1933 Act Registration No. 2-74747
1940 Act Registration No. 811-3313
As filed with the Securities and Exchange Commission on November 26, 1999
================================================================================
FORM N-1A
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|
Pre-Effective Amendment No. ___ | |
Post-Effective Amendment No. 32 |X|
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 |X|
Amendment No. 32
FIRST AMERICAN FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
OAKS, PENNSYLVANIA 19456
(Address of Principal Executive Offices) (Zip Code)
(610) 676-1924
(Registrant's Telephone Number, including Area Code)
JAMES R. FOGGO
C/O SEI INVESTMENTS COMPANY, OAKS, PENNSYLVANIA 19456
(Name and Address of Agent for Service)
COPIES TO:
Christopher O. Petersen
U.S. Bank - MPFP2016
601 Second Avenue South
Minneapolis, Minnesota 55402
Kathleen L. Prudhomme, Esq.
Dorsey & Whitney LLP
220 South Sixth Street
Minneapolis, Minnesota 55402
It is proposed that this filing shall become effective (check
appropriate box):
|X| immediately upon filing pursuant to paragraph (b) of rule 485
| | on February 1, 1999 pursuant to paragraph (b) of rule 485
| | 60 days after filing pursuant to paragraph (a)(1) of Rule 485
| | on February 1, 1999 pursuant to paragraph (a)(1) of Rule 485
| | 75 days after filing pursuant to paragraph (a)(2) of Rule 485
| | on (date) pursuant to paragraph (a)(2) of Rule 485
================================================================================
<PAGE>
December 1, 1999
MONEY MARKET FUNDS
CLASS A, CLASS B AND CLASS C SHARES
Government Obligations Fund
Prime Obligations Fund
Tax Free Obligations Fund
Treasury Obligations Fund
FIRST AMERICAN
FUNDS, INC.
PROSPECTUS
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved the shares of these funds, or determined if the
information in this prospectus is accurate or complete. Any statement to the
contrary is a criminal offense.
[LOGO] FIRST AMERICAN (R)
THE POWER OF DISCIPLINED INVESTING(R)
<PAGE>
TABLE OF
CONTENTS
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FUND SUMMARIES
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Government Obligations Fund 2
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Prime Obligations Fund 4
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Tax Free Obligations Fund 6
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Treasury Obligations Fund 8
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POLICIES & SERVICES
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Buying Shares 10
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Selling Shares 13
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Managing Your Investment 14
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ADDITIONAL INFORMATION
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Management 16
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More About The Funds 17
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Financial Highlights 18
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FOR MORE INFORMATION Back Cover
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<PAGE>
FUND SUMMARIES
INTRODUCTION
This section of the prospectus describes the objectives of the First American
Money Market Funds, summarizes the main investment strategies used by each fund
in trying to achieve its objectives, and highlights the risks involved with
these strategies. It also provides you with information about the performance,
fees and expenses of the funds.
AN INVESTMENT IN THE FUNDS IS NOT A DEPOSIT OF U.S. BANK NATIONAL ASSOCIATION
AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR
ANY OTHER GOVERNMENT AGENCY. ALTHOUGH THE FUNDS SEEK TO PRESERVE THE VALUE OF
YOUR INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN
THE FUNDS.
1 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS
CLASS A, CLASS B AND CLASS C SHARES
<PAGE>
FUND SUMMARIES
GOVERNMENT OBLIGATIONS FUND
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OBJECTIVE
Government Obligations Fund seeks maximum current income to the extent
consistent with the preservation of capital and maintenance of liquidity.
- --------------------------------------------------------------------------------
MAIN INVESTMENT STRATEGIES
Government Obligations Fund invests exclusively in short-term U.S. government
securities and repurchase agreements secured by U.S. government securities.
U.S. government securities are bonds or other debt obligations issued or
guaranteed as to principal and interest by the U.S. government or one of its
agencies or instrumentalities. U.S. Treasury securities and some obligations of
U.S. government agencies and instrumentalities are supported by the "full faith
and credit" of the United States government. Other U.S. government securities
are backed by the right of the issuer to borrow from the U.S. Treasury. Still
others are supported only by the credit of the issuer or instrumentality.
When selecting securities for the fund, the portfolio managers use a "top-down"
approach, looking first at general economic factors and market conditions, then
at individual securities.
To generate additional income, the fund may lend securities representing up to
one-third of the value of its total assets to broker-dealers, banks and other
institutions.
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MAIN RISKS
The main risks of investing in this fund include:
o Although the fund seeks to preserve the value of your investment at $1.00
per share, it is possible to lose money by investing in the fund. A major
change in interest rates or a default on a security or repurchase agreement
held by the fund, or a securities lending agreement entered into by the
fund, could cause the value of your investment to decline.
o The level of income you receive from the fund will be affected by movements
in short-term interest rates.
o By investing solely in U.S. government securities and repurchase agreements
secured by those securities, the fund may offer less income than a money
market fund investing in other high-quality money market securities.
- --------------------------------------------------------------------------------
FUND PERFORMANCE
Illustrations on the next page provide you with information on the fund's
volatility and performance. Of course, past performance does not guarantee
future results.
The bar chart shows you how performance of the fund's shares has varied from
year to year. The table illustrates the fund's average annual total returns over
different time periods. Both the chart and the table assume that all
distributions have been reinvested.
Information in the bar chart and the table is for the fund's Class Y shares,
which are offered through another prospectus. Class A shares commenced
operations on April 29, 1998. The classes will have substantially similar
returns, because they are invested in the same portfolio of securities. However,
Class A share returns will be lower because these shares have higher expenses.
2 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS
CLASS A, CLASS B AND CLASS C SHARES
<PAGE>
FUND SUMMARIES
GOVERNMENT OBLIGATIONS FUND (CONTINUED)
- --------------------------------------------------------------------------------
FUND PERFORMANCE (CONTINUED)
ANNUAL TOTAL RETURNS AS OF 12/31 EACH YEAR(1) BEST QUARTER:
Quarter ending 3/31/91
[BAR CHART] Total Return 1.53%
5.56% 3.34% 2.89% 4.00% 5.69% 5.13% 5.26% 5.15%
- ------------------------------------------------------ WORST QUARTER:
1991 1992 1993 1994 1995 1996 1997 1998 Quarter ending 6/30/93
Total Return 0.71%
AVERAGE ANNUAL TOTAL RETURNS Inception Since
AS OF 12/31/98 Date One Year Five Years Inception
- --------------------------------------------------------------------------------
Government Obligations Fund (Class Y) 3/1/90 5.15% 5.04% 4.92%
- --------------------------------------------------------------------------------
(1) Total return for the period from 12/31/98 to 9/30/99 was 3.46%.
- --------------------------------------------------------------------------------
FEES AND EXPENSES
The fund does not impose any sales charges (loads) or other fees when you buy,
sell or exchange shares. However, when you hold shares of the fund you
indirectly pay a portion of the fund's operating expenses. These expenses are
deducted from fund assets. The figures below are based on expenses during the
fiscal year ended September 30, 1999.(1)
- --------------------------------------------------------------------------------
SHAREHOLDER FEES CLASS A
- --------------------------------------------------------------------------------
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON PURCHASES None
MAXIMUM DEFERRED SALES CHARGE (LOAD) None
ANNUAL FUND OPERATING EXPENSES AS A % OF AVERAGE NET ASSETS
- --------------------------------------------------------------------------------
Management Fees 0.40%
Distribution and Service (12b-1) Fees 0.25%
Other Expenses 0.17%
TOTAL 0.82%
- --------------------------------------------------------------------------------
(1) Actual expenses for the fiscal year were lower than those shown in the table
because of voluntary fee waivers by the advisor. See "Additional Information
-- Financial Highlights" for effective management fees after waivers. The
net expenses the fund actually paid after waivers for the fiscal year ended
September 30, 1999, were:
Waiver of Fund Expenses (0.07)%
TOTAL ACTUAL ANNUAL OPERATING EXPENSES (AFTER WAIVERS) 0.75%
THE ADVISOR INTENDS TO WAIVE FEES DURING THE CURRENT FISCAL YEAR SO THAT TOTAL
FUND OPERATING EXPENSES DO NOT EXCEED 0.77%. FEE WAIVERS MAY BE DISCONTINUED AT
ANY TIME.
- --------------------------------------------------------------------------------
EXAMPLE This example is intended to help you compare the cost of investing in
the fund with the cost of investing in other mutual funds. It assumes that you
invest $10,000 for the time periods indicated, that your investment has a 5%
return each year, and that the fund's operating expenses remain the same.
Although your actual costs and returns may differ, based on these assumptions
your costs would be:
- --------------------------------------------------------------------------------
1 year $ 84
3 years $ 262
5 years $ 455
10 years $1,014
3 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS
CLASS A, CLASS B AND CLASS C SHARES
<PAGE>
FUND SUMMARIES
PRIME OBLIGATIONS FUND
- --------------------------------------------------------------------------------
OBJECTIVE
Prime Obligations Fund seeks maximum current income to the extent consistent
with preservation of capital and maintenance of liquidity.
- --------------------------------------------------------------------------------
MAIN INVESTMENT STRATEGIES
Prime Obligations Fund invests in high-quality short-term debt obligations,
including:
o securities issued by the U.S. government or one of its agencies or
instrumentalities;
o U.S. dollar-denominated obligations of domestic and foreign banks with total
assets of at least $500 million (including fixed and variable rate
certificates of deposit, time deposits and bankers' acceptances);
o commercial paper;
o non-convertible corporate debt securities;
o loan participation interests; and
o repurchase agreements for the securities in which the fund may invest.
When selecting securities for the fund, the portfolio managers use a "top-down"
approach, looking first at general economic factors and market conditions, then
at individual securities.
The fund may invest up to 25% of its total assets in dollar-denominated
obligations of U.S. branches of foreign banks which are subject to the same
regulation as U.S. banks. The fund also may invest up to 25% of its total
assets, collectively, in dollar-denominated obligations of foreign branches of
domestic banks, foreign banks and foreign corporations.
- --------------------------------------------------------------------------------
MAIN RISKS
The main risks of investing in this fund include:
o Although the fund seeks to preserve the value of your investment at $1.00
per share, it is possible to lose money by investing in the fund. A major
change in interest rates or a default on a security or repurchase agreement
held by the fund could cause the value of your investment to decline.
o The level of income you receive from the fund will be affected by movements
in short-term interest rates.
o Foreign securities in which the fund invests, although dollar denominated,
may present some additional risk. Political or social instability or
diplomatic developments could adversely affect the securities. There is also
the risk of possible withholding taxes, seizure of foreign deposits,
currency controls, interest limitations, or other governmental restrictions
which might affect the payment of principal or interest on securities owned
by the fund. In addition, there may be less public information available
about foreign corporations and foreign banks and their branches.
- --------------------------------------------------------------------------------
FUND PERFORMANCE
Illustrations on the next page provide you with information on the fund's
volatility and performance. Of course, past performance does not guarantee
future results.
The bar chart shows you how performance of the fund's Class A shares has varied
from year to year. The performance of Class B and Class C shares will be lower
due to their higher expenses. The table illustrates the fund's average annual
total returns over different time periods. Because Class C shares have not been
offered for a full calendar year, no performance information is presented in the
table. Both the chart and the table assume that all distributions have been
reinvested.
4 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS
CLASS A, CLASS B AND CLASS C SHARES
<PAGE>
FUND SUMMARIES
PRIME OBLIGATIONS FUND (CONTINUED)
- --------------------------------------------------------------------------------
FUND PERFORMANCE (CONTINUED)
ANNUAL TOTAL RETURNS AS OF 12/31 EACH YEAR(1) BEST QUARTER:
Quarter ending: 12/31/97
[BAR CHART] Total Return 1.29%
4.97% 5.12% 5.04%
- ------------------------------------------------- WORST QUARTER:
1996 1997 1998 Quarter ending: 12/31/98
Total Return 1.18%
AVERAGE ANNUAL TOTAL RETURNS Inception Since
AS OF 12/31/98 Date One Year Inception
- --------------------------------------------------------------------------------
Prime Obligations Fund (Class A) 1/21/95 5.04% 5.16%
Prime Obligations Fund (Class B) 1/23/95 4.28% 4.38%
- --------------------------------------------------------------------------------
(1) Total return for the period from 12/31/98 to 9/30/99 was 3.29%.
- --------------------------------------------------------------------------------
FEES AND EXPENSES
As an investor, you pay fees and expenses to buy and hold shares of the fund.
