic conditions
and circumstances, however, are more likely to have an adverse impact on these
bonds, and therefore, impair timely payment. The likelihood that the ratings
of these bonds will fall below investment grade is higher than for bonds with
higher ratings.
"BB," "B," "CCC," "CC," "C," "DDD," "DD," and "D" - Bonds that
possess one of these ratings are considered by Fitch to be speculative
investments. The ratings "BB" to "C" represent Fitch's assessment of the
likelihood of timely payment of principal and interest in accordance with the
terms of obligation for bond issues not in default. For defaulted bonds, the
rating "DDD" to "D" is an assessment of the ultimate recovery value through
reorganization or liquidation.
To provide more detailed indications of credit quality, the
Fitch ratings from and including "AA" to "C" may be modified by the addition of
a plus (+) or minus (-) sign to show relative standing within these major
rating categories.
IBCA assesses the investment quality of unsecured debt with an
original maturity of more than one year which is issued by bank holding
companies and their principal bank subsidiaries. The following summarizes the
rating categories used by IBCA for long-term debt ratings:
"AAA" - Obligations for which there is the lowest expectation
of investment risk. Capacity for timely repayment of principal and interest is
substantial such that adverse changes in business, economic or financial
conditions are unlikely to increase investment risk substantially.
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"AA" - Obligations for which there is a very low expectation
of investment risk. Capacity for timely repayment of principal and interest is
substantial. Adverse changes in business, economic or financial conditions may
increase investment risk albeit not very significantly.
"A" - Obligations for which there is a low expectation of
investment risk. Capacity for timely repayment of principal and interest is
strong, although adverse changes in business, economic or financial conditions
may lead to increased investment risk.
"BBB" - Obligations for which there is currently a low
expectation of investment risk. Capacity for timely repayment of principal and
interest is adequate, although adverse changes in business, economic or
financial conditions are more likely to lead to increased investment risk than
for obligations in higher categories.
"BB," "B," "CCC," "CC," and "C" - Obligations are assigned one
of these ratings where it is considered that speculative characteristics are
present. "BB" represents the lowest degree of speculation and indicates a
possibility of investment risk developing. "C" represents the highest degree
of speculation and indicates that the obligations are currently in default.
IBCA may append a rating of plus (+) or minus (-) to a rating
to denote relative status within major rating categories.
Thomson BankWatch assesses the likelihood of an untimely
repayment of principal or interest over the term to maturity of long term debt
and preferred stock which are issued by United States commercial banks, thrifts
and non-bank banks; non-United States banks; and broker-dealers. The following
summarizes the rating categories used by Thomson BankWatch for long-term debt
ratings:
"AAA" - This designation represents the highest category
assigned by Thomson BankWatch to long-term debt and indicates that the ability
to repay principal and interest on a timely basis is extremely high.
"AA" - This designation indicates a very strong ability to
repay principal and interest on a timely basis with limited incremental risk
compared to issues rated in the highest category.
"A" - This designation indicates that the ability to repay
principal and interest is strong. Issues rated "A" could
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<PAGE> 54
be more vulnerable to adverse developments (both internal and external) than
obligations with higher ratings.
"BBB" - This designation represents Thomson BankWatch's lowest
investment grade category and indicates an acceptable capacity to repay
principal and interest. Issues rated "BBB" are, however, more vulnerable to
adverse developments (both internal and external) than obligations with higher
ratings.
"BB," "B," "CCC," and "CC," - These designations are assigned
by Thomson BankWatch to non-investment grade long-term debt. Such issues are
regarded as having speculative characteristics regarding the likelihood of
timely payment of principal and interest. "BB" indicates the lowest degree of
speculation and "CC" the highest degree of speculation.
"D" - This designation indicates that the long-term debt is in
default.
PLUS (+) OR MINUS (-) - The ratings from "AAA" through "CC"
may include a plus or minus sign designation which indicates where within the
respective category the issue is placed.
MUNICIPAL NOTE RATINGS
A Standard and Poor's rating reflects the liquidity concerns
and market access risks unique to notes due in three years or less. The
following summarizes the ratings used by Standard & Poor's Ratings Group for
municipal notes:
"SP-1" - The issuers of these municipal notes exhibit very
strong or strong capacity to pay principal and interest. Those issues
determined to possess overwhelming safety characteristics are given a plus (+)
designation.
"SP-2" - The issuers of these municipal notes exhibit
satisfactory capacity to pay principal and interest.
"SP-3" - The issuers of these municipal notes exhibit
speculative capacity to pay principal and interest.
Moody's ratings for state and municipal notes and other
short-term loans are designated Moody's Investment Grade ("MIG") and variable
rate demand obligations are designated Variable Moody's Investment Grade
("VMIG"). Such ratings recognize the differences between short-term credit
risk and long-term risk. The following summarizes the ratings by Moody's
Investors Service, Inc. for short-term notes:
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"MIG-1"/"VMIG-1" - Loans bearing this designation are of the
best quality, enjoying strong protection by established cash flows, superior
liquidity support or demonstrated broad-based access to the market for
refinancing.
"MIG-2"/"VMIG-2" - Loans bearing this designation are of high
quality, with margins of protection ample although not so large as in the
preceding group.
"MIG-3"/"VMIG-3" - Loans bearing this designation are of
favorable quality, with all security elements accounted for but lacking the
undeniable strength of the preceding grades. Liquidity and cash flow
protection may be narrow and market access for refinancing is likely to be less
well established.
"MIG-4"/"VMIG-4" - Loans bearing this designation are of
adequate quality, carrying specific risk but having protection commonly
regarded as required of an investment security and not distinctly or
predominantly speculative.
"SG" - Loans bearing this designation are of speculative
quality and lack margins of protection.
Fitch and Duff & Phelps use the short-term ratings described
under Commercial Paper Ratings for municipal notes.
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<PAGE> 56
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements:
(1) Included in Part A of the Registration Statement for
the T-Fund Portfolio: None
(2) Included in Part B:
The financial Statements contained in Registrant's
October 31, 1995 Annual Report to Shareholders,
copies of which have been filed with the Commission,
are incorporated herein by reference.
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(b) Exhibits:
(1) Amended and Restated Declaration of Trust dated as of
August 9, 1993, relating to its FedFund, T-Fund, FedCash,
T-Cash, Federal Trust Fund and Treasury Trust Fund
Portfolios is incorporated herein by reference to Exhibit
(1) of Post-Effective Amendment No. 39 to Registrant's
Registration
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<PAGE> 58
Statement on Form N-1A filed on January 28, 1994.
(2) Amended and Restated By-laws dated as of August 9, 1993,
relating to its FedFund, T-Fund, FedCash, T-Cash, Federal
Trust Fund and Treasury Trust Fund Portfolios is
incorporated herein by reference to Exhibit (2) of
Post-Effective Amendment No. 39 to Registrant's
Registration Statement on Form N-1A filed on January 28,
1994.
(3) None.
(4) (a) Specimen copy of share certificate for FedFund shares
of beneficial interest in the FedFund portfolio is
incorporated herein by reference to Exhibit (4)(a) of
Post-Effective Amendment No. 26 to Registrant's
Registration Statement on Form N-1A filed on December
2, 1987.
(b) Specimen copy of share certificate for FedFund Dollar
shares of beneficial interest in the FedFund portfolio
is incorporated herein by reference to Exhibit (4)(b)
of Post-Effective Amendment No. 26 to Registrant's
Registration Statement on Form N-1A filed on December
2, 1987.
(c) Specimen copy of share certificate for T-Fund shares
of beneficial interest in the T-Fund portfolio is
incorporated herein by reference to Exhibit (4)(c) of
Post-Effective Amendment No. 26 to Registrant's
Registration Statement on Form N-1A filed on December
2, 1987.
(d) Specimen copy of share certificate for T-Fund Dollar
shares of beneficial interest in the T-Fund portfolio
is incorporated herein by reference to Exhibit (4)(d)
of Post-Effective Amendment No. 26 to Registrant's
Registration Statement on Form N-1A filed on December
2, 1987.
(e) Specimen copy of share certificate for Treasury Trust
shares of beneficial interest in the Treasury Trust
Fund portfolio is incorporated herein by
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reference to Exhibit (4)(g) of Post-Effective
Amendment No. 31 to Registrant's Registration
Statement on Form N-1A filed on May 26, 1989.
(f) Specimen copy of share certificate for Treasury Trust
Dollar shares of beneficial interest in the Treasury
Trust Fund portfolio is incorporated herein by
reference to Exhibit (4)(h) of Post-Effective
Amendment No. 31 to Registrant's Registration
Statement on Form N-1A filed on May 26, 1989.
(g) Specimen copy of share certificate for Federal Trust
shares of beneficial interest in the Federal Trust
Fund portfolio is incorporated herein by reference to
Exhibit (4)(o) of Post-Effective Amendment No. 34 to
Registrant's Registration Statement on Form N-1A filed
on September 28, 1990.
(h) Specimen copy of share certificate for Federal Trust
Dollar shares of beneficial interest in the Federal
Trust Fund portfolio is incorporated herein by
reference to Exhibit (4)(p) of Post-Effective
Amendment No. 34 to Registrant's Registration
Statement on Form N-1A filed on September 28, 1990.
(i) Specimen copy of share certificate for FedCash shares
of beneficial interest in the FedCash portfolio is
incorporated herein by reference to Exhibit (4)(q) of
Post-Effective Amendment No. 37 to Registrant's
Registration Statement on Form N-1A filed on November
21, 1991.
(j) Specimen copy of share certificate for FedCash Dollar
shares of beneficial interest in the FedCash portfolio
is incorporated herein by reference to Exhibit (4)(r)
of Post-Effective Amendment No. 37 to Registrant's
Registration Statement on Form N-1A filed on November
21, 1991.
(k) Specimen copy of share certificate for T-Cash shares
of beneficial interest in the T-Cash portfolio is
incorporated
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<PAGE> 60
herein by reference to Exhibit (4)(s) of
Post-Effective Amendment No. 37 to Registrant's
Registration Statement on Form N-1A filed on November
21, 1991.
(1) Specimen copy of share certificate for T-Cash Dollar
shares of beneficial interest in the T-Cash portfolio
is incorporated herein by reference to Exhibit (4)(t)
of Post-Effective Amendment No. 37 to Registrant's
Registration Statement on Form N-1A filed on November
21, 1991.
(5) (a) Investment Advisory Agreement dated March 11, 1987
between Registrant and PNC Institutional Management
Corporation relating to its FedFund and T-Fund
portfolios is incorporated herein by reference to
Exhibit (5)(a) of Post-Effective Amendment No. 26 to
Registrant's Registration Statement on Form N-1A filed
on December 2, 1987.
(b) Addendum No. 1 to Investment Advisory Agreement dated
June 30, 1988 between Registrant and PNC Institutional
Management Corporation relating to its Treasury Trust
Fund portfolio is incorporated herein by reference to
Exhibit (5)(b) of Post-Effective Amendment No. 30 to
Registrant's Registration Statement on Form N-1A filed
on January 25, 1989.
(c) Addendum No. 2 to Investment Advisory Agreement dated
September 7, 1988 between Registrant and PNC
Institutional Management Corporation relating to its
Intermediate Government and Long Government Fund
portfolios is incorporated herein by reference to
Exhibit (5)(c) of Post-Effective Amendment No. 30 to
Registrant's Registration Statement on Form N-1A filed
on January 25, 1989.
