<PAGE> 1
[PROVIDENT
INSTITUTIONAL
FUNDS LOGO]
400 Bellevue Parkway, Wilmington, DE 19809 - Phone:
302-792-2555 - Fax: 302-792-5876
G. Willing Pepper
Chairman TRUST FOR FEDERAL SECURITIES
December 10, 1997
Dear Shareholder:
Enclosed is the Annual Report to Shareholders of Trust for Federal
Securities for the year ended October 31, 1997.
The report of our investment Adviser contains interesting commentary on the
economy and on their investment strategy.
Provident Institutional Funds remains committed to providing its
shareholders with quality service, liquidity, competitive returns and stability
of principal.
Please contact your Provident Distributors, Inc. account representative or
our Client Service Center at (800) 821-7432 for information on a variety of
taxable and tax-exempt Money Market Funds offered by Provident Institutional
Funds.
We welcome the opportunity to service your investment needs.
Sincerely,
[G. WILLING PEPPER SIGNATURE]
G. Willing Pepper
Chairman
<PAGE> 2
TRUST FOR FEDERAL SECURITIES
ANNUAL INVESTMENT ADVISER'S REPORT
In leaving short-term interest rates unchanged over the past few quarters,
Federal Reserve officials relied on a belief that economic growth would slow
substantially from its strong first quarter pace. By mid-spring, however, there
was persistent evidence of continued strength in U.S. productivity and
employment. Economic reports, as evidenced by the drop in the unemployment rate
to 4.8%, showed no letup in the gradual tightening of the U.S. labor market. The
production side of the economy also sustained its momentum as the National
Association of Purchasing Managers survey reached its highest level since April
1995. Consumer spending, however, appeared to remain subdued as motor vehicle
and chain store sales slipped to levels below their first quarter averages. On
the inflation front, the news remained excellent as core producer prices were
virtually unchanged over the past year. In response to the good news on
inflation, the Fed demonstrated a clear preference for patience in responding to
the economy's strength, continuing to believe instead that growth would slow to
a pace that would nullify the need for further monetary tightening. The reaction
in the marketplace to the Fed's decision to keep short-term interest rates
unchanged was one of caution as investors were skeptical about the outlook for
an economic slowdown. In early autumn, the release of economic data that showed
growth was still quite strong, led to a growing "hawkish" sentiment towards
further monetary tightening. However, the Fed opted not to tighten monetary
policy at its September meeting and the advent of the Asian crisis in late
October made it very unlikely that the Fed would consider doing so anytime in
the near future.
Over the past two quarters most short-term interest rates moved broadly
lower despite the fact that the Federal Reserve did not change monetary policy.
The only non-participating sector was the short-term U.S. Treasury market where
three-month bill yields traded below overnight rates for the entire year to
date. This situation tended to bias Treasury Trust Fund, which holds no repos,
toward the shorter end of the yield curve, as there was very little incentive to
extend. The other three portfolios, T-Fund, FedFund, and Federal Trust Fund,
were better able to participate in periodically higher rates available through
investments in longer-dated treasury and agency obligations. Even though the
treasury and agency money market curves flattened throughout the year, there
were ample opportunities to selectively purchase longer maturities at
substantial premiums to overnight rates. Federal Trust Fund and Treasury Trust
Fund retained their AAA Standard & Poor's ratings, while T-Fund remained
AAA-rated by both Standard & Poor's and Moody's.
As always, we look forward to the opportunity to provide you with high
quality liquidity products that emphasize safety of principal and competitive
market rates of return.
PNC INSTITUTIONAL MANAGEMENT CORPORATION
2
<PAGE> 3
FEDFUND PORTFOLIO
Trust for Federal Securities
Statement of Net Assets
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- -------- --------------
<S> <C> <C> <C>
U.S. GOVERNMENT AGENCY & INSTRUMENTALITY OBLIGATIONS--50.8%
Federal Farm Credit Bank Bonds
5.51%............. 01/02/98 $ 30,000 $ 29,991,144
--------------
Federal Home Loan Bank Bonds
5.42.............. 12/02/97 15,000 14,998,805
5.73.............. 01/27/98 8,550 8,551,562
5.96.............. 06/09/98 20,000 20,006,368
5.78.............. 07/07/98 10,000 9,992,526
5.725............. 09/08/98 13,335 13,323,874
--------------
66,873,135
--------------
Federal Home Loan Bank Discount Notes
5.34.............. 03/12/98 8,000 7,844,547
--------------
Federal Home Loan Mortgage Corporation Discount Notes
5.65.............. 11/03/97 100,000 99,968,612
--------------
Federal National Mortgage Association Bonds
5.71.............. 03/18/98 35,125 35,117,730
5.79.............. 03/25/98 16,020 16,026,650
6.00.............. 04/17/98 25,000 24,984,808
5.84.............. 06/10/98 25,000 25,001,789
5.84.............. 06/18/98 14,000 13,997,150
5.63.............. 08/15/98 15,000 14,974,123
--------------
130,102,250
--------------
Federal National Mortgage Association Discount Notes
5.35.............. 12/24/97 25,000 24,803,090
--------------
Federal National Mortgage Association Variable Rate
Notes+
5.5275............ 11/03/97 40,000 39,997,608
5.29.............. 11/04/97 58,000 58,000,000
5.5275............ 11/13/97 20,000 19,996,695
--------------
117,994,303
--------------
Student Loan Marketing Association Medium Term Notes
5.44.............. 12/19/97 10,000 9,997,945
6.25.............. 06/30/98 6,000 6,019,844
5.63.............. 08/06/98 20,000 19,997,620
5.775............. 09/09/98 10,000 9,997,134
5.79.............. 09/16/98 5,000 5,002,065
--------------
51,014,608
--------------
<CAPTION>
PAR
MATURITY (000) VALUE
-------- -------- --------------
<S> <C> <C> <C>
Student Loan Marketing Association Variable Rate Notes+
5.27%............. 11/04/97 $ 47,850 $ 47,849,736
5.29.............. 11/04/97 48,545 48,523,401
5.30.............. 11/04/97 10,000 10,000,000
5.31.............. 11/04/97 20,000 20,002,171
5.45.............. 11/04/97 4,475 4,474,876
5.60.............. 11/04/97 20,000 19,992,346
--------------
150,842,530
--------------
Total............................... 679,434,219
--------------
REPURCHASE AGREEMENTS--49.2%
First (The)Boston Corporation
5.54.............. 12/16/97 75,000 75,000,000
(Agreement dated 09/17/97
to be repurchased at
$76,038,750,
collateralized by
$103,375,183 Federal Home
Loan Mortgage Corporation
Notes and Federal
National Mortgage
Association Bonds 6.07%
to 7.38% due from
08/01/26 to 07/01/36. The
market value is
$102,312,647.)
Goldman Sachs & Co.
5.68.............. 11/03/97 50,000 50,000,000
(Agreement dated 10/31/97
to be repurchased at
$50,023,667,
collateralized by
$51,317,789 Federal Home
Loan Mortgage Corporation
Notes and Federal
National Mortgage
Association Notes 5.8125%
to 7.50% due from
01/15/05 to 11/15/25. The
market value is
$51,500,000.)
</TABLE>
3
<PAGE> 4
FEDFUND PORTFOLIO
Statement of Net Assets (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- -------- --------------
<S> <C> <C> <C>
REPURCHASE AGREEMENTS (CONTINUED)
Greenwich Capital Markets, Inc.