You pay shareholder fees directly when you buy or sell shares. You pay annual
fund operating expenses indirectly since they are deducted from fund assets. The
figures below are based on fund expenses during the fiscal year ended September
30, 1999.(1)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
SHAREHOLDER FEES CLASS A CLASS B CLASS C
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MAXIMUM SALES CHARGE (LOAD) None None None
MAXIMUM DEFERRED SALES CHARGE (LOAD) None 5.00%(2) 1.00%(2)
ANNUAL FUND OPERATING EXPENSES AS A % OF AVERAGE NET ASSETS
- ---------------------------------------------------------------------------------------------
Management Fees 0.40% 0.40% 0.40%
Distribution and Service (12b-1) Fees 0.25% 1.00% 1.00%
Other Expenses 0.22% 0.11% 0.11%
TOTAL 0.87% 1.51% 1.51%
- ---------------------------------------------------------------------------------------------
</TABLE>
(1) Actual expenses for the fiscal year were lower than those shown in the table
because of voluntary fee waivers by the advisor. See "Additional Information
-- Financial Highlights" for effective management fees after waivers. The
net expenses the fund actually paid after waivers for the fiscal year ended
September 30, 1999, were:
<TABLE>
<S> <C> <C> <C>
Waiver of Fund Expenses (0.07)% (0.06)% (0.06)%
TOTAL ACTUAL ANNUAL OPERATING EXPENSES (AFTER WAIVERS) 0.80% 1.45% 1.45%
</TABLE>
THE ADVISOR INTENDS TO WAIVE FEES DURING THE CURRENT FISCAL YEAR SO THAT TOTAL
FUND OPERATING EXPENSES DO NOT EXCEED 0.81%, 1.45% AND 1.45%, RESPECTIVELY, FOR
CLASS A, CLASS B AND CLASS C SHARES. FEE WAIVERS MAY BE DISCONTINUED AT ANY
TIME.
(2) Class B and Class C shares generally are available only in exchange for
Class B or Class C shares, respectively, of another First American fund. The
contingent deferred sales charge imposed when you sell your Class B or Class
C shares of Prime Obligations Fund will be based on the date you purchased
shares of the original First American fund.
- --------------------------------------------------------------------------------
EXAMPLE This example is intended to help you compare the cost of investing in
the fund with the cost of investing in other mutual funds. It assumes that you
invest $10,000 for the time periods indicated, that your investment has a 5%
return each year, and that the fund's operating expenses remain the same.
Although your actual costs and returns may differ, based on these assumptions
your costs would be:
<TABLE>
<CAPTION>
CLASS B CLASS B CLASS C CLASS C
assuming assuming no assuming assuming no
redemption redemption redemption redemption
at end of at end of at end of at end of
CLASS A each period each period each period each period
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 year $ 89 $ 654 $ 154 $ 352 $ 252
3 years $ 278 $ 877 $ 477 $ 572 $ 572
5 years $ 482 $1,024 $ 824 $ 915 $ 915
10 years $1,073 $1,629 $1,629 $1,884 $1,884
</TABLE>
5 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS
CLASS A, CLASS B AND CLASS C SHARES
<PAGE>
FUND SUMMARIES
TAX FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
OBJECTIVE
Tax Free Obligations Fund seeks maximum current income exempt from federal
income taxes consistent with the preservation of capital and maintenance of
liquidity.
- --------------------------------------------------------------------------------
MAIN INVESTMENT STRATEGIES
Tax Free Obligations Fund invests at least 80% of its total assets in
high-quality, short-term municipal securities that pay interest that is exempt
from federal income tax, including the federal alternative minimum tax.
Municipal securities are issued by state and local governments and certain U.S.
territorial possessions to finance public infrastructure projects such as
streets and highways, schools, water and sewer systems, hospitals, and airports.
They also may be issued to refinance outstanding obligations as well as to
obtain funds for general operating expenses and for loans to other public
institutions and facilities. There are two principal classifications of
municipal securities:
o general obligation bonds, which are backed by the full faith, credit and
taxing power of the issuer, and
o revenue bonds, which are payable only from the revenues generated by a
specific project or from another specific revenue source.
The balance of the fund's total assets may be invested in taxable money market
securities and municipal securities subject to the alternative minimum tax.
However, the fund currently does not intend to invest in these types of
securities.
When selecting securities for the fund, the portfolio managers use a "top-down"
approach, looking first at general economic factors and market conditions, then
at individual securities.
- --------------------------------------------------------------------------------
MAIN RISKS
The main risks of investing in this fund include:
o Although the fund seeks to preserve the value of your investment at $1.00
per share, it is possible to lose money by investing in the fund. A major
change in interest rates or a default on a security or repurchase agreement
held by the fund could cause the value of your investment to decline.
o The level of income you receive from the fund will be affected by movements
in short-term interest rates.
o The value of municipal securities owned by the fund may be adversely
affected by future changes in federal income tax laws, including rate
reductions or the imposition of a flat tax.
- --------------------------------------------------------------------------------
FUND PERFORMANCE
Illustrations on the next page provide you with information on the fund's
volatility and performance. Of course, past performance does not guarantee
future results.
The bar chart shows you how performance of the fund's shares has varied from
year to year. The table illustrates the fund's average annual total returns over
different time periods. Both the chart and the table assume that all
distributions have been reinvested.
6 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS
CLASS A, CLASS B AND CLASS C SHARES
<PAGE>
FUND SUMMARIES
TAX FREE OBLIGATIONS FUND (CONTINUED)
- --------------------------------------------------------------------------------
FUND PERFORMANCE (CONTINUED)
ANNUAL TOTAL RETURNS AS OF 12/31 EACH YEAR(1) BEST QUARTER:
Quarter ending: 6/30/98
[BAR CHART] Total Return 0.77%
2.65% 2.87% 2.85%
- ------------------------------------------------- WORST QUARTER:
1996 1997 1998 Quarter ending: 9/30/96
Total Return 0.63%
AVERAGE ANNUAL TOTAL RETURNS Inception Since
AS OF 12/31/98(2) Date One Year Inception
- --------------------------------------------------------------------------------
Tax Free Obligations Fund (Class A) 1/9/95 2.85% 2.85%
- --------------------------------------------------------------------------------
(1) Total return for the period from 12/31/98 to 9/30/99 was 1.84%.
(2) Performance prior to 11/25/97 is that of Qualivest Tax-Free Money Market
Fund.
- --------------------------------------------------------------------------------
FEES AND EXPENSES
The fund does not impose any sales charges (loads) or other fees when you buy,
sell or exchange shares. However, when you hold shares of the fund you
indirectly pay a portion of the fund's operating expenses. These expenses are
deducted from fund assets. The figures below are based on expenses during the
fiscal year ended September 30, 1999.(1)
- --------------------------------------------------------------------------------
SHAREHOLDER FEES CLASS A
- --------------------------------------------------------------------------------
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON PURCHASES None
MAXIMUM DEFERRED SALES CHARGE (LOAD) None
ANNUAL FUND OPERATING EXPENSES AS A % OF AVERAGE NET ASSETS
- --------------------------------------------------------------------------------
Management Fees 0.40%
Distribution and Service (12b-1) Fees 0.25%
Other Expenses 0.17%
TOTAL 0.82%
- --------------------------------------------------------------------------------
(1) Actual expenses for the fiscal year were lower than those shown in the table
because of voluntary fee waivers by the advisor. See "Additional Information
-- Financial Highlights" for effective management fees after waivers. The
net expenses the fund actually paid after waivers for the fiscal year ended
September 30, 1999, were:
Waiver of Fund Expenses (0.08)%
TOTAL ACTUAL ANNUAL OPERATING EXPENSES (AFTER WAIVERS) 0.74%
THE ADVISOR INTENDS TO WAIVE FEES DURING THE CURRENT FISCAL YEAR SO THAT TOTAL
FUND OPERATING EXPENSES DO NOT EXCEED 0.75%. FEE WAIVERS MAY BE DISCONTINUED AT
ANY TIME.
- --------------------------------------------------------------------------------
EXAMPLE This example is intended to help you compare the cost of investing in
the fund with the cost of investing in other mutual funds. It assumes that you
invest $10,000 for the time periods indicated, that your investment has a 5%
return each year, and that the fund's operating expenses remain the same.
Although your actual costs and returns may differ, based on these assumptions
your costs would be:
- --------------------------------------------------------------------------------
1 year $ 84
3 years $ 262
5 years $ 455
10 years $1,014
7 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS
CLASS A, CLASS B AND CLASS C SHARES
<PAGE>
FUND SUMMARIES
TREASURY OBLIGATIONS FUND
- --------------------------------------------------------------------------------
OBJECTIVE
Treasury Obligations Fund seeks maximum current income consistent with the
preservation of capital and maintenance of liquidity.
- --------------------------------------------------------------------------------
MAIN INVESTMENT STRATEGIES
Treasury Obligations Fund invests exclusively in short-term U.S. Treasury
obligations and repurchase agreements secured by U.S. Treasury obligations. The
U.S. Treasury obligations in which the fund invests include U.S. Treasury bonds,
notes and bills. These types of Treasury securities are essentially the same
except for differences in interest rates, maturities and dates of issuance. U.S.
Treasury obligations are backed by the full faith and credit of the United
States government.
When selecting securities for the fund, the portfolio managers use a "top-down"
approach, looking first at general economic factors and market conditions, then
at individual securities.
- --------------------------------------------------------------------------------
MAIN RISKS
The main risks of investing in this fund include:
o Although the fund seeks to preserve the value of your investment at $1.00
per share, it is possible to lose money by investing in the fund. A major
change in interest rates or a default on a repurchase agreement held by the
fund could cause the value of your investment to decline.
o The level of income you receive from the fund will be affected by movements
in short-term interest rates.
o By investing solely in U.S. Treasury obligations and repurchase agreements
secured by those securities, the fund may offer less income than a money
market fund investing in other high-quality money market securities.
- --------------------------------------------------------------------------------
FUND PERFORMANCE
Illustrations on the next page provide you with information on the fund's
volatility and performance. Of course, past performance does not guarantee
future results.
The bar chart is designed to show you how performance of the fund's shares has
varied from year to year. Because this fund was first offered in 1997, only one
calendar year of performance information is presented. The table illustrates the
fund's average annual total returns over different time periods. Both the chart
and the table assume that all distributions have been reinvested.
8 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS
CLASS A, CLASS B AND CLASS C SHARES
<PAGE>
FUND SUMMARIES
TREASURY OBLIGATIONS FUND (CONTINUED)
- --------------------------------------------------------------------------------
FUND PERFORMANCE (CONTINUED)
ANNUAL TOTAL RETURNS AS OF 12/31 EACH YEAR(1) BEST QUARTER:
Quarter ending: 9/30/98
[BAR CHART] Total Return 1.23%
4.84%
- ------------------------------------------------- WORST QUARTER:
1998 Quarter ending: 12/31/98
Total Return 1.09%
AVERAGE ANNUAL TOTAL RETURNS Inception Since
AS OF 12/31/98 Date One Year Inception
- --------------------------------------------------------------------------------
Treasury Obligations Fund (Class A) 11/3/97 4.84% 4.87%
- --------------------------------------------------------------------------------
(1) Total return for the period from 12/31/98 to 9/30/99 was 3.19%.
- --------------------------------------------------------------------------------
FEES AND EXPENSES
The fund does not impose any sales charges (loads) or other fees when you buy,
sell or exchange shares. However, when you hold shares of the fund you
indirectly pay a portion of the fund's operating expenses. These expenses are
deducted from fund assets. The figures below are based on expenses during the
fiscal year ended September 30, 1999.(1)
SHAREHOLDER FEES CLASS A
- --------------------------------------------------------------------------------
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON PURCHASE None
MAXIMUM DEFERRED SALES CHARGE (LOAD) None
ANNUAL FUND OPERATING EXPENSES AS A % OF AVERAGE NET ASSETS
- --------------------------------------------------------------------------------
Management Fees 0.40%
Distribution and Service (12b-1) Fees 0.25%
Other Expenses 0.11%
TOTAL 0.76%
- --------------------------------------------------------------------------------
(1) Actual expenses for the fiscal year were lower than those shown in the table
because of voluntary fee waivers by the advisor. See "Additional Information
-- Financial Highlights" for effective management fees after waivers. The
net expenses the fund actually paid after waivers for the fiscal year ended
September 30, 1999, were:
Waiver of Fund Expenses (0.06)%
TOTAL ACTUAL ANNUAL OPERATING EXPENSES (AFTER WAIVERS) 0.70%
THE ADVISOR INTENDS TO WAIVE FEES DURING THE CURRENT FISCAL YEAR SO THAT TOTAL
FUND OPERATING EXPENSES DO NOT EXCEED 0.70%. FEE WAIVERS MAY BE DISCONTINUED AT
ANY TIME.