(d) Addendum No. 3 to Investment Advisory Agreement dated
as of November 1, 1990 between Registrant and PNC
Institutional Management Corporation relating to its
Federal Trust Fund portfolio is
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<PAGE> 61
incorporated herein by reference to Exhibit (5)(d) of
Post-Effective Amendment No. 35 to Registrant's
Registration Statement on Form N-1A filed on February
28, 1991.
(e) Addendum No. 4 to Investment Advisory Agreement dated
May 9, 1991 between Registrant and PNC Institutional
Management Corporation relating to its FedCash and
T-Cash portfolios is incorporated herein by reference
to Exhibit (5)(e) of Post-Effective Amendment No. 37
to Registrant's Registration Statement on Form N-1A
filed on November 21, 1991.
(f) Sub-Advisory Agreement dated March 11, 1987 between
PNC Institutional Management Corporation and PNC Bank,
National Association relating to Registrant's FedFund
and T-Fund portfolios is incorporated herein by
reference to Exhibit (5)(c) of Post-Effective
Amendment No. 26 to Registrant's Registration
Statement on Form N-1A filed on December 2, 1987.
(g) Addendum No. 1 to Sub-Advisory Agreement dated June
30, 1988 between PNC Institutional Management
Corporation and PNC Bank, National Association
relating to Registrant's Treasury Trust Fund portfolio
is incorporated herein by reference to Exhibit (5)(e)
of Post-Effective Amendment No. 30 to Registrant's
Registration Statement on Form N-1A filed on January
25, 1989.
(h) Addendum No. 2 to Sub-Advisory Agreement dated
September 7, 1988 between PNC Institutional Management
Corporation and PNC Bank, National Association
relating to Registrant's Intermediate Government and
Long Government Fund portfolios is incorporated herein
by reference to Exhibit (5)(f) of Post-Effective
Amendment No. 30 to Registrant's Registration
Statement on Form N-1A filed on January 25, 1989.
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<PAGE> 62
(i) Addendum No. 3 to Sub-Advisory Agreement dated as of
November 1, 1990 between PNC Institutional Management
Corporation and PNC Bank, National Association
relating to its Federal Trust Fund portfolio is
incorporated herein by reference to Exhibit (5)(h) of
Post-Effective Amendment No. 35 to Registrant's
Registration Statement on Form N-1A filed on February
28, 1991.
(j) Addendum No. 4 to Sub-Advisory Agreement dated May 9,
1991 between PNC Institutional Management Corporation
and PNC Bank, National Association relating to
Registrant's FedCash and T-Cash portfolios is
incorporated herein by reference to Exhibit (5)(j) of
Post Effective Amendment No. 37 to Registrant's
Registration Statement on Form N-1A filed on November
21, 1991.
(6) (a) Distribution Agreement dated January 31, 1994 between
Registrant and Provident Distributors, Inc. relating
to its FedFund, T-Fund, FedCash, T-Cash, Federal Trust
Fund and Treasury Trust Fund portfolios is
incorporated herein by reference to Exhibit (6) of
Post-Effective Amendment No. 39 to Registrant's
Registration Statement on Form N-1A filed on January
28, 1994.
(b) Form of Addendum No. 1 to Distribution Agreement
between Registrant and Provident Distributors, Inc.
relating to Plus Shares on its T-Funds Portfolio.
(7) Trust for Federal Securities Fund Office Retirement
Profit-Sharing Plan and Trust Agreement as approved Fall
of 1990 is incorporated herein by reference to Exhibit
(7) of Post-Effective Amendment No. 49 to Temporary
Investment Fund, Inc.'s Registration Statement on Form
N-1A filed on December 12, 1990.
(8) (a) Custodian Fee Agreement dated May 9, 1991 between
Registrant and PNC Bank, National Association relating
to its FedFund, T-Fund, FedCash, T-Cash, Federal Trust
Fund and Treasury Trust Fund portfolios is
incorporated herein by reference to Exhibit (8)(b) of
Post-Effective Amendment No. 37 to Registrant's
Registration Statement on Form N-1A filed on November
21, 1991.
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(b) Custodian Agreement dated June 1, 1989 between
Registrant and PNC Bank, National Association relating
to its FedFund, T-Fund and Treasury Trust Fund
portfolios is incorporated herein by reference to
Exhibit (8) of Post-Effective Amendment No. 32 to
Registrant's Registration Statement on Form N-1A filed
on November 21, 1991.
(c) Addendum No. 1 to Custodian Fee Agreement dated
November 1, 1990 between Registrant and PNC Bank,
National Association relating to its Federal Trust
Fund portfolio is incorporated herein by reference to
Exhibit (8)(d) of Post-Effective Amendment No. 35 to
Registrant's Registration Statement on Form N-1A filed
on November 21, 1991.
(d) Addendum No. 2 to Custodian Fee Agreement dated May 9,
1991 between Registrant and PNC Bank, National
Association relating to its FedCash and T-Cash
portfolios is incorporated herein by reference to
Exhibit (8)(e) of Post-Effective Amendment No. 37 to
Registrant's Registration Statement on Form N-1A filed
on November 21, 1991.
(e) Form of Addendum No. 3 to Custodian Agreement between
Registrant and PNC Bank, National Association relating
to Plus Shares in its T-Fund Portfolios.
(9) (a) Administration Agreement dated January 18, 1993
between Registrant and PFPC Inc. and Provident
Distributors, Inc. as co-administrators, relating to
its FedFund, T-Fund, FedCash, T-Cash, Federal Trust
Fund and Treasury Trust Fund portfolios is
incorporated herein by reference to Exhibit (9)(a) of
Post-Effective Amendment No. 39 to Registrant's
Registration Statement on Form N-1A filed on January
28, 1994.
(b) Form of Addenbum No. 1 to the Administration Agreement
between the Registrant, PFPC Inc. and Provident
Distributors Inc. relating to the Plus Shares in its
T-Fund Portfolio.
(c) Transfer Agency Fee Agreement dated May 9, 1991
between Registrant and PFPC Inc. relating to its
FedFund, T-Fund, FedCash, T-Cash, Federal Trust Fund
and Treasury Trust Fund portfolios is incorporated
herein by reference to Exhibit (9)(e) of
Post-Effective Amendment No. 37 to Registrant's
Registration Statement on Form N-1A filed on November
21, 1991.
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(d) Transfer Agency Agreement dated June 1, 1989 between
Registrant and PFPC Inc. relating to its FedFund,
T-Fund and Treasury Trust Fund portfolios is
incorporated herein by reference to Exhibit (9)(e) of
Post-Effective Amendment No. 33 to Registrant's
Registration Statement on Form N-1A filed on January
15, 1990.
(e) Addendum No. 1 to Transfer Agency Agreement dated as
of November 1, 1990 between the Registrant and PFPC
Inc. relating to its Federal Trust Fund portfolio is
incorporated herein by reference to Exhibit (9)(i) of
Post-Effective Amendment No. 35 to Registrant's
Registration Statement on Form N-1A filed on February
28, 1991.
(f) Addendum No. 2 to Transfer Agency Agreement dated May
9, 1991 between the Registrant and PFPC Inc. relating
to its FedCash and T-Cash portfolios is incorporated
herein by reference to Exhibit (9)(h) of
Post-Effective Amendment No. 37 to Registrant's
Registration Statement on Form N-1A filed on November
21, 1991.
(8) Form of Addendum No. 5 to Transfer Agency Agreement
between the Registrant and PFPC Inc. relating to Plus
Shares in its T-Fund Portfolio.
(10)(a) Opinion and Consent of Counsel*.
(11)(a) Consent of Coopers & Lybrand.
(b) Consent of Drinker Biddle & Reath.
(12) None.
(13) Inapplicable.
(14) None.
(15) Form of Distribution and Service Plan and accompanying
agreement for Plus Shares in its T-Fund Portfolio.
- --------------------
* Filed pursuant to Rule 24f-2 as part of Registrant's Rule 24f-2
Notice on December 28, 1995.
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(16)(a) Schedules of Performance Computations with respect to
FedFund, T-Fund and Treasury Trust Fund portfolios are
incorporated herein by reference to Exhibit (16)(a) of
Post-Effective Amendment No. 35 to Registrant's
Registration Statement on Form N-1A filed on February
28, 1991.
(b) Schedules of Performance Computations with respect to
the FedCash, T-Cash and Federal Trust Fund portfolios
is incorporated herein by reference to Exhibit (16)(b)
of Post-Effective Amendment No. 37 to Registrant's
Registration Statement on Form N-1A filed on November
21, 1991.
(18) Plan pursuant to Rule 18f-3 for operation of a
Multi-Class System.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Registrant is controlled by its Board of Trustees. Each of
Registrant's trustees serves on the board of directors/trustees of certain
other registered investment companies. See "Management of the Fund - Trustees
and Officers" in Part B hereof.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
The following information is as of January 10, 1996:
<TABLE>
<CAPTION>
Number of
Title of Class Record Holders
-------------- --------------
<S> <C>
Shares of beneficial interest in FedFund . . . 274
Shares of beneficial interest in FedFund
Dollar shares . . . . . . . . . . . . . . 25
Shares of beneficial interest in T-Fund . . . . 249
Shares of beneficial interest in T-Fund
Dollar shares . . . . . . . . . . . . . . 15
Shares of beneficial interest in FedCash . . . 27
Shares of beneficial interest in FedCash
Dollar shares . . . . . . . . . . . . . 1
Shares of beneficial interest in T-Cash . . . . 29
Shares of beneficial interest in T-Cash
Dollar shares . . . . . . . . . . . . . 3
</TABLE>
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<TABLE>
<S> <C>
Shares of beneficial interest in Federal
Trust Fund . . . . . . . . . . . . . . . 79
Shares of beneficial interest in Federal
Trust Fund Dollar shares . . . . . . . . 18
Shares of beneficial interest in Treasury
Trust Fund . . . . . . . . . . . . . . . 169
Shares of beneficial interest in Treasury
Trust Fund Dollar shares . . . . . . . . 19
</TABLE>
ITEM 27. INDEMNIFICATION
Indemnification of Registrant's Principal Underwriter, Custodian and
Transfer Agent against certain stated liabilities is provided for in Section 6
of the Distribution Agreement, included herein as Exhibit (6), and in Section
22 of the Custodian Agreement and in Section 17 of the Transfer Agency
Agreement, incorporated herein by reference as Exhibits (8)(b) and (9)(e),
respectively. Registrant has obtained from at least one major insurance
carrier a directors' and officers' liability policy covering certain types of
errors and omissions. In addition, Section 2 of Article X of Registrant's
Amended and Restated Declaration of Trust dated August 9, 1994 incorporated
herein by reference as Exhibit (l), provides as follows:
10.2 Indemnification of Trustees, Officers and Employees. The
Trust shall indemnify each of its Trustees against all liabilities
and expenses (including amounts paid in satisfaction of judgments, in
compromise, as fines and penalties, and as counsel fees) reasonably
incurred by him in connection with the defense or disposition of any
action, suit or other proceeding, whether civil or criminal, in which
he may be involved or with which he may be threatened, while in
office or thereafter, by reason of his being or having been such a
Trustee except with respect to any matter as to which, he shall have
been adjudicated to have acted in bad faith, willful misfeasance,
gross negligence or reckless disregard of his duties; provided,
however, that as to any matter disposed of by a compromise payment by
such person, pursuant to a consent decree or otherwise, no
indemnification either for said payment or for any other expenses
shall be provided unless the Trust shall have received a written
opinion from independent legal counsel approved by the Trustees to
the effect that if either the matter of willful misfeasance, gross
negligence or reckless disregard of duty, or the matter of bad faith
had been adjudicated, it would in his opinion have been
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adjudicated in favor of such person. The rights accruing to any
person under these provisions shall not exclude any other right to
which he may be lawfully entitled; provided that no person may
satisfy any right of indemnity or reimbursement except out of the
property of the Trust. The Trustees may make advance payments in
connection with the indemnification under this Section 10.2, provided
that the indemnified person shall have given a written undertaking to
reimburse the Trust in the event it is subsequently determined that
he is not entitled to such indemnification.