5.74%............. 11/03/97 $200,000 $ 200,000,000
(Agreement dated 10/31/97
to be repurchased at
$200,095,667,
collateralized by
$207,493,000 Federal Farm
Credit Bank Discount
Notes, Federal Home Loan
Bank Notes, Tennessee
Valley Authority Discount
Notes and U.S. Treasury
Bills and Inflation
Indexed Securities 3.625%
to 6.22% due from
11/13/97 to 10/15/98. The
market value is
$205,011,901.)
Morgan Stanley & Co.
5.75.............. 11/03/97 100,000 100,000,000
(Agreement dated 10/31/97
to be repurchased at
$100,047,917,
collateralized by
$100,234,000 Federal Home
Loan Mortgage Corporation
Bonds, Resolution Funding
Corporation Notes,
Student Loan Marketing
Association Notes and
U.S. Treasury Notes
5.625% to 9.15% due from
11/30/98 to 07/15/20. The
market value is
$103,931,706.)
<CAPTION>
PAR
MATURITY (000) VALUE
-------- -------- --------------
<S> <C> <C> <C>
PaineWebber Incorporated
5.73%............. 11/03/97 $102,100 $ 102,100,000
(Agreement dated 10/31/97
to be repurchased at
$102,148,753,
collateralized by
$108,140,000 Federal
National Mortgage
Association Bonds and
Discount Notes 0.0% to
7.11% due from 01/30/98
to 09/18/07. The market
value is $105,164,111.)
Swiss Bank Corp.
5.50.............. 11/03/97 70,000 70,000,000
(Agreement dated 10/31/97
to be repurchased at
$70,032,083,
collateralized by
$47,304,385 U.S. Treasury
Bonds and Notes 6.375% to
11.25% due from 03/31/01
to 02/15/15. The market
value is $71,407,842.)
5.62.............. 11/03/97 60,000 60,000,000
(Agreement dated 10/31/97
to be repurchased at
$60,028,100,
collateralized by
$40,546,615 U.S. Treasury
Bonds and Notes 6.375% to
11.25% due from 03/31/01
to 02/15/15. The market
value is $61,206,721.)
--------------
Total............................. 657,100,000
--------------
</TABLE>
4
<PAGE> 5
FEDFUND PORTFOLIO
Statement of Net Assets (Concluded)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
--------------
<S> <C> <C> <C>
TOTAL INVESTMENTS IN SECURITIES
(Cost $1,336,534,219*)....... 100.0% $1,336,534,219
OTHER ASSETS IN EXCESS OF
LIABILITIES.................. 0.0 638,568
------ --------------
NET ASSETS (equivalent to $1.00
per share based on
1,221,129,585 FedFund and
116,348,375 FedFund Dollar
Shares of beneficial interest
outstanding)................. 100.0% $1,337,172,787
====== ==============
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE
($1,337,172,787 [divided by] 1,337,477,960)........ $1.00
=====
</TABLE>
- ---------------
* Also cost for federal income tax purposes.
+ Variable rate obligations--the rate shown is the rate as of October 31, 1997,
and the maturity date shown is the longer of the next interest readjustment
date or the date the principal amount can be recovered upon demand.
FEDFUND PORTFOLIO
Maturity Schedule of Portfolio
October 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
MATURITY
PERIOD PAR PERCENTAGE
------------- ------------ ----------
<S> <C> <C> <C>
1- 30 Days $950,970,000 71.1%
31- 60 Days 125,000,000 9.4
61- 90 Days 38,550,000 2.9
121-150 Days 59,145,000 4.4
Over 150 Days 163,335,000 12.2
Average Weighted Maturity--45 Days
- ------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
5
<PAGE> 6
T-FUND PORTFOLIO
Trust for Federal Securities
Statement of Net Assets
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- -------- --------------
<S> <C> <C> <C>
U.S. GOVERNMENT SECURITIES--26.0%
U.S. Treasury Notes
7.375%............ 11/15/97 $ 50,000 $ 50,028,632
5.375............. 11/30/97 109,000 108,970,448
6.00.............. 11/30/97 3,000 3,001,160
5.00.............. 01/31/98 38,000 37,937,244
7.25.............. 02/15/98 8,000 8,036,984
5.125............. 02/28/98 131,000 130,765,346
7.875............. 04/15/98 8,500 8,584,148
5.125............. 04/30/98 40,000 39,914,557
5.875............. 04/30/98 55,000 55,081,589
6.125............. 05/15/98 20,000 20,061,681
5.375............. 05/31/98 19,000 18,979,038
6.00.............. 05/31/98 20,000 20,039,273
6.25.............. 06/30/98 39,000 39,152,307
8.25.............. 07/15/98 15,000 15,247,895
6.25.............. 07/31/98 38,000 38,185,998
--------------
Total............................... 593,986,300
--------------
REPURCHASE AGREEMENTS--73.9%
Aubrey G. Lanston & Co., Inc.
5.67.............. 11/03/97 80,000 80,000,000
(Agreement dated 10/31/97
to be repurchased at
$80,037,800,
collateralized by
$79,033,000 U.S. Treasury
Notes 6.875% due
08/31/99. The market
value is $81,609,476.)
Barclay De Zoet Wedd Securities, Inc.
5.40.............. 11/03/97 70,000 70,000,000
(Agreement dated 10/31/97
to be repurchased at
$70,031,500,
collateralized by
$45,680,000 U.S. Treasury
Bonds 11.25% due
02/15/15. The market
value is $71,406,976.)
Donaldson, Lufkin & Jenrette Securities Corp.
5.48.............. 12/11/97 60,000 60,000,000
(Agreement dated 09/15/97
to be repurchased at
$60,794,600,
collateralized by
$59,220,000 U.S. Treasury
Bonds 6.875% due
08/15/25. The market
value is $61,458,516.)
<CAPTION>
PAR
MATURITY (000) VALUE
-------- -------- --------------
<S> <C> <C> <C>
First (The) Boston Corp.
5.50%............. 11/24/97 $ 60,000 $ 60,000,000
(Agreement dated 09/24/97
to be repurchased at
$60,559,167,
collateralized by
$146,980,000, U.S.
Treasury STRIPS due from
05/15/09 to 05/15/14. The
market value is
$61,417,730.)
5.48.............. 12/03/97 50,000 50,000,000
(Agreement dated 09/04/97
to be repurchased at
$50,685,000,
collateralized by
$40,680,000 U.S. Treasury
Bonds 10.375% due
11/15/09. The market
value is $51,203,916.)
5.48.............. 12/10/97 50,000 50,000,000
(Agreement dated 09/11/97
to be repurchased at
$50,685,000,
collateralized by
$40,100,000 U.S. Treasury
Bonds 10.75% due
08/15/05. The market
value is $51,299,930.)
5.58.............. 01/09/98 50,000 50,000,000
(Agreement dated 10/22/97
to be repurchased at
$50,612,250,
collateralized by
$36,900,000 U.S. Treasury
Bonds 10.375% to 12.50%
due from 11/15/09 to
08/15/14. The market
value is $51,162,470.)
Goldman Sachs & Co.
5.70.............. 11/03/97 100,000 100,000,000
(Agreement dated 10/31/97
to be repurchased at
$100,047,500,
collateralized by
$100,720,370 U.S.
Treasury Notes 5.875% to
6.00% due from 08/15/00
to 09/30/02. The market
value is $102,000,357.)