- --------------------------------------------------------------------------------
EXAMPLE This example is intended to help you compare the cost of investing in
the fund with the cost of investing in other mutual funds. It assumes that you
invest $10,000 for the time periods indicated, that your investment has a 5%
return each year, and that the fund's operating expenses remain the same.
Although your actual costs and returns may differ, based on these assumptions
your costs would be:
- --------------------------------------------------------------------------------
1 year $ 78
3 years $243
5 years $422
10 years $942
9 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS
CLASS A, CLASS B AND CLASS C SHARES
<PAGE>
POLICIES & SERVICES
BUYING SHARES
You may become a shareholder in any of the funds with an initial investment of
$1,000 or more ($250 for a retirement plan or a Uniform Gifts to Minors
Act/Uniform Transfers to Minors Act (UGMA/UTMA) account). Additional investments
can be made for as little as $100 ($25 for a retirement plan or an UGMA/UTMA
account). The funds have the right to waive these minimum investment
requirements for employees of the funds' advisor and its affiliates. The funds
also have the right to reject any purchase order.
- --------------------------------------------------------------------------------
CHOOSING A SHARE CLASS
All funds in this prospectus offer Class A shares. Prime Obligations Fund also
offers Class B and Class C shares.
Each class has its own cost structure. Class B and Class C shares are available
only in exchange for Class B or Class C shares, respectively, of another First
American fund or to set up a systematic exchange program to purchase Class B or
Class C shares of other First American funds.
CLASS A SHARES
Class A shares are offered at net asset value with no front-end or contingent
deferred sales charge. Because Class A shares will normally be the better choice
if your investment qualifies for a reduced sales charge, orders for Class B
shares for $250,000 or more (and Class C shares for $1 million or more) normally
will be treated as orders for Class A shares.
CLASS B SHARES
Prime Obligations Fund Class B shares are available only in exchange for Class B
shares of another First American fund, or in establishing a systematic exchange
program that will be used to purchase Class B shares of other First American
funds. See "Managing Your Investment -- Systematic Exchange Program."
Class B shares have no front-end sales charge, however they do have:
o higher annual expenses than Class A shares. (See "Fees and Expenses" in the
"Fund Summaries" section.)
o a back-end sales charge, called a "contingent deferred sales charge," if you
redeem your shares within six years of the date you purchased the original
First American fund shares.
o automatic conversion to Class A shares approximately eight years after
purchase, thereby reducing future annual expenses.
CLASS C SHARES
Prime Obligations Fund Class C shares are available only in exchange for Class C
shares of another First American fund, or in establishing a systematic exchange
program that will be used to purchase Class C shares of other First American
funds. Class C shares of the other First American funds have a front-end sales
charge. You pay no front-end sales charge when you exchange other First American
fund Class C shares for Prime Obligations Fund Class C shares. However, Prime
Obligations Fund Class C shares:
o are subject to a 1% contingent deferred sales charge if you redeem your
shares within 18 months of the date you purchased the original First
American fund shares.
o have higher annual expenses than Class A shares. (See "Fees and Expenses" in
the "Fund Summaries" section.)
o do not convert to Class A shares.
Because Class C shares do not convert to Class A shares, they will continue to
have higher annual expenses than Class A shares for as long as you hold them.
- --------------------------------------------------------------------------------
12b-1 FEES
Each fund has adopted a plan under rule 12b-1 of the Investment Company Act that
allows it to pay the fund's distributor an annual fee for the distribution and
sale of its shares and for services provided to shareholders.
For 12b-1 fees are equal to:
- --------------------------------------------------------------------------------
Class A shares 0.25% of average daily net assets
Class B shares 1% of average daily net assets
Class C shares 1% of average daily net assets
Because these fees are paid out of a fund's assets on an ongoing basis, over
time these fees will increase the cost of your investment and may cost you more
than paying other types of sales charges.
The Class A share 12b-1 fee is a shareholder servicing fee. For Class B and
Class C shares, a portion of the 12b-1 fee equal to 0.25% of average daily net
assets is a shareholder servicing fee, and the rest is a distribution fee.
The funds' distributor uses the shareholder servicing fee to compensate brokers,
participating institutions and "one-stop" mutual fund networks for providing
ongoing services to shareholder accounts. These institutions receive annual fees
equal to 0.25% of a fund's Class A, Class B and Class C share average daily net
assets attributable to shares sold through such institutions. For Class B
shares, the institution does not begin to receive its annual fee until one year
after the shares are sold. The funds' distributor also pays institutions which
sell Class C shares a 0.75% annual distribution fee beginning one year after the
shares are sold. The distributor may pay additional fees to institutions out of
its own assets, in exchange for sales and/or administrative services performed
on behalf of the institution's customers.
- --------------------------------------------------------------------------------
CALCULATING YOUR SHARE PRICE
Your purchase price will be based on the fund's net asset value (NAV) per share,
which is generally calculated as of the close of regular trading on the New York
Stock Exchange (usually 3:00 p.m. Central time) every day the exchange and
federally chartered banks are open. As discussed below, your order must be
received by the funds by 11:30 a.m. Central time for Tax Free Obligations Fund,
and by 3:00 p.m. Central
10 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS
CLASS A, CLASS B AND CLASS C SHARES
<PAGE>
POLICIES & SERVICES
BUYING SHARES (CONTINUED)
time for Government Obligations Fund, Prime Obligations Fund and Treasury
Obligations Fund, in order for shares to be priced at that day's NAV.
A fund's NAV is equal to the market value of its investments and other assets,
less any liabilities, divided by the number of fund shares. The securities held
by the funds are valued on the basis of amortized cost. This involves valuing an
instrument at its cost and thereafter assuming a constant amortization of any
discount or premium until the instrument's maturity, rather than looking at
actual changes in the market value of the instrument. Each fund's net asset
value is normally expected to be $1 per share.
CLASS A SHARES
Your purchase price for Class A shares is their net asset value. You pay no
front-end or contingent deferred sales charge.
CLASS B SHARES
Prime Obligations Fund Class B shares are available only in exchange for Class B
shares of another First American fund, or in establishing a systematic exchange
program that will be used to purchase Class B shares of other First American
funds. See "Managing Your Investment -- Systematic Exchange Program."
Your purchase price for Class B shares is their net asset value -- there is no
front-end sales charge. However, if you redeem your shares within six years of
the date you purchased the original First American fund shares, you will pay a
back-end sales charge, called a contingent deferred sales charge (CDSC).
Although you pay no front-end sales charge when you buy Class B shares, the
funds' distributor pays a sales commission of 4.25% of the amount invested to
brokers and financial institutions which sell Class B shares. The funds'
distributor receives any CDSC imposed when you sell your Class B shares.
Your CDSC will be based on the value of your original First American fund shares
when they were purchased or on the value of the Prime Obligations Fund Class B
shares at the time of sale, whichever is less. The charge does not apply to
shares you acquired by reinvesting your dividend or capital gain distributions.
Shares will be sold in the order that minimizes your CDSC.
Year since purchase of original CDSC as a % of the
First American fund shares value of your shares
- --------------------------------------------------------------------------------
First 5%
Second 5%
Third 4%
Fourth 3%
Fifth 2%
Sixth 1%
Seventh 0%
Eighth 0%
Your Class B shares will automatically convert to Class A shares eight years
after the first day of the month you purchased the original First American fund
shares. For example, if you purchase Class B shares of one of the First American
funds on June 15, 2000, and later exchange them for Prime Obligations Fund Class
B shares, the Prime Obligations Fund shares will convert to Class A shares on
June 1, 2008.
The CDSC will be waived for:
o redemptions following the death or disability (as defined in the Internal
Revenue Code) of a shareholder.
o redemptions that equal the minimum required distribution from an individual
retirement account or other retirement plan to a shareholder who has reached
the age of 70 1/2.
o redemptions through a systematic withdrawal plan, at a rate of up to 12% a
year of your account's value. During the first year, the 12% annual limit
will be based on the value of your account on the date the plan is
established. Thereafter, it will be based on the value of your account on
the preceding December 31.
CLASS C SHARES
Prime Obligations Fund Class C shares are available only in exchange for Class C
shares of another First American fund, or in establishing a systematic exchange
program that will be used to purchase Class C shares of other First American
funds. When you purchase Prime Obligations Fund Class C shares in order to
establish a systematic exchange program, you do not pay a sales charge. However,
when you exchange these shares for Class C shares of another First American
fund, you pay a front-end sales charge equal to 1% of the purchase price (1.01%
of the net amount invested). In addition, the funds' distributor pays a sales
commission of 1.00% of the amount you invested to brokers and financial
institutions which sell Class C shares. You pay no front-end sales charge when
you exchange other First American fund Class C shares for Prime Obligations Fund
Class C shares. However, if you redeem your shares within 18 months of the date
you purchased the original First American fund shares, you will be assessed a
contingent deferred sales charge (CDSC) of 1% of the value of the original First
American fund shares at the time of purchase or the Prime Obligations Fund Class
C shares at the time of sale, whichever is less. The CDSC does not apply to
shares you acquired by reinvesting your dividend or capital gain distributions.
Shares will be sold in the order that minimizes your CDSC.
The distributor receives any CDSC imposed when you sell your Class C shares.
The CDSC for Class C shares will be waived in the same circumstances as the
Class B share CDSC. See "Class B Shares" above.
Unlike Class B shares, Class C shares do not convert to Class A shares after a
specified period of time. Therefore, your shares will continue to have higher
annual expenses than Class A shares.
11 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS
CLASS A, CLASS B AND CLASS C SHARES
<PAGE>
POLICIES & SERVICES
BUYING SHARES (CONTINUED)
- --------------------------------------------------------------------------------
HOW TO BUY SHARES
You may buy shares on any day when the New York Stock Exchange and federally
chartered banks are open, however purchases of shares may be restricted in the
event of an early or unscheduled close of the New York Stock Exchange. Your
shares will be priced at the net asset value determined on the day your purchase
order is processed. To make sure that your order is accepted, follow the
directions for purchasing shares given below.
BY PHONE
You may purchase shares by calling your broker or financial institution, if they
have a sales agreement with the funds' distributor. In order for shares to be
purchased at that day's price, your broker or financial institution must
transmit orders to the funds by 11:30 a.m. Central time for Tax Free Obligations
Fund and 3:00 p.m. Central time for Government Obligations Fund, Prime
Obligations Fund and Treasury Obligations Fund. Your broker or financial
institution will specify the time by which they must receive your purchase order
to assure same day processing.
Some financial institutions may charge a fee for helping you purchase shares.
Contact your broker or financial institution for more information.
If you are paying by wire, you may purchase shares by calling 1-800-637-2548
before 11:30 a.m. Central time for Tax Free Obligations Fund, and before 3:00
p.m. Central time for Government Obligations Fund, Prime Obligations Fund and
Treasury Obligations Fund. All information will be taken over the telephone, and
your order will be placed when the funds' custodian receives payment by wire.
Wire federal funds as follows:
U.S. BANK NATIONAL ASSOCIATION, MINNEAPOLIS, MN
ABA NUMBER 091000022
FOR CREDIT TO: DST SYSTEMS, INC.:
ACCOUNT NUMBER 160234580266
FOR FURTHER CREDIT TO (INVESTOR NAME, FUND NAME AND ACCOUNT NUMBER)
BY MAIL
To purchase shares by mail, simply complete and sign a new account form, enclose
a check made payable to the fund you wish to invest in, and mail both to:
First American Funds
c/o DST Systems, Inc.
P.O. Box 219382
Kansas City, Missouri 64121-9382
After you have established an account, you may continue to purchase shares by
mailing your check to First American Funds at the same address.
Please note the following:
o All purchases must be made in U.S. dollars.
o THIRD-PARTY CHECKS, CREDIT CARDS, CREDIT CARD CHECKS AND CASH ARE NOT
ACCEPTED.
o If a check does not clear your bank, the funds reserve the right to cancel
the purchase, and you could be liable for any losses or fees incurred.