The Trustees shall have the power, but not the duty, in their
sole discretion, to indemnify representatives and employees of the
Trust to the same extent that Trustees are entitled to
indemnification hereunder.
In addition to such rights of indemnification as may be provided
hereunder, the Trustees may purchase insurance against the risk of
liability imposed against Trustees, officers or employees by reason
of their services on behalf of the Trust.
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to trustees, officers and controlling persons of
Registrant pursuant to the foregoing provisions, or otherwise, Registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by Registrant of expenses
incurred or paid by a trustee, officer or controlling person of Registrant in
the successful defense of any action, suit or proceeding) is asserted by such
trustee, officer or controlling person in connection with the securities being
registered, Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication
of such issue.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
PIMC performs investment advisory services for Registrant and certain
other investment companies. PNC and its predecessors have been in the business
of managing the investments of fiduciary and other accounts in the Philadelphia
area since 1847. In addition to its trust business, PNC provides commercial
banking services.
C-12
<PAGE> 68
(a) To Registrant's knowledge, none of the directors or
officers of PIMC, except those set forth below, is, or has been at any time
during Registrant's past two fiscal years, engaged in any other business,
profession, vocation or employment of a substantial nature, except that certain
directors and officers and certain executives of PIMC also hold various
positions with, and engage in business for, PNC Bank Corp, which owns all the
outstanding stock of PIMC, or other subsidiaries of PNC Bank Corp. Set forth
below are the names and principal businesses of the directors and certain
executives of PIMC who are engaged in any other business, profession, vocation
or employment of a substantial nature.
(b) To Registrant's knowledge, none of the directors or
officers of PNC Bank, N.A., except those set forth below, is, or has been at
any time during Registrant's past two fiscal years, engaged in any other
business, profession, vocation or employment of a substantial nature, except
that certain directors and officers and certain executives of PNC Bank, N.A.
also hold various positions with, and engage in business for, PNC Bank Corp.,
which owns all the outstanding stock of PNC Bank, N.A. or other subsidiaries of
PNC Bank Corp. Set forth below are the names and principal businesses of the
directors and certain executives of PNC Bank, N.A. who are engaged in any other
business, profession, vocation or employment of a substantial nature.
(c) The information required by this Item 28 with respect to
each director, officer and partner of PIMC is incorporated by reference to
Schedules A and D of Form ADV filed by PIMC with the Securities and Exchange
Commission pursuant to the Investment Advisors Act of 1940 (SEC File
No. 801-13304).
(d) Set forth below are the names and principal businesses of
the directors and certain executives of PNC Bank who are engaged in any other
business, profession, vocation or employment of a substantial nature.
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<PAGE> 69
PNC Bank, National Association
Directors
<TABLE>
<CAPTION>
Position with Other Business Type of
PNC Bank Name Connections Business
-------- ---- ----------- --------
<S> <C> <C> <C>
Director B.R. Brown President and C.E.O. of Coal
Consol, Inc.
Consol Plaza
Pittsburgh, PA 15241
Director Constance E. Clayton Chief, Division of Community Health Care Medical College of Medical
Pennsylvania
3300 Hinley Avenue, Office 4338
Philadelphia, PA 19129
Director Eberhard Faber, IV Chairman and C.E.O. Manufacturing
E.F.L., Inc.
450 Hedge Road
P.O. Box 49
Bearcreek, PA 18602
Director Dr. Stuart Heydt President and C.E.O. Medical
Geisinger Foundation
100 N. Academy Avenue
Danville, PA 17822
Director Edward P. Junker, III Vice Chairman Banking
PNC Bank, N.A.
Ninth and State Streets
Erie, PA 16553
Director Thomas A. McConomy President, C.E.O. and Manufacturing
Chairman, Calgon Carbon
Corporation
P.O. Box 717
Pittsburgh, PA 15230-0717
Director Robert C. Milsom Retired
PNC Bank, National Association
One PNC Plaza, Suite 2310
Pittsburgh, PA 15265
Director Thomas H. O'Brien Chairman Banking
PNC Bank, National Association
One PNC Plaza, 30th Floor
Pittsburgh, PA 15265
Director Dr. J. Dennis O'Connor Chancellor, University Education
of Pittsburgh
107 Cathedral of Learning
Pittsburgh, PA 15260
Director Rocco A. Ortenzio Chairman and C.E.O. Medical
Continental Medical
Systems, Inc.
P.O. Box 715
Mechanicsburg, PA 17055
</TABLE>
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<PAGE> 70
<TABLE>
<S> <C> <C> <C>
Director Jane G. Pepper President Horticulture
Pennsylvania Horticultural Society
325 Walnut Street
Philadelphia, PA 19106
Director Robert C. Robb, Jr. President, Lewis, Eckert, Financial and
Robb & Company Management Consultants
425 One Plymouth Meeting
Plymouth Meeting, PA 19462
Director James E. Rohr President and C.E.O. Bank Holding Company
PNC Bank, National Association
One PNC Plaza, 30th Floor
Pittsburgh, PA 15265
Director Daniel M. Rooney President, Pittsburgh Steelers Football
Football Club of the National Football League
300 Stadium Circle
Pittsburgh, PA 15212
Director Seth E. Schofield Chairman, President and C.E.O. Airline
USAir Group, Inc. and
USAir, Inc.
2345 Crystal Drive
Arlington, VA 22227
Director Robert M. Valentini President and C.E.O. Communications
Bell Atlantic - Pennsylvania, Inc.
One Parkway, 18th Floor
Philadelphia, PA 19102
</TABLE>
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<PAGE> 71
PNC BANK, NATIONAL ASSOCIATION OFFICERS
<TABLE>
<CAPTION>
POSITION
WITH
NAME PNC BANK OTHER BUSINESS CONNECTIONS
---- -------- --------------------------
<S> <C> <C>
John E. Alden Senior Vice President
John W. Atkinson Executive Vice President None
D. Paul Beard Senior Vice President
Peter R. Begg Senior Vice President
James S. Best Senior Vice President
Eva T. Blum Senior Vice President
Susan B. Bohn Senior Vice President
Michael S. Borocz Senior Vice President
George Brikis Senior Vice President,
Manager of Credit Policy
Russell P. Brooks Senior Vice President
Anthony J. Cacciatore Senior Vice President
Richard C. Caldwell Executive Vice President Director, D.R. Corp.
Investment Officer, J.L. Caldwell Company
Council Member, Pennsylvania
Horticultural Society
Director, PFPC
Executive Vice President, Investment
Management and Trust, PNC Bank Corp.
Craig T. Campbell Senior Vice President
</TABLE>
C-16
<PAGE> 72
<TABLE>
<CAPTION>
POSITION
WITH
NAME PNC BANK OTHER BUSINESS CONNECTIONS
---- -------- --------------------------
<S> <C> <C>
J. Richard Carnall Executive Vice President Director, Franklin Institute (The)
Director, Hayden Bolts, Inc.
Director, Parkway Real Estate Company
Director, PNC Trust Company of New York
Director, Provident Capital Management,
Inc.
Chairman and Director, PFPC
Chairman and Director, PIMC
Peter K. Classen Senior Vice President
James P. Conley Senior Vice
President/Credit Policy
Robert Crouse Senior Vice President
W. Herbert Crowder, III Executive Vice President
John J. Daggett Senior Vice President
Victor M. DiBattista General Counsel
Thomas C. Dilworth Senior Vice President
James Dionise Senior Vice President and
CFO
Patrick S. Doran Vice President, Head of
Consumer Lending
Robert D. Edwards Senior Vice President
David J. Egan Senior Vice President
J. Lynn Evans Senior Vice President and
Controller
William E. Fallon Senior Vice President
James M. Ferguson, III Senior Vice President
</TABLE>
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<PAGE> 73
<TABLE>
<CAPTION>
POSITION
WITH
NAME PNC BANK OTHER BUSINESS CONNECTIONS
---- -------- --------------------------
<S> <C> <C>
Frederick C. Frank, III Executive Vice President Director, PNC National Bank
Director, PNC National Bank of New Jersey
William J. Friel Executive Vice President Director, Cedarbrook Country Club
Advisory Board Member, Chicago Title &
Abstract
Director, National Adoption Agency
George D. Gonczar Senior Vice President
Richard C. Grace Senior Vice President
James S. Graham Senior Vice President
Joseph C. Guyaux Senior Vice President
Michael J. Hannon Senior Vice President
Stephen G. Hardy Senior Vice President
Marva H. Harris Senior Vice President
G. Robert Hoffman Executive Vice President Director, J.W. Pepper & Sons, Inc.
Director, Land Holding Corp. of PA
Chairman, President and Director,
Provident Realty Management, Inc.
Chairman, President and Director,
Provident Realty, Inc.
Sylvan M. Holzer Senior Vice President
John M. Infield Senior Vice President
</TABLE>
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<PAGE> 74
<TABLE>
<CAPTION>
WITH
NAME PNC BANK OTHER BUSINESS CONNECTIONS
---- -------- --------------------------
<S> <C> <C>
Joe R. Irwin Executive Vice President Member of the Executive Committee and
Director
Blue Cross of Western Pennsylvania
Director
Civic Light Opera
(Non-Profit Enterprise)
Chairman of the Board
Dinamo
(Non-Profit Enterprise)
Treasurer and Director
Girls' Hope
(Non-Profit Organization)
Member of the Executive Committee and
Director
Greater Pittsburgh Chamber of Commerce
Member of the Governing Council
Pennsylvania Bankers Association
Chairman
Pennsylvania Economy League, Inc.
Chairman, Annual Sustaining Fund Campaign
Pittsburgh Opera
Executive Vice President and Chief
Investment Officer
PNC Bank Corp.
Chairman, Chief Executive Officer and
Director
PNC Funding Corp.
Chairman and Director
PNC International Bank
Chairman and Director
PNC International Bank (New York)
Chairman and Director
PNC International Investment Corporation
Director
PNC Mortgage Bank, N.A.
</TABLE>
C-19
<PAGE> 75
<TABLE>
<CAPTION>
POSITION
WITH
NAME PNC BANK OTHER BUSINESS CONNECTIONS
---- -------- --------------------------
<S> <C> <C>
Joe R. Irwin (Cont'd.) Director
PNC Mortgage Corp. of America
Director
Ruffed Grouse Society, The
(Non-Profit Enterprise)
Philip C. Jackson Senior Vice President
William R. Johnson Audit Director
Edward P. Junker, III Vice Chairman Vice Chairman, PNC Bank Corp.
and Director
Director, PNC Mortgage Bank, N.A.