5.48.............. 12/16/97 60,000 60,000,000
(Agreement dated 09/17/97
to be repurchased at
$60,822,000,
collateralized by
$60,432,222 U.S. Treasury
Notes 5.875% to 6.00% due
from 08/15/00 to
09/30/02. The market
value is $61,200,215.)
</TABLE>
6
<PAGE> 7
T-FUND PORTFOLIO
Statement of Net Assets (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- -------- --------------
<S> <C> <C> <C>
REPURCHASE AGREEMENTS (CONTINUED)
5.48%............. 12/22/97 $ 50,000 $ 50,000,000
(Agreement dated 09/23/97
to be repurchased at
$50,685,000,
collateralized by
$50,360,186 U.S. Treasury
Notes 5.875% to 6.00% due
from 08/15/00 to
09/30/02. The market
value is $51,000,179.)
5.51.............. 12/22/97 60,000 60,000,000
(Agreement dated 10/21/97
to be repurchased at
$60,569,367,
collateralized by
$60,432,222 U.S. Treasury
Notes 5.875% to 6.00% due
from 08/15/00 to
09/30/02. The market
value is $61,200,215.)
Greenwich Capital Markets, Inc.
5.68.............. 11/03/97 200,000 200,000,000
(Agreement dated 10/31/97
to be repurchased at
$200,094,667,
collateralized by
$377,362,000 U.S.
Treasury STRIPS due from
05/15/02 to 11/15/19. The
market value is
$204,001,068.)
Hong Kong Shanghai Bank Securities, Inc.
5.625............. 11/03/97 60,000 60,000,000
(Agreement dated 10/31/97
to be repurchased at
$60,028,125,
collateralized by
$41,178,000 U.S. Treasury
Bonds 10.625% due
08/15/15. The market
value is $61,581,699.)
Lehman Government Securities, Inc.
5.65.............. 11/03/97 100,000 100,000,000
(Agreement dated 10/31/97
to be repurchased at
$100,047,083,
collateralized by
$83,444,000 U.S. Treasury
Bonds and Notes 6.00% to
10.75% due from 12/31/97
to 05/15/17. The market
value is $102,003,752.)
<CAPTION>
PAR
MATURITY (000) VALUE
-------- -------- --------------
<S> <C> <C> <C>
Merrill Lynch & Co., Inc.
5.68%............. 11/03/97 $ 80,000 $ 80,000,000
(Agreement dated 10/31/97
to be repurchased at
$80,037,867,
collateralized by
$232,641,000 U.S.
Treasury Notes and STRIPS
5.875% to 12.00% due from
07/31/99 to 02/15/25. The
market value is
$81,602,346.)
Morgan Stanley & Co.
5.70.............. 11/03/97 300,200 300,200,000
(Agreement dated 10/31/97
to be repurchased at
$300,342,595,
collateralized by
$313,838,617 U.S.
Treasury Bonds, CUBES,
Notes and STRIPS 5.875%
to 9.25% due from
11/15/97 to 05/15/23. The
market value is
$306,623,000.)
5.48.............. 12/18/97 75,000 75,000,000
(Agreement dated 09/22/97
to be repurchased at
$75,993,250,
collateralized by
$78,407,383 U.S. Treasury
Bonds, CUBES, Notes and
STRIPS 5.875% to 9.25%
due from 11/15/97 to
05/15/23. The market
value is $76,604,680.)
Swiss Bank Corp.
5.52.............. 01/07/98 100,000 100,000,000
(Agreement dated 10/10/97
to be repurchased at
$101,364,667,
collateralized by
$93,236,000 U.S. Treasury
Bonds 6.25% to 8.50% due
from 02/15/20 to
08/15/26. The market
value is $105,252,572.)
</TABLE>
7
<PAGE> 8
T-FUND PORTFOLIO
Statement of Net Assets (Concluded)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- -------- --------------
<S> <C> <C> <C>
REPURCHASE AGREEMENTS (CONTINUED)
UBS Securities Inc.
5.63%............. 11/03/97 $ 80,000 $ 80,000,000
(Agreement dated 10/31/97
to be repurchased at
$80,037,533,
collateralized by
$78,087,000 U.S. Treasury
Notes 6.625% to 6.75% due
from 05/31/99 to
07/31/01. The market
value is $81,390,915.)
--------------
Total............................. 1,685,200,000
--------------
TOTAL INVESTMENTS IN SECURITIES
(Cost $2,279,186,300*)....... 99.9% 2,279,186,300
OTHER ASSETS IN EXCESS OF
LIABILITIES.................. 0.1 2,237,568
------ --------------
NET ASSETS (equivalent to $1.00
per share based on
1,765,387,510 T-Fund and
516,101,844 T-Fund Dollar
Shares of beneficial interest
outstanding.)................ 100.0% $2,281,423,868
====== ==============
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE ($2,281,423,868
[divided by] 2,281,489,354)...................... $1.00
=====
- ---------------
* Cost for federal income tax purposes is $2,279,199,772.
- --------------------------------------------------------
</TABLE>
T-FUND PORTFOLIO
Maturity Schedule of Portfolio
October 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
MATURITY
PERIOD PAR PERCENTAGE
-------------- -------------- ----------
<S> <C> <C> <C>
1- 30 Days $1,292,200,000 56.7%
31- 60 Days 405,000,000 17.8
61- 90 Days 150,000,000 6.6
91-120 Days 177,000,000 7.8
Over 150 Days 254,500,000 11.1
Average Weighted Maturity--49 Days
- --------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
8
<PAGE> 9
FEDERAL TRUST FUND PORTFOLIO
Trust for Federal Securities
Statement of Net Assets
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- ------- ------------
<S> <C> <C> <C>
U.S. GOVERNMENT AGENCY & INSTRUMENTALITY
OBLIGATIONS--100.3%
Federal Farm Credit Bank Discount Notes
5.47%............ 11/06/97 $12,600 $ 12,590,427
5.37............. 11/17/97 10,000 9,976,133
5.42............. 11/21/97 5,000 4,984,944
5.42............. 11/24/97 6,000 5,979,223
5.38............. 11/25/97 10,000 9,964,133
5.40............. 12/01/97 12,000 11,946,000
5.45............. 12/05/97 11,259 11,201,047
5.39............. 12/08/97 10,000 9,944,603
------------
76,586,510
------------
Federal Home Loan Bank Bonds
6.16............. 11/18/97 500 500,096
------------
Federal Home Loan Bank Discount Notes
5.38............. 11/04/97 10,000 9,995,517
5.39............. 11/05/97 5,495 5,491,709
5.40............. 11/05/97 2,720 2,718,368
5.46............. 11/05/97 9,505 9,499,234
5.39............. 11/07/97 15,000 14,986,525
5.41............. 11/12/97 285 284,529
5.38............. 11/14/97 825 823,397
5.44............. 11/28/97 3,215 3,201,883
5.39............. 12/10/97 10,000 9,941,608
5.45............. 12/19/97 15,000 14,891,000
5.40............. 03/04/98 805 790,148
------------
72,623,918
------------
Federal Home Loan Bank Variable Rate Notes+
5.50............. 11/04/97 9,250 9,250,000
------------
Student Loan Marketing Association Discount Notes
5.50............. 11/07/97 6,908 6,901,668
------------
Student Loan Marketing Association Variable Rate Notes+
5.27............. 11/04/97 5,000 4,999,942
5.30............. 11/04/97 30,000 30,000,000
5.335............ 11/04/97 1,000 998,549
5.45............. 11/04/97 12,000 12,000,000
------------
47,998,491
------------
Tennessee Valley Authority Discount Notes
5.36%............ 11/07/97 $10,000 $ 9,991,067
5.37............. 11/12/97 15,000 14,975,388
5.36............. 11/14/97 15,000 14,970,967
5.39............. 11/20/97 15,000 14,957,329
------------
54,894,751
------------
<CAPTION>
PAR
MATURITY (000) VALUE
-------- ------- ------------
<S> <C> <C> <C>
TOTAL INVESTMENTS IN SECURITIES
(Cost $268,755,434*)........ 100.3% 268,755,434
LIABILITIES IN EXCESS OF OTHER
ASSETS...................... (0.3) (763,107)
------ ------------
NET ASSETS (equivalent to
$1.00 per share based on
229,497,843 Federal Trust
and 38,705,688 Federal Trust
Dollar Shares of beneficial
interest outstanding)....... 100.0% $267,992,327
====== ============
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE
($267,992,327 [divided by] 268,203,531).......... $1.00
=====
- ---------------
</TABLE>
* Also cost for federal income tax purposes.