- --------------------------------------------------------------------------------
INVESTING AUTOMATICALLY
To purchase shares as part of a savings discipline, you may add to your
investment on a regular basis by having $100 or more ($25 for retirement plans
and UGMA/UTMA accounts) automatically withdrawn from your bank account on a
periodic basis and invested in fund shares. You may apply for participation in
this program through your broker or financial institution or by calling
1-800-637-2548.
12 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS
CLASS A, CLASS B AND CLASS C SHARES
<PAGE>
POLICIES & SERVICE
SELLING SHARES
- --------------------------------------------------------------------------------
HOW TO SELL SHARES
You may sell your shares on any day when the New York Stock Exchange (NYSE) and
federally chartered banks are open. However, redemption of shares may be
restricted in the event of an early or unscheduled close of the NYSE. Your
shares will be sold at the net asset value determined on the day your redemption
is processed, less any applicable contingent deferred sales charge. To make sure
that your order is accepted, follow the directions for selling shares given
below.
If the fund receives a redemption request, payment will generally be made the
same day by transfer of federal funds the same day. Otherwise, payment will
generally be made on the next business day.
BY PHONE
If you purchased shares through a broker or financial institution, simply call
them to sell your shares. Your broker or financial institution must transmit
redemption requests to the funds by 11:30 a.m. Central time for Tax Free
Obligations Fund and 3:00 p.m. Central time for Government Obligations Fund,
Prime Obligations Fund and Treasury Obligations Fund in order for redemptions to
be processed on that day. Your broker or financial institution will specify the
time by which they must receive your redemption request to assure same day
processing. Contact your broker or financial institution directly for more
information.
If you did not purchase shares through a broker or financial institution, you
may sell your shares by calling 1-800-637-2548 before 11:30 a.m. Central time
for Tax Free Obligations Fund, and before 3:00 p.m. Central time for Government
Obligations Fund, Prime Obligations Fund and Treasury Obligations Fund. Calls
received after these times will be processed the following business day.
Proceeds can be wired to your bank account (if the proceeds are at least $1,000
and you have previously supplied your bank account information to the transfer
agent) or sent to you by check.
If you recently purchased your shares by check or through the Automated Clearing
House (ACH), proceeds from the sale of those shares may not be available until
your check or ACH payment has cleared, which may take up to 10 calendar days
from the date of purchase.
BY MAIL
To sell shares by mail, send a written request to your
broker or financial institution, or to the funds' transfer
agent at the following address:
First American Funds
c/o DST Systems, Inc.
P.O. Box 219382
Kansas City, Missouri 64121-9382
Your request should include the following information:
o name of the fund;
o account number;
o dollar amount or number of shares redeemed;
o name on the account; and
o signatures of all registered account owners.
Signatures on a written request must be guaranteed if:
o you would like the proceeds from the sale to be paid to anyone other than to
the shareholder of record.
o you would like the check mailed to an address other than the address on the
funds' records.
o your redemption request is for $50,000 or more.
A signature guarantee assures that a signature is genuine and protects
shareholders from unauthorized account transfers. Banks, savings and loan
associations, trust companies, credit unions, broker-dealers and member firms of
a national securities exchange may guarantee signatures. Call your financial
institution to determine if it has this capability.
Proceeds from a written redemption request will be sent to you by check unless
another form of payment is requested.
BY CHECKING ACCOUNT
Check writing privileges are available for Class A shares of Prime Obligations
Fund. You may sign up for check writing privileges when you complete a new
account form, or by calling your broker, financial institution or the funds.
With a fund checking account, you may redeem shares simply by writing a check
for $100 or more. Call 1-800-637-2548 for more information.
Please note that you may not use a check to close your account.
- --------------------------------------------------------------------------------
SYSTEMATIC WITHDRAWALS
If your account has a value of $5,000 or more, you may redeem a specific dollar
amount from your account on a regular basis. To set up systematic withdrawals,
contact your broker or financial institution.
You should not make systematic withdrawals if you plan to continue investing in
the fund, due to sales charges and tax liabilities. In addition, it may not be
in your best interest to make systematic withdrawals of Class B or Class C
shares, since these withdrawals may be subject to a CDSC.
- --------------------------------------------------------------------------------
ACCOUNTS WITH LOW BALANCES
Except for retirement plans and UGMA/ UTMA accounts, if your account balance
falls below $500 as a result of selling or exchanging shares, you may
receive written notice and be given 30 days to re-establish the minimum
balance. If you do not, the fund may close your account and send you the
proceeds, less any applicable contingent deferred sales charge, or deduct a
$25 annual fee in December of each year if your account balance at that time
is below $500.
13 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS
CLASS A, CLASS B AND CLASS C SHARES
<PAGE>
POLICIES & SERVICES
MANAGING YOUR INVESTMENT
- --------------------------------------------------------------------------------
SYSTEMATIC EXCHANGE PROGRAM
You may make automatic monthly exchanges of your Class A, Class B or Class C
shares for the same Class of shares of another First American fund. Investing a
fixed dollar amount at regular intervals, sometimes referred to as "dollar cost
averaging," may have the effect of reducing the average cost per share of the
fund acquired.
To set up a systematic exchange program, you initially purchase an amount of
Class A, Class B or Class C shares equal to the total amount that you wish to
invest in the other First American fund. On a monthly basis, the dollar amount
of Class A, Class B or Class C shares that you specify will then be exchanged
for shares of the other First American fund within the same class. Exchanges of
Class A and Class C shares will be subject to the applicable sales charge
imposed by the First American fund into which you are exchanging. You may wish
to execute a letter of intent in connection with a Class A share systematic
exchange program. (A letter of intent indicates a non-binding intent to purchase
$50,000 or more of First American fund Class A shares over a 13-month period,
which lowers your sales charge. See the prospectus of the First American fund
into which you plan to exchange for more information.) Exchanges of Prime
Obligations Fund Class B or Class C shares will not be subject to a CDSC. See
"Exchanging Shares," below. However, if you redeem the Prime Obligations Fund
Class B or Class C shares in your account, rather than exchange them, they will
be subject to a CDSC.
You may set up a systematic exchange program through your broker or financial
institution, or by calling 1-800-637-2548.
- --------------------------------------------------------------------------------
EXCHANGING SHARES
If your investment goals or your financial needs change, you may move from one
First American fund to another. There is no fee to exchange shares.
You may exchange your shares only for shares of the same class of the other
First American fund. Exchanges are made based on the net asset value per share
of each fund at the time of the exchange. When you exchange your Class A or
Class C shares for another First American fund of the same class, you will have
to pay the sales charge imposed by the fund, unless your money market fund
shares were originally issued in exchange for shares of a First American fund
that had a sales charge. When you exchange your Class B or Class C shares for
Class B or Class C shares of another First American fund, the time you held the
shares of the "old" fund will be added to the time you hold the shares of the
"new" fund for purposes of determining your CDSC or, in the case of Class B
shares, calculating when your shares convert to Class A shares.
Before exchanging into any fund, be sure to read its prospectus carefully. A
fund may change or cancel its exchange policies at any time. You will be
notified of any changes. The funds have the right to limit exchanges to four
times per year.
BY PHONE
You may exchange shares by calling your broker, your financial institution, or
the funds' transfer agent, provided that both funds have identical shareholder
registrations. To request an exchange through the funds' transfer agent, call
1-800-637-2548. Your instructions must be received by the funds' transfer agent
before 11:30 a.m. Central time for Tax Free Obligations Fund and before 3:00
p.m. Central time for Government Obligations Fund, Prime Obligations Fund and
Treasury Obligations Fund, or by an earlier time specified by your broker or
financial institution, in order for shares to be exchanged the same day.
BY MAIL
To exchange shares by written request, please follow the procedures under
"Selling Shares." Be sure to include the names of both funds involved in the
exchange.
- --------------------------------------------------------------------------------
TELEPHONE TRANSACTIONS
You may buy, sell or exchange shares by telephone, unless you elected on
your new account form to restrict this privilege. If you wish to reinstate
this option on an existing account, please call Investor Services at
1-800-637-2548 to request the appropriate form. The funds and their agents
will not be responsible for any losses that may result from acting on wire
or telephone instructions that they reasonably believe to be genuine.
The funds and their agents will each follow reasonable procedures to confirm
that instructions received by telephone are genuine, which may include
taping telephone conversations.
It may be difficult to reach the funds by telephone during periods of
unusual market activity. If you are unable to reach the funds or their
agents by telephone, please consider sending written instructions.
14 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS
CLASS A, CLASS B AND CLASS C SHARES
<PAGE>
POLICIES & SERVICES
MANAGING YOUR INVESTMENT (CONTINUED)
- --------------------------------------------------------------------------------
STAYING INFORMED
SHAREHOLDER REPORTS
Shareholder reports are mailed twice a year, in November and May. They include
financial statements, performance information, a message from your portfolio
managers, and, on an annual basis, the auditor's report.
In an attempt to reduce shareholder costs and help eliminate duplication, the
funds will try to limit their mailings to one report for each address that lists
one or more shareholders with the same last name. If you would like additional
copies, please call 1-800-637-2548.
STATEMENTS AND CONFIRMATIONS
Statements summarizing activity in your account are mailed at least quarterly.
Confirmations are mailed following each non-systematic purchase or sale of fund
shares.
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS
Dividends from a fund's net investment income are declared daily, starting on
the day you purchase your shares, and paid monthly. You will not receive a
dividend for the day on which you sell shares.
Dividends will be reinvested in additional shares of the same fund, unless you
request that distributions be reinvested in another First American fund or paid
in cash. This request may be made on your new account form or by writing to the
fund, your broker or your financial institution. If you request that your
distributions be paid in cash but those distributions cannot be delivered
because of an incorrect mailing address, the undelivered distributions and all
future distributions will be reinvested in fund shares.
- --------------------------------------------------------------------------------
TAXES
Some of the tax consequences of investing in the funds are discussed below. More
information about taxes is in the Statement of Additional Information. However,
because everyone's tax situation is unique, always consult your tax professional
about federal, state and local tax consequences.
For Government Obligations Fund, Prime Obligations Fund and Treasury Obligations
Fund, dividends you receive from the fund are generally taxable as ordinary
income, whether you reinvest them or take them in cash. Dividends attributable
to income from U.S. government securities may be exempt from state personal
income taxes. You should consult your tax advisor for more information.
Tax Free Obligations Fund intends to meet certain federal tax requirements so
that distributions of tax-exempt interest income may be treated as "exempt-
interest dividends." These dividends are not subject to regular federal tax.
However, although it has no current intention of doing so, the fund may invest
up to 20% of its net assets in municipal securities the interest on which is
subject to the federal alternative minimum tax. Any portion of exempt-interest
dividends attributable to interest on these securities may increase some
shareholders' alternative minimum tax.
15 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS
CLASS A, CLASS B AND CLASS C SHARES
<PAGE>
ADDITIONAL INFORMATION
MANAGEMENT
INVESTMENT ADVISOR
Investment Advisor
First American Asset Management
601 Second Avenue South
Minneapolis, Minnesota 55402
U.S. Bank National Association (U.S. Bank), acting through its First American
Asset Management division, is the funds' investment advisor. First American
Asset Management provides investment management services to individuals and
institutions, including corporations, foundations, pensions and retirement
plans. As of September 30, 1999, it had more than $78 billion in assets under
management, including investment company assets of more than $32 billion. As
investment advisor, First American Asset Management manages the funds' business
and investment activities, subject to the authority of the board of directors.
Each fund pays the investment advisor a monthly fee for providing investment
advisory services. During their most recent fiscal year, after taking into
account fee waivers, the funds paid the following investment advisory fees to
First American Asset Management:
ADVISORY FEE
AS A % OF
AVERAGE DAILY
NET ASSETS
- --------------------------------------------------------------------------------
GOVERNMENT OBLIGATIONS FUND 0.33%
PRIME OBLIGATIONS FUND 0.34%
TAX FREE OBLIGATIONS FUND 0.33%
TREASURY OBLIGATIONS FUND 0.34%
- --------------------------------------------------------------------------------
CUSTODIAN
U.S. Bank National Association
U.S. Bank Center 180 East Fifth Street
St. Paul, Minnesota 55101
ADMINISTRATOR*
U.S. Bank National Association
U.S. Bank Place
601 Second Avenue South
Minneapolis, Minnesota 55402
DISTRIBUTOR
SEI Investments Distribution Co.
Oaks, Pennsylvania 19456
*Effective January 1, 2000.