Director, PNC Mortgage Corp. of America
John F. Karaszewski Senior Vice President, PNC
Mortgage Company
Michael D. Kelsey Chief Compliance Officer
Randall C. King Senior Vice President
Joseph E. Kloecker Senior Vice President and
Controller
Christopher M. Knoll Senior Vice President
Frank R. Krepp Senior Vice President
Kenneth P. Leckey Senior Vice President
Marilyn R. Levins Senior Vice President
William H. Lochman Senior Vice President
George Lula Senior Vice President
Jane E. Madio Senior Vice President
Nicholas M. Marsini, Jr. Senior Vice
President/Finance
J. William Mills Senior Vice President
</TABLE>
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<PAGE> 76
<TABLE>
<CAPTION>
POSITION
WITH
NAME PNC BANK OTHER BUSINESS CONNECTIONS
---- -------- --------------------------
<S> <C> <C>
Marlene D. Mosco Senior Vice President
Peter F. Moylan Senior Vice President
Louis J. Myers President and CEO, PNC None
Bank, Northeast, PA
Michael B. Nelson Senior Vice President
</TABLE>
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<PAGE> 77
<TABLE>
<CAPTION>
POSITION
WITH
NAME PNC BANK OTHER BUSINESS CONNECTIONS
---- -------- --------------------------
<S> <C> <C>
Thomas H. O'Brien Chairman Director, Allegheny Club (Non-Profit
Corporation)
Chairman and Director, Allegheny
Conference on Community Development (Non-
Profit Organization)
Director, Alpine Indemnity Limited
Director, Bell Atlantic Corporation
Trustee, Carnegie (The)
Director, Central Bancorporation, Inc.
(The)
Director, Children's Hospital (Non-Profit
Corporation)
Director, Governor Casey's Pennsylvania
Economic Development Partnership
Director, Hilb, Rogal and Hamilton Co.
Chairman - Board of Visitors, Katz
Graduate School of Business
Director, Laurel Valley Golf Club
Director, Pittsburgh Baseball, Inc.
Co-Chairman of the Board of Directors,
Pittsburgh Opera (The)
President, PNC Bancorp, Inc.
Chairman, CEO & Director, PNC Bank Corp.
Director, PNC Investment Corp.
Chairman and Director, PNC Trust Company
of Florida, N.A.
Director, United Way of S.W. PA (Non-
Profit Organization)
</TABLE>
C-22
<PAGE> 78
<TABLE>
<CAPTION>
POSITION
WITH
NAME PNC BANK OTHER BUSINESS CONNECTIONS
---- -------- --------------------------
<S> <C> <C>
Trustee, University of Pittsburgh
James F. O'Day Senior Vice President
George R. Partridge Senior Vice
President/Human Resources
David M. Payne Senior Vice President
Charles C. Pearson, Jr. President and CEO, PNC Director and Chairman, Chamber of
Bank, Central, PA Business and Industry of Centre County
Partner, Charrob Investments
Trustee, Juniata College
Partner, LPNS c/o Cir Realty
Director, Second Mile
Director, Uni-Marts, Inc.
Partner, University Drive Associates
John V. Petrycki President and CEO, PNC Director, Allied Arts Fund, Inc. (of
Bank, Southcentral, PA Harrisburg)
Director, Capital Region Economic
Development Corporation
Director, Channels
Director, Keystone Sports Foundation
Director, West Short YMCA
Donald G. Poppelton Senior Vice President
Helen P. Pudlin Senior Vice President
Joseph E. Quinnan Senior Vice President
</TABLE>
C-23
<PAGE> 79
<TABLE>
<CAPTION>
POSITION
WITH
NAME PNC BANK OTHER BUSINESS CONNECTIONS
---- -------- --------------------------
<S> <C> <C>
Edward V. Randall, Jr. President and CEO, PNC Board of Trustees, Carlow College
Bank, Pittsburgh
Board Member, Cities in Schools
Board of Trustees, Landmarks Financial
Corporation
Board of Trustees, Landmarks Real Estate
Corporation
Board Member, Pittsburgh Downtown
Partnership
Board Member, Pittsburgh History &
Landmarks Foundation
Director Emeritus, Pittsburgh Partnership
for Neighborhood Development
Member, Advisory Committee Transportation
& Technology Museum
Member, Board of Visitors University of
Pittsburgh School of Social Work (Non-
Profit Organization)
</TABLE>
C-24
<PAGE> 80
<TABLE>
<CAPTION>
POSITION
WITH
NAME PNC BANK OTHER BUSINESS CONNECTIONS
---- -------- --------------------------
<S> <C> <C>
James E. Rohr President, CEO and Director, Allegheny Ludlum Corporation
Director
Director, Alpine Indemnity Limited
Committee Member, American Bankers
Association Commercial Lending Div. Exec.
Com.
Director, American Cancer Society
Director, Boy Scouts of America
Business Advisory Council, Graduate
School of Industrial Adm. Carnegie Mellon
University
Trustee, Penn's Southwest Association
President and Director, Pittsburgh
National Bank Foundation
Chairman and Director, PNB Holdings, Inc.
President and Director, PNC Bank Corp.
Director, PNC International Bank (New
York)
Chairman, President, CEO and Director,
PNC Mortgage Bank, N.A.
Director, PNC Mortgage Corp. of America
Director, River City Brass Bank (Non-
Profit Corporation)
Chairman - Advisory Board, Salvation Army
(Non-Profit Organization)
Director, Shady Side Health, Education
and Research Center
Director, St. Vincent College
</TABLE>
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<PAGE> 81
<TABLE>
<CAPTION>
POSITION
WITH
NAME PNC BANK OTHER BUSINESS CONNECTIONS
---- -------- --------------------------
<S> <C> <C>
Gary Royer Senior Vice President
A. William Schenck, III Vice Chairman Board of Directors, Allegheny General
Hospital (Non-Profit Organization)
Director, Consumer Bankers Association
Board of Directors, Forward Products,
Inc.
Board of Directors, Health & Welfare
Planning Association (Non-Profit
Organization)
Chairman, Leadership Pittsburgh Steering
Committee
Director, Massachusetts Company, (The)
Board of Directors, Metropolitan
Pittsburgh Public Broadcasting, Inc.
(Non-Profit Organization)
Joint Ownership with wife Mikell Schenck,
Mikell Schenck Associates
1989 PBA Convention Committee Member,
Pennsylvania Bankers Association Group 8
(Non-Profit Organization)
Chairman and Director, Pinaco, Inc.
Board of Trustees, Pittsburgh Ballet
Theater (Non-Profit Organization)
Regional Advisory Council Member,
Pittsburgh Cancer Institute (Non-Profit
Organization)
Board of Trustees, Pittsburgh Center for
the Arts (Non-Profit Organization)
</TABLE>
C-26
<PAGE> 82
<TABLE>
<CAPTION>
POSITION
WITH
NAME PNC BANK OTHER BUSINESS CONNECTIONS
---- -------- --------------------------
<S> <C> <C>
A. William Schenck, III (Cont'd) Vice President and Director, Pittsburgh
National Bank Foundation
Chairman and Director, Pittsburgh
National Life Insurance Co.
Director, Pittsburgh Theological Seminary
Committee Member, Pittsburgh Trust for
Cultural Resources (Non-Profit
Organization)
Executive Vice President -PNC Retail
Banking, PNC Bank Corp.
Director, PNC Mortgage Bank, N.A.
Director, PNC Mortgage Corp. of America
Board of Trustee, Three Rivers
Shakespeare Festival (Non-Profit
Organization)
Board of Directors, Urban League of
Pittsburgh, Inc. (Non-Profit
Organization)
Director, Visa U.S.A., Inc.
Director, Wiser Oil Company
Board of Trustee, YMCA of Pittsburgh
(Non-Profit Organization)
Timothy G. Shack Senior Vice President
George R. Simon Senior Vice President
</TABLE>
C-27
<PAGE> 83
<TABLE>
<CAPTION>
POSITION
WITH
NAME PNC BANK OTHER BUSINESS CONNECTIONS
---- -------- --------------------------
<S> <C> <C>
Richard L. Smoot President and CEO of PNC Trustee, Agnes Irwin School
Bank, Philadelphia
Board of Council, Episcopal Community
Services
Director, Greater Philadelphia Chamber of
Commerce
Director, Greater Philadelphia First
Corporation (The)
Director, Greater Philadelphia Urban
Affairs Coalition (The)
Director, Pennsylvania Ballet
Director, Philadelphia Orchestra (The)
Chairman and Director, PNC Credit Corp.
Chairman, CEO and Director, PNC National
Bank
Chairman, President and Director, PNC
National Bank of New Jersey
Director, PNC Service Corp.
Director, PNC Trust Company of New York
Director, Police Athletic League of
Philadelphia
Director, PFPC
Director, PIMC
Director, Settlement Music School
Director, St. John's College
Director, United Negro College Fund
Director, Widener University
Director, World Affairs Council of
Philadelphia
</TABLE>
C-28
<PAGE> 84
<TABLE>
<CAPTION>
Position
with
Name PNC Bank Other Business Connections
- ---- -------- --------------------------
<S> <C> <C>
Timothy N. Smyth Senior Vice
President
Kenneth S. Spatz Senior Vice
President
William F. Strome Senior Vice
President and
Secretary
Herbert G. Summerfield, Executive Vice
Jr. President Director, CBM-Old York
Associates, Inc.
Director, CBM-Walnut Hill,
Inc.
Director, Pennsylvania
Mountain, Inc.
Executive Vice President -PNC
Real Estate, PNC Bank Corp.
Chairman and Director, PNC
Realty Holding Corp.
Director, PNC Realty Holding
Corp. of Georgia
Director, PNC Realty Holding
Corp. of Florida
Director, PNC Realty Holding
Corp. of Kentucky
Director, PNC Realty Holding
Corp. of Mississippi
Director, PNC Realty Holding
Corp. of New Jersey
Director, PNC Realty Holding
Corp. of Ohio
Director, PNC Realty Holding
Corp. of Pennsylvania
Director, PNC Realty Holding
Corp. of Texas
Director, PNC Realty Mortgage
Company
</TABLE>
C-29
<PAGE> 85
<TABLE>
<CAPTION>
Position
with
Name PNC Bank Other Business Connections
- ---- -------- --------------------------
<S> <C> <C>
Herbert G. Summerfield, Jr. (Cont'd) Director, Regional Industrial
Development Corp. of
Southwestern, PA
Director, Special Asset Holdings
of Michigan, Inc.
Stephen L. Swanson Senior Vice
President
Jane B. Tompkins Senior Vice
President
Robert E. Trempe Senior vice
President
Alan P. Vail Senior Vice
President
Annette M. Ward-Kredel Senior Vice
President
Malcolm C. Wilson Executive Vice Board of Trustees, People's
President Light & Theatre Company
Senior Vice President and
Director, PNC National Bank of
New Jersey
Craig A. Wolfanger Senior Vice
President
</TABLE>
- -------------------------------------
* For more information, contact the office of the Secretary of PNC Bank,
National Association, 5th and Wood Streets, Pittsburg, PA 15265.
ITEM 29. PRINCIPAL UNDERWRITER
(a) Provident Distributors, Inc. currently acts as distributor for,
in addition to the Company, Temporary Investment Fund, Inc., Municipal Fund for
Temporary Investment, Municipal Fund for California Investors, Inc. and
Municipal Fund for New York Investors, Inc.
(b) The information required by this Item 29 with respect to each
director, officer or partner of Provident Distributors, Inc. is incorporated by
reference to Schedule A of FORM BD filed by Provident Distributors, Inc. with
the Securities and Exchange Commission pursuant to the Securities Exchange Act
of 1934 (SEC File No. 8-36892).