+ Variable Rate Obligations--the rate shown is the rate as
of October 31, 1997, and the maturity date shown is the
longer of the next interest readjustment date or the date
the principal amount can be recovered upon demand.
FEDERAL TRUST FUND PORTFOLIO
Maturity Schedule of Portfolio
October 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
MATURITY
PERIOD PAR PERCENTAGE
------------ ------------ ----------
<S> <C> <C> <C>
1- 30 Days $210,303,000 78.1%
31- 60 Days 58,259,000 21.6
121-150 Days 805,000 0.3
Average Weighted Maturity--17 Days
</TABLE>
See accompanying notes to financial statements.
9
<PAGE> 10
TREASURY TRUST FUND PORTFOLIO
Trust for Federal Securities
Statement of Net Assets
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- -------- --------------
<S> <C> <C> <C>
U.S. GOVERNMENT SECURITIES--98.5%
U.S. Treasury Bills
4.50%............. 11/06/97 $ 22,760 $ 22,745,775
4.80.............. 11/13/97 5,400 5,391,360
4.84.............. 11/13/97 3,500 3,494,353
4.88.............. 11/13/97 20,100 20,067,304
5.115............. 11/13/97 640 638,909
5.015............. 01/02/98 2,000 1,982,725
--------------
54,320,426
--------------
U.S. Treasury Notes
7.375............. 11/15/97 140,000 140,078,130
8.875............. 11/15/97 40,000 40,048,355
5.375............. 11/30/97 472,189 472,160,953
5.25.............. 12/31/97 50,000 49,992,316
5.00.............. 01/31/98 120,000 119,886,403
7.25.............. 02/15/98 125,000 125,588,786
5.125............. 02/28/98 99,000 98,869,276
--------------
1,046,624,219
--------------
TOTAL INVESTMENTS IN SECURITIES
(Cost $1,100,944,645*)............ 98.5% 1,100,944,645
OTHER ASSETS IN EXCESS OF
LIABILITIES..................... 1.5 17,109,700
------ --------------
NET ASSETS (equivalent to $1.00
per share based on 786,756,944
Treasury Trust and 331,539,471
Treasury Trust Dollar Shares of
beneficial interest
outstanding).................... 100.0% $1,118,054,345
====== ==============
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE
($1,118,054,345 [divided by]
1,118,296,415).................. $1.00
=====
</TABLE>
- ---------------
* Cost for federal income tax purposes is $1,100,951,383.
- ----------------------------------------------------
TREASURY TRUST FUND PORTFOLIO
Maturity Schedule of Portfolio
October 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
MATURITY
PERIOD PAR PERCENTAGE
----------- ------------ ----------
<S> <C> <C> <C>
1- 30 Days $704,589,000 64.0%
61- 90 Days 52,000,000 4.7
91-120 Days 344,000,000 31.3
Average Weighted Maturity--52 Days
- ----------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
10
<PAGE> 11
TRUST FOR FEDERAL SECURITIES
Statements of Operations
Year Ended October 31, 1997
<TABLE>
<CAPTION>
FEDERAL TREASURY
TRUST TRUST
FEDFUND T-FUND FUND FUND
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
Investment Income:
Interest income...................................................... $78,199,647 $114,686,734 $15,152,924 $64,505,254
----------- ------------ ----------- -----------
Expenses:
Investment advisory fee.............................................. 1,831,253 2,691,135 360,033 1,590,378
Administration fee................................................... 1,831,253 2,691,135 360,033 1,590,378
Trustees' fees and officer's salary.................................. 24,581 39,508 5,698 21,337
Transfer agent fee................................................... 112,270 128,647 32,654 91,875
Custodian fee........................................................ 226,180 319,182 68,694 212,465
Shareholder computer access program.................................. 20,149 25,996 -- 18,090
Legal and audit...................................................... 51,977 77,727 10,075 44,668
Registration fees and expenses....................................... 31,096 11,684 20,914 16,193
Printing............................................................. 13,502 21,482 5,004 12,099
Other................................................................ 43,271 61,074 10,750 40,538
----------- ------------ ----------- -----------
4,185,532 6,067,570 873,855 3,638,021
Service Organization fees--Dollar Shares............................. 189,582 1,066,632 88,473 895,799
----------- ------------ ----------- -----------
4,375,114 7,134,202 962,328 4,533,820
Less fees waived..................................................... (1,339,520) (1,881,908) (313,930) (1,175,729)
----------- ------------ ----------- -----------
Total expenses..................................................... 3,035,594 5,252,294 648,398 3,358,091
----------- ------------ ----------- -----------
Net investment income................................................ 75,164,053 109,434,440 14,504,526 61,147,163
Realized gain (loss) on investments:
Net realized gain (loss) from security transactions.................. (23,331) 8,808 (8,037) 32,503
----------- ------------ ----------- -----------
Net increase in net assets resulting from operations................. $75,140,722 $109,443,248 $14,496,489 $61,179,666
=========== ============ =========== ===========
</TABLE>
See accompanying notes to financial statements.
11
<PAGE> 12
TRUST FOR FEDERAL SECURITIES
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
FEDFUND PORTFOLIO T-FUND PORTFOLIO
------------------------------------ ------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, 1997 OCTOBER 31, 1996 OCTOBER 31, 1997 OCTOBER 31, 1996
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income........................ $ 75,164,053 $ 75,881,590 $ 109,434,440 $ 80,881,458
Net gain (loss) on investments............... (23,331) (14,773) 8,808 (63,912)
---------------- ---------------- ---------------- ----------------
Net increase in net assets resulting from
operations................................. 75,140,722 75,866,817 109,443,248 80,817,546
---------------- ---------------- ---------------- ----------------
Distributions to shareholders:
From net investment income:
FedFund Shares............................. (71,336,960) (70,341,167) -- --
FedFund Dollar Shares...................... (3,827,093) (5,540,423) -- --
T-Fund Shares.............................. -- -- (87,961,168) (71,094,135)
T-Fund Dollar Shares....................... -- -- (21,473,272) (9,787,323)
From net realized gains:
T-Fund Shares.............................. -- -- -- (30,186)
T-Fund Dollar Shares....................... -- -- -- (2,768)
---------------- ---------------- ---------------- ----------------
Total distributions to shareholders...... (75,164,053) (75,881,590) (109,434,440) (80,914,412)
---------------- ---------------- ---------------- ----------------
Capital share transactions:
Sale of shares............................... 10,159,957,992 12,893,699,892 22,232,918,782 13,625,291,726
Reinvestment of dividends.................... 15,153,501 19,010,856 24,571,259 19,893,692
Repurchase of shares......................... (10,359,191,055) (13,179,759,396) (21,834,949,208) (13,523,973,979)
Capital issued in merger..................... -- 197,987,140 -- 444,037,729
---------------- ---------------- ---------------- ----------------
Increase (decrease) in net assets derived
from capital share transactions............ (184,079,562) (69,061,508) 422,540,833 565,249,168
---------------- ---------------- ---------------- ----------------
Total increase (decrease) in net
assets................................. (184,102,893) (69,076,281) 422,549,641 565,152,302
Net assets:
Beginning of period............................ 1,521,275,680 1,590,351,961 1,858,874,227 1,293,721,925
---------------- ---------------- ---------------- ----------------
End of period.................................. $ 1,337,172,787 $ 1,521,275,680 $ 2,281,423,868 $ 1,858,874,227
================ ================ ================ ================
</TABLE>
See accompanying notes to financial statements.