- --------------------------------------------------------------------------------
ADDITIONAL COMPENSATION
U.S. Bank and other affiliates of U.S. Bancorp may act as fiduciary with
respect to plans subject to the Employee Retirement Income Security Act of 1974
(ERISA) and other trust and agency accounts that invest in the funds. As
described above, U.S. Bank receives compensation for acting as the funds'
investment advisor. U.S. Bank and its affiliates also receive compensation in
connection with the following:
CUSTODY SERVICES. As compensation for acting as the funds' custodian, U.S. Bank
is paid monthly fees equal, on an annual basis, to 0.03% of a fund's average
daily net assets. In addition, U.S. Bank is reimbursed for its out-of-pocket
expenses incurred while providing custody services to the funds.
ADMINISTRATIVE SERVICES. U.S. Bank provides or compensates others to provide
administrative services to the funds including general administrative and
accounting services, transfer agency and dividend disbursing services, and
shareholder services. The funds pay U.S. Bank an asset-based monthly fee equal,
on an annual basis, to 0.07% of the aggregate average daily net assets of all
open-end mutual funds in the First American fund family up to $8 billion and
0.055% of the aggregate average daily net assets of all open-end mutual funds in
the First American fund family in excess of $8 billion. Additionally, the funds
pay U.S. Bank fees based upon the number of funds and accounts maintained.
SECURITIES LENDING SERVICES. In connection with lending its portfolio
securities, Government Obligations Fund pays administrative and custodial fees
to U.S. Bank which are equal to 40% of the fund's income from these securities
lending transactions.
BROKERAGE TRANSACTIONS. The funds purchase most of their portfolio securities
directly from the issuer or from an underwriter or market maker, and not from a
broker acting as agent. However, the funds may from time to time use brokers
when buying portfolio securities. The funds' investment advisor may place
trades through its affiliates, U.S. Bancorp Investments, Inc. and U.S. Bancorp
Piper Jaffray Inc., which will earn commissions on such transactions.
SALES OF FUND SHARES. U.S. Bancorp Investments, Inc. and U.S. Bancorp Piper
Jaffray Inc., broker-dealers affiliated with U.S. Bank, have entered into
agreements with the funds' distributor to sell fund shares and will earn annual
shareholder servicing fees in connection with these sales.
PORTFOLIO MANAGEMENT
Each fund's investments are managed by a team of persons associated with First
American Asset Management.
16 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS
CLASS A, CLASS B AND CLASS C SHARES
<PAGE>
ADDITIONAL INFORMATION
MORE ABOUT THE FUNDS
- --------------------------------------------------------------------------------
INVESTMENT STRATEGIES
The funds' main investment strategies are discussed in the "Fund Summaries"
section. These are the strategies that the funds' investment advisor believes
are most likely to be important in trying to achieve the funds' objectives. You
should be aware that each fund may also use strategies and invest in securities
that are not described in this prospectus, but that are described in the
Statement of Additional Information (SAI). For a copy of the SAI, call Investor
Services at 1- 800-637-2548.
In addition to the securities specified in the "Fund Summaries" section, each
fund may invest in other money market funds that invest in the same types of
securities as the respective fund, including money market funds advised by U.S.
Bank.
INVESTMENT APPROACH
Each fund complies with Securities and Exchange Commission regulations that
apply to money market funds. These regulations require that each fund's
investments mature within 397 days from the date of purchase, and that the
average maturity of each fund's investments (on a dollar-weighted basis) be 90
days or less. The funds may invest in securities with variable or floating
interest rates and securities with demand features. The maturities of these
securities are determined according to regulations which allow the funds to
consider some of these securities as having maturities shorter than their stated
maturity dates. All of the funds' investments must be in U.S. dollar-denominated
high quality securities which have been determined by the funds' advisor to
present minimal credit risks.
When selecting securities for the funds, the portfolio managers use a "top-down"
approach, looking first at general economic factors and market conditions, then
at individual securities. The portfolio managers look for value while adhering
to the credit and other restrictions on money market funds.
- --------------------------------------------------------------------------------
YEAR 2000 ISSUES
Like other mutual funds and business and financial organizations, the funds
could be adversely affected if the computer systems used by the funds' advisor,
other service providers and entities with computer systems that are linked to
fund records do not properly process and calculate date-related information from
and after January 1, 2000. While year 2000-related computer problems could have
a negative effect on the funds, the funds' administrator has undertaken a
program designed to assess and monitor the steps being taken by the funds'
service providers to address year 2000 issues. This program includes seeking
assurances from service providers that their systems are or will be year 2000
compliant and reviewing service providers' periodic reports to monitor their
status concerning their year 2000 readiness and compliance.
The administrator and the advisor also report regularly to the funds' board of
directors concerning their own and other service providers' progress toward year
2000 readiness. Although these reports indicate that service providers are or
expect to be year 2000 compliant, there can be no assurance that this will be
the case in all instances or that year 2000 difficulties experienced by others
in the financial services industry will not impact the funds. In addition, there
can be no assurance that year 2000 difficulties will not have an adverse effect
on the funds' investments or on global markets or economies, generally. The
funds are not bearing any of the expenses incurred by their service providers in
preparing for the year 2000.
17 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS
CLASS A, CLASS B AND CLASS C SHARES
<PAGE>
ADDITIONAL INFORMATION
FINANCIAL HIGHLIGHTS
The tables that follow present performance information about the Class A shares
of each fund and the Class B and Class C shares of Prime Obligations Fund. This
information is intended to help you understand each fund's financial performance
for the past five years or, if shorter, the period of the fund's operations.
Some of this information reflects financial results for a single fund share.
Total returns in the tables represent the rate that you would have earned or
lost on an investment in a fund, excluding sales charges and assuming you
reinvested all of your dividends and distributions.
The information for the fiscal year ended September 30, 1999, has been audited
by Ernst & Young LLP, independent auditors, whose report, along with the funds'
financial statements, is included in the funds' annual report, which is
available upon request. The information for the fiscal years ended on or before
September 30, 1998, has been audited by other auditors.
GOVERNMENT OBLIGATIONS FUND
<TABLE>
<CAPTION>
Fiscal year ended Fiscal period ended
CLASS A SHARES September 30, 1999 September 30, 1998(1)
=---------------------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE DATA
Net Asset Value, Beginning of Period $ 1.00 $ 1.00
Net Investment Income 0.04 0.02
Dividends (from Net Investment Income) (0.04) (0.02)
----------------------------------
Net Asset Value, End of Period $ 1.00 $ 1.00
==================================
Total Return 4.36% 2.10%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000) $435,227 $325,024
Ratio of Expenses to Average Net Assets 0.75% 0.70%(2)
Ratio of Net Investment Income to Average
Net Assets 4.28% 4.93%(2)
Ratio of Expenses to Average Net Assets
(excluding waivers) 0.82% 0.76%(2)
Ratio of Net Investment Income to Average Net Assets
(excluding waivers) 4.21% 4.87%(2)
- ---------------------------------------------------------------------------------------------------
</TABLE>
(1) Class A shares have been offered since April 29, 1998.
(2) Annualized.
18 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS
CLASS A, CLASS B AND CLASS C SHARES
<PAGE>
ADDITIONAL INFORMATION
FINANCIAL HIGHLIGHTS (CONTINUED)
PRIME OBLIGATIONS FUND
<TABLE>
<CAPTION>
Fiscal year/period ended September 30,
CLASS A SHARES 1999 1998 1997 1996 1995(1)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value, Beginning of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net Investment Income 0.04 0.05 0.05 0.05 0.04
Dividends (from Net Investment Income) (0.04) (0.05) (0.05) (0.05) (0.04)
------------------------------------------------------------------
Net Asset Value, End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
==================================================================
Total Return 4.51% 5.15% 5.06% 5.08% 3.84%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000) $4,170,881 $3,699,197 $218,261 $135,146 $96,083
Ratio of Expenses to Average
Net Assets 0.80% 0.70% 0.70% 0.70% 0.70%(3)
Ratio of Net Investment Income to Average
Net Assets 4.42% 5.00% 4.95% 4.94% 5.43%(3)
Ratio of Expenses to Average Net Assets
(excluding waivers) 0.87% 0.79% 0.77% 0.79% 0.82%(3)
Ratio of Net Investment Income to Average Net Assets
(excluding waivers) 4.35% 4.91% 4.88% 4.85% 5.31%(3)
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Fiscal year/period ended September 30,
CLASS B SHARES 1999 1998 1997 1996 1995(2)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value, Beginning of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net Investment Income 0.04 0.04 0.04 0.04 0.03
Dividends (from Net Investment Income) (0.04) (0.04) (0.04) (0.04) (0.03)
------------------------------------------------------------
Net Asset Value, End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
============================================================
Total Return 3.85% 4.37% 4.27% 4.29% 3.28%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000) $ 4,007 $ 2,397 $ 2,018 $ 1,763 $ 14
Ratio of Expenses to Average Net Assets 1.45% 1.45% 1.45% 1.45% 1.45%(3)
Ratio of Net Investment Income to Average
Net Assets 3.78% 4.29% 4.17% 4.15% 4.70%(3)
Ratio of Expenses to Average Net Assets
(excluding waivers) 1.51% 1.53% 1.52% 1.54% 1.57%(3)
Ratio of Net Investment Income to Average
Net Assets (excluding waivers) 3.72% 4.21% 4.10% 4.06% 4.58%(3)
- --------------------------------------------------------------------------------------------------------
</TABLE>
(1) Class A shares have been offered since January 21, 1995.
(2) Class B shares have been offered since January 23, 1995.
(3) Annualized.
<TABLE>
<CAPTION>
Fiscal period ended
CLASS C SHARES September 30, 1999(1)
- --------------------------------------------------------------------------------------
<S> <C>
PER SHARE DATA
Net Asset Value, Beginning of Period $ 1.00
Net Investment Income 0.02
Dividends (from Net Investment Income) (0.02)
-----------
Net Asset Value, End of Period $ 1.00
===========
Total Return 2.47%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000) $ 341
Ratio of Expenses to Average Net Assets 1.45%(2)
Ratio of Net Investment Income to Average Net Assets 3.75%(2)
Ratio of Expenses to Average Net Assets
(excluding waivers) 1.51%(2)
Ratio of Net Investment Income to Average Net Assets
(excluding waivers) 3.69%(2)
- -------------------------------------------------------------------------------------
</TABLE>
(1) Class C shares have been offered since February 1, 1999.
(2) Annualized.
19 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS
CLASS A, CLASS B AND CLASS C SHARES
<PAGE>
ADDITIONAL INFORMATION
FINANCIAL HIGHLIGHTS (CONTINUED)
TAX FREE OBLIGATIONS FUND(1)
<TABLE>
<CAPTION>
Fiscal year Fiscal period Fiscal period
ended ended ended
September 30, September 30, November 30, Fiscal year ended July 31
CLASS A SHARES 1999 1998 1997 1997 1996 1995(2)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value, Beginning of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net Investment Income 0.03 0.02 0.01 0.03 0.03 0.02
Dividends (from Net Investment Income) (0.03) (0.02) (0.01) (0.03) (0.03) (0.02)
Net Asset Value, End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
================================================================================
Total Return 2.51% 2.45% 0.96% 2.76% 2.81% 1.66%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period(000) $268,626 $247,154 $28,662 $31,668 $30,143 $33,569
Ratio of Expenses to Average Net Assets 0.74% 0.70%(3) 0.89%(3) 0.88% 0.89% 1.00%(3)
Ratio of Net Investment Income to Average
Net Assets 2.47% 2.84%(3) 2.83%(3) 2.73% 2.78% 2.98%(3)
Ratio of Expenses to Average Net Assets
(excluding waivers) 0.82% 0.83%(3) 1.23%(3) 1.23% 1.25% 1.36%(3)
Ratio of Net Investment Income to Average
Net Assets (excluding waivers) 2.39% 2.71%(3) 2.49%(3) 2.38% 2.42% 2.62%(3)
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The financial highlights for Tax Free Obligations Fund include the
historical financial highlights of the Qualivest Tax-Free Money Market Fund.
The assets of Qualivest Tax-Free Money Market Fund were acquired by Tax Free
Obligations Fund on November 25, 1997.
(2) Class A shares have been offered since January 9, 1995.
(3) Annualized.
