FIRST AMERICAN FUNDS, INC.
1997 ANNUAL REPORT
THE POWER OF DISCIPLINED INVESTING
[3 PHOTOS]
<PAGE>
TABLE OF CONTENTS
September 30, 1997
Message To Shareholders........................................Page 1
Economic and Investment Review.................................Page 2
Portfolio Performance Review...................................Page 8
Independent Auditors' Report...................................Page 9
Statements of Net Assets......................................Page 11
Statement of Operations.......................................Page 29
Statements of Changes in Net Assets...........................Page 30
Financial Highlights..........................................Page 32
Notes to Financial Statements.................................Page 34
Notice to Shareholders........................................Page 41
<PAGE>
MESSAGE TO SHAREHOLDERS
September 30, 1997
Dear Shareholder:
On behalf of the Board of Directors of First American Funds, I am pleased to
report to you that the past year was another year of solid investment
performance and tremendous asset growth. As of September 30, 1997, total First
American Fund money market assets had approached $9 billion up from $6.3 billion
one year ago. This growth has not come at the expense of quality. First American
Funds are on-line to produce above average investment results for our
shareholders. As of fiscal year-end, First American Funds was one of the top 25
money market fund providers in the country.
I am pleased to announce that a new Tax Free Obligations Fund will be
introduced in November. You can expect that this Fund will be run with the same
commitment to quality results you have come to expect from First American Funds.
In this report you will learn about the year's economic and investment
environment and how these factors affected fund results. The final section of
this report highlights the financial statements for each fund.
I would urge you to read the report closely.
The Board of Directors thanks you for your continued support and confidence
in First American Funds. We are confident that the Funds' tradition of
conservative management, competitive results and innovative products will
continue to serve you well.
Sincerely,
/s/ Virginia L. Stringer
Virginia L. Stringer
Chairman
First American Funds, Inc.
<PAGE>
ECONOMIC AND INVESTMENT REVIEW
September 30, 1997
The close of the First American Funds' fiscal year marked a very successful
period for investors. For the fiscal year ended September 30, 1997, the S&P 500
Composite Index produced a 40.43% total return. The Index produced 29.89% and
20.75% average annual returns for the trailing three- and five-year periods,
respectively. International equity ownership provided more modest total returns
of 12.19% for the fiscal year and 8.84% and 12.34% annualized for the three- and
five-year periods as measured by the Morgan Stanley MSCI EAFE Index. Returns
from the fixed income markets, measured by the Lehman Government/Corporate Bond
Index, were 9.59% for the fiscal year and 9.41% and 6.95% for the three- and
five-year periods. The yield on 30-year Treasury bonds fell from 7.82% at the
end of September 1994 and 7.40% in September 1992 to 6.40% at the close of the
fiscal year.
THE STOCK MARKET
Line graph depicting the yields of S&P Index and NASDAQ Composite.
[PLOT POINTS GRAPH]
S&P 500 NASDAQ Composite
Jan-85 172 261
Jan 86 208 329
Jan-87 265 384
Jan-88 250 339
Jan-89 285 389
Jan-90 340 439
Jan-91 325 377
Jan-92 416 616
Jan-93 435 691
Jan-94 473 788
Jan-95 465 758
Jan-90 340 439
Jan-96 614 1025
Jan-97 766 1345
Sep-97 927 1596
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ECONOMIC AND INVESTMENT REVIEW
September 30, 1997
TREASURY YIELDS
Line graph depicting the yields of 30 year Treasury Bond and three month
Treasury Bills.
[PLOT POINTS GRAPH]
30 year 3 month 30 year 3 month
bonds bills bonds bills
11.52 8.06 90 8.24 6.74
Jan-85 11.45 7.76 Jan-91 8.27 6.22
Feb-85 11.47 8.26 Feb-91 8.03 5.94
Mar-85 11.81 8.52 Mar-91 8.29 5.91
Apr-85 11.47 7.95 Apr-91 8.21 5.65
May-85 11.05 7.48 May-91 8.27 5.46
Jun-85 10.45 6.95 Jun-91 8.47 5.57
Jul-85 10.5 7.08 Jul-91 8.45 5.58
Aug-85 10.56 7.13 Aug-91 8.14 5.33
Sep-85 10.61 7.1 Sep-91 7.95 5.22
Oct-85 10.5 7.16 Oct-91 7.93 4.99
Nov-85 10.06 7.24 Nov-91 7.92 4.56
85 9.54 7.1 91 7.7 4.07
Jan-86 9.4 7.07 Jan-92 7.58 3.8
Feb-86 8.93 7.06 Feb-92 7.85 3.84
Mar-86 7.96 6.56 Mar-92 7.97 4.04
Apr-86 7.39 6.06 Apr-92 7.96 3.75
May-86 7.52 6.15 May-92 7.89 3.63
Jun-86 7.57 6.21 Jun-92 7.84 3.66
Jul-86 7.27 5.83 Jul-92 7.6 3.21
Aug-86 7.33 5.53 Aug-92 7.39 3.13
Sep-86 7.62 5.21 Sep-92 7.34 2.91
Oct-86 7.7 5.18 Oct-92 7.53 2.86
Nov-86 7.52 5.35 Nov-92 7.61 3.13
86 7.37 5.53 92 7.44 3.22
Jan-87 7.39 5.43 Jan-93 7.34 3
Feb-87 7.54 5.59 Feb-93 7.09 2.93
Mar-87 7.55 5.59 Mar-93 6.82 2.95
Apr-87 8.25 5.64 Apr-93 6.85 2.87
May-87 8.78 5.66 May-93 6.92 2.96
Jun-87 8.57 5.67 Jun-93 6.81 3.07
Jul-87 8.64 5.69 Jul-93 6.63 3.04
Aug-87 8.97 6.04 Aug-93 6.32 3.02
Sep-87 9.59 6.4 Sep-93 6 2.95
Oct-87 9.61 6.13 Oct-93 5.94 3.02
Nov-87 8.95 5.69 Nov-93 6.21 3.1
87 9.12 5.77 93 6.25 3.06
Jan-88 8.83 5.81 Jan-94 6.29 2.98
Feb-88 8.43 5.66 Feb-94 6.49 3.25
Mar-88 8.63 5.7 Mar-94 6.91 3.5
Apr-88 8.95 5.91 Apr-94 7.27 3.68
May-88 9.23 6.26 May-94 7.41 4.14
Jun-88 9 6.46 Jun-94 7.4 4.14
Jul-88 9.14 6.73 Jul-94 7.58 4.33
Aug-88 9.32 7.06 Aug-94 7.49 4.48
Sep-88 9.06 7.24 Sep-94 7.71 4.62
Oct-88 8.89 7.35 Oct-94 7.94 4.95
Nov-88 9.02 7.76 Nov-94 8.08 5.29
88 9.01 8.07 94 7.87 5.6
Jan-89 8.93 8.26 Jan-95 7.85 5.71
Feb-89 9.01 8.53 Feb-95 7.61 5.77
Mar-89 9.17 8.82 Mar-95 7.45 5.73
Apr-89 9.03 8.65 Apr-95 7.35 5.82
May-89 8.83 8.43 May-95 6.95 5.67
Jun-89 8.27 8.15 Jun-95 6.57 5.63
Jul-89 8.08 7.88 Jul-95 6.72 5.42
Aug-89 8.12 7.9 Aug-95 6.86 5.55
Sep-89 8.15 7.75 Sep-95 6.55 5.28
Oct-89 8 7.64 Oct-95 6.37 5.28
Nov-89 7.9 7.69 Nov-95 6.26 5.36
89 7.9 7.63 95 6.06 5.14
Jan-90 8.26 7.64 Jan-96 6.05 5
Feb-90 8.5 7.74 Feb-96 6.24 4.83
Mar-90 8.56 7.9 Mar-96 6.6 4.96
Apr-90 8.76 7.77 Apr-96 6.79 4.95
May-90 8.73 7.74 May-96 6.93 5.02
Jun-90 8.46 7.73 Jun-96 7.06 5.09
Jul-90 8.5 7.62 Jul-96 7.03 5.15
Aug-90 8.86 7.45 Aug-96 6.84 5.05
Sep-90 9.03 7.36 Sep-96 7.03 5.09
Oct-90 8.86 7.17 Oct-96 6.81 4.99
Nov-90 8.54 7.06 Nov-96 6.49 5.16
96 6.327 5.03
Jan-97 6.83 5.03
Feb-97 6.69 5.01
Mar-97 6.93 5.27
Apr-97 7.088 5.281
May-97 6.75 5.27
Jun-97 6.70 5.25
Jul-97 6.25 5.20
Aug-97 6.80 5.10
Sep-97 7.08 5.01
One need not look far to discover the confluence of favorable factors that
has supported the positive investment environment. Healthy domestic economic
growth, combined with declining inflation expectations, and an aging
population's heightened focus on investing for financial security have produced
an ideal setting for the stock and bond markets. Confident consumers have
benefited from a high level of job availability, higher real incomes, and growth
in their net worth as the securities markets advanced. Aggressive capital
spending strengthened the United States' international competitive position,
while the promise of a balanced federal budget built the confidence of our
overseas creditors.