C-30
<PAGE> 86
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
(1) PNC Bank, National Association, Broad and Chestnut Streets,
Philadelphia, Pennsylvania 19102 (records relating to its
functions as sub-investment adviser).
(2) PNC Bank, National Association, 200 Stevens Drive, Suite 440,
Lester, Pennsylvania 19113 (records relating to its functions as
custodian).
(3) PNC Institutional Management Corporation, Bellevue Park
Corporate Center, 400 Bellevue Parkway, 4th Floor, Wilmington,
Delaware 19809 (records relating to its functions as investment
adviser).
(4) PFPC Inc., Bellevue Park Corporate Center, 400 Bellevue Parkway,
Wilmington, Delaware 19809 (records relating to its functions as
administrator).
(5) Provident Distributors, Inc., 259 Radnor-Chester Road, Suite 120
Radnor, Pennsylvania 19087 (relating to its function as
administrator and distributor).
(6) PFPC Inc., Bellevue Park Corporate Center, 400 Bellevue Parkway,
Wilmington, Delaware 19809 (records relating to its functions as
transfer agent, registrar and dividend disbursing agent).
(7) Drinker Biddle & Reath, Philadelphia National Bank Building,
1345 Chestnut Street, Philadelphia, Pennsylvania 19107-3496
(Registrant's Declaration of Trust, Bylaws and Minutes Books).
ITEM 31. MANAGEMENT SERVICES
None.
ITEM 32. UNDERTAKINGS
Registrant undertakes to furnish each person to whom a
prospectus is delivered with a copy of Registrant's latest
annual report to shareholders upon request and without charge.
C-31
<PAGE> 87
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Post-Effective Amendment No. 43 to its Registration Statement to be signed on
its behalf by the undersigned, thereto duly authorized, in the City of
Wilmington, and State of Delaware, on April 1, 1996.
TRUST FOR FEDERAL SECURITIES
/s/ Edward J. Roach, Vice President and Treasurer
-------------------------------------------------
Edward J. Roach (Signature and Title)
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 43 to Registrant's Registration Statement has been
signed below by the following persons in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
* Philip E. Coldwell Trustee April 1, 1996
- --------------------------
Philip E. Coldwell
* Robert R. Fortune Trustee April 1, 1996
- --------------------------
Robert R. Fortune
* Rodney D. Johnson Trustee April 1, 1996
- --------------------------
Rodney D. Johnson
* G. Willing Pepper Chairman of April 1, 1996
- -------------------------- the Board and
G. Willing Pepper President
/s/ Edward J. Roach Vice President April 1, 1996
- -------------------------- and Treasurer
Edward J. Roach (Principal Financial
and Accounting
Officer)
*By:/s/ Edward J. Roach
----------------------
Edward J. Roach
Attorney-in-Fact
</TABLE>
<PAGE> 88
TEMPORARY INVESTMENT FUND, INC.
TRUST FOR FEDERAL SECURITIES
MUNICIPAL FUND FOR TEMPORARY INVESTMENT
PORTFOLIOS FOR DIVERSIFIED INVESTMENT
POWER OF ATTORNEY
G. Willing Pepper, whose signature appears below, hereby constitutes and
appoints G. Willing Pepper and Edward J. Roach, and either of them, his true
and lawful attorneys and agents, with power of substitution or resubstitution,
to do any and all acts and things and to execute any and all instruments which
said attorneys and agents, or either of them, may deem necessary or advisable
or which may be required to enable Temporary Investment Fund, Inc., Trust for
Federal Securities, Municipal Fund for Temporary Investment and Portfolios for
Diversified Investment (each a "Company") to comply with the Investment Company
Act of 1940 as amended, and the Securities Act of 1933, as amended ("Acts"),
and any rules, regulations or requirements of the Securities and Exchange
Commission in respect thereof, in connection with the filing and effectiveness
of any and all amendments (including post-effective amendments) to each
Company's Registration Statement(s) pursuant to said Acts, including
specifically, but without limiting the generality of the foregoing, the power
and authority to sign in the name and on behalf of the undersigned as director
or trustee and/or officer of the relevant Company any and all such amendments
filed with the Securities and Exchange Commission under said Acts, and any
other instruments or documents related thereto, and the undersigned does hereby
ratify and confirm all that said attorneys and agents, or either of them, shall
do or cause to be done by virtue hereof.
/s/ G. Willing Pepper
------------------------
G. Willing Pepper
Date: April 18, 1995
<PAGE> 89
TEMPORARY INVESTMENT FUND, INC.
TRUST FOR FEDERAL SECURITIES
MUNICIPAL FUND FOR TEMPORARY INVESTMENT
PORTFOLIOS FOR DIVERSIFIED INVESTMENT
POWER OF ATTORNEY
Philip E. Coldwell, whose signature appears below, hereby constitutes and
appoints G. Willing Pepper and Edward J. Roach, and either of them, his true
and lawful attorneys and agents, with power of substitution or resubstitution,
to do any and all acts and things and to execute any and all instruments which
said attorneys and agents, or either of them, may deem necessary or advisable
or which may be required to enable Temporary Investment Fund, Inc., Trust for
Federal Securities, Municipal Fund for Temporary Investment and Portfolios for
Diversified Investment (each a "Company") to comply with the Investment Company
Act of 1940 as amended, and the Securities Act of 1933, as amended ("Acts"),
and any rules, regulations or requirements of the Securities and Exchange
Commission in respect thereof, in connection with the filing and effectiveness
of any and all amendments (including post-effective amendments) to each
Company's Registration Statement(s) pursuant to said Acts, including
specifically, but without limiting the generality of the foregoing, the power
and authority to sign in the name and on behalf of the undersigned as director
or trustee and/or officer of the relevant Company any and all such amendments
filed with the Securities and Exchange Commission under said Acts, and any
other instruments or documents related thereto, and the undersigned does hereby
ratify and confirm all that said attorneys and agents, or either of them, shall
do or cause to be done by virtue hereof.
/s/ Philip E. Coldwell
-----------------------
Philip E. Coldwell
Date: April 18, 1995
<PAGE> 90
TEMPORARY INVESTMENT FUND, INC.
TRUST FOR FEDERAL SECURITIES
MUNICIPAL FUND FOR TEMPORARY INVESTMENT
PORTFOLIOS FOR DIVERSIFIED INVESTMENT
POWER OF ATTORNEY
Rodney D. Johnson, whose signature appears below, hereby constitutes and
appoints G. Willing Pepper and Edward J. Roach, and either of them, his true
and lawful attorneys and agents, with power of substitution or resubstitution,
to do any and all acts and things and to execute any and all instruments which
said attorneys and agents, or either of them, may deem necessary or advisable
or which may be required to enable Temporary Investment Fund, Inc., Trust for
Federal Securities, Municipal Fund for Temporary Investment and Portfolios for
Diversified Investment (each a "Company") to comply with the Investment Company
Act of 1940 as amended, and the Securities Act of 1933, as amended ("Acts"),
and any rules, regulations or requirements of the Securities and Exchange
Commission in respect thereof, in connection with the filing and effectiveness
of any and all amendments (including post-effective amendments) to each
Company's Registration Statement(s) pursuant to said Acts, including
specifically, but without limiting the generality of the foregoing, the power
and authority to sign in the name and on behalf of the undersigned as director
or trustee and/or officer of the relevant Company any and all such amendments
filed with the Securities and Exchange Commission under said Acts, and any
other instruments or documents related thereto, and the undersigned does hereby
ratify and confirm all that said attorneys and agents, or either of them, shall
do or cause to be done by virtue hereof.
/s/ Rodney D. Johnson
----------------------
Rodney D. Johnson
Date: April 18, 1995
<PAGE> 91
TEMPORARY INVESTMENT FUND, INC.
TRUST FOR FEDERAL SECURITIES
MUNICIPAL FUND FOR TEMPORARY INVESTMENT
PORTFOLIOS FOR DIVERSIFIED INVESTMENT
POWER OF ATTORNEY
Robert R. Fortune, whose signature appears below, hereby constitutes and
appoints G. Willing Pepper and Edward J. Roach, and either of them, his true
and lawful attorneys and agents, with power of substitution or resubstitution,
to do any and all acts and things and to execute any and all instruments which
said attorneys and agents, or either of them, may deem necessary or advisable
or which may be required to enable Temporary Investment Fund, Inc., Trust for
Federal Securities, Municipal Fund for Temporary Investment and Portfolios for
Diversified Investment (each a "Company") to comply with the Investment Company
Act of 1940 as amended, and the Securities Act of 1933, as amended ("Acts"),
and any rules, regulations or requirements of the Securities and Exchange
Commission in respect thereof, in connection with the filing and effectiveness
of any and all amendments (including post-effective amendments) to each
Company's Registration Statement(s) pursuant to said Acts, including
specifically, but without limiting the generality of the foregoing, the power
and authority to sign in the name and on behalf of the undersigned as director
or trustee and/or officer of the relevant Company any and all such amendments
filed with the Securities and Exchange Commission under said Acts, and any
other instruments or documents related thereto, and the undersigned does hereby
ratify and confirm all that said attorneys and agents, or either of them, shall
do or cause to be done by virtue hereof.
/s/ Robert R. Fortune
----------------------
Robert R. Fortune
Date: April 21, 1995
<PAGE> 92
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Page
- ------- ----
<S> <C>
6(b) Form of Addendum No. 1 to Distribution Agreement between
Registrant and Provident Distributors, Inc. relating to
Plus Shares in its T-Fund Portfolio.
8(e) Form of Addendum No. 3 to Custodian Agreement between
Registrant and PNC Bank, National Association relating to
Plus Shares in its T-Fund Portfolio.
9(b) Form of Addendum No. 1 to the Administration Agreement between
the Registrant, PFPC Inc. and Provident Distributors, Inc.
relating to the Plus Shares in its T-Fund Portfolio.
9(g) Form of Addendum No. 3 to Transfer Agency Agreement between
the Registrant and PFPC Inc. relating to Plus Shares in its
T-Fund Portfolio.
11(a) Consent of Coopers & Lybrand L.L.P.
11(b) Consent of Drinker Biddle & Reath.
15 Form of Distribution and Service Plan and accompanying
Agreement for Plus Shares in its T-Fund Portfolio.
18 Plan pursuant to Rule 18f-3 for operation of a Multi-Class
System.
</TABLE>
<PAGE> 1
Exhibit (6)(b)
ADDENDUM NO. 1 TO DISTRIBUTION AGREEMENT
This Addendum, dated as of the __th day of March, 1996, is
entered into between TRUST FOR FEDERAL SECURITIES (the "Company") a
Pennsylvania business trust, and PROVIDENT DISTRIBUTORS, INC. (the
"Distributor"), a Delaware corporation.
WHEREAS, the Company and the Distributor have entered into a
Distribution Agreement dated as of January 31, 1994 (the "Distribution
Agreement"), pursuant to which the Company appointed the Distributor to act as
distributor to the Company for each class and subclass of shares of beneficial
interest ("Shares") in each of the Company's investment portfolios
(individually, a "Fund," collectively, the "Funds") as listed on Appendix A to
the Distribution Agreement ("Appendix A");
WHEREAS, Paragraph 1 of the Distribution Agreement provides
that in the event the Company establishes one or more additional classes other
than those listed on Appendix A with respect to which it desires to retain the
Distributor to act as the distributor under the Distribution Agreement, the
Company shall so notify the Distributor, whereupon Appendix A shall be
supplemented (or amended); and
WHEREAS, pursuant to Paragraph 1 of the Distribution Agreement
the Company has notified the Distributor that it has established a new class of
shares, namely, the Plus series of shares in the T-Fund portfolio ("Plus
shares"), and that it desires to retain the Distributor to act as the
distributor therefor.