12
<PAGE> 13
TRUST FOR FEDERAL SECURITIES
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
FEDERAL TRUST TREASURY TRUST
FUND PORTFOLIO FUND PORTFOLIO
------------------------------------ ------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, 1997 OCTOBER 31, 1996 OCTOBER 31, 1997 OCTOBER 31, 1996
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income........................ $ 14,504,526 $ 15,054,595 $ 61,147,163 $ 60,676,524
Net gain (loss) on investments............... (8,037) (14,255) 32,503 (213,661)
--------------- --------------- --------------- ---------------
Net increase in net assets resulting from
operations................................. 14,496,489 15,040,340 61,179,666 60,462,863
--------------- --------------- --------------- ---------------
Distributions to shareholders:
From net investment income:
Federal Trust Shares....................... (12,745,296) (13,824,260) -- --
Federal Trust Dollar Shares................ (1,759,230) (1,230,335) -- --
Treasury Trust Shares...................... -- -- (43,994,646) (48,204,888)
Treasury Trust Dollar Shares............... -- -- (17,152,517) (12,471,636)
--------------- --------------- --------------- ---------------
Total distributions to shareholders...... (14,504,526) (15,054,595) (61,147,163) (60,676,524)
--------------- --------------- --------------- ---------------
Capital share transactions:
Sale of shares............................... 1,113,408,997 1,759,666,416 8,110,835,799 7,377,831,706
Reinvestment of dividends.................... 1,777,322 3,353,428 20,130,709 19,149,426
Repurchase of shares......................... (1,147,812,970) (1,728,498,456) (8,204,831,424) (7,529,986,362)
--------------- --------------- --------------- ---------------
Increase (decrease) in net assets derived
from capital share transactions............ (32,626,651) 34,521,388 (73,864,916) (133,005,230)
--------------- --------------- --------------- ---------------
Total increase (decrease) in net
assets................................. (32,634,688) 34,507,133 (73,832,413) (133,218,891)
Net assets:
Beginning of period............................ 300,627,015 266,119,882 1,191,886,758 1,325,105,649
--------------- --------------- --------------- ---------------
End of period.................................. $ 267,992,327 $ 300,627,015 $ 1,118,054,345 $ 1,191,886,758
=============== =============== =============== ===============
</TABLE>
See accompanying notes to financial statements.
13
<PAGE> 14
TRUST FOR FEDERAL SECURITIES
Financial Highlights
(For a Share Outstanding Throughout Each Period)
[CAPTION]
<TABLE>
FEDFUND SHARES
------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
------------------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ---------- ---------- ----------
Income From Investment Operations:
Net Investment Income.............................. .0530 .0529 .0571 .0377 .0308
Net Capital Gains.................................. -- -- -- -- .0001
---------- ---------- ---------- ---------- ----------
Total From Investment Operations................. .0530 .0529 .0571 .0377 .0309
---------- ---------- ---------- ---------- ----------
Less Distributions:
Dividends to Shareholders from:
Net Investment Income.............................. (.0530) (.0529) (.0571) (.0377) (.0308)
Net Capital Gains.................................. -- -- -- -- (.0001)
---------- ---------- ---------- ---------- ----------
Total Distributions.............................. (.0530) (.0529) (.0571) (.0377) (.0309)
---------- ---------- ---------- ---------- ----------
Net Asset Value, End of Period...................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ==========
Total Return........................................ 5.43% 5.41% 5.86% 3.84% 3.12%
Ratios/Supplemental Data:
Net Assets, End of Period $(000).................... $1,220,857 $1,407,529 $1,377,175 $1,557,562 $1,290,971
Ratio of Expenses to Average Daily Net Assets(1).... .20% .19% .18% .18% .20%
Ratio of Net Investment Income to Average Daily Net
Assets............................................. 5.30% 5.29% 5.71% 3.76% 3.08%
<CAPTION>
FEDFUND DOLLAR SHARES
----------------------------------------------------------
YEAR ENDED OCTOBER 31,
----------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Income From Investment Operations:
Net Investment Income.............................. .0505 .0504 .0546 .0352 .0283
Net Capital Gains.................................. -- -- -- -- .0001
-------- -------- -------- -------- --------
Total From Investment Operations................. .0505 .0504 .0546 .0352 .0284
-------- -------- -------- -------- --------
Less Distributions:
Dividends to Shareholders from:
Net Investment Income.............................. (.0505) (.0504) (.0546) (.0352) (.0283)
Net Capital Gains.................................. -- -- -- -- (.0001)
-------- -------- -------- --------
Total Distributions.............................. (.0505) (.0505) (.0546) (.0352) (.0284)
-------- -------- -------- -------- --------
Net Asset Value, End of Period...................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total Return........................................ 5.18% 5.16% 5.61% 3.59% 2.87%
Ratios/Supplemental Data:
Net Assets, End of Period $(000).................... $116,316 $116,317 $213,177 $135,769 $169,877
Ratio of Expenses to Average Daily Net Assets(1).... .45% .44% .43% .43% .45%
Ratio of Net Investment Income to Average Daily Net
Assets............................................. 5.05% 5.04% 5.46% 3.51% 2.83%
</TABLE>
- ---------------
(1) Without the waiver of advisory and administration fees, the ratio of
expenses to average daily net assets would have been .29%, .30%, .29%, .30%
and .27%, respectively, for the years ended October 31, 1997, 1996, 1995,
1994 and 1993 for FedFund Shares, and .54%, .55%, .54%, .55% and .52%,
respectively, for the years ended October 31, 1997, 1996, 1995, 1994 and
1993 for FedFund Dollar Shares.
See accompanying notes to financial statements.