Moderation in everything is often mentioned as a prescription for long life
for investors - so too for market advances. Clearly, economic growth at a
moderate pace that does not encourage inflation has been the source of today's
accommodative monetary policy. Knowing the importance of monetary policy to the
stock and bond markets, what is the maximum non-inflationary rate of growth for
the domestic economy? A number of well supported opinions are heard, but it
would seem that growth closer to 3.0% real Gross Domestic Product (GDP) than
2.0% is
<PAGE>
ECONOMIC AND INVESTMENT REVIEW
September 30, 1997
possible. As the largest participant in the global economy, the United States
has benefited greatly from excess global productive capacity, competitive
pricing, and a strong dollar that has increased domestic purchasing power.
Substantial rationalization of business structures, heavy investment in
productivity enhancing technology, and restrained wage demands in favor of job
security are contributing to a potential for greater economic growth without
touching off inflation.
REAL GDP -- SEASONALLY ADJUSTED ANNUAL RATE
Line graph depicting real GDP using a quarter/quarter percent change and a
year/year percent change.
[PLOT POINTS GRAPH]
Quarter/Quarter Year/Year Quarter/Quarter Year/Year
% Change % Change % Change % Change
1988 2.4 4 1994 3 3.1
4.1 4 4.7 3.8
2.4 3.7 1.8 3.7
5.1 3.5 3.6 3.3
1989 4 3.9 1995 0.9 2.7
3 3.6 0.3 1.6
2.2 3.6 3 2
0.4 2.4 2.2 1.6
1990 3.9 2.4 1996 1.8 1.8
1.2 1.9 6 3.2
-1.9 0.9 1 2.7
-4 -0.2 4.3 3.3
1991 -2.1 -1.7 1997E 4.9 4
1.8 -1.6 3.3 3.4
1 -0.8 3.3 3.9
1 0.4 3 3.6
1992 4.7 2.1 1998E 2.8 3.1
2.5 2.3 2.7 3
3 2.8 2.6 2.8
4.3 3.6 2.6 2.7
1993 0.1 2.5
2 2.3
2.1 2.1
5.3 2.4
The current expansion, now over six years old, has certainly not progressed
in a straight line, but it has possessed the capacity to correct imbalances with
a series of small inventory adjustments and interest rate fluctuations,
resulting from cautious shifts in monetary policy or changes in bond market
psychology. No condition is present that points to an end to the economic
expansion, although its sheer age suggests a slower pace of growth. Terminal
scenarios circulating today range from inflationary boom to deflationary bust,
but we expect a period of moderate growth, averaging slightly less than 3.0%
real GDP in coming quarters.
<PAGE>
ECONOMIC AND INVESTMENT REVIEW
September 30, 1997
Although inflation should be contained below 3.0%, our concern rests with a
visible shortage of skilled workers that threatens to drive labor costs beyond
that which can be offset by efficiencies. Signs of employment cost pressure
could promote tighter monetary policy and an eventual slowing of economic
growth. Monetary restraint would be a strong negative for the securities
markets. Knowing that equity ownership has expanded greatly as a portion of
household net worth in the past decade, we are concerned that a correction of
today's fully priced stock market could adversely influence consumption,
corporate profits, and capital investment, in turn.
CONSUMER PRICES
Graph depicting Consumer Prices using quarter/quarter % change and year/year %
change.
[PLOT POINTS GRAPH]
Quarter/Quarter Year/Year Quarter/Quarter Year/Year
% Change % Change % Change % Change
1988 4.665308 3.946981 1993 2.918486 3.122765
4.963709 4.109589 1.862147 2.815235
4.555087 4.302628 3.260476 2.743902
4.618315 4.700487 2.023855 2.514552
1989 6.503806 5.157268 1994 2.383030 2.380952
3.273053 4.731243 3.754603 2.853198
4.015241 4.595792 2.529234 2.670623
7.061599 5.201204 2.785411 2.861685
1990 4.121541 4.607922 1995 3.127208 3.048092
7.084450 5.560011 2.120068 2.639821
6.961204 6.299629 2.463589 2.623388
3.021696 5.282332 3.333780 2.759991
1991 2.393909 4.842865 1996 3.394325 2.826468
3.081669 3.849076 2.668529 2.964255
3.357734 2.963147 3.343406 3.184575
2.736221 2.891745 2.372276 2.943704
1992 3.110340 3.071253 1997 3.552955 2.983166
3.086342 3.072421 3.012972 3.069433
3.547542 3.119710 3.242644 3.044300
2.939935 3.170790
The current bond market can best be described as trapped between the fear
of excess growth with the risk of higher inflation and a sense that the
expansion could progress at a pace that permits continued moderate inflation and
possibly lower bond yields. With a forecast of moderate economic growth and some
wariness regarding the continuation of very low price inflation, our bond
portfolio policy is essentially neutral. Signs of an acceleration in inflation
would cause us to shorten portfolio duration quickly.
<PAGE>
ECONOMIC AND INVESTMENT REVIEW
September 30, 1997
THE BOND MARKET BALANCE
(Graphic: Scale weighted to the negatives)
NEGATIVES POSITIVES
RESILIENCE OF ECONOMY MODERATE ECONOMIC GROWTH
LABOR COST PRESSURE LOW REPORTED INFLATION
POSSIBLE REDUCED FOREIGN CAPITAL FLOWS STABLE TO RISING DOLLAR
FED TIGHTENING DIMINISHED FEDERAL DEFICIT
The strong, globally competitive position of the U.S. economy, the opening
of new business opportunities in emerging market-based economies, and the
beneficial balance of demand and capacity at low price levels suggest that the
secular advance in equities is not over. The potential for correction exists,
however. The valuation of the general market is at a very high level, apparently
incorporating assumptions about lower interest rates or profit growth that we
find exceedingly optimistic. Believing that interest rates are confined to a
fairly narrow range and expecting far more difficult profit comparisons in
coming quarters, we have placed additional emphasis on valuation in our
disciplined approach to stock selection. In our portfolio strategy we have
balanced exposure to opportunity with a keen appreciation of the volatility of
the current market.
THE STOCK MARKET BALANCE
(Graphic: Scale weighted to the negatives)
NEGATIVES POSITIVES
DIFFICULT PROFIT COMPARISONS AHEAD SUSTAINED ECONOMIC EXPANSION
MARKET FAIRLY VALUED LOW INFLATION
RISK OF HIGHER INTEREST RATES ACCOMMODATIVE MONETARY POLICY
DEMOGRAPHICALLY BASED DEMAND
<PAGE>
ECONOMIC AND INVESTMENT REVIEW
September 30, 1997
We are pleased to fulfill your unique investment needs through the distinct
investment disciplines represented by the First American Funds. Our twin focus
on competitive investment return and control of risk will help you achieve your
long term investment goals. We appreciate your confidence and look forward to
serving you in the coming year.
Sincerely,
/s/ John M. Murphy, Jr.
John M. Murphy, Jr.
Chief Investment Officer
First Asset Management
<PAGE>
PORTFOLIO PERFORMANCE REVIEW
September 30, 1997
MONEY MARKET FUNDS
INVESTMENT OBJECTIVES: TO PROVIDE MAXIMUM CURRENT INCOME WHILE PRESERVING
CAPITAL AND MAINTAINING LIQUIDITY.
First American Funds offers three money market funds: Treasury Obligations,
Government Obligations and Prime Obligations. The aggregate assets of these
Funds have grown from $6.3 billion one year ago to $9 billion.
The TREASURY OBLIGATIONS FUND invests in U.S. Treasury obligations and
repurchase agreements related to such securities. As of fiscal year-end, the
Fund has outperformed its average peer for 11 consecutive quarters.* Fund assets
grew from $1.9 billion to $3.7 billion during the year. For the fiscal year-end,
the Institutional Class C shares seven-day effective yield was 5.32% and the
average weighted maturity was 37 days. This Fund is rated Triple-A by both
Moody's and Standard & Poor's.
The GOVERNMENT OBLIGATIONS FUND invests in short-term debt obligations
issued or backed by the U.S. Government or its agencies and repurchase
agreements related to such securities. As of fiscal year-end, the Fund has
performed in the top quartile of its universe for 19 consecutive quarters.* Fund
assets grew from $1 billion to $1.3 billion during the year. At year-end, the
Institutional, Class C seven-day effective yield was 5.34% and the average
weighted maturity was 42 days.
The PRIME OBLIGATIONS FUND invests in short-term debt obligations issued or
backed by the U.S. Government or its agencies, and corporate obligations
including high grade commercial paper, corporate debt and loan participation
interests. As of fiscal year-end, the Fund has performed in the top quartile of
its universe for 19 consecutive quarters.* Fund assets grew from $3.4 billion to
$4.0 billion during the year. At year-end, the Institutional Class C seven-day
effective yield was 5.48% and the average weighted maturity was 40 days.