TREASURY OBLIGATIONS FUND
<TABLE>
<CAPTION>
Fiscal year ended Fiscal period ended
CLASS A SHARES September 30, 1999 September 30, 1998(1)
- -----------------------------------------------------------------------------------------
PER SHARE DATA
<S> <C> <C>
Net Asset Value, Beginning of Period $ 1.00 $ 1.00
Net Investment Income 0.04 0.05
Dividends (from Net Investment Income) (0.04) (0.05)
----------------------------------
Net Asset Value, End of Period $ 1.00 $ 1.00
==================================
Total Return 4.31% 4.54%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000) $23,496 $101,749
Ratio of Expenses to Average Net Assets 0.70% 0.70%(2)
Ratio of Net Investment Income to Average
Net Assets 4.24% 4.88%(2)
Ratio of Expenses to Average Net Assets
(excluding waivers) 0.76% 0.76%(2)
Ratio of Net Investment Income to Average
Net Assets (excluding waivers) 4.18% 4.82%(2)
- -----------------------------------------------------------------------------------------
</TABLE>
(1) Class A shares have been offered since November 3, 1997.
(2) Annualized.
20 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS
CLASS A, CLASS B AND CLASS C SHARES
<PAGE>
FOR MORE INFORMATION
More information about the funds is available in the funds' Statement of
Additional Information and annual and semiannual reports.
STATEMENT OF ADDITIONAL INFORMATION (SAI)
The SAI provides more details about the funds and their policies. A current SAI
is on file with the Securities and Exchange Commission (SEC) and is incorporated
into this prospectus by reference (which means that it is legally considered
part of this prospectus).
ANNUAL AND SEMIANNUAL REPORTS
Additional information about the funds' investments is available in the funds'
annual and semiannual reports to shareholders. In the funds' annual report, you
will find a discussion of the market conditions and investment strategies that
significantly affected the funds' performance during their last fiscal year.
You can obtain a free copy of the funds' SAI and/or free copies of the funds'
most recent annual or semiannual reports by calling Investor Services at
1-800-637-2548. The material you request will be sent by first-class mail or
other means designed to ensure equally prompt delivery, within three business
days of receipt of the request.
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC, or by sending your request and a duplicating fee to the SEC's
Public Reference Section, Washington, DC 20549-6009. For more information, call
1-800-SEC-0330.
Information about the funds is also available on the Internet. Text-only
versions of fund documents can be viewed online or down-loaded from the SEC's
Internet site at http://www.sec.gov.
SEC file number: 811-3313
FAF-1901 (11/1999)R
<PAGE>
December 1, 1999
MONEY MARKET FUNDS
CLASS Y SHARES
Government Obligations Fund
Prime Obligations Fund
Tax Free Obligations Fund
Treasury Obligations Fund
FIRST AMERICAN
FUNDS, INC.
PROSPECTUS
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved the shares of these funds, or determined if the
information in this prospectus is accurate or complete. Any statement to the
contrary is a criminal offense.
[LOGO] FIRST AMERICAN(R)
THE POWER OF DISCIPLINED INVESTING(R)
<PAGE>
TABLE OF
CONTENTS
FUND SUMMARIES
- --------------------------------------------------------------------------------
Government Obligations Fund 2
- --------------------------------------------------------------------------------
Prime Obligations Fund 4
- --------------------------------------------------------------------------------
Tax Free Obligations Fund 6
- --------------------------------------------------------------------------------
Treasury Obligations Fund 8
- --------------------------------------------------------------------------------
POLICIES & SERVICES
- --------------------------------------------------------------------------------
Buying and Selling Shares 10
- --------------------------------------------------------------------------------
Managing Your Investment 11
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
Management 12
- --------------------------------------------------------------------------------
More About The Funds 13
- --------------------------------------------------------------------------------
Financial Highlights 14
- --------------------------------------------------------------------------------
FOR MORE INFORMATION Back Cover
- --------------------------------------------------------------------------------
<PAGE>
FUND SUMMARIES
INTRODUCTION
This section of the prospectus describes the objectives of the First American
Money Market Funds, summarizes the main investment strategies used by each fund
in trying to achieve its objectives, and highlights the risks involved with
these strategies. It also provides you with information about the performance,
fees and expenses of the funds.
AN INVESTMENT IN THE FUNDS IS NOT A DEPOSIT OF U.S. BANK NATIONAL ASSOCIATION
AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR
ANY OTHER GOVERNMENT AGENCY. ALTHOUGH THE FUNDS SEEK TO PRESERVE THE VALUE OF
YOUR INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN
THE FUNDS.
1 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS
CLASS Y SHARES
<PAGE>
FUND SUMMARIES
GOVERNMENT OBLIGATIONS FUND
- --------------------------------------------------------------------------------
OBJECTIVE
Government Obligations Fund seeks maximum current income to the extent
consistent with the preservation of capital and maintenance of liquidity.
- --------------------------------------------------------------------------------
MAIN INVESTMENT STRATEGIES
Government Obligations Fund invests exclusively in short-term U.S. government
securities and repurchase agreements secured by U.S. government securities.
U.S. government securities are bonds or other debt obligations issued or
guaranteed as to principal and interest by the U.S. government or one of its
agencies or instrumentalities. U.S. Treasury securities and some obligations of
U.S. government agencies and instrumentalities are supported by the "full faith
and credit" of the United States government. Other U.S. government securities
are backed by the right of the issuer to borrow from the U.S. Treasury. Still
others are supported only by the credit of the issuer or instrumentality.
When selecting securities for the fund, the portfolio managers use a "top-down"
approach, looking first at general economic factors and market conditions, then
at individual securities.
To generate additional income, the fund may lend securities representing up to
one-third of the value of its total assets to broker-dealers, banks and other
institutions.
- --------------------------------------------------------------------------------
MAIN RISKS
The main risks of investing in this fund include:
o Although the fund seeks to preserve the value of your investment at $1.00
per share, it is possible to lose money by investing in the fund. A major
change in interest rates or a default on a security or repurchase agreement
held by the fund, or a securities lending agreement entered into by the
fund, could cause the value of your investment to decline.
o The level of income you receive from the fund will be affected by movements
in short-term interest rates.
o By investing solely in U.S. government securities and repurchase agreements
secured by those securities, the fund may offer less income than a money
market fund investing in other high-quality money market securities.
- --------------------------------------------------------------------------------
FUND PERFORMANCE
Illustrations on the next page provide you with information on the fund's
volatility and performance. Of course, past performance does not guarantee
future results.
The bar chart shows you how performance of the fund's shares has varied from
year to year. The table illustrates the fund's average annual total returns over
different time periods. Both the chart and the table assume that all
distributions have been reinvested.
2 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS
CLASS Y SHARES
<PAGE>
FUND SUMMARIES
GOVERNMENT OBLIGATIONS FUND (CONTINUED)
- --------------------------------------------------------------------------------
FUND PERFORMANCE (CONTINUED)
ANNUAL TOTAL RETURNS AS OF 12/31 EACH YEAR(1) BEST QUARTER:
Quarter ending: 3/31/91
Total Return: 1.53%
WORST QUARTER:
Quarter ending: 6/30/93
[BAR CHART] Total Return: 0.71%
5.56% 3.34% 2.89% 4.00% 5.69% 5.13% 5.26% 5.15%
- -------------------------------------------------------------
1991 1992 1993 1994 1995 1996 1997 1998
AVERAGE ANNUAL TOTAL RETURNS Inception Since
AS OF 12/31/98 Date One Year Five Years Inception
- --------------------------------------------------------------------------------
Government Obligations Fund 3/1/90 5.15% 5.04% 4.92%
- --------------------------------------------------------------------------------
(1) Total return for the period from 12/31/98 to 9/30/99 was 3.46%
- --------------------------------------------------------------------------------
FEES AND EXPENSES
The fund does not impose any sales charges (loads) or other fees when you buy,
sell or exchange shares. However, when you hold shares of the fund you
indirectly pay a portion of the fund's operating expenses. These expenses are
deducted from fund assets. The figures below are based on expenses during the
fiscal year ended September 30, 1999.(1)
- --------------------------------------------------------------------------------
SHAREHOLDER FEES
- --------------------------------------------------------------------------------
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON PURCHASES None
MAXIMUM DEFERRED SALES CHARGE (LOAD) None
ANNUAL FUND OPERATING EXPENSES AS A % OF AVERAGE NET ASSETS
- --------------------------------------------------------------------------------
Management Fees 0.40%
Distribution and Service (12b-1) Fees None
Other Expenses 0.12%
TOTAL 0.52%
- --------------------------------------------------------------------------------
(1) Actual expenses for the fiscal year were lower than those shown in the table
because of voluntary fee waivers by the advisor. See "Additional Information
-- Financial Highlights" for effective management fees after waivers. The
net expenses the fund actually paid after waivers for the fiscal year ended
September 30, 1999, were:
Waiver of Fund Expenses (0.07)%
TOTAL ACTUAL ANNUAL OPERATING EXPENSES (AFTER WAIVERS) 0.45%
THE ADVISOR INTENDS TO WAIVE FEES DURING THE CURRENT FISCAL YEAR SO THAT TOTAL
FUND OPERATING EXPENSES DO NOT EXCEED 0.45%. FEE WAIVERS MAY BE DISCONTINUED AT
ANY TIME.
- --------------------------------------------------------------------------------
EXAMPLE This example is intended to help you compare the cost of investing in
the fund with the cost of investing in other mutual funds. It assumes that you
invest $10,000 for the time periods indicated, that your investment has a 5%
return each year, and that the fund's operating expenses remain the same.
Although your actual costs and returns may differ, based on these assumptions
your costs would be:
- --------------------------------------------------------------------------------
1 year $ 53
3 years $167
5 years $291
10 years $653
3 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS
CLASS Y SHARES
<PAGE>
FUND SUMMARIES
PRIME OBLIGATIONS FUND
- --------------------------------------------------------------------------------
OBJECTIVE
Prime Obligations Fund seeks maximum current income to the extent consistent
with preservation of capital and maintenance of liquidity.
- --------------------------------------------------------------------------------
MAIN INVESTMENT STRATEGIES
Prime Obligations Fund invests in high-quality short-term debt obligations,
including:
o securities issued by the U.S. government or one of its agencies or
instrumentalities;
o U.S. dollar-denominated obligations of domestic and foreign banks with total
assets of at least $500 million (including fixed and variable rate
certificates of deposit, time deposits and bankers' acceptances);
o commercial paper;
o non-convertible corporate debt securities;
o loan participation interests; and
o repurchase agreements for the securities in which the fund may invest.
When selecting securities for the fund, the portfolio managers use a "top-down"
approach, looking first at general economic factors and market conditions, then
at individual securities.
The fund may invest up to 25% of its total assets in dollar-denominated
obligations of U.S. branches of foreign banks which are subject to the same
regulation as U.S. banks. The fund also may invest up to 25% of its total
assets, collectively, in dollar-denominated obligations of foreign branches of
domestic banks, foreign banks and foreign corporations.
- --------------------------------------------------------------------------------
MAIN RISKS
The main risks of investing in this fund include:
o Although the fund seeks to preserve the value of your investment at $1.00
per share, it is possible to lose money by investing in the fund. A major
change in interest rates or a default on a security or repurchase agreement
held by the fund could cause the value of your investment to decline.
o The level of income you receive from the fund will be affected by movements
in short-term interest rates.
o Foreign securities in which the fund invests, although dollar denominated,
may present some additional risk. Political or social instability or
diplomatic developments could adversely affect the securities. There is also
the risk of possible withholding taxes, seizure of foreign deposits,
currency controls, interest limitations, or other governmental restrictions
which might affect the payment of principal or interest on securities owned
by the fund. In addition, there may be less public information available
about foreign corporations and foreign banks and their branches.
- --------------------------------------------------------------------------------
FUND PERFORMANCE
Illustrations on the next page provide you with information on the fund's
volatility and performance. Of course, past performance does not guarantee
future results.
The bar chart shows you how performance of the fund's shares has varied from
year to year. The table illustrates the fund's average annual total returns over
different time periods. Both the chart and the table assume that all
distributions have been reinvested.
4 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS
CLASS Y SHARES
<PAGE>
FUND SUMMARIES
PRIME OBLIGATIONS FUND (CONTINUED)
- --------------------------------------------------------------------------------
FUND PERFORMANCE (CONTINUED)
ANNUAL TOTAL RETURNS AS OF 12/31 EACH YEAR(1) BEST QUARTER:
Quarter ending: 3/31/91
Total Return 1.65%
WORST QUARTER:
Quarter ending: 6/30/93
[BAR CHART] Total Return 0.73%
5.86% 3.54% 2.99% 4.08% 5.78% 5.23% 5.39% 5.32%
- -------------------------------------------------------------
1991 1992 1993 1994 1995 1996 1997 1998
AVERAGE ANNUAL TOTAL RETURNS Inception Since
AS OF 12/31/98 Date One Year Five Years Inception
- --------------------------------------------------------------------------------
Prime Obligations Fund 3/1/90 5.32% 5.16% 5.09%
- --------------------------------------------------------------------------------
(1) Total return for the period from 12/31/98 to 9/30/99 was 3.58%.