14
<PAGE> 15
TRUST FOR FEDERAL SECURITIES
Financial Highlights
(For a Share Outstanding Throughout Each Period)
<TABLE>
<CAPTION>
T-FUND SHARES
------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
------------------------------------------------------------------
1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ---------- ---------- ----------
Income From Investment Operations:
Net Investment Income............................... .0528 .0528 .0565 .0368 .0303
---------- ---------- ---------- ---------- ----------
Total From Investment Operations.................. .0528 .0528 .0565 .0368 .0303
---------- ---------- ---------- ---------- ----------
Less Distributions:
Dividends to Shareholders from:
Net Investment Income............................... (.0528) (.0528) (.0565) (.0368) (.0303)
---------- ---------- ---------- ---------- ----------
Total Distributions............................... (.0528) (.0528) (.0565) (.0368) (.0303)
---------- ---------- ---------- ---------- ----------
Net Asset Value, End of Period....................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ==========
Total Return......................................... 5.41% 5.40% 5.80% 3.75% 3.07%
Ratios/Supplemental Data:
Net Assets, End of Period $(000)..................... $1,765,332 $1,507,603 $1,211,220 $1,012,977 $1,361,624
Ratio of Expenses to Average Daily Net Assets(1)..... .20% .19% .18% .18% .20%
Ratio of Net Investment Income to Average Daily Net
Assets.............................................. 5.28% 5.26% 5.66% 3.65% 3.03%
<CAPTION>
T-FUND DOLLAR SHARES
-----------------------------------------------------
YEAR ENDED OCTOBER 31,
-----------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- ------- ------- -------
Income From Investment Operations:
Net Investment Income............................... .0503 .0503 .0540 .0343 .0278
-------- -------- ------- ------- -------
Total From Investment Operations.................. .0503 .0503 .0540 .0343 .0278
-------- -------- ------- ------- -------
Less Distributions:
Dividends to Shareholders from:
Net Investment Income............................... (.0503) (.0503) (.0540) (.0343) (.0278)
-------- -------- ------- ------- -------
Total Distributions............................... (.0503) (.0503) (.0540) (.0343) (.0278)
-------- -------- ------- ------- -------
Net Asset Value, End of Period....................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======= ======= =======
Total Return......................................... 5.16% 5.15% 5.55% 3.50% 2.82%
Ratios/Supplemental Data:
Net Assets, End of Period $(000)..................... $516,092 $351,271 $82,502 $22,195 $13,328
Ratio of Expenses to Average Daily Net Assets(1)..... .45% .44% .43% .43% .45%
Ratio of Net Investment Income to Average Daily Net
Assets.............................................. 5.03% 5.01% 5.41% 3.40% 2.78%
</TABLE>
- ---------------
(1) Without the waiver of advisory and administration fees, the ratio of
expenses to average daily net assets would have been .29%, .30%, .29%, .29%
and .28%, respectively, for the years ended October 31, 1997, 1996, 1995,
1994 and 1993 for T-Fund Shares, and .54%, .55%, .54%, .54% and .53%,
respectively, for the years ended October 31, 1997, 1996, 1995, 1994 and
1993 for T-Fund Dollar Shares.
See accompanying notes to financial statements.
15
<PAGE> 16
TRUST FOR FEDERAL SECURITIES
Financial Highlights
(For a Share Outstanding Throughout Each Period)
<TABLE>
<CAPTION>
FEDERAL TRUST SHARES
------------------------------------------------------------
YEAR ENDED OCTOBER 31,
------------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Income From Investment Operations:
Net Investment Income................................. .0521 .0523 .0563 .0380 .0302
Net Capital Gains..................................... -- -- -- -- .0001
-------- -------- -------- -------- --------
Total From Investment Operations.................... .0521 .0523 .0563 .0380 .0303
-------- -------- -------- -------- --------
Less Distributions:
Dividends to Shareholders from:
Net Investment Income................................. (.0521) (.0523) (.0563) (.0380) (.0302)
Net Capital Gains..................................... -- -- -- -- (.0001)
-------- -------- -------- -------- --------
Total Distributions................................. (.0521) (.0523) (.0563) (.0380) (.0303)
-------- -------- -------- -------- --------
Net Asset Value, End of Period......................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total Return........................................... 5.33% 5.35% 5.77% 3.87% 3.06%
Ratios/Supplemental Data:
Net Assets, End of Period $(000)....................... $229,292 $273,752 $237,718 $317,769 $257,125
Ratio of Expenses to Average Daily Net Assets(1)....... .20% .19% .18% .18% .18%
Ratio of Net Investment Income to Average Daily Net
Assets................................................ 5.21% 5.22% 5.61% 3.85% 3.02%
<CAPTION>
FEDERAL TRUST DOLLAR SHARES
------------------------------------------------------
YEAR ENDED OCTOBER 31,
------------------------------------------------------
1997 1996 1995 1994 1993
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------ ------
Income From Investment Operations:
Net Investment Income................................. .0496 .0498 .0538 .0355 .0277
Net Capital Gains..................................... -- -- -- -- .0001
------- ------- ------- ------ ------
Total From Investment Operations.................... .0496 .0498 .0538 .0355 .0278
------- ------- ------- ------ ------
Less Distributions:
Dividends to Shareholders from:
Net Investment Income................................. (.0496) (.0498) (.0538) (.0355) (.0277)
Net Capital Gains..................................... -- -- -- -- (.0001)
------- ------- ------- ------ ------
Total Distributions................................. (.0496) (.0498) (.0538) (.0355) (.0278)
------- ------- ------- ------ ------
Net Asset Value, End of Period......................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ====== ======
Total Return........................................... 5.08% 5.10% 5.52% 3.62% 2.81%
Ratios/Supplemental Data:
Net Assets, End of Period $(000)....................... $38,700 $26,875 $28,402 $ 8,278 $ 1,025
Ratio of Expenses to Average Daily Net Assets(1)....... .45% .44% .43% .43% .43%
Ratio of Net Investment Income to Average Daily Net
Assets................................................ 4.96% 4.97% 5.36% 3.60% 2.77%
</TABLE>
- ---------------
(1) Without the waiver of advisory and administration fees, the ratio of
expenses to average daily net assets would have been .31%, .31%, .32%, .31%
and .29%, respectively, for the years ended October 31, 1997, 1996, 1995,
1994 and 1993 for Federal Trust Shares, and .56%, .56%, .57%, .56% and .54%,
respectively, for the years ended October 31, 1997, 1996, 1995, 1994 and
1993 for Federal Trust Dollar Shares.
See accompanying notes to financial statements.