* ON A GROSS YIELD BASIS AS REPORTED BY IBC
<PAGE>
INDEPENDENT AUDITORS' REPORT
September 30, 1997
The Board of Directors and Shareholders
First American Funds, Inc.:
We have audited the accompanying statements of net assets as of September
30, 1997, and the related statements of operations, the statements of changes in
net assets and the financial highlights for each of the three funds constituting
First American Funds, Inc., for each of the periods presented. These financial
statements and the financial highlights are the responsibility of the funds'
management. Our responsibility is to express an opinion on these financial
statements and the 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 the financial
highlights are free of material misstatement. An audit also includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. Investment securities held in custody are confirmed to us
by the custodian. As to securities on loan, we request confirmations from
brokers and where replies are not received, we carry out other appropriate
auditing procedures. 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 the financial highlights
referred to above present fairly, in all material respects, the financial
position of each of the three funds constituting
<PAGE>
INDEPENDENT AUDITORS' REPORT
September 30, 1997
First American Funds, Inc. as of September 30, 1997, and the results of their
operations, changes in their net assets and the financial highlights for the
periods presented, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
November 7, 1997
<PAGE>
STATEMENTS OF NET ASSETS
September 30, 1997
PRIME OBLIGATIONS FUND
DESCRIPTION PAR (000) VALUE (000)
- -----------------------------------------------------------------------------
COMMERCIAL PAPER - 49.6%
BROKERAGE - 1.3%
Bear Stearns
5.530%, 10/17/97 $ 25,000 $ 24,939
Credit Suisse First Boston
5.971%, 10/20/97 (B) 25,000 24,923
----------
49,862
----------
CAPTIVE FINANCE - 1.1%
Bell Atlantic Financial Services
5.576%, 10/09/97 35,000 34,957
Ford Motor Credit
5.618%, 10/01/97 4,000 4,000
5.581%, 10/14/97 4,000 3,992
----------
42,949
----------
COMMERCIAL FUNDING CORPORATIONS - 19.5%
Distribution Funding
5.573%, 10/02/97 (B) 5,000 4,999
5.603%, 10/02/97 (B) 5,340 5,339
5.585%, 10/07/97 (B) 34,660 34,628
5.591%, 10/14/97 (B) 33,500 33,433
5.585%, 11/03/97 (B) 15,000 14,924
Equipment Funding
5.583%, 10/03/97 25,275 25,267
5.557%, 10/07/97 30,000 29,972
5.635%, 11/05/97 9,992 9,938
Equipment Intermediation Partnership
5.534%, 10/02/97 (B) 47,025 47,018
5.565%, 10/07/97 (B) 30,000 29,972
5.635%, 11/05/97 (B) 46,438 46,185
Fleet Funding
5.568%, 10/21/97 (B) 25,000 24,923
Pooled Accounts Receivable Capital
5.552%, 10/01/97 (B) 25,000 25,000
5.558%, 10/06/97 (B) 25,129 25,110
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATEMENTS OF NET ASSETS
September 30, 1997
PRIME OBLIGATIONS FUND (CONTINUED)
DESCRIPTION PAR (000) VALUE (000)
- -----------------------------------------------------------------------------
5.570%, 10/17/97 (B) $ 25,137 $ 25,075
5.576%, 10/23/97 (B) 20,000 19,932
5.607%, 10/27/97 (B) 26,370 26,264
5.586%, 11/10/97 (B) 20,166 20,042
5.622%, 11/25/97 (B) 27,764 27,528
Premium Funding E
5.581%, 10/02/97 (B) 20,000 19,997
5.614%, 10/06/97 (B) 35,487 35,460
5.585%, 10/08/97 (B) 15,000 14,984
5.578%, 10/20/97 (B) 28,911 28,826
5.592%, 10/24/97 (B) 29,946 29,839
5.608%, 10/27/97 (B) 28,714 28,598
5.626%, 10/29/97 (B) 20,000 19,913
Receivables Capital
5.578%, 10/01/97 (B) 25,031 25,031
5.567%, 10/10/97 (B) 30,000 29,958
5.581%, 10/10/97 (B) 23,112 23,080
5.576%, 10/16/97 (B) 15,386 15,350
5.557%, 10/20/97 (B) 25,000 24,927
----------
771,512
----------
DIVERSIFIED FINANCE - 1.1%
American Express Credit
5.589%, 10/14/97 4,000 3,992
Commercial Credit
5.607%, 11/07/97 40,000 39,772
----------
43,764
----------
DOMESTIC BANKS - 10.7%
Hahn Issuing II (LOC: Citibank)
5.558%, 10/07/97 20,721 20,702
5.582%, 10/20/97 26,000 25,924
International Securitization
(Guarantor: FNB Chicago)
5.584%, 10/21/97 (B) 40,000 39,877
5.599%, 10/27/97 (B) 45,000 44,820
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATEMENTS OF NET ASSETS
September 30, 1997
PRIME OBLIGATIONS FUND (CONTINUED)
DESCRIPTION PAR (000) VALUE (000)
- -----------------------------------------------------------------------------
5.590%, 11/07/97 (B) $ 10,071 $ 10,014
5.595%, 11/13/97 (B) 16,405 16,296
5.707%, 02/26/98 (B) 13,304 12,999
5.708%, 02/27/98 (B) 27,228 26,600
Kzh-Ing-1 (LOC: Chase Manhattan)
5.623%, 10/24/97 (B) 15,131 15,077
5.640%, 10/28/97 (B) 9,131 9,093
5.580%, 11/26/97 (B) 9,120 9,041
5.657%, 12/01/97 (B) 9,092 9,006
Kzh Crescent (LOC: Chase Manhattan)
5.635%, 11/28/97 (B) 8,812 8,733
5.637%, 11/28/97 (B) 9,105 9,023
5.759%, 02/27/98 (B) 4,531 4,426
5.731%, 01/30/98 (B) 4,242 4,163
5.760%, 03/03/98 (B) 7,732 7,548
Kzh Holding III (LOC: Chase Manhattan)
5.650%, 10/10/97 (B) 7,610 7,599
5.625%, 10/15/97 (B) 10,635 10,612
5.604%, 10/21/97 (B) 5,037 5,021
5.637%, 12/01/97 (B) 7,589 7,518
5.580%, 12/03/97 (B) 9,917 9,820
5.654%, 12/19/97 (B) 30,000 29,633
5.679%, 12/29/97 (B) 6,052 5,969
5.759%, 02/27/98 (B) 9,108 8,897
Kzh Soleil (LOC: Chase Manhattan)
5.606%, 10/08/97 (B) 27,035 27,006
5.605%, 10/09/97 (B) 16,324 16,304
5.580%, 11/26/97 (B) 5,061 5,017
5.658%, 12/08/97 (B) 9,582 9,481
5.758%, 02/17/98 (B) 5,117 5,006
----------
421,225
----------
FOREIGN BANKS - 7.5%
Banco Real S A (LOC: Barclays Bank)
5.902%, 10/01/97 25,000 25,000
Biltmore Capital (LOC: Bank of Tokyo-Mitsubishi)
5.607%, 10/09/97 5,000 4,994
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATEMENTS OF NET ASSETS
September 30, 1997
PRIME OBLIGATIONS FUND (CONTINUED)
DESCRIPTION PAR (000) VALUE (000)
- -----------------------------------------------------------------------------
Casio Phonemate (LOC: Bank of Tokyo-Mitsubishi)
5.640%, 10/17/97 $ 14,000 $ 13,965
China International Marine Containers Group
(LOC: Societe Generale)
5.583%, 10/08/97 20,000 19,979
Cosco Cayman Limited (LOC: Credit Suisse)
5.586%, 11/03/97 20,000 19,898
Hartz 667 (LOC: Bank of Tokyo-Mitsubishi)
5.607%, 10/06/97 15,640 15,628
5.606%, 10/08/97 34,670 34,632
5.626%, 10/22/97 41,260 41,125
Koc Funding (LOC: Credit Suisse)
5.994%, 02/13/98 10,000 9,784
6.064%, 02/13/98 10,000 9,783
Mitsubishi Motors Credit America
(LOC: Bank of Tokyo-Mitsubishi)
5.617%, 10/01/97 15,000 15,000
Pemex Capital (LOC: Credit Suisse)
5.856%, 10/22/97 15,000 14,950
Towson Town Center
(LOC: Bank of Tokyo-Mitsubishi)
5.631%, 10/09/97 12,685 12,669
5.646%, 10/15/97 20,000 19,956
5.621%, 10/17/97 8,500 8,479
5.629%, 10/21/97 20,000 19,938
US Prime Property (LOC: Westpac Banking)
5.690%, 02/17/98 12,400 12,135
----------
297,915
----------
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATEMENTS OF NET ASSETS
September 30, 1997
PRIME OBLIGATIONS FUND (CONTINUED)
DESCRIPTION PAR (000) VALUE (000)
- -----------------------------------------------------------------------------
FOREIGN FUNDING CORPORATIONS - 2.1%
Sigma Finance
5.620%, 10/06/97 (B) $ 24,000 $ 23,982
5.622%, 10/09/97 (B) 12,975 12,959
5.597%, 10/27/97 (B) 28,000 27,888
5.712%, 02/02/98 (B) 20,000 19,616
----------
84,445
----------
RETAIL FUNDING CORPORATIONS - 6.3%
Enterprise Funding
5.575%, 10/03/97 (B) 45,979 45,965
5.569%, 10/14/97 (B) 10,000 9,980
5.713%, 02/19/98 (B) 10,000 9,783