- --------------------------------------------------------------------------------
FEES AND EXPENSES
The fund does not impose any sales charges (loads) or other fees when you buy,
sell or exchange shares. However, when you hold shares of the fund you
indirectly pay a portion of the fund's operating expenses. These expenses are
deducted from fund assets. The figures below are based on expenses during the
fiscal year ended September 30, 1999.(1)
- --------------------------------------------------------------------------------
SHAREHOLDER FEES
- --------------------------------------------------------------------------------
MAXIMUM SALES CHARGE (LOAD) None
MAXIMUM DEFERRED SALES CHARGE (LOAD) PROCEEDS, WHICHEVER IS LESS None
ANNUAL FUND OPERATING EXPENSES AS A % OF AVERAGE NET ASSETS
- --------------------------------------------------------------------------------
Management Fees 0.40%
Distribution and Service (12b-1) Fees None
Other Expenses 0.11%
TOTAL 0.51%
- --------------------------------------------------------------------------------
(1) Actual expenses for the fiscal year were lower than those shown in the table
because of voluntary fee waivers by the advisor. See "Additional Information
-- Financial Highlights" for effective management fees after waivers. The
net expenses the fund actually paid after waivers for the fiscal year ended
September 30, 1999, were:
Waiver of Fund Expenses (0.06)%
TOTAL ACTUAL ANNUAL OPERATING EXPENSES (AFTER WAIVERS) 0.45%
THE ADVISOR INTENDS TO WAIVE FEES DURING THE CURRENT FISCAL YEAR SO THAT TOTAL
FUND OPERATING EXPENSES DO NOT EXCEED 0.45%. FEE WAIVERS MAY BE DISCONTINUED AT
ANY TIME.
- --------------------------------------------------------------------------------
EXAMPLE This example is intended to help you compare the cost of investing in
the fund with the cost of investing in other mutual funds. It assumes that you
invest $10,000 for the time periods indicated, that your investment has a 5%
return each year, and that the fund's operating expenses remain the same.
Although your actual costs and returns may differ, based on these assumptions
your costs would be:
- --------------------------------------------------------------------------------
1 year $ 52
3 years $164
5 years $285
10 years $640
5 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS
CLASS Y SHARES
<PAGE>
FUND SUMMARIES
TAX FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
OBJECTIVE
Tax Free Obligations Fund seeks maximum current income exempt from federal
income taxes consistent with the preservation of capital and maintenance of
liquidity.
- --------------------------------------------------------------------------------
MAIN INVESTMENT STRATEGIES
Tax Free Obligations Fund invests at least 80% of its total assets in
high-quality, short-term municipal securities that pay interest that is exempt
from federal income tax, including the federal alternative minimum tax.
Municipal securities are issued by state and local governments and certain U.S.
territorial possessions to finance public infrastructure projects such as
streets and highways, schools, water and sewer systems, hospitals, and airports.
They also may be issued to refinance outstanding obligations as well as to
obtain funds for general operating expenses and for loans to other public
institutions and facilities. There are two principal classifications of
municipal securities:
o general obligation bonds, which are backed by the full faith, credit and
taxing power of the issuer; and
o revenue bonds, which are payable only from the revenues generated by a
specific project or from another specific revenue source.
The balance of the fund's total assets may be invested in taxable money market
securities and municipal securities subject to the alternative minimum tax.
However, the fund currently does not intend to invest in these types of
securities.
When selecting securities for the fund, the portfolio managers use a "top-down"
approach, looking first at general economic factors and market conditions, then
at individual securities.
- --------------------------------------------------------------------------------
MAIN RISKS
The main risks of investing in this fund include:
o Although the fund seeks to preserve the value of your investment at $1.00
per share, it is possible to lose money by investing in the fund. A major
change in interest rates or a default on a security or repurchase agreement
held by the fund could cause the value of your investment to decline.
o The level of income you receive from the fund will be affected by movements
in short-term interest rates.
o The value of municipal securities owned by the fund may be adversely
affected by future changes in federal income tax laws, including rate
reductions or the imposition of a flat tax.
- --------------------------------------------------------------------------------
FUND PERFORMANCE
Illustrations on the next page provide you with information on the fund's
volatility and performance. Of course, past performance does not guarantee
future results.
The bar chart shows you how performance of the fund's shares has varied from
year to year. The table illustrates the fund's average annual total returns over
different time periods. Both the chart and the table assume that all
distributions have been reinvested.
6 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS
CLASS Y SHARES
<PAGE>
FUND SUMMARIES
TAX FREE OBLIGATIONS FUND (CONTINUED)
- --------------------------------------------------------------------------------
FUND PERFORMANCE (CONTINUED)
ANNUAL TOTAL RETURNS AS OF 12/31 EACH YEAR(1) BEST QUARTER:
Quarter ending: 6/30/97
[BAR CHART] Total Return 0.85%
3.06% 3.26% 3.12%
- ------------------------------------------------ WORST QUARTER:
1996 1997 1998 Quarter ending: 3/31/97
Total Return 0.73%
AVERAGE ANNUAL TOTAL RETURNS Inception Since
AS OF 12/31/98(2) Date One Year Inception
- --------------------------------------------------------------------------------
Tax Free Obligations Fund 1/9/95 3.12% 3.22%
- --------------------------------------------------------------------------------
(1) Total return for the period from 12/31/98 to 9/30/99 was 2.07%.
(2) Performance prior to 11/25/97 is that of Qualivest Tax-Free Money Market
Fund.
- --------------------------------------------------------------------------------
FEES AND EXPENSES
The fund does not impose any sales charges (loads) or other fees when you buy,
sell or exchange shares. However, when you hold shares of the fund you
indirectly pay a portion of the fund's operating expenses. These expenses are
deducted from fund assets. The figures below are based on expenses during the
fiscal year ended September 30, 1999.(1)
- --------------------------------------------------------------------------------
SHAREHOLDER FEES
- --------------------------------------------------------------------------------
MAXIMUM SALES CHARGE (LOAD) None
MAXIMUM DEFERRED SALES CHARGE (LOAD) PROCEEDS, WHICHEVER IS LESS None
ANNUAL FUND OPERATING EXPENSES AS A % OF AVERAGE NET ASSETS
- --------------------------------------------------------------------------------
Management Fees 0.40%
Distribution and Service (12b-1) Fees None
Other Expenses 0.12%
TOTAL 0.52%
- --------------------------------------------------------------------------------
(1) Actual expenses for the fiscal year were lower than those shown in the table
because of voluntary fee waivers by the advisor. See "Additional Information
-- Financial Highlights" for effective management fees after waivers. The
net expenses the fund actually paid after waivers for the fiscal year ended
September 30, 1999, were:
Waiver of Fund Expenses (0.07)%
TOTAL ACTUAL ANNUAL OPERATING EXPENSES (AFTER WAIVERS) 0.45%
THE ADVISOR INTENDS TO WAIVE FEES DURING THE CURRENT FISCAL YEAR SO THAT TOTAL
FUND OPERATING EXPENSES DO NOT EXCEED 0.45%. FEE WAIVERS MAY BE DISCONTINUED AT
ANY TIME.
- --------------------------------------------------------------------------------
EXAMPLE This example is intended to help you compare the cost of investing in
the fund with the cost of investing in other mutual funds. It assumes that you
invest $10,000 for the time periods indicated, that your investment has a 5%
return each year, and that the fund's operating expenses remain the same.
Although your actual costs and returns may differ, based on these assumptions
your costs would be:
- --------------------------------------------------------------------------------
1 year $ 53
3 years $167
5 years $291
10 years $653
7 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS
CLASS Y SHARES
<PAGE>
FUND SUMMARIES
TREASURY OBLIGATIONS FUND
- --------------------------------------------------------------------------------
OBJECTIVE
Treasury Obligations Fund seeks maximum current income consistent with the
preservation of capital and maintenance of liquidity.
- --------------------------------------------------------------------------------
MAIN INVESTMENT STRATEGIES
Treasury Obligations Fund invests exclusively in short-term U.S. Treasury
obligations and repurchase agreements secured by U.S. Treasury obligations. The
U.S. Treasury obligations in which the fund invests include U.S. Treasury bonds,
notes and bills. These types of Treasury securities are essentially the same
except for differences in interest rates, maturities and dates of issuance. U.S.
Treasury obligations are backed by the full faith and credit of the United
States government.
When selecting securities for the fund, the portfolio managers use a "top-down"
approach, looking first at general economic factors and market conditions, then
at individual securities.
- --------------------------------------------------------------------------------
MAIN RISKS
The main risks of investing in this fund include:
o Although the fund seeks to preserve the value of your investment at $1.00
per share, it is possible to lose money by investing in the fund. A major
change in interest rates or a default on a repurchase agreement held by the
fund could cause the value of your investment to decline.
o The level of income you receive from the fund will be affected by movements
in short-term interest rates.
o By investing solely in U.S. Treasury obligations and repurchase agreements
secured by those securities, the fund may offer less income than a money
market fund investing in other high-quality money market securities.
- --------------------------------------------------------------------------------
FUND PERFORMANCE
Illustrations on the next page provide you with information on the fund's
volatility and performance. Of course, past performance does not guarantee
future results.
The bar chart shows you how performance of the fund's shares has varied from
year to year. The table illustrates the fund's average annual total returns over
different time periods. Both the chart and the table assume that all
distributions have been reinvested.
8 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS
CLASS Y SHARES
<PAGE>
FUND SUMMARIES
TREASURY OBLIGATIONS FUND (CONTINUED)
- --------------------------------------------------------------------------------
FUND PERFORMANCE (CONTINUED)
ANNUAL TOTAL RETURNS AS OF 12/31 EACH YEAR(1) BEST QUARTER:
Quarter ending: 12/31/97
[BAR CHART] Total Return 1.31%
5.05% 5.20% 5.10%
- ------------------------------------------------ WORST QUARTER:
1996 1997 1998 Quarter ending: 12/31/98
Total Return 1.15%
AVERAGE ANNUAL TOTAL RETURNS Inception Since
AS OF 12/31/98 Date One Year Inception
- --------------------------------------------------------------------------------
Treasury Obligations Fund 1/24/95 5.10% 5.23%
- --------------------------------------------------------------------------------
(1) Total return for the period from 12/31/98 to 9/30/99 was 3.38%.
- --------------------------------------------------------------------------------
FEES AND EXPENSES
The fund does not impose any sales charges (loads) or other fees when you buy,
sell or exchange shares. However, when you hold shares of the fund you
indirectly pay a portion of the fund's operating expenses. These expenses are
deducted from fund assets. The figures below are based on expenses during the
fiscal year ended September 30, 1999.(1)
- --------------------------------------------------------------------------------
SHAREHOLDER FEES
- --------------------------------------------------------------------------------
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON PURCHASES None
MAXIMUM DEFERRED SALES CHARGE (LOAD) None
ANNUAL FUND OPERATING EXPENSES AS A % OF AVERAGE NET ASSETS
- --------------------------------------------------------------------------------
Management Fees 0.40%
Distribution and Service (12b-1) Fees None
Other Expenses 0.11%
TOTAL 0.51%
- --------------------------------------------------------------------------------
(1) Actual expenses for the fiscal year were lower than those shown in the table
because of voluntary fee waivers by the advisor. See "Additional Information
-- Financial Highlights" for effective management fees after waivers. The
net expenses the fund actually paid after waivers for the fiscal year ended
September 30, 1999, were:
Waiver of Fund Expenses (0.06)%
TOTAL ACTUAL ANNUAL OPERATING EXPENSES (AFTER WAIVERS) 0.45%
THE ADVISOR INTENDS TO WAIVE FEES DURING THE CURRENT FISCAL YEAR SO THAT TOTAL
FUND OPERATING EXPENSES DO NOT EXCEED 0.45%. FEE WAIVERS MAY BE DISCONTINUED AT
ANY TIME.
- --------------------------------------------------------------------------------
EXAMPLE This example is intended to help you compare the cost of investing in
the fund with the cost of investing in other mutual funds. It assumes that you
invest $10,000 for the time periods indicated, that your investment has a 5%
return each year, and that the fund's operating expenses remain the same.