16
<PAGE> 17
TRUST FOR FEDERAL SECURITIES
Financial Highlights
(For a Share Outstanding Throughout Each Period)
<TABLE>
<CAPTION>
TREASURY TRUST SHARES
--------------------------------------------------------------
YEAR ENDED OCTOBER 31,
--------------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- ---------- ---------- ----------
Income From Investment Operations:
Net Investment Income................................. .0504 .0508 .0545 .0359 .0292
-------- -------- ---------- ---------- ----------
Total From Investment Operations.................... .0504 .0508 .0545 .0359 .0292
-------- -------- ---------- ---------- ----------
Less Distributions:
Dividends to Shareholders from:
Net Investment Income................................. (.0504) (.0508) (.0545) (.0359) (.0292)
-------- -------- ---------- ---------- ----------
Total Distributions................................. (.0504) (.0508) (.0545) (.0359) (.0292)
-------- -------- ---------- ---------- ----------
Net Asset Value, End of Period......................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ========== ========== ==========
Total Return........................................... 5.16% 5.20% 5.59% 3.65% 2.96%
Ratios/Supplemental Data:
Net Assets, End of Period $(000)....................... $786,556 $897,659 $1,101,834 $1,016,635 $1,188,412
Ratio of Expenses to Average Daily Net Assets(1)....... .20% .19% .18% .18% .18%
Ratio of Net Investment Income to Average Daily Net
Assets................................................ 5.04% 5.08% 5.45% 3.57% 2.92%
<CAPTION>
TREASURY TRUST DOLLAR SHARES
--------------------------------------------------------
YEAR ENDED OCTOBER 31,
--------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Income From Investment Operations:
Net Investment Income................................. .0479 .0483 .0520 .0334 .0267
-------- -------- -------- -------- --------
Total From Investment Operations.................... .0479 .0483 .0520 .0334 .0267
-------- -------- -------- -------- --------
Less Distributions:
Dividends to Shareholders from:
Net Investment Income................................. (.0479 ) (.0483) (.0520) (.0334) (.0267)
-------- -------- -------- -------- --------
Total Distributions................................. (.0479) (.0483) (.0520) (.0334) (.0267)
-------- -------- -------- -------- --------
Net Asset Value, End of Period......................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total Return........................................... 4.91% 4.95% 5.34% 3.40% 2.71%
Ratios/Supplemental Data:
Net Assets, End of Period $(000)....................... $331,498 $294,228 $223,272 $181,934 $258,206
Ratio of Expenses to Average Daily Net Assets(1)....... .45% .44% .43% .43% .43%
Ratio of Net Investment Income to Average Daily Net
Assets................................................ 4.79% 4.83% 5.20% 3.32% 2.67%
</TABLE>
- ---------------
(1) Without the waiver of advisory and administration fees, the ratio of
expenses to average daily net assets would have been .30%, .30%, .29%, .29%
and .28%, respectively, for the years ended October 31, 1997, 1996, 1995,
1994 and 1993 for Treasury Trust Shares, and .55%, .55%, .54%, .54% and
.53%, respectively, for the years ended October 31, 1997, 1996, 1995, 1994
and 1993 for Treasury Trust Dollar Shares.
See accompany notes to financial statements.
17
<PAGE> 18
Notes to Financial Statements
A. Trust for Federal Securities (the Company) was established as a Pennsylvania
business trust under a Declaration of Trust originally dated as of May 14, 1975,
and is registered under the Investment Company Act of 1940, as amended, as a
diversified open-end management investment company. The Company consists of four
separate portfolios, FedFund, T-Fund, Federal Trust Fund and Treasury Trust
Fund.
The FedFund portfolio has two classes of shares, FedFund Shares and FedFund
Dollar Shares. The T-Fund portfolio has three classes of shares, T-Fund Shares,
T-Fund Dollar Shares, and T-Fund Plus Shares. Federal Trust Fund portfolio has
two classes of shares, Federal Trust Shares and Federal Trust Dollar Shares.
Treasury Trust Fund portfolio also has two classes of shares, Treasury Trust
Shares and Treasury Trust Dollar Shares. Each portfolio's classes of shares are
identical in all respects, except that Dollar Shares and Plus Shares are sold to
institutions and broker-dealers (Service Organizations) which provide support
services to their customers who beneficially own such shares, in consideration
of the Company's payment of 0.25% (on an annualized basis) of the average daily
net asset value of the Dollar Shares or Plus Shares held for the benefit of
their customers. The Service Organization fee is charged to the earnings of the
respective Dollar Shares or Plus Shares. The T-Fund Plus Shares also bear
distribution fees of 0.15% (on an annualized basis) of their average daily net
asset value payable to the Company's distributor, Provident Distributors, Inc.
(PDI), for distribution and sales support services. No T-Fund Plus Shares have
been sold as of October 31, 1997.
B. Significant accounting policies are as follows:
Use of Estimates--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statement and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from these
estimates. The following is a summary of significant accounting policies
consistently followed by the Company in the preparation of its financial
statements
Security Valuation--Portfolio securities are valued under the amortized cost
method which approximates current market value. Under this method, securities
are valued at cost when purchased and thereafter a constant proportionate
amortization of any discount or premium is recorded until maturity of the
security. Regular review and monitoring of the valuation is performed in an
attempt to avoid dilution or other unfair results to shareholders. The Company
seeks to maintain the net asset value per share of each portfolio at $1.00.
Repurchase Agreements--The Company may purchase, for FedFund and T-Fund, money
market instruments from financial institutions, such as banks and non-bank
dealers, subject to the seller's agreement to repurchase them at an agreed upon
date and price. Collateral for repurchase agreements may have longer maturities
than the maximum permissible remaining maturity of portfolio investments,
provided the repurchase agreements themselves mature in one year or less. The
seller will be required on a daily basis to maintain the value of the securities
subject to the agreement at no less than the repurchase price. Repurchase
agreements with maturities in excess of seven days are subject to a seven day
put feature.
Dividends to Shareholders--Dividends are declared daily and paid monthly.
Dividends payable are recorded on the dividend record date. Net income for
dividend purposes includes interest accrued, discount earned and net realized
short term gains on portfolio securities, less the amortization of market
premium and applicable
18
<PAGE> 19
Notes to Financial Statements (Continued)
expenses. Capital gains, if any, are distributed at least once a year.
Federal Taxes--No provision is made for federal taxes as it is the Company's
intention to have each portfolio continue to qualify as a regulated investment
company and to make the requisite distributions to its shareholders which will
be sufficient to relieve it from federal income and excise taxes.
Other--Investment transactions are accounted for on the trade date and the
cost of investments sold is determined by use of the specific identification
method for both financial reporting and income tax purposes. Expenses not
directly attributable to a specific portfolio are allocated among the portfolios
based on their relative net assets.
C. Under agreements among the Company, PNC Bank, National Association (PNC Bank)
and PNC Institutional Management Corporation (PIMC), an indirect wholly owned
subsidiary of PNC Bank, PIMC manages the Company's portfolios and maintains
their financial accounts. PNC Bank is the Company's sub-advisor and custodian
and PFPC Inc. (PFPC) is the Company's transfer agent.
PDI serves as the Company's distributor. No compensation is payable by the
Company to PDI for its distribution services, except that the T-fund Plus Shares
pay PDI a distribution fee of 0.15% of their average net assets per annum for
distribution and sales support services.
The Company has entered into an Administration Agreement with PFPC and PDI
(the Administrators) for certain administrative services.
In return for their advisory and administrative services, the Company pays
PIMC and the Administrators each a fee, computed daily and payable monthly,
based upon an annualized percentage of the combined average net assets of each
portfolio as follows: .175% of the first $1 billion, .15% of the next $1
billion, .125% of the next $1 billion, .10% of the next $1 billion, .095% of the
next $1 billion, .09% of the next $1 billion, .085% of the next $1 billion and
.08% of net assets in excess of $7 billion.
If expenses borne by any portfolio in any fiscal year exceed the applicable
expense limitation imposed by state securities regulations, the administrators
and PIMC will each reimburse the portfolio for one-half of any excess expense up
to the amount of fees payable to it (except where such regulations require
reimbursement regardless of the fees payable to it).
The Administrators and PIMC have also agreed to reduce their fees, on an equal
basis, to the extent necessary to ensure that the total operating expenses
(excluding Service Organization fees) of each portfolio do not exceed .20% of
their respective average net assets. For the year ended October 31, 1997, the
Administrators and PIMC waived, on an equal basis, a total of $1,339,520 of the
administration and advisory fees payable to them with respect to FedFund,
$1,881,908 with respect to T-Fund, $313,930 with respect to Federal Trust Fund
and $1,175,729 with respect to Treasury Trust Fund.
Service Organization fees of $958,958 were paid to affiliates of PNC Bank for
the year ended October 31, 1997.
D. The Company's Declaration of Trust permits the Trustees to authorize the
issuance of an unlimited number of full and fractional shares of beneficial
interest (shares) in the Company and to classify or reclassify any unissued
shares into one or more additional classes of shares.