5.961%, 02/27/98 (B) 13,768 13,442
First Deposit Master Trust
5.550%, 10/03/97 (B) 17,982 17,976
5.563%, 10/08/97 (B) 24,000 23,974
5.555%, 10/16/97 (B) 30,000 29,931
5.567%, 10/17/97 (B) 34,700 34,615
5.586%, 10/23/97 (B) 20,000 19,932
5.588%, 11/06/97 (B) 35,000 34,806
5.630%, 11/13/97 (B) 8,338 8,283
----------
248,687
----------
TOTAL COMMERCIAL PAPER
(Cost $1,960,359) 1,960,359
----------
CORPORATE OBLIGATIONS - 30.2%
BROKERAGE - 10.1%
Bankers Trust
5.840%, 10/01/97 (A) (B) 105,000 105,000
Bear Stearns
5.740%, 10/01/97 (A) 100,000 100,000
Morgan Stanley
5.706%, 10/15/97 (A) 75,000 75,000
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATEMENTS OF NET ASSETS
September 30, 1997
PRIME OBLIGATIONS FUND (CONTINUED)
DESCRIPTION PAR (000) VALUE (000)
- -----------------------------------------------------------------------------
Structured Enhanced Return Trust 1995
(Guarantor: Merrill Lynch)
5.742%, 12/18/97 (B) $ 35,000 $ 35,000
WFP Tower B Finance Short Term Steers Trust
(Guarantor: Merrill Lynch)
5.716%, 10/08/97 (A) 84,343 84,341
----------
399,341
----------
CAPTIVE FINANCE - 1.3%
Ford Motor Credit
7.125%, 12/01/97 9,760 9,776
8.000%, 12/01/97 10,315 10,351
9.375%, 12/15/97 10,920 10,992
6.250%, 02/26/98 4,000 4,000
9.250%, 06/15/98 14,415 14,733
----------
49,852
----------
DIVERSIFIED FINANCE - 2.3%
American General Finance
8.250%, 01/15/98 11,500 11,582
Associates of North America
7.250%, 05/15/98 3,660 3,690
5.250%, 09/01/98 5,000 4,973
6.500%, 09/09/98 18,650 18,750
Beneficial
8.220%, 06/15/98 11,865 12,054
General Electric Capital
5.050%, 02/09/98 4,000 3,983
Household Finance
7.550%, 03/16/98 12,450 12,527
International Lease Finance
5.870%, 02/13/98 10,850 10,848
5.625%, 03/01/98 6,450 6,434
8.350%, 10/01/98 6,469 6,622
----------
91,463
----------
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATEMENTS OF NET ASSETS
September 30, 1997
PRIME OBLIGATIONS FUND (CONTINUED)
DESCRIPTION PAR (000) VALUE (000)
- -----------------------------------------------------------------------------
DOMESTIC BANKS - 3.0%
Credit Suisse First Boston
6.148%, 06/02/98 (B) $ 8,000 $ 8,015
SMM Trust 1996-D
(Guarantor: Morgan Guaranty)
5.706%, 10/28/97 (A) (B) 110,000 110,000
----------
118,015
----------
FINANCIAL SERVICES - 0.1%
Goldman Sachs
6.100%, 04/15/98 3,000 3,004
----------
FOREIGN FUNDING CORPORATIONS - 6.4%
Beta Finance
5.870%, 01/30/98 (B) 30,000 30,016
Salts III Cayman Island Series 1997-1
(Guarantor: Bankers Trust)
6.064%, 12/18/97 (B) 100,000 100,000
5.943%, 01/23/98 (B) 80,000 80,000
Sigma Finance
5.870%, 01/20/98 (B) 15,000 14,986
5.915%, 03/05/98 (B) 27,000 26,995
----------
251,997
----------
INSURANCE - 7.0%
Anchor National Life Insurance Investment
5.670%, 10/01/97 (A) (C) 75,000 75,000
Commonwealth Life Insurance
5.806%, 10/01/97 (A) (C) 125,000 125,000
Sun Life Insurance of America
6.000%, 10/01/97 (A) (C) 75,000 75,000
----------
275,000
----------
TOTAL CORPORATE OBLIGATIONS
(Cost $1,188,672) 1,188,672
----------
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATEMENTS OF NET ASSETS
September 30, 1997
PRIME OBLIGATIONS FUND (CONTINUED)
DESCRIPTION PAR (000) VALUE (000)
- -----------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT - 7.9%
Bankers Trust
6.000%, 09/10/98 $ 35,000 $ 34,981
FCC National Bank of Wilmington
5.725%, 01/07/98 50,000 49,990
Mercantile Safe Deposit & Trust
5.716%, 10/01/97 (A) 20,000 20,000
5.706%, 10/06/97 (A) 20,000 20,000
Mercantile Safe Deposit & Trust
5.160%, 03/02/98 5,640 5,624
Societe Generale Institutional
6.585%, 10/01/97 (A) 100,000 99,939
Societe Generale Institutional
5.770%, 01/09/98 25,000 24,971
5.800%, 01/13/98 25,000 24,999
6.340%, 04/16/98 20,000 19,996
6.105%, 05/26/98 10,000 10,005
----------
TOTAL CERTIFICATES OF DEPOSIT
(Cost $310,505) 310,505
----------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 4.2%
Export-Import Bank
5.779%, 10/15/97 (A) (B) 70,455 70,445
Export-Import Bank/KA Leasing
5.739%, 10/15/97 (A) (B) 36,163 36,163
SLMA
5.410%, 10/07/97 (A) 21,150 21,148
5.320%, 10/07/97 (A) 38,400 38,191
U.S. AID
5.890%, 10/07/97 (A) 1,250 1,248
----------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $167,195) 167,195
----------
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATEMENTS OF NET ASSETS
September 30, 1997
PRIME OBLIGATIONS FUND (CONTINUED)
DESCRIPTION PAR (000) VALUE (000)
- -----------------------------------------------------------------------------
LOAN PARTICIPATION CERTIFICATES - 3.3%
Barclays Bank (Morgan Stanley)
5.570%, 10/15/97 $ 50,000 $ 50,000
5.560%, 10/16/97 50,000 50,000
Toronto Dominion Bank
(National Rural Utilities)
5.570%, 10/03/97 30,000 30,000
----------
TOTAL LOAN PARTICIPATION CERTIFICATES
(Cost $130,000) 130,000
----------
ASSET-BACKED SECURITY - 2.8%
CARCO Auto Loan Master Trust 1993-2 A1
5.575%, 10/15/97 (A) 111,500 111,500
----------
TOTAL ASSET-BACKED SECURITY
(Cost $111,500) 111,500
----------
REPURCHASE AGREEMENT - 2.0%
Nomura Securities
6.100%, dated 09/30/97, matures 10/01/97,
repurchase price $80,320,608 (collateralized
by U.S. Treasury Instruments: total market
value $81,914,140) 80,307 80,307
----------
TOTAL REPURCHASE AGREEMENT
(Cost $80,307) 80,307
----------
TOTAL INVESTMENTS - 100.0%
(Cost $3,948,538) 3,948,538
----------
OTHER ASSETS AND LIABILITIES, NET - 0.0% 678
----------
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATEMENTS OF NET ASSETS
September 30, 1997
PRIME OBLIGATIONS FUND (CONTINUED)
DESCRIPTION VALUE (000)
- -----------------------------------------------------------------------------
NET ASSETS:
Portfolio Shares - Institutional Class ($.01 par value -
20 billion authorized) based on 3,615,864,191 outstanding
shares 3,615,864
Portfolio Shares - Retail Class A ($.01 par value -
20 billion authorized) based on 218,262,281 outstanding
shares $ 218,262
Portfolio Shares - Retail Class B ($.01 par value -
20 billion authorized) based on 2,020,273 outstanding
shares 2,020
Portfolio Shares - Corporate Trust Class ($.01 par value -
20 billion authorized) based on 113,070,148 outstanding
shares 113,070
----------
TOTAL NET ASSETS - 100.0% $3,949,216
----------
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION
PRICE PER SHARE - INSTITUTIONAL CLASS $ 1.00
----------
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION
PRICE PER SHARE - RETAIL CLASS A $ 1.00
----------
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION
PRICE PER SHARE - RETAIL CLASS B (1) $ 1.00
----------
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION
PRICE PER SHARE - CORPORATE TRUST CLASS $ 1.00
----------
(1)Retail Class B has a contingent deferred sales charge. For a description of
possible redemption charge, see the notes to the financial statements.
(A)Variable Rate Security - the rate reported on the Statement of Net Assets
is the rate in effect as of September 30, 1997. The date shown is the next
reset date.
(B)Security sold within the terms of a private placement memorandum, exempt
from registration under section 4(2) or 144A of the Securities Act of 1933,
as amended, and may be sold only to dealers in that program or other
"accredited investors." These securities have been determined to be liquid
under guidelines established by the Board of Directors.
(C)Private placement securities - considered illiquid investments.