NOW THEREFORE, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. APPOINTMENT. The Company hereby appoints the
Distributor to act as distributor to the Company for Plus shares in the T-Fund
portfolio for the period and on the terms set forth in the Distribution
Agreement.
2. TERMS. From and after the date hereof, the term
"Shares" as used in the Distribution Agreement shall be deemed to include the
Plus shares. Capitalized terms used herein and not otherwise defined shall
have the meanings ascribed to them in the Distribution Agreement.
3. APPENDIX A. Appendix A to the Distribution Agreement
is hereby supplemented to read as set forth in Appendix A attached hereto.
<PAGE> 2
4. MISCELLANEOUS. Except to the extend supplemented
hereby, the Distribution Agreement shall remain unchanged and in full force and
effect and is hereby ratified and confirmed in all respects as supplemented
hereby.
IN WITNESS WHEREOF, the undersigned have executed this
Addendum as of the date and year first above written.
TRUST FOR FEDERAL SECURITIES
By:
-------------------------
Title:
PROVIDENT DISTRIBUTORS, INC.
By:
-------------------------
Title:
-2-
<PAGE> 3
APPENDIX A
TO THE
DISTRIBUTION AGREEMENT
BETWEEN
TRUST FOR FEDERAL SECURITIES
AND
PROVIDENT DISTRIBUTORS, INC.
- ----------------------------------------------------------------------------
FedFund (FedFund shares and FedFund Dollar shares)
T-Fund (T-Fund shares, T-Fund Dollar shares and T-Fund Plus shares)
FedCash (FedCash shares and FedCash Dollar shares)
T-Cash (T-Cash shares and T-Cash Dollar shares)
Federal Trust Fund (Federal Trust shares and Federal Trust Dollar shares)
Treasury Trust Fund (Treasury Trust shares and Treasury Trust Dollar shares)
-3-
<PAGE> 1
Exhibit (8)(e)
ADDENDUM NO. 3 TO CUSTODIAN AGREEMENT
This Addendum, dated as of the __th day of March, 1996, is
entered into between TRUST FOR FEDERAL SECURITIES (the "Company"), a
Pennsylvania business trust, and PNC BANK, NATIONAL ASSOCIATION ("PNC"), a
national banking association.
WHEREAS, the Company and PNC have entered into a Custodian
Agreement dated June 1, 1989, as supplemented by Addendum No. 1 dated as of
November 1, 1990 and Addendum No. 2 dated as of May 9, 1991 (the "Custodian
Agreement"), pursuant to which the Company appointed PNC to act as custodian to
the Company for its FedFund portfolio, its T-Fund portfolio, its Federal Trust
Fund portfolio, its Treasury Trust Fund portfolio, its FedCash portfolio and
its T-Cash portfolio (each a "Fund");
WHEREAS, Paragraph 1 of the Custodian Agreement provides that
in the event the Company establishes one or more additional classes with
respect to which it desires to retain PNC to act as the custodian under the
Custodian Agreement, the Company shall so notify PNC in writing and if PNC is
willing to render such services it shall notify the Company in writing, and the
compensation to be paid to PNC shall be that which is agreed to in writing by
the Company and PNC; and
WHEREAS, pursuant to Paragraph 1 of the Custodian Agreement,
the Company has notified PNC that it has established a new class of shares,
namely, the Plus series of shares in the T-Fund portfolio ("Plus shares"), and
that it desires to retain PNC to act as the custodian therefor, and PNC has
notified the Company that it is willing to serve as custodian for Plus shares
in the T-Fund portfolio.
NOW THEREFORE, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. APPOINTMENT. The Company hereby appoints PNC to act
as custodian to the Company for Plus shares in the T-Fund portfolio for the
period and on the terms set forth in the Custodian Agreement. PNC hereby
accepts such appointment and agrees to render the services set forth in the
Custodian Agreement, for the compensation agreed to in writing by the Company
and PNC pursuant to Paragraph 21 of the Custodian Agreement.
2. CAPITALIZED TERMS. From and after the date hereof,
the term "Shares" as used in the Custodian Agreement shall be deemed to include
Plus shares. Capitalized terms used herein and not otherwise defined shall
have the meanings ascribed to them in the Custodian Agreement.
<PAGE> 2
3. MISCELLANEOUS. Except to the extent supplemented
hereby, the Custodian Agreement shall remain unchanged and in full force and
effect and is hereby ratified and confirmed in all respects as supplemented
hereby.
IN WITNESS WHEREOF, the undersigned have executed this
Addendum as of the date and year first above written.
TRUST FOR FEDERAL SECURITIES
By:
-------------------------
Title:
PNC BANK, NATIONAL ASSOCIATION
By:
------------------------
Title:
-2-
<PAGE> 1
Exhibit (9)(b)
ADDENDUM NO. 1 TO ADMINISTRATION AGREEMENT
This Addendum, dated as of March __, 1996, is entered into
between TRUST FOR FEDERAL SECURITIES (the "Company"), a Pennsylvania business
trust, and PFPC INC. ("PFPC"), a Delaware corporation which is an indirect,
wholly owned subsidiary of PNC Bank Corp., and PROVIDENT DISTRIBUTORS, INC.
("PDI"), a Delaware corporation (together, the "Administrators").
WHEREAS, the Company and the Administrators have entered into
an Administration Agreement dated as of January 18, 1993 (the "Administration
Agreement"), pursuant to which the Company appointed the Administrators to act
as co-administrators to the Company for each class and subclass of units of
beneficial interest ("Shares") in each of the Company's investment portfolios
(individually, a "Fund", collectively, the "Funds") as listed on Appendix A to
the Administration Agreement ("Appendix A");
WHEREAS, Paragraph 1 of the Administration Agreement provides
that in the event the Company establishes one or more additional classes other
than those listed on Appendix A with respect to which it desires to retain the
Administrators to act as co-administrators under the Administration Agreement,
the Company shall so notify the Administrators, whereupon Appendix A shall be
supplemented (or amended); and
WHEREAS, pursuant to Paragraph 1 of the Administration
Agreement, the Company has notified the Administrators that it has established
a new class of shares, namely, the Plus series of shares in the T-Fund
portfolio (the "Plus shares") and that it desires to retain the Administrators
to act as the co-administrators therefor.
NOW THEREFORE, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. APPOINTMENT. The Company hereby appoints the
Administrators to act as co-administrators to the Company for Plus shares in
the T-Fund portfolio for the period and on the terms set forth in the
Administration Agreement.
2. TERMS. From and after the date hereof, the term
"Shares" as used in the Administration Agreement shall be deemed to include the
Plus shares. Capitalized terms used herein and not otherwise defined shall
have the meanings ascribed to them in the Administration Agreement.
<PAGE> 2
3. APPENDIX A. Appendix A to the Administration
Agreement is hereby supplemented to read as set forth in Appendix A attached
hereto.
4. MISCELLANEOUS. Except to the extent supplemented
hereby, the Administration Agreement shall remain unchanged and in full force
and effect and is hereby ratified and confirmed in all respects as supplemented
hereby.
IN WITNESS WHEREOF, the undersigned have executed this
Addendum as of the date and year first above written.
TRUST FOR FEDERAL SECURITIES
By:
------------------------
Title:
PFPC INC.
By:
------------------------
Title:
PROVIDENT DISTRIBUTORS, INC.
By:
-------------------------
Title:
<PAGE> 3
APPENDIX A
TO THE
ADMINISTRATION AGREEMENT
BETWEEN
TRUST FOR FEDERAL SECURITIES
AND
PFPC INC. AND
PROVIDENT DISTRIBUTORS, INC.
- ----------------------------------------------------------------------------
FedFund (FedFund shares and FedFund Dollar shares)
T-Fund (T-Fund shares, T-Fund Dollar shares and T-Fund Plus shares)
FedCash (FedCash shares and FedCash Dollar shares)
T-Cash (T-Cash shares and T-Cash Dollar shares)
Federal Trust Fund (Federal Trust shares and Federal Trust Dollar shares)
Treasury Trust Fund (Treasury Trust shares and Treasury Trust Dollar shares)
<PAGE> 1
Exhibit (9)(g)
ADDENDUM NO. 3 TO TRANSFER AGENCY AGREEMENT
This Addendum, dated as of the __th day of March, 1996, is
entered into between TRUST FOR FEDERAL SECURITIES (the "Company"), a
Pennsylvania business trust, and PFPC INC. ("PFPC"), a Delaware corporation
which is an indirect, wholly owned subsidiary of PNC Bank Corp.
WHEREAS, the Company and PFPC have entered into a Transfer
Agreement dated June 1, 1989, as supplemented by Addendum No. 1 dated as of
November 1, 1990 and Addendum No. 2 dated as of May 9, 1991 (the "Transfer
Agency Agreement"), pursuant to which the Company appointed PFPC to act as
transfer agent, registrar and dividend disbursing agent (the "Transfer Agent")
to the Company for its FedFund portfolio, its T-Fund portfolio, its Federal
Trust Fund portfolio, its Treasury Trust Fund portfolio, its FedCash portfolio
and its T-Cash portfolio (each a "Fund");
WHEREAS, Paragraph 1 of the Transfer Agency Agreement provides
that in the event the Company establishes one or more additional classes with
respect to which it desires to retain PFPC to act as the Transfer Agent under
the Transfer Agency Agreement, the Company shall so notify PFPC in writing and
if PFPC is willing to render such services it shall notify the Company in
writing, and the compensation to be paid to PFPC shall be that which is agreed
to in writing by the Company and PFPC; and
WHEREAS, pursuant to Paragraph 1 of the Transfer Agency
Agreement, the Company has notified PFPC that it has established a new class of
shares, namely, the Plus series of shares in the T-Fund portfolio ("Plus
shares"), and that it desires to retain PFPC to act as the Transfer Agent
therefor, and PFPC has notified the Company that it is willing to serve as
Transfer Agent for Plus shares of the T-Fund portfolio.
NOW THEREFORE, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. APPOINTMENT. The Company hereby appoints PFPC to act
as Transfer Agent to the Company for Plus shares in the T-Fund portfolio for
the period and on the terms set forth in the Transfer Agency Agreement. PFPC
hereby accepts such appointment and agrees to render the services set forth in
the Transfer Agency Agreement, for the compensation agreed to in writing by the
Company and PFPC pursuant to Paragraph 16 of the Transfer Agency Agreement.
<PAGE> 2
2 CAPITALIZED TERMS. From and after the date hereof,
the term "Shares" as used in the Transfer Agency Agreement shall be deemed to
include Plus shares. Capitalized terms used herein and not otherwise defined
shall have the meanings ascribed to them in the Transfer Agency Agreement.
3. MISCELLANEOUS. Except to the extent supplemented
hereby, the Transfer Agency Agreement shall remain unchanged and in full force
and effect and is hereby ratified and confirmed in all respects as supplemented
hereby.
IN WITNESS WHEREOF, the undersigned have executed this
Addendum as of the date and year first above written.
TRUST FOR FEDERAL SECURITIES
BY:
------------------------
Title:
PFPC INC.