19
<PAGE> 20
Notes to Financial Statements (Continued)
Transactions in shares of the Company are summarized as follows:
<TABLE>
<CAPTION>
FEDFUND PORTFOLIO
-------------------------------------
YEAR ENDED YEAR ENDED
OCTOBER 31, 1997 OCTOBER 31, 1996
---------------- ----------------
<S> <C> <C>
Shares sold:
FedFund....................................................... 7,982,671,603 9,628,571,506
FedFund Dollar................................................ 2,177,286,389 3,265,128,386
Shares issued in reinvestment of dividends:
FedFund....................................................... 11,985,551 14,249,401
FedFund Dollar................................................ 3,167,950 4,761,455
Shares repurchased:
FedFund....................................................... (8,181,306,912) (9,810,439,998)
FedFund Dollar................................................ (2,177,884,143) (3,369,319,398)
Shares issued from merger:
FedFund....................................................... -- 198,044,619
--------------- ---------------
Net decrease in shares..................................... (184,079,562) (69,004,029)
=============== ===============
</TABLE>
<TABLE>
<CAPTION>
T-FUND PORTFOLIO
------------------------------------
YEAR ENDED YEAR ENDED
OCTOBER 31, 1997 OCTOBER 31, 1996
---------------- ----------------
<S> <C> <C>
Shares sold:
T-Fund......................................................... 18,993,277,228 12,513,467,305
T-Fund Dollar.................................................. 3,239,641,554 1,111,824,421
Shares issued in reinvestment of dividends:
T-Fund......................................................... 21,093,890 19,221,200
T-Fund Dollar.................................................. 3,477,369 672,492
Shares repurchased:
T-Fund......................................................... (18,756,649,706) (12,629,448,435)
T-Fund Dollar.................................................. (3,078,299,502) (894,525,544)
Shares issued from merger:
T-Fund......................................................... -- 393,229,363
T-Fund Dollar.................................................. -- 50,811,711
--------------- ---------------
Net increase in shares...................................... 422,540,833 565,252,513
=============== ===============
</TABLE>
20
<PAGE> 21
Notes to Financial Statements (Continued)
<TABLE>
<CAPTION>
FEDERAL TRUST FUND PORTFOLIO
-------------------------------------
YEAR ENDED YEAR ENDED
OCTOBER 31, 1997 OCTOBER 31, 1996
---------------- ----------------
<S> <C> <C>
Shares sold:
Federal Trust................................................... 883,098,652 1,615,471,302
Federal Trust Dollar............................................ 230,310,345 144,195,114
Shares issued in reinvestment of dividends:
Federal Trust................................................... 1,604,400 3,217,621
Federal Trust Dollar............................................ 172,922 135,807
Shares repurchased:
Federal Trust................................................... (929,156,412) (1,582,641,507)
Federal Trust Dollar............................................ (218,656,558) (145,856,949)
-------------- --------------
Net increase (decrease) in shares............................ (32,626,651) 34,521,388
============== ==============
</TABLE>
<TABLE>
<CAPTION>
TREASURY TRUST FUND PORTFOLIO
-------------------------------------
YEAR ENDED YEAR ENDED
OCTOBER 31, 1997 OCTOBER 31, 1996
---------------- ----------------
<S> <C> <C>
Shares sold:
Treasury Trust.................................................. 6,033,944,270 6,593,661,701
Treasury Trust Dollar........................................... 2,076,891,529 784,170,005
Shares issued in reinvestment of dividends:
Treasury Trust.................................................. 8,360,341 9,135,502
Treasury Trust Dollar........................................... 11,770,368 10,013,924
Shares repurchased:
Treasury Trust.................................................. (6,153,431,801) (6,806,800,550)
Treasury Trust Dollar........................................... (2,051,399,623) (723,185,812)
-------------- --------------
Net decrease in shares....................................... (73,864,916) (133,005,230)
============== ==============
</TABLE>
On October 31, 1997, one shareholder held approximately 23% of the
outstanding shares of T-Fund, two shareholders held approximately 53% of the
outstanding shares of Federal Trust Fund and one shareholder held approximately
14% of the outstanding shares of Treasury Trust Fund.
21
<PAGE> 22
Notes to Financial Statements (Concluded)
E. At October 31, 1997, net assets consisted of:
<TABLE>
<CAPTION>
FEDERAL TREASURY
TRUST TRUST
FEDFUND T-FUND FUND FUND
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
-------------- -------------- ------------ --------------
<S> <C> <C> <C> <C>
Paid-in capital........................ $1,337,477,960 $2,281,489,354 $268,203,531 $1,118,296,415
Accumulated net realized loss on
security transactions................ (305,173) (65,486) (211,204) (242,070)
-------------- -------------- ------------ --------------
$1,337,172,787 $2,281,423,868 $267,992,327 $1,118,054,345
============== ============== ============ ==============
</TABLE>
F. At October 31, 1997, FedFund, T-Fund, Federal Trust Fund and Treasury Trust
Fund had capital loss carryovers amounting to $305,173, $52,014, $211,204 and
$235,332, respectively, expiring at various times from 2001 to 2005. The capital
loss carryovers are available to offset possible future capital gains of the
corresponding portfolios.
22
<PAGE> 23
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Trustees
of Trust for Federal Securities:
We have audited the accompanying statements of net assets of Trust for
Federal Securities (the "Company"), comprising, respectively, the FedFund,
T-Fund, Federal Trust Fund and Treasury Trust Fund Portfolios, as of October 31,
1997, and the related statements of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the years presented. These
financial statements and financial highlights are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments owned as of
October 31, 1997 by correspondence with custodians and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
each of the respective portfolios comprising Trust for Federal Securities as of
October 31, 1997, the results of their operations for the year then ended, the
changes in their net assets for each of the two years in the period then ended,
and the financial highlights for each of the years presented, in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
December 9, 1997
23
<PAGE> 24
Board of Trustees
G. Willing Pepper
Chairman
G. Nicholas Beckwith III
Philip E. Coldwell
Robert R. Fortune
Jerrold B. Harris
Rodney D. Johnson
Officers
G. Willing Pepper
President
Edward J. Roach
Vice President and
Treasurer
W. Bruce McConnel, III
Secretary
Investment Adviser
PNC Institutional Management
Corporation
400 Bellevue Parkway
Wilmington, DE 19809
Co-Administrators
PFPC Inc.
400 Bellevue Parkway
Wilmington, DE 19809
Provident Distributors, Inc.
Four Falls Corporate Center
6th Floor
West Conshohocken, PA 19428
Distributor
Provident Distributors, Inc.
Four Falls Corporate Center
6th Floor
West Conshohocken, PA 19428
Transfer Agent
PFPC Inc.
P.O. Box 8950
Wilmington, DE 19885-9628
This report is submitted for
the general information of the
shareholders of the Company.
It is not authorized for
distribution to prospective
investors unless accompanied
or preceded by effective
prospectuses for each
portfolio of the Company,
which contain information
concerning the investment
policies of the portfolios as
well as other pertinent
information.
PIF-T-003
FEDFUND
T-FUND
FEDERAL TRUST FUND
TREASURY TRUST FUND
Investment Portfolios
Offered by
Trust for Federal Securities
[PROVIDENT INSTITUTIONAL FUNDS LOGO]
Annual Report
to Shareholders
October 31, 1997