AID--Agency for International Development
LOC--Letter of Credit
SLMA--Student Loan Marketing Association
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATEMENTS OF NET ASSETS
September 30, 1997
GOVERNMENT OBLIGATIONS FUND
DESCRIPTION PAR (000) VALUE (000)
- -----------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 51.1%
Export-Import Bank
5.779%, 10/15/97 (A) (B) $ 30,000 $ 29,996
5.739%, 10/15/97 (A) (B) 18,198 18,199
5.750%, 10/15/97 (A) (B) 25,000 25,000
FFCB
5.790%, 10/01/97 (A) 20,000 20,019
5.450%, 03/03/98 22,000 21,954
5.900%, 06/02/98 20,000 20,013
5.750%, 07/01/98 7,000 7,000
FHLB
5.760%, 10/01/97 5,000 5,000
5.790%, 10/01/97 (A) 13,000 12,982
6.000%, 10/01/97 (A) 25,000 25,021
5.505%, 10/02/97 45,600 45,593
5.589%, 12/04/97 (A) 20,000 19,995
5.490%, 01/02/98 10,000 9,995
5.650%, 01/07/98 4,000 4,000
5.960%, 06/09/98 3,000 3,002
5.760%, 07/08/98 8,440 8,440
5.755%, 09/30/98 14,750 14,750
FHLMC
5.443%, 10/20/97 (A) 50,000 49,982
FNMA
5.460%, 10/01/97 (A) 50,000 49,996
5.680%, 10/07/97 22,380 22,380
9.550%, 11/10/97 3,700 3,716
5.420%, 12/16/97 10,000 9,998
5.480%, 01/02/98 16,350 16,332
6.080%, 05/06/98 15,000 15,009
5.630%, 08/14/98 15,000 14,976
SLMA
5.250%, 10/07/97 (A) 30,000 30,000
5.320%, 10/07/97 (A) 14,000 13,983
5.410%, 10/07/97 (A) 15,000 15,000
5.615%, 10/29/97 30,000 30,000
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATEMENTS OF NET ASSETS
September 30, 1997
GOVERNMENT OBLIGATIONS FUND (CONTINUED)
DESCRIPTION PAR (000) VALUE (000)
- -----------------------------------------------------------------------------
5.850%, 06/10/98 $ 10,000 $ 10,005
5.600%, 08/11/98 15,000 14,977
5.820%, 09/16/98 14,400 14,408
U.S. AID
5.510%, 10/07/97 (A) 28,000 28,005
5.560%, 10/07/97 (A) 850 850
5.764%, 10/07/97 (A) 15,000 15,000
5.774%, 10/07/97 (A) 10,000 9,988
----------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $655,564) 655,564
----------
OTHER U.S. GOVERNMENT OBLIGATIONS - 9.9%
Downey Savings & Loan
(LOC: FHLB of San Francisco)
5.686%, 10/24/97 20,000 19,929
5.465%, 11/18/97 25,000 24,825
5.680%, 12/05/97 10,000 9,902
5.680%, 03/27/98 9,000 8,758
Secondary Market Services
(LOC: SLMA of San Francisco)
5.526%, 10/06/97 23,066 23,048
5.497%, 10/20/97 20,871 20,811
5.524%, 10/22/97 20,000 19,936
----------
TOTAL OTHER U.S. GOVERNMENT OBLIGATIONS
(Cost $127,209) 127,209
----------
REPURCHASE AGREEMENTS - 38.9%
Lehman Brothers
6.000%, dated 09/30/97, matures 10/01/97,
repurchase price $119,552,922 (collateralized by
U.S. Treasury Instruments: total market value
$121,923,780) 119,533 119,533
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATEMENTS OF NET ASSETS
September 30, 1997
GOVERNMENT OBLIGATIONS FUND (CONTINUED)
DESCRIPTION PAR (000) VALUE (000)
- -----------------------------------------------------------------------------
Nomura Securities
6.100%, dated 09/30/97, matures 10/01/97,
repurchase price $260,044,056 (collateralized
by U.S. Treasury Instruments: total market
value $265,200,538) $ 260,000 $ 260,000
Prudential Securities
6.080%, dated 09/30/97, matures 10/01/97,
repurchase price $120,020,267 (collateralized
by U.S. Treasury and Government Agency
Instruments: total market value $122,401,199) 120,000 120,000
----------
TOTAL REPURCHASE AGREEMENTS
(Cost $499,533) 499,533
----------
TOTAL INVESTMENTS - 99.9%
(Cost $1,282,306) 1,282,306
----------
OTHER ASSETS AND LIABILITIES, NET - 0.1% (C) 1,089
----------
NET ASSETS:
Portfolio Shares - Institutional Class ($.01 par value -
20 billion authorized) based on 946,221,708 outstanding
shares $ 946,222
Portfolio Shares - Corporate Trust Class ($.01 par value -
20 billion authorized) based on 337,210,778 outstanding
shares 337,210
Accumulated net realized loss on investments (37)
----------
TOTAL NET ASSETS - 100.0% $1,283,395
----------
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION
PRICE PER SHARE - INSTITUTIONAL CLASS $ 1.00
----------
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION
PRICE PER SHARE - CORPORATE TRUST CLASS $ 1.00
----------
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATEMENTS OF NET ASSETS
September 30, 1997
GOVERNMENT OBLIGATIONS FUND (CONTINUED)
- --------------------------------------------------------------------------------
(A)Variable Rate Security - the rate reported on the Statement of Net Assets
is the rate in effect as of September 30, 1997. The date shown is the next
reset date.
(B)Security sold within terms of a private placement memorandum, exempt from
registration under Section 4(2) or 144A of the Securities Act of 1933, as
amended, and may be sold only to dealers in that program or other
"accredited investors." These securities have been determined to be liquid
under guidelines established by the Board of Directors.
(C)Other assets and liabilities representing greater than five percent of
total net assets include the following:
Cash collateral received for securities on loan $ 144,884
Payable upon return of securities on loan $ (144,884)
AID--Agency for International Development
FFCB--Federal Farm Credit Bank
FHLB--Federal Home Loan Bank
FHLMC--Federal Home Loan Mortgage Corporation
FNMA--Federal National Mortgage Association
LOC--Letter of Credit
SLMA--Student Loan Marketing Association
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATEMENTS OF NET ASSETS
September 30, 1997
TREASURY OBLIGATIONS FUND
DESCRIPTION PAR (000) VALUE (000)
- -----------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS - 19.1%
U.S. Treasury Bills
5.530%, 12/11/97 $ 25,000 $ 24,741
5.650%, 01/08/98 50,000 49,258
5.525%, 02/05/98 50,000 49,074
5.910%, 03/05/98 50,000 48,794
5.945%, 04/02/98 50,000 48,571
5.880%, 04/30/98 25,000 24,187
5.590%, 05/28/98 25,000 24,118
5.570%, 08/20/98 25,000 23,817
U.S. Treasury Notes
5.625%, 10/31/97 45,000 45,004
5.750%, 10/31/97 25,000 25,003
7.875%, 01/15/98 50,000 50,320
7.875%, 04/15/98 50,000 50,517
5.875%, 04/30/98 25,000 24,990
6.125%, 05/15/98 50,000 50,058
8.250%, 07/15/98 50,000 50,948
5.250%, 07/31/98 50,000 49,832
6.125%, 08/31/98 75,000 75,294
----------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $714,526) 714,526
----------
REPURCHASE AGREEMENTS - 81.1%
Bear Stearns
6.050%, dated 09/30/97, matures 10/01/97,
repurchase price $450,075,625 (collateralized
by U.S. Treasury STRIPS: total market
value $458,982,000) 450,000 450,000
BT Securities
5.460%, dated 09/25/97, matures 10/01/97,
repurchase price $180,163,800 (collateralized
by U.S. Treasury Instruments: total market
value $183,583,000) 180,000 180,000
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATEMENTS OF NET ASSETS
September 30, 1997
TREASURY OBLIGATIONS FUND (CONTINUED)
DESCRIPTION PAR (000) VALUE (000)
- -----------------------------------------------------------------------------
Donaldson, Lufkin & Jenrette
6.070%, dated 09/30/97, matures 10/01/97,
repurchase price $590,099,481 (collateralized
by U.S. Treasury Instruments: total market
value $601,800,608) $ 590,000 $ 590,000
First Boston
6.050%, dated 09/30/97, matures 10/01/97,
repurchase price $180,030,250 (collateralized
by U.S. Treasury Bonds: total market
value $184,053,485) 180,000 180,000
First Union
5.470%, dated 09/25/97, matures 10/01/97,
repurchase price $180,164,100 (collateralized
by U.S. Treasury Instruments: total market
value $183,658,000) 180,000 180,000
Goldman Sachs
5.460%, dated 09/26/97, matures 10/01/97,
repurchase price $180,136,500 (collateralized
by U.S. Treasury Instruments: total market
value $183,789,000) 180,000 180,000
Lehman Brothers
6.000%, dated 09/30/97, matures 10/01/97,
repurchase price $179,678,942
(collateralized by U.S. Treasury Instruments:
total market value $183,242,982) 179,649 179,649
Nomura Securities
6.100%, dated 09/30/97, matures 10/01/97,
repurchase price $240,040,667 (collateralized
by U.S. Treasury Instruments: total market
value $244,800,798) 240,000 240,000
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATEMENTS OF NET ASSETS
September 30, 1997
TREASURY OBLIGATIONS FUND (CONTINUED)
DESCRIPTION PAR (000) VALUE (000)
- -----------------------------------------------------------------------------
Prudential Securities
6.080%, dated 09/30/97, matures 10/01/97,
repurchase price $180,030,400 (collateralized
by U.S. Treasury Note: total market
value $183,600,671) $ 180,000 $ 180,000
Smith Barney
6.100%, dated 09/30/97, matures 10/01/97,
repurchase price $100,016,944 (collateralized
by U.S. Treasury Instruments: total market
value $102,000,203) 100,000 100,000
Societe Generale
6.100%, dated 09/30/97, matures 10/01/97,
repurchase price $180,030,500 (collateralized
by U.S. Treasury Instruments: total market
value $183,604,000) 180,000 180,000
UBS Securities
6.050%, dated 09/30/97, matures 10/01/97,
repurchase price $400,067,222 (collateralized
by U.S. Treasury Notes: total market
value $408,002,428) 400,000 400,000
----------
TOTAL REPURCHASE AGREEMENTS
(Cost $3,039,649) 3,039,649
----------
TOTAL INVESTMENTS - 100.2%
(Cost $3,754,175) 3,754,175
----------
OTHER ASSETS AND LIABILITIES, NET - (0.2%) (9,163)
----------
NET ASSETS:
Portfolio Shares - Institutional Class ($.01 par value -
20 billion authorized) based on 897,798,054 outstanding
shares $ 897,799
Portfolio Shares - Corporate Trust Class ($.01 par value -
20 billion authorized) based on 2,847,200,292 outstanding
shares 2,847,200
Accumulated net realized gain on investments 13
----------
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATEMENTS OF NET ASSETS
September 30, 1997
TREASURY OBLIGATIONS FUND (CONTINUED)
DESCRIPTION VALUE (000)
- -----------------------------------------------------------------------------
TOTAL NET ASSETS - 100.0% $3,745,012
----------
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION
PRICE PER SHARE - INSTITUTIONAL CLASS $ 1.00
----------
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION
PRICE PER SHARE - CORPORATE TRUST CLASS $ 1.00
----------
STRIPS--Separately Trading of Registered Interest and Principal of Securities
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATEMENTS OF OPERATIONS
September 30, 1997
<TABLE>
<CAPTION>
PRIME GOVERNMENT TREASURY
OBLIGATIONS OBLIGATIONS OBLIGATIONS
FUND FUND FUND
.......... ........... ...........