BY:
-------------------------
Title:
-2-
<PAGE> 1
Exhibit (11)(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Post-Effective Amendment
No. 43 to the Registration Statement under the Securities Act of 1933 on Form
N-1A (File No. 2-53808) of our report dated December 8, 1995 accompanying
financial statements and financial highlights of Trust For Federal Securities
as of October 31, 1995. We also consent to the reference to our Firm under the
caption "Auditors" in the Statement of Additional Information in the filing.
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
March 29, 1996
<PAGE> 1
Exhibit (11)(b)
CONSENT OF COUNSEL
Trust for Federal Securities
(FedFund and T-Fund Portfolios)
We hereby consent to the use of our name and to the references to our
firm under the captions "Management of the Funds -- Trustees and Officers" and
"Counsel" in the Statement of Additional Information and under the caption
"Management of the Fund" in the Prospectus in Post-Effective Amendment No. 43
to the Registration Statement (File No. 2-53808) on Form N-1A of Trust for
Federal Securities (FedFund and T-Fund Portfolios) under the Securities Act of
l933 and the Investment Company Act of l940, respectively. This consent does
not constitute a consent under Section 7 of the Securities Act of 1933, and in
consenting to the use of our name and the references to our Firm under such
caption we have not certified any part of the Registration Statement and do not
otherwise come within the categories of persons whose consent is required under
Section 7 or the rules and regulations of the Securities and Exchange
Commission thereunder.
/s/DRINKER BIDDLE & REATH
-------------------------
DRINKER BIDDLE & REATH
Philadelphia, Pennsylvania
March 29, 1996
<PAGE> 1
Exhibit 15
TRUST FOR FEDERAL SECURITIES
DISTRIBUTION AND SERVICE PLAN
March 22, 1996
This Distribution and Service Plan (the "Plan") is adopted in
accordance with Rule 12b-1 (the "Rule") under the Investment Company Act of
1940, as amended (the "1940 Act"), by Trust for Federal Securities, a
Pennsylvania business trust (the "Trust"), with respect to the Plus Shares (the
"Shares") of the T-Fund Portfolio (the "Portfolio") of the Trust as amended
from time to time, subject to the terms and conditions set forth herein. The
Service Fees (as defined herein) payable pursuant to the Plan are fees payable
for the administration and servicing of shareholder accounts, as more fully
described in Section 2 below, and not costs which are primarily intended to
result in the sale of the Trust's shares and which would require approval
pursuant to the Rule.
Section 1. Distribution Fees
(a) Pursuant to the Plan, the Trust may pay to
the Distributor of its shares, Provident Distributors, Inc., or any entity that
may in the future act as a distributor for its shares (collectively, the
"Distributor"), with respect to and at the expense of the Shares of the
Portfolio, a fee for distribution and sales support services, as applicable,
and as more fully described in Section 1(b) hereof (the "Distribution Fee"),
such fee in the aggregate to be at the annual rate of .25%.
(b) Payments of the Distribution Fee under the
Plan shall be used primarily to compensate the Distributor for distribution
services and sales support services provided in connection with the offering
and sale of the Shares of the Portfolio, and to reimburse the Distributor for
related expenses incurred, including payments by the Distributor to compensate
or reimburse brokers, dealers, other financial institutions or other industry
professionals (collectively, "Selling Agents"), for sales support services
provided and related expenses incurred by such Selling Agents. The services
and expenses described in this Section 1(b) may include, but are not limited
to, the following: (i) the development, formulation and implementation of
marketing and promotional activities, including direct mail promotions and
television, radio, magazine, newspaper, electronic and other mass media
advertising; (ii) the preparation, printing and distribution of prospectuses
and reports (other than prospectuses
<PAGE> 2
or reports used for regulatory purposes or for distribution to existing
shareholders); (iii) the preparation, printing and distribution of sales
literature; (iv) expenditures for sales or distribution support services such
as for telephone facilities and in-house telemarketing; (v) preparation of
information, analyses and opinions with respect to marketing and promotional
activities; (vi) commissions, incentive compensation or other compensation to,
and expenses of, account executives or other employees of the Distributor or
Selling Agents, attributable to distribution or sales support activities, as
applicable, including interest expenses and other costs associated with
financing of such commissions, compensation and expenses; (vii) travel,
equipment, printing, delivery and mailing costs, overhead and other office
expenses of the Distributor or Selling Agents, attributable to distribution or
sales support activities, as applicable; (viii) the costs of administering the
Plan; (ix) expenses of organizing and conducting sales seminars; and (x) any
other costs and expenses relating to distribution or sales support activities.
(c) Payments of the Distribution Fee on behalf of
the Portfolio must be in consideration of services rendered for or on behalf of
the Portfolio. However, joint distribution or sales support financing with
respect to the Shares of the Portfolio (which financing may also involve other
investment portfolios or companies that are affiliated persons of such a
person, or affiliated persons of the Distributor) shall be permitted in
accordance with applicable law. Payments of the Distribution Fee under Section
1 of the Plan may be made without regard to expenses actually incurred.
(d) It is acknowledged that the Distributor and
other parties that receive fees from the Trust may each make payments without
limitation as to amount relating to distribution or sales support activities,
as applicable, in connection with the Shares of the Portfolio out of its past
profits or any additional sources other than the Distribution Fee which are
available to it.
Section 2. Service Fees
(a) Pursuant to the Plan, the Trust shall pay to
the Distributor, with respect to and at the expense of the Shares of the
Portfolio, a fee in respect of the provision of personal services to
shareholders of the Shares of the Portfolio, as more fully described in Section
2(b) hereof (the "Service Fee"), such fee to be at the annual rate of .25%.
The Distributor shall determine the amount of the Service Fee to be paid to one
or more brokers, dealers, other financial institutions or other industry
professionals (collectively, "Service Agents") and the basis on which such
payments will be made. Payments to a Service Agent
-2-
<PAGE> 3
will be subject to compliance by the Service Agent with the terms of any
related Plan agreement entered into by the Service Agent.
(b) Payments of the Service Fee shall be used to
compensate the Distributor and Service Agents for general shareholder liaison
services provided with respect to shareholders in the Shares of the Portfolio,
including, but not limited to, (i) answering shareholder inquiries regarding
account status and history, the manner in which purchases, exchanges and
redemptions of shares may be effected and certain other matters pertaining to
the shareholders' investments; and (ii) assisting shareholders in designating
and changing dividend options, account designations and addresses.
(c) Payments of the Service Fee under Section 2
of the Plan may be made without regard to expenses actually incurred.
Section 3. Calculation and Payment of Fees
The amount of the Distribution Fee and Service Fee payable
with respect to the Shares of the Portfolio shall be calculated daily and paid
monthly, at the applicable annual rates of .25% and 25%, respectively. The
Distribution Fee and Service Fee shall be calculated and paid separately for
the Shares of the Portfolio.
Section 4. Approval of Plan
The Plan will become effective immediately upon its approval
by (a) a majority of the Board of Trustees, including a majority of the
trustees who are not "interested persons" (as defined in the Act) of the Trust
and who have no direct or indirect financial interest in the operation of the
Plan or in any agreements entered into in connection with the Plan, pursuant to
a vote cast in person at a meeting called for the purpose of voting on the
approval of the Plan, and (b) with respect to Section 1 of the Plan only, a
majority of the outstanding Shares of the Portfolio.
Section 5. Continuance of the Plan
The Plan will continue in effect for so long as its
continuance is specifically approved at least annually by the Trust's Board of
Trustees in the manner described in Section 4 above.
Section 6. Additional Classes and Portfolios
The Plan shall become effective with respect to classes of
shares of the Portfolio other than Plus Shares upon obtaining
-3-
<PAGE> 4
the requisite approvals with respect to such classes of the Portfolio in
accordance with Section 4 above.
Section 7. Termination
The Plan may be terminated at any time without penalty at any
time by (a) a vote of a majority of the Trustees who are not "interested
persons" (as defined in the Act) of the Trust and who have no direct or
indirect financial interest in the operation of the Plan or in any agreements
entered into in connection with the Plan, or (b) a vote of a majority of the
outstanding Shares of the Portfolio.
Section 8. Amendments
The Plan may not be amended so as to increase materially the
amount of the Distribution Fee described in Section 1 above unless the
amendment is approved by a vote of at least a majority of the outstanding
Shares of the Portfolio and otherwise complies with Rule 18f-3(e)(2) under the
Act or any successor provision as in effect at the time of such amendment. In
addition, no material amendment to the Plan may be made unless approved by the
Trust's Board of Trustees in the manner described in Section 4 above.
Section 9. Selection of Certain Trustees
While the Plan is in effect, the selection and nomination of
the Trust's Trustees who are not "interested persons" of the Trust (as defined
in the Act) will be committed to the discretion of the Trustees then in office
who are not "interested persons" (as so defined) of the Trust.
Section 10. Written Reports
While the Plan is in effect, the Trust's Board of Trustees
shall receive, and the Trustees shall review, at least quarterly, written
reports complying with the requirements of the Rule, which set out the amounts
expended under the Plan and the purposes for which those expenditures were
made.
Section 11. Preservation of Materials
The Trust will preserve copies of the Plan, any agreement
relating to the Plan and any report made pursuant to Section 10 above, for a
period of not less than six years (the first two years in an easily accessible
place) from the date of the Plan, agreement or report.
-4-
<PAGE> 5
Section 12. Limitation of Liability
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
State Secretary of the Commonwealth of Pennsylvania and at 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, officers,
representatives or agents are made not individually, but in such capacities,
and are not binding upon any of the Trustees, Shareholders, officers,
representatives or agents of the Trust personally, but bind only the Trust
Property (as defined in the Amended and Restated Declaration of Trust), and all
persons dealing with any class of shares of the Trust must look solely to the
Trust Property belonging to such shares for the enforcement of any claims
against the Trust.
Section 13. Miscellaneous
The captions in the Plan are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
IN WITNESS WHEREOF, the Trust has executed the Plan as of
March __, 1996 on behalf of the Shares of the Portfolio.
TRUST FOR FEDERAL SECURITIES
By:
----------------------------
Vice President and Treasurer
-5-
<PAGE> 6
DISTRIBUTION AND SERVICING AGREEMENT
Gentlemen:
We wish to enter into this Distribution and Servicing
Agreement ("Agreement") with you concerning the provision of distribution
services (and, to the extent provided below, support services) to your clients
("Clients") who may from time to time beneficially own Plus Shares ("Shares")
of the T-Fund Portfolio offered by Trust for Federal Securities (the "Fund"),
of which we are or will be the principal underwriter as defined in the
Investment Company Act of 1940 (the "Act") and the exclusive agent for the
continuous distribution of said Shares.
The terms and conditions of this Agreement are as follows:
Section 1. You agree to provide(1): (x) reasonable
assistance in connection with the distribution of Shares to Clients as
requested from time to time by us, which assistance may include forwarding
sales literature and advertising provided by us for Clients; and (y) the
following support services to Client who may from time to time acquire and
beneficially own Shares: (i) establishing and maintaining accounts and records
relating to Clients that invest in Shares; (ii) processing dividend and
distribution payments from the Fund on behalf of Clients; (iii) providing
information periodically to Clients showing their positions in Shares; (iv)
arranging for bank wires; (v) responding to Client inquiries relating to the
services performed by you; (vi) responding to routine inquiries from Clients
concerning their investments in Shares; (vii) providing subaccounting with
respect to Shares beneficially owned by Clients or the information to the Fund
necessary for subaccounting; (viii) if required by law, forwarding shareholder
communications from the Fund (such as proxies, shareholder reports, annual and
semi-annual financial statements and dividend, distribution and tax notices) to
Clients; (ix) assisting in processing purchase, exchange and redemption
requests from Clients and in placing such orders with our service contractors;
(x) assisting Clients in changing dividend options, account designations and
addresses; (xi) providing Clients with a service that invests the assets of
their accounts in Shares pursuant to specific or pre-authorized instructions;
and (xii) providing such other similar services as we may reasonably
- --------------------
(1)Services may be modified or omitted in the particular case
and items relettered or renumbered.