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $210,069 $ 67,081+ $170,423
-------- -------- --------
EXPENSES:
INVESTMENT ADVISORY FEES 14,886 4,856 12,433
Waiver of investment advisory fees (2,485) (836) (2,528)
Distribution fees - Retail Class A 432 -- --
Distribution fees - Retail Class B 31 -- --
Distribution fees - Corporate Trust Class 223 485 3,609
Administrator fees 2,376 776 1,976
Custodian fees 1,119 359 932
Registration fees 281 99 666
Professional fees 200 71 161
Transfer agent fees 139 44 82
Printing 116 45 110
Directors' fees 81 26 68
Amortization of organizational costs -- -- 4
Other 48 25 85
-------- -------- --------
NET EXPENSES BEFORE EXPENSES PAID INDIRECTLY 17,447 5,950 17,598
Less: Expenses paid indirectly (11) (1) --
-------- -------- --------
TOTAL NET EXPENSES 17,436 5,949 17,598
======== ======== ========
Investment income - net 192,633 61,132 152,825
-------- -------- --------
NET REALIZED GAIN (LOSS) ON INVESTMENTS -- (6) 19
-------- -------- --------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $192,633 $ 61,126 $152,844
======== ======== ========
</TABLE>
+ Includes income from securities lending program. See the Notes to the
Financial Statements.
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS (000)
<TABLE>
<CAPTION>
PRIME
OBLIGATIONS FUND
...........................
10/1/96 10/1/95
TO TO
9/30/97 9/30/96
----------- ------------
<S> <C> <C>
OPERATIONS:
INVESTMENT INCOME - NET $ 192,633 $ 146,306
Net realized gain (loss) on investments -- 4
----------- ------------
Net increase in net assets resulting from operations 192,633 146,310
----------- ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
INVESTMENT INCOME - NET:
Institutional class (176,476) (137,264)
Retail class A (8,570) (6,263)
Retail class B (131) (30)
Corporate Trust class (7,465) (2,749)
Net realized gain on investments
Institutional class -- --
Retail class A -- --
Retail class B -- --
Corporate Trust class -- --
----------- ------------
TOTAL DISTRIBUTIONS (192,642) (146,306)
=========== ============
CAPITAL SHARE TRANSACTIONS
AT NET ASSET VALUE OF $1.00 PER SHARE:
Institutional Class:
Proceeds from sales 14,572,560 15,297,762
Share issued in connection
with acquisition of Common Trust Fund Assets 140,497 --
Reinvestment of distributions 60,409 44,907
Payments for redemptions (14,323,805) (15,087,516)
----------- ------------
Increase in net assets from Institutional Class transactions 449,661 255,153
----------- ------------
Retail class A:
Proceeds from sales 620,931 315,802
Reinvestment of distributions 8,075 6,093
Payments for redemptions (545,891) (282,831)
----------- ------------
Increase in net assets from Retail Class A transactions 83,115 39,064
----------- ------------
Retail class B:
Proceeds from sales 7,242 2,605
Reinvestment of distributions 121 25
Payments for redemptions (7,107) (880)
----------- ------------
Increase in net assets from Retail Class B transactions 256 1,750
----------- ------------
Corporate Trust Class:
Proceeds from sales 714,714 522,024
Payments for redemptions (710,856) (422,547)
----------- ------------
Increase in net assets from Corporate Trust Class transactions 3,858 99,477
----------- ------------
Increase in net assets from capital share transactions 536,890 395,444
----------- ------------
Total increase in net assets 536,881 395,448
NET ASSETS AT BEGINNING OF PERIOD 3,412,335 3,016,887
=========== ============
NET ASSETS AT END OF PERIOD (1) $ 3,949,216 $ 3,412,335
=========== ============
</TABLE>
(1)Includes undistributed net investment income (000) of $0 and $9 for Prime
Obligations Fund, $0 and $35 for Government Obligations Fund, and $0 and $31
for Treasury Obligations Fund at September 30, 1997 and September 30, 1996,
respectively.
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS (000)
GOVERNMENT TREASURY
OBLIGATIONS FUND OBLIGATIONS FUND
.......................... ...........................
10/1/96 10/1/95 10/1/96 10/1/95
to to to to
9/30/97 9/30/96 9/30/97 9/30/96
----------- ----------- ----------- ------------
$ 61,132 $ 48,394 $ 152,825 $ 76,326
(6) 5 19 (6)
----------- ----------- ----------- ------------
61,126 48,399 152,844 76,320
----------- ----------- ----------- ------------
(45,205) (36,142) (35,311) (11,845)
-- -- -- --
-- -- -- --
(15,962) (12,252) (117,545) (64,450)
-- -- -- (5)
-- -- -- --
-- -- -- --
-- -- -- (26)
----------- ----------- ----------- ------------
(61,167) (48,394) (152,856) (76,326)
=========== =========== =========== ============
5,674,757 6,156,036 5,288,369 2,598,130
-- -- 6,884 --
24,252 20,243 4,510 4,174
(5,530,377) (5,949,974) (4,719,356) (2,402,082)
----------- ----------- ----------- ------------
168,632 226,305 580,407 200,222
----------- ----------- ----------- ------------
-- -- -- --
-- -- -- --
-- -- -- --
----------- ----------- ----------- ------------
-- -- -- --
----------- ----------- ----------- ------------
-- -- -- --
-- -- -- --
-- -- -- --
----------- ----------- ----------- ------------
-- -- -- --
----------- ----------- ----------- ------------
1,115,568 747,717 6,989,426 5,207,698
(1,047,740) (677,196) (5,758,331) (4,630,381)
----------- ----------- ----------- ------------
67,828 70,521 1,231,095 577,317
----------- ----------- ----------- ------------
236,460 296,826 1,811,502 777,539
----------- ----------- ----------- ------------
236,419 296,831 1,811,490 777,533
1,046,976 750,145 1,933,522 1,155,989
=========== =========== =========== ============
$ 1,283,395 $ 1,046,976 $ 3,745,012 $ 1,933,522
=========== =========== =========== ============
<PAGE>
FINANCIAL HIGHLIGHTS
September 30, 1997
NET ASSET DIVIDENDS NET ASSET
VALUE NET FROM NET VALUE
BEGINNING INVESTMENT INVESTMENT END OF
OF PERIOD INCOME INCOME PERIOD
.....................................................
PRIME OBLIGATIONS FUND
INSTITUTIONAL CLASS
1997 $1.00 $ 0.052 $ (0.052) $ 1.00
1996 1.00 0.052 (0.052) 1.00
1995 1.00 0.055 (0.055) 1.00
1994 1.00 0.035 (0.035) 1.00
1993 1.00 0.030 (0.030) 1.00
1992 1.00 0.039 (0.039) 1.00
1991 1.00 0.064 (0.064) 1.00
1990(1) 1.00 0.046 (0.046) 1.00
RETAIL CLASS A
1997 $1.00 $ 0.049 $ (0.049) $ 1.00
1996 1.00 0.050 (0.050) 1.00
1995(2) 1.00 0.038 (0.038) 1.00
RETAIL CLASS B
1997 $1.00 $ 0.042 $ (0.042) $ 1.00
1996 1.00 0.042 (0.042) 1.00
1995(3) 1.00 0.032 (0.032) 1.00
CORPORATE TRUST CLASS
1997 $1.00 $ 0.050 $ (0.050) $ 1.00
1996 1.00 0.051 (0.051) 1.00
1995(4) 1.00 0.038 (0.038) 1.00
GOVERNMENT OBLIGATIONS FUND
INSTITUTIONAL CLASS
1997 $1.00 $ 0.051 $ (0.051) $ 1.00
1996 1.00 0.051 (0.051) 1.00
1995 1.00 0.054 (0.054) 1.00
1994 1.00 0.034 (0.034) 1.00
1993 1.00 0.028 (0.028) 1.00
1992 1.00 0.038 (0.038) 1.00
1991 1.00 0.060 (0.060) 1.00
1990(1) 1.00 0.045 (0.045) 1.00
CORPORATE TRUST CLASS
1997 $1.00 $ 0.049 $ (0.049) $ 1.00
1996 1.00 0.050 (0.050) 1.00
1995(2) 1.00 0.038 (0.038) 1.00
TREASURY OBLIGATIONS FUND
INSTITUTIONAL CLASS
1997 $1.00 $ 0.050 $ (0.050) $ 1.00
1996 1.00 0.050 (0.050) 1.00
1995(4) 1.00 0.038 (0.038) 1.00
CORPORATE TRUST CLASS
1997 $1.00 $ 0.049 $ (0.049) $ 1.00
1996 1.00 0.049 (0.049) 1.00
1995 1.00 0.051 (0.051) 1.00
1994(5) 1.00 0.031 (0.031) 1.00
+ Returns are for the period indicated and have not been annualized.
(1)Commenced operations on March 1, 1990. All ratios for the period have been
annualized.
(2)Commenced operations on January 21, 1995. All ratios for the period have
been annualized.
(3)Commenced operations on January 23, 1995. All ratios for the period have
been annualized.
(4)Commenced operations on January 24, 1995. All ratios for the period have
been annualized.
(5)Commenced operations on October 4, 1993. All ratios for the period have been
annualized.
The accompanying notes are an integral part of the financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS
September 30, 1997
RATIO OF
RATIO OF NET EXPENSES TO
RATIO OF INVESTMENT AVERAGE
NET ASSETS EXPENSES TO INCOME TO NET ASSETS
TOTAL END OF AVERAGE AVERAGE (EXCLUDING
RETURN PERIOD (000) NET ASSETS NET ASSETS WAIVERS)
..................................................................
5.32% $3,615,873 0.45% 5.19% 0.52%
5.34 3,166,213 0.45 5.20 0.54
5.64 2,911,055 0.45 5.53 0.60
3.56 1,307,347 0.45 3.58 0.60
3.02 682,988 0.45 2.97 0.62
4.02 203,765 0.45 3.90 0.59
6.60 193,650 0.45 6.43 0.57
4.73+ 239,231 0.45 7.90 0.55
5.06% $ 218,261 0.70% 4.95% 0.77%
5.08 135,146 0.70 4.94 0.79
3.84+ 96,083 0.70 5.43 0.82
4.27% $ 2,018 1.45% 4.17% 1.52%
4.29 1,763 1.45 4.15 1.54
3.28+ 14 1.45 4.70 1.57
5.16% $ 113,064 0.60% 5.02% 0.67%
5.18 109,213 0.60 4.98 0.69
3.86+ 9,735 0.60 5.51 0.72
5.20% $ 946,196 0.45% 5.07% 0.52%
5.24 777,594 0.45 5.10 0.54
5.55 551,286 0.45 5.44 0.60
3.48 455,869 0.45 3.61 0.61
2.87 237,331 0.45 2.83 0.65
3.85 93,770 0.45 3.71 0.64
6.22 72,824 0.45 5.90 0.68
4.56+ 29,704 0.45 7.60 0.98
5.04% $ 337,199 0.60% 4.92% 0.67%
5.08 269,382 0.60 4.96 0.69
3.85+ 198,859 0.60 5.45 0.70
5.14% $ 897,797 0.45% 5.03% 0.53%
5.15 317,392 0.45 5.00 0.55
3.83+ 117,171 0.45 5.50 0.55
4.98% $2,847,215 0.60% 4.88% 0.68%
5.00 1,616,130 0.60 4.86 0.70
5.22 1,038,818 0.60 5.13 0.70
3.12+ 746,090 0.58 3.19 0.68
<PAGE>
NOTES TO FINANCIAL STATEMENTS
September 30, 1997
1 ORGANIZATION
The First American Prime Obligations Fund, Government Obligations Fund and
Treasury Obligations Fund are funds offered by First American Funds, Inc.
(FAF). FAF is registered under the Investment Company Act of 1940, as amended,
as open end, management investment companies. The FAF's articles of
incorporation permit the Board of Directors to create additional funds in the
future.
FAF offers Class A, Class B, Class C and Class D shares. Class B shares
are only available pursuant to an exchange for Class B shares of another fund
in the First American Investment Funds, Inc. Class B shares may also be subject
to a contingent deferred sales charge for six years and automatically convert
to Class A shares after eight years. Class C and D shares are offered only to
qualifying institutional investors. Class A and B shares are not offered by the
Government Obligations Fund or Treasury Obligations Fund.
The Funds' prospectus provides a description of each Fund's investment
objectives, policies and strategies. All classes of shares in FAF have
identical voting, dividend, liquidation and other rights, and the same terms
and conditions, except that the level of distribution fees charged may differ
among classes.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies followed by the Fund's are as follows:
SECURITY VALUATION -- Investment securities held are stated at amortized
cost which approximates market value. Under the amortized cost method, any
discount or premium is amortized ratably to the maturity of the security and is
included in interest income.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
September 30, 1997
SECURITY TRANSACTIONS AND INVESTMENT INCOME -- The Funds record security
transactions on the trade date of the security purchase or sale. Interest
income, including amortization of bond premium and discount is recorded on the
accrual basis.
DISTRIBUTIONS TO SHAREHOLDERS -- Distributions from net investment income
are declared on a daily basis and are payable on the first business day of the
following month.
EXPENSES -- Expenses that are directly related to one of the funds are
charged directly to that fund. Other operating expenses are prorated to the
fund on the basis of relative net assets for each of the funds within the First
American Family of Funds (First American Funds, Inc., First American Investment
Funds, Inc., and First American Strategy Funds, Inc.). Class specific expenses,
such as the 12b-1 fees, are borne by that class. Income, other expenses and
realized and unrealized gains and losses of a fund are allocated to the
respective class on the basis of the relative net asset value each day.
FEDERAL TAXES -- It is each Fund's intention to continue to qualify as a
regulated investment company and distribute all of its taxable income.
Accordingly, no provision for Federal income taxes is required. For Federal
income tax purposes, required distributions related to realized gains from
security transactions are computed as of October 31st. The amounts of
distributions from net investment income and net realized capital gains are
determined in accordance with federal income tax regulations, which may differ
from those amounts determined under generally accepted accounting principles.
These book/tax differences are either temporary or permanent in nature.
REPURCHASE AGREEMENTS -- The Funds may enter into repurchase agreements
with member banks of the Federal Deposit Insurance Corporation or registered
broker dealers whom the Adviser or Sub-Adviser deems creditworthy under
guidelines approved by the
<PAGE>
NOTES TO FINANCIAL STATEMENTS
September 30, 1997
Board of Directors, subject to the seller's agreement to repurchase such
securities at a mutually agreed upon date and price. The repurchase price would
generally equal the price paid by the fund plus interest negotiated on the
basis of current short-term rates.
Securities pledged as collateral for repurchase agreements are held by the
custodian bank until the respective agreements mature. The Fund may also invest
in tri-party repurchase agreements. Securities held as collateral for tri-party
repurchase agreements are maintained in a segregated account by the broker's
custodian bank until the maturity of the repurchase agreement. Provisions of
the repurchase agreements ensure that the market value of the collateral,
including accrued interest thereon, is sufficient in the event of default of
the counterparty. If the counterparty defaults and the value of the collateral
declines or if the counterparty enters an insolvency proceeding, realization of
the collateral by the funds may be delayed or limited.
SECURITIES LENDING -- Each fund may lend up to one-third of the value of
its total assets to broker-dealers, banks or other institutional borrowers of
securities in order to earn additional income. The funds' policy is to maintain
collateral in the form of cash, United States' Government securities or other
high grade debt obligations equal to at least 100% of the value of securities
loaned. The collateral is then marked to market daily until the securities are
returned.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS -- The
preparation of financial statements, in conformity with generally accepted
accounting principles, requires management to make estimates and assumptions
that affect the reported amount of net assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported results of operations during the reporting period. Actual results
could differ from those estimates.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
September 30, 1997
3 FEES AND EXPENSES
Pursuant to an investment advisory agreement (the Agreement), U.S. Bank
National Association (the Adviser) manages each Fund's assets and furnishes
related office facilities, equipment, research and personnel. The Agreement
requires each fund to pay the Adviser a monthly fee based upon average daily
net assets. The fee for each of the FAF Funds is equal to an annual rate of
.40% of the average daily net assets.