<PAGE> 7
request to the extent you are permitted to do so under applicable statutes,
rules and regulations.
Section 2. You will provide such office space and equipment,
telephone facilities and personnel (which may be any part of the space,
equipment and facilities currently used in your business, or any personnel
employed by you) as may be reasonably necessary or beneficial in order to
provide the aforementioned services and assistance to Clients.
Section 3. Neither you nor any of your officers, employees or
agents are authorized to make any representations concerning us or the Shares
except those contained in the Fund's applicable prospectuses and statements of
additional information for the Shares, copies of which will be supplied by us
to you, or in such supplemental literature or advertising as may be authorized
by us in writing.
Section 4. For all purposes of this Agreement you will be
deemed to be an independent contractor, and will have no authority to act as
agent for us or the Fund in any matter or in any respect. By your written
acceptance of this Agreement, you agree to and do release, indemnify and hold
us harmless and the Fund harmless from and against any and all direct or
indirect liabilities or losses resulting from requests, directions, actions or
inactions of or by you or your officers, employees or agents regarding your
responsibilities hereunder or the purchase, redemption, transfer or
registration of Shares (or orders relating to the same) by or on behalf of
Clients. You and your employees will, upon request, be available during normal
business hours to consult with us or our designees concerning the performance
of your responsibilities under this Agreement.
Section 5. In consideration of the services and facilities
provided by you hereunder, we will pay to you, and you will accept as full
payment therefor, a fee at the annual rate of .___ of 1% of the average daily
net asset value of the Shares beneficially owned by your Clients for whom you
are the dealer of record or holder of record or with whom you have a servicing
relationship (the "Clients' Shares"), which fee will be computed daily and
payable monthly. For purposes of determining the fees payable under this
Section 5, the average daily net asset value of the Clients' Shares will be
computed in the manner specified in the Fund's Registration Statement (as the
same is in effect from time to time) in connection with the computation of the
net asset value of the particular Shares involved for purposes of purchases and
redemptions. By your acceptance of this Agreement, you agree to and do waive
such portion of any fee payable to you hereunder to the extent necessary to
assure that such fee and other expenses required to be accrued hereunder on any
day with respect to the Clients' Shares in any Portfolio that declares its net
investment income as a dividend to shareholders on a daily
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<PAGE> 8
basis do not exceed the income to be accrued by the Fund to such Shares on that
day. The fee rate stated above may be prospectively increased or decreased by
us, in our sole discretion, at any time upon notice to you. Further, we may,
in our discretion and without notice, suspend or withdraw the sale of Shares,
including the sale of Shares for the account of any Client or Clients.
Section 6. Any person authorized to direct the disposition of
monies paid or payable by us pursuant to this Agreement will provide to us and
the Fund, and the Fund's trustees will review, at least quarterly, a written
report of the amounts so expended and the purposes for which such expenditures
were made. In addition, you will furnish us or our designees with such
information as we or they may reasonably request (including, without
limitation, periodic certifications confirming the provision to Clients of the
services described herein), and will otherwise cooperate with us and our
designees (including, without limitation, any auditors designated by us), in
connection with the preparation of reports to the Fund's Board of Trustees
concerning this Agreement and the monies paid or payable by us pursuant hereto,
as well as any other reports or filings that may be required by law.
Section 7. We may enter into other similar Agreements with
any other person or persons without your consent.
Section 8. By your written acceptance of this Agreement, you
represent, warrant and agree that the compensation payable to you hereunder,
together with any other compensation you receive from Clients for services
contemplated by this Agreement, will be disclosed by you to your Clients, will
be authorized by your Clients and will not be excessive or unreasonable under
the laws and instruments governing your relationships with Clients. In
addition, you understand that this Agreement has been entered into pursuant to
Rule 12b-1 under the Act, and is subject to the provisions of said Rule, as
well as any other applicable rules or regulations promulgated by the Securities
and Exchange Commission.
Section 9. This Agreement will become effective on the date a
fully executed copy of this Agreement is received by us or our designee.
Unless sooner terminated, this Agreement will continue until _______________,
1997, and thereafter will continue automatically for successive annual periods
provided such continuance is specifically approved at least annually by the
Fund in the manner described in Section 12. This Agreement is terminable with
respect to Shares, without penalty, at any time by the Fund (which termination
may be by a vote of a majority of the Disinterested Trustees as defined in
Section 12 or by vote of the holders of a majority of the outstanding Shares of
such Class) or by us or you upon notice to the other party
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<PAGE> 9
hereto. This Agreement will also terminate automatically in the event of its
assignment (as defined in the Act).
Section 10. All notices and other communications to either
you or us will be duly given if mailed, telegraphed, telexed or transmitted by
similar telecommunications device to the appropriate address stated herein, or
to such other address as either party shall so provide the other.
Section 11. This Agreement will be construed in accordance
with the laws of the State of Delaware.
Section 12. This Agreement has been approved by vote of a
majority of (i) the Fund's Board of Trustees and (ii) those Trustees of the
Fund who are not "interested persons" (as defined in the Act) of the Fund and
have no direct or indirect financial interest in the operation of the
Distribution and Service Plan adopted by the Fund regarding the provision of
distribution and support services in connection with the Shares or in any
agreement related thereto cast in person at a meeting called for the purpose of
voting on such approval ("Disinterested Directors").
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<PAGE> 10
If you agree to be legally bound by the provisions of this
Agreement, please sign a copy of this letter where indicated below and promptly
return it to us, at the following address: 259 Radnor-Chester Road, Suite 120,
Radnor, Pennsylvania 19087.
Very truly yours,
PROVIDENT DISTRIBUTORS, INC.
Date: By:
-------------- ----------------------------
(Authorized Officer)
Accepted and Agreed to:
[Service Organization]
Date: By:
-------------- ----------------------------
(Authorized Officer)
Address of Service Organization:
-------------------------------
-------------------------------
-------------------------------
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<PAGE> 1
Exhibit 18
TRUST FOR FEDERAL SECURITIES
(THE "COMPANY")
PLAN PURSUANT TO RULE 18f-3 FOR OPERATION OF
A MULTI-CLASS SYSTEM
I. INTRODUCTION
On February 23, 1995, the Securities and Exchange Commission
(the "Commission") adopted Rule 18f-3 under the Investment Company Act of 1940,
as amended (the "1940 Act"), which permits the creation and operation of a
multi-class distribution structure without the need to obtain an exemptive
order under Section 18 of the 1940 Act. Rule 18f-3, which became effective on
April 3, 1995, requires an investment company to file with the Commission a
written plan specifying all of the differences among classes, including the
various services offered to shareholders, different distribution arrangements
for each class, methods for allocating expenses relating to those differences
and any conversion features or exchange privileges. Currently, the Company
operates a multi-class distribution structure pursuant to an exemptive order
previously granted by the Commission. On March 22, 1996, the Board of Trustees
of the Company authorized the Company to operate its current multi-class
distribution structure in compliance with Rule 18f-3. This Plan shall become
effective when it is filed with the Securities and Exchange Commission.
II. ATTRIBUTES OF CLASSES
A. Generally
Pursuant to this Plan, the Company will initially offer two
classes of shares -- Shares and Dollar Shares -- in the Federal Cash, FedFund,
Federal Trust Fund, T-Cash and Treasury Trust Fund portfolios and three classes
of shares -- Shares, Dollar Shares and Plus Shares in the T-Fund portfolio. In
general, shares of each class will be identical except for different expense
variables (which will result in different returns for each class), certain
related rights and certain shareholder services. More particularly, Shares,
Dollar Shares and Plus Shares will represent interests in the same portfolio of
investments of the particular Fund, and will be identical in all respects,
except for: (a) the impact of (i) expenses assessed to a particular class
pursuant to the Shareholder Service Agreement and/or Distribution and Service
Agreement entered into in accordance with the Shareholder Service Plan and/or
Distribution and Service Agreement adopted for that class and (ii) any other
incremental expenses identified that should be properly allocated to one class
so long as any changes in expense allocations are reviewed and approved by a
vote of the Board of Trustees,
<PAGE> 2
including a majority of the independent Trustees; (b) the fact that (i) a class
will vote separately on matters which pertain to the Shareholder Service Plan
and/or Distribution and Service Plan adopted for that class and (ii) each class
will vote separately on any matter submitted to shareholders relating to class
expenses; (c) the designation of each class of shares of a Fund; and (d) the
different shareholder services relating to a class of shares.
B. Distribution Arrangements, Expenses and Sales Charges
1. Shares
Shares will be available for purchase by institutional
investors and will be offered without a sales charge. Shares will not be
subject to a fee payable pursuant to a Shareholder Service Agreement or a
Distribution and Service Agreement.
2. Dollar Shares
Dollar Shares will be available for purchase by institutional
investors and will be offered without a sales charge. Dollar Shares will be
subject to a fee payable pursuant to a Shareholder Service Agreement which will
not exceed 0.25% )on an annual basis) of the average daily net asset value of
the particular portfolio's Dollar Shares held by the particular service
organization for the benefit of its customers. Services provided by a service
organization under the Shareholder Service Agreement may include: (i)
aggregating and processing purchase and redemption requests from customers and
placing net purchase and redemption orders with the transfer agent; (ii)
providing customers with a service that invests the assets of their accounts in
Dollar Shares; (iii) processing dividend payments from the particular portfolio
on behalf of customers; (iv) providing information periodically to customers
showing their positions in Dollar Shares; (v) arranging for bank wires; (vi)
responding to customer inquiries relating to the services performed by the
Service Organization; (vii) providing sub-accounting with respect to Dollar
Shares beneficially owned by customers or the information necessary for
sub-accounting; (viii) forwarding shareholder communications from the
particular portfolio (such as proxies, shareholder reports, annual and
semi-annual financial statements and dividend, distribution and tax notices) to
customers, if required by law; and (ix) other similar services if requested by
the particular portfolio.
3. Plus Shares
Plus Shares will be available for purchase by institutional
investors and will be offered without a sales charge. Shares will be subject
to a distribution fee which will
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<PAGE> 3
not exceed 0.25% (on an annual basis) of the average daily net asset value of
outstanding Plus Shares and a shareholder service fee which will not exceed
0.25% (on an annual basis) of the average daily net asset value of the Plus
Shares held by the particular service organization for the benefit of its
customers, both of such fees being payable pursuant to agreements entered into
in accordance with the Distribution and Service Plan adopted for Plus Shares.
Services provided by a service organization under a Service
Agreement may include (i) answering shareholder inquiries regarding account
status and history, the manner in which purchases, exchanges and redemptions of
shares may be effected and certain other matters pertaining to the
shareholders' investments; and (ii) assisting shareholders in designating and
changing dividend options, account designations and addresses.
C. Methods for Allocating Expenses Among Classes
Class expenses are allocated to the specific class of shares
of the particular portfolio. All other expenses are allocated in accordance
with Rule 18f-3(c).
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