Through a separate contractual agreement, First Trust National
Association, an affiliate of the Adviser, serves as the Funds' custodian. In
the Statement of Operations, expenses paid indirectly represent a reduction of
custodian fees for earnings on cash balances.
SEI Investments Distribution Co. (SIDCO) and SEI Investments Management
Corporation (SIMC) serve as distributor and administrator of the Funds,
respectively. Under the distribution plan, each of the Funds pay SIDCO a
monthly distribution fee of .25% of each Fund's average daily net assets of the
Retail Class A shares, 1.00% of the Retail Class B shares and .15% of the
Corporate Trust Class D shares, which may be used by SIDCO to provide
compensation for sales support and distribution activities. No distribution
fees are paid by Institutional Class C shares. SIMC provides administrative
services, including certain accounting, legal and shareholder services, at an
annual rate of .07% of each FAF Fund's a minimum annual fee of $50,000 per
Fund. To the extent that the aggregate net assets of FAF, First American
Investment Funds, Inc. and First American Strategy Funds, Inc. exceed $8
billion, the annual rate of each FAF fund is reduced to .055%.
In addition to the investment advisory and management fees, custodian
fees, distribution fees, administrator and transfer agent fees, each fund is
responsible for paying most other operating expenses including organization
costs, fees and expenses of outside directors,
<PAGE>
NOTES TO FINANCIAL STATEMENTS
September 30, 1997
registration fees, printing shareholder reports, legal, auditing, insurance and
other miscellaneous expenses.
For the period ended September 30, 1997, legal fees and expenses were paid
to a law firm of which the Secretary of the Funds is a partner.
DST Systems, Inc. provides transfer agent services for the Funds.
A Contingent Deferred Sales Charge (CDSC) is imposed on redemptions made
in the Retail Class B. The CDSC varies depending on the number of years from
time of payment for the purchase of Class B shares until the redemption of such
shares.
CONTINGENT DEFERRED SALES CHARGE
AS A PERCENTAGE OF DOLLAR
YEAR SINCE PURCHASE AMOUNT SUBJECT TO CHARGE
................... ................................
First 5.00%
Second 5.00%
Third 4.00%
Fourth 3.00%
Fifth 2.00%
Sixth 1.00%
Seventh 0.00%
Eighth 0.00%
4 SECURITIES LENDING TRANSACTIONS
In order to generate additional income, certain funds may lend portfolio
securities representing up to one-third of the value of total assets (which
includes collateral received for securities on loan) to broker dealers, banks,
or other institutional borrowers of securities. As with other extensions of
credit, there may be risks of delay in recovery of the securities or even loss
of rights in the collateral should the borrower of the security fail
financially. The market value of the securities on loan at September 30, 1997,
the collateral purchased with cash received and held at September 30, 1997 with
<PAGE>
NOTES TO FINANCIAL STATEMENTS
September 30, 1997
respect to such loans, and income generated during fiscal 1997 from the program
were as follows (000):
INCOME RECEIVED
MARKET VALUE OF FROM SECURITIES
FUND LOANED SECURITIES LENDING
...................... .................. ................
Government Obligations $140,753 $17
MARKET VALUE OF
COLLATERAL PURCHASED
WITH CASH RECEIVED
.............................................
REPURCHASE MONEY MARKET FIXED INCOME
FUND AGREEMENTS INSTRUMENT SECURITIES
- ------------------------ ------------ -------------- -------------
Government Obligations $144,884 $ -- $ --
5 COMMON TRUST FUND CONVERSIONS
On August 8, 1997 a common trust fund conversion took place. Certain
Common Trust Funds of the Adviser and its affiliates were converted into FAF.
The Funds involved in the conversion are as follows:
COMMON TRUST FUND ACQUIRING FUND
............................................ ........................
US Bancorp Daily Intermediate Trust Prime Obligations Fund
US Bancorp Daily Intermediate Trust Treasury Treasury Obligations Fund
The assets which consisted of securities, and related receivable were
converted on a tax-free basis. The number of shares issued for each fund and
the net assets of each fund (including net unrealized gain/loss) immediately
before the conversion were as follows:
NET
UNREALIZED
COMMON TRUST FUND ASSETS GAIN/(LOSS)
.............................. .............. ...........
US Bankcorp Daily Intermediate
Trust $140,497,316 $ --
US Bankcorp Daily Intermediate
Trust Treasury 6,884,236 --
MUTUAL FUND NET ASSETS SHARES ISSUED
......................... .............. .............
Prime Obligations Fund $3,851,371,412 140,497,316
Treasury Obligations Fund 3,574,473,062 6,884,236
<PAGE>
NOTES TO FINANCIAL STATEMENTS
September 30, 1997
The value and number of shares issued in exchange for each Common Trust
Fund's assets and shares outstanding in the tax-free conversions are included
in the capital share transactions of the Institutional Class in the Statement
of Changes in Net Assets for each respective fund.
6 SUBSEQUENT EVENTS
The Board of Directors of the Funds and Shareholders of the Qualivest
Funds have approved the reorganization of the following Qualivest Funds into
the First American Funds, on November 21, 1997:
QUALIVEST ACQUIRED FUND FAF ACQUIRING FUND
............................... .........................
Money Market Fund Prime Obligations Fund
U.S. Treasury Money Market Fund Treasury Obligations Fund
Tax Free Money Market Fund Tax Free Obligations Fund
(New FAF Fund)
The acquisition will be accounted for by the method of accounting for tax
free mergers of investment companies (sometimes referred to as the pooling
without restatement method). Under the proposed Agreement and Plan of
Reorganization, Qualivest Class A and Class C shares will be exchanged for
Retail Class A shares of FAF and Qualivest Class Q and Class Y shares will be
exchanged for Institutional shares of FAF.
<PAGE>
NOTICE TO SHAREHOLDERS
September 30, 1997
THE INFORMATION SET FORTH BELOW IS FOR THE FUND'S FISCAL YEAR AS REQUIRED BY
FEDERAL LAWS. SHAREHOLDERS, HOWEVER, MUST REPORT DISTRIBUTIONS ON A CALENDAR
YEAR BASIS FOR INCOME TAX PURPOSES WHICH MAY INCLUDE DISTRIBUTIONS FOR PORTIONS
OF TWO FISCAL YEARS OF THE FUND. ACCORDINGLY, THE INFORMATION NEEDED BY
SHAREHOLDERS FOR INCOME TAX PURPOSES WILL BE SENT TO THEM IN EARLY 1998. PLEASE
CONSULT YOUR TAX ADVISER FOR PROPER TREATMENT OF THIS INFORMATION.
Dear First American Fund Shareholders:
For the fiscal year ended September 30, 1997, each fund has designated
distributions as follows:
(A) (B)
ORDINARY INCOME TOTAL
DISTRIBUTIONS DISTRIBUTIONS
FUND (TAX BASIS) (TAX BASIS)
.................................. ............... .............
Prime Obligations 100% 100%
Government Obligations 100% 100%
Treasury Obligations 100% 100%
* Item (A) is based on a percentage of the fund's total distributions.
<PAGE>
FIRST AMERICAN FUNDS, INC.
1 Freedom Valley Drive
Oaks, Pennsylvania 19456
INVESTMENT ADVISER
FIRST ASSET MANAGEMENT
601 Second Avenue South
Minneapolis, Minnesota 55402
CUSTODIAN
FIRST TRUST NATIONAL ASSOCIATION
180 East Fifth Street
St. Paul, Minnesota 55101
ADMINISTRATOR
SEI INVESTMENTS MANAGEMENT CORPORATION
1 Freedom Valley Drive
Oaks, Pennsylvania 19456
TRANSFER AGENT
DST SYSTEMS, INC.
210 West Tenth Street
Kansas City, Missouri 64105
DISTRIBUTOR
SEI INVESTMENTS DISTRIBUTION CO.
1 Freedom Valley Drive
Oaks, Pennsylvania 19456
INDEPENDENT AUDITORS
KPMG PEAT MARWICK LLP
90 South Seventh Street
Minneapolis, Minnesota 55402
COUNSEL
DORSEY & WHITNEY LLP
220 South Sixth Street
Minneapolis, Minnesota 55402
This report and the financial statements contained herein are submitted for the
general information of the shareholders of the corporation. The report is not
authorized for distribution to prospective investors in the corporation unless
preceded or accompanied by an effective prospectus for each of the Funds
included. Shares in the Funds are not deposits or obligations of, or guaranteed
or endorsed by, U.S. Bank or any of its affiliates. Such shares are also not
federally insured by the Federal Deposit Insurance Corporation, the Federal
Reserve Board, or any other agency. Investment in the shares involve investment
risk including loss of principal amount invested.
FAF-1303 11/97