Although your actual costs and returns may differ, based on these assumptions
your costs would be:
- --------------------------------------------------------------------------------
1 year $ 52
3 years $164
5 years $285
10 years $640
9 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS
CLASS Y SHARES
<PAGE>
POLICIES & SERVICES
BUYING AND SELLING SHARES
Class Y shares are offered through banks and other financial institutions that
have entered into sales agreements with the funds' distributor and that hold the
shares in an omnibus account with the transfer agent. Class Y shares are
available to certain accounts for which the financial institution acts in a
fiduciary, agency or custodial capacity, such as certain trust accounts and
investment advisory accounts. To find out whether you may purchase Class Y
shares, contact your financial institution.
- --------------------------------------------------------------------------------
CALCULATING YOUR SHARE PRICE
Your purchase price will be equal to the fund's net asset value (NAV) per share,
which is generally calculated as of the close of regular trading on the New York
Stock Exchange (usually 3:00 p.m. Central time) every day the exchange and
federally chartered banks are open. As discussed below, your order must be
received by the funds by 11:30 a.m. Central time for Tax Free Obligations Fund,
and by 3:00 p.m. Central time for Government Obligations Fund, Prime Obligations
Fund and Treasury Obligations Fund, in order for shares to be priced at that
day's NAV.
A fund's NAV is equal to the market value of its investments and other assets,
less any liabilities, divided by the number of fund shares. The securities held
by the funds are valued on the basis of amortized cost. This involves valuing an
instrument at its cost and thereafter assuming a constant amortization of any
discount or premium until the instrument's maturity, rather than looking at
actual changes in the market value of the instrument. Each fund's net asset
value is normally expected to be $1 per share.
- --------------------------------------------------------------------------------
HOW TO BUY AND SELL SHARES
You may purchase or sell shares by calling your financial institution. Shares
may be purchased and sold only on days when both the New York Stock Exchange and
federally chartered banks are open. Purchases and sales of shares may also be
restricted in the event of an early or unscheduled close of the New York Stock
Exchange.
When purchasing shares, payment must be made by wire transfer, which can be
arranged by your financial institution.
Purchase orders and redemption requests must be received by your financial
institution by the time specified by the institution to be assured same day
processing. In order for shares to be purchased or sold at that day's price, the
funds must receive purchase orders or redemption requests by 11:30 a.m. Central
time for Tax Free Obligations Fund, and by 3:00 p.m. Central time for Government
Obligations Fund, Prime Obligations Fund and Treasury Obligations Fund. It is
the responsibility of your financial institution to promptly transmit orders to
the funds. In addition, a purchase order will be effective on the day given only
if the funds' custodian receives payment by wire before the close of business.
If the fund receives a redemption request by the time specified above, payment
will generally be made the same day by transfer of federal funds. Otherwise,
payment will generally be made on the next business day.
- --------------------------------------------------------------------------------
HOW TO EXCHANGE SHARES
If your investment goals or your financial needs change, you may exchange your
shares for Class Y shares of another First American fund. Exchanges will be made
at the net asset value per share of each fund at the time of the exchange. There
is no fee to exchange shares. If you are no longer eligible to hold Class Y
shares, for example, if you decide to discontinue your fiduciary, agency or
custodian account, you may exchange your shares for Class A shares at net asset
value. Class A shares have higher expenses than Class Y shares.
To exchange your shares, call your financial institution. In order for your
shares to be exchanged the same day, you must call your financial institution by
the time specified by the institution and your exchange order must be received
by the funds by 11:30 a.m. Central time for Tax Free Obligations Fund, and by
3:00 p.m. Central time for Government Obligations Fund, Prime Obligations Fund
and Treasury Obligations Fund. It is the responsibility of your financial
institution to promptly transmit your exchange order to the funds. Before
exchanging into any fund, be sure to read its prospectus carefully. A fund may
change or cancel its exchange policies at any time. You will be notified of any
changes. The funds have the right to limit exchanges to four times per year.
10 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS
CLASS Y SHARES
<PAGE>
POLICIES & SERVICES
MANAGING YOUR INVESTMENT
- --------------------------------------------------------------------------------
STAYING INFORMED
SHAREHOLDER REPORTS
Shareholder reports are mailed twice a year, in November and May. They include
financial statements, performance information, a message from your portfolio
managers and, on an annual basis, the auditor's report.
In an attempt to reduce shareholder costs and help eliminate duplication, the
funds will try to limit their mailings to one report for each address that lists
one or more shareholders with the same last name. If you would like additional
copies, please call 1-800-637-2548.
STATEMENTS AND CONFIRMATIONS
Statements summarizing activity in your account are mailed at least quarterly.
Confirmations are mailed following each purchase or sale of fund shares.
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS
Dividends from a fund's net investment income are declared daily, starting on
the day you purchase your shares, and paid monthly. You will not receive a
dividend for the day on which you sell shares.
Dividends will be reinvested in additional shares of the same fund, unless you
request that distributions be reinvested in another First American fund or paid
in cash. This request may be made on your new account form or by writing to the
fund or your financial institution. If you request that your distributions be
paid in cash but those distributions cannot be delivered because of an incorrect
mailing address, the undelivered distributions and all future distributions will
be reinvested in fund shares.
- --------------------------------------------------------------------------------
TAXES
Some of the tax consequences of investing in the funds are discussed below. More
information about taxes is in the Statement of Additional Information. However,
because everyone's tax situation is unique, always consult your tax professional
about federal, state and local tax consequences.
For Government Obligations Fund, Prime Obligations Fund and Treasury Obligations
Fund, dividends you receive from the fund are generally taxable as ordinary
income, whether you reinvest them or take them in cash. Dividends attributable
to income from U.S. government securities may be exempt from state personal
income taxes. You should consult your tax advisor for more information.
Tax Free Obligations Fund intends to meet certain federal tax requirements so
that distributions of tax-exempt interest income may be treated as
"exempt-interest dividends." These dividends are not subject to regular federal
tax. However, although it has no current intention of doing so, the fund may
invest up to 20% of its net assets in municipal securities the interest on which
is subject to the federal alternative minimum tax. Any portion of
exempt-interest dividends attributable to interest on these securities may
increase some shareholders' alternative minimum tax.
11 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS
CLASS Y SHARES
<PAGE>
ADDITIONAL INFORMATION
MANAGEMENT
INVESTMENT ADVISOR
First American Asset Management
601 Second Avenue South
Minneapolis, Minnesota 55402
U.S. Bank National Association (U.S. Bank), acting through its First American
Asset Management division, is the funds' investment advisor. First American
Asset Management provides investment management services to individuals and
institutions, including corporations, foundations, pensions and retirement
plans. As of September 30, 1999, it had more than $78 billion in assets under
management, including investment company assets of more than $32 billion. As
investment advisor, First American Asset Management manages the funds' business
and investment activities, subject to the authority of the board of directors.
Each fund pays the investment advisor a monthly fee for providing investment
advisory services. During their most recent fiscal years, after taking into
account fee waivers, the funds paid the following investment advisory fees to
First American Asset Management:
ADVISORY FEE
AS A % OF
AVERAGE DAILY
NET ASSETS
- --------------------------------------------------------------------------------
Government Obligations Fund 0.33%
Prime Obligations Fund 0.34%
Tax Free Obligations Fund 0.33%
Treasury Obligations Fund 0.34%
- --------------------------------------------------------------------------------
CUSTODIAN
U.S. Bank National Association
U.S. Bank Center
180 East Fifth Street
St. Paul, Minnesota 55101
ADMINISTRATOR*
U.S. Bank National Association
U.S. Bank Place
601 Second Avenue South
Minneapolis, Minnesota 55402
DISTRIBUTOR
SEI Investments Distribution Co.
Oaks, Pennsylvania 19456
*Effective January 1, 2000.
ADDITIONAL COMPENSATION
U.S. Bank and other affiliates of U.S. Bancorp may act as fiduciary with respect
to plans subject to the Employee Retirement Income Security Act of 1974 (ERISA)
and other trust and agency accounts that invest in the funds. As described
above, U.S. Bank receives compensation for acting as the funds' investment
advisor. U.S. Bank and its affiliates also receive compensation in connection
with the following:
CUSTODY SERVICES. As compensation for acting as the funds' custodian, U.S. Bank
is paid monthly fees equal, on an annual basis, to 0.03% of a fund's average
daily net assets. In addition, U.S. Bank is reimbursed for its out-of-pocket
expenses incurred while providing custody services to the funds.
ADMINISTRATIVE SERVICES. U.S. Bank provides or compensates others to provide
administrative services to the funds including general administrative and
accounting services, transfer agency and dividend disbursing services, and
shareholder services. The funds pay U.S. Bank an asset-based monthly fee equal,
on an annual basis, to 0.07% of the aggregate average daily net assets of all
open-end mutual funds in the First American fund family up to $8 billion and
0.055% of the aggregate average daily net assets of all open-end mutual funds in
the First American fund family in excess of $8 billion. Additionally, the funds
pay U.S. Bank fees based upon the number of funds and accounts maintained.
SECURITIES LENDING SERVICES. In connection with lending its portfolio
securities, Government Obligations Fund pays administrative and custodial fees
to U.S. Bank which are equal to 40% of the fund's income from these securities
lending transactions.
BROKERAGE TRANSACTIONS. The funds purchase most of their portfolio securities
directly from the issuer or from an underwriter or market maker, and not from a
broker acting as agent. However, the funds may from time to time use brokers
when buying portfolio securities. The funds' investment advisor may place trades
through its affiliates, U.S. Bancorp Investments, Inc. and U.S. Bancorp Piper
Jaffray Inc., which will earn commissions on such transactions.
Sales of Fund Shares. U.S. Bancorp Investments, Inc. and U.S. Bancorp Piper
Jaffray, Inc., broker-dealers affiliated with U.S. Bank, have entered into
agreements with the Funds' distributor to sell Fund shares and will earn annual
shareholder servicing fees in connection with these sales.
PORTFOLIO MANAGEMENT
Each fund's investments are managed by a team of persons associated with First
American Asset Management.
12 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS
CLASS Y SHARES
<PAGE>
ADDITIONAL INFORMATION
MORE ABOUT THE FUNDS
- --------------------------------------------------------------------------------
INVESTMENT STRATEGIES
The funds' main investment strategies are discussed in the "Fund Summaries"
section. These are the strategies that the funds' investment advisor believes
are most likely to be important in trying to achieve the funds' objectives. You
should be aware that each fund may also use strategies and invest in securities
that are not described in this prospectus, but that are described in the
Statement of Additional Information (SAI). For a copy of the SAI, call Investor
Services at 1-800-637-2548.
In addition to the securities specified in the "Fund Summaries" section, each
fund may invest in other money market funds that invest in the same types of
securities as the respective fund, including money market funds advised by U.S.
Bank.
INVESTMENT APPROACH
Each fund complies with Securities and Exchange Commission regulations that
apply to money market funds. These regulations require that each fund's
investments mature within 397 days from the date of purchase, and that the
average maturity of each fund's investments (on a dollar-weighted basis) be 90
days or less. The funds may invest in securities with variable or floating
interest rates and securities with demand features. The maturities of these
securities are determined according to regulations which allow the funds to
consider some of these securities as having maturities shorter than their stated
maturity dates. All of the funds' investments must be in U.S. dollar-denominated
high quality securities which have been determined by the funds' advisor to
present minimal credit risks.
When selecting securities for the funds, the portfolio managers use a "top-down"
approach, looking first at general economic factors and market conditions, then
at individual securities. The portfolio managers look for value while adhering
to the credit and other restrictions on money market funds.
- --------------------------------------------------------------------------------
YEAR 2000 ISSUES
Like other mutual funds and business and financial organizations, the funds
could be adversely affected if the computer systems used by the funds' advisor,
other service providers and entities with computer systems that are linked to
fund records do not properly process and calculate date-related information from
and after January 1, 2000. While year 2000-related computer problems could have
a negative effect on the funds, the funds' administrator has undertaken a
program designed to assess and monitor the steps being taken by the funds'
service providers to address year 2000 issues. This program includes seeking
assurances from service providers that their systems are or will be year 2000
compliant and reviewing service providers' periodic reports to monitor their
status concerning their year 2000 readiness and compliance.
The administrator and the advisor also report regularly to the funds' board of
directors concerning their own and other service providers' progress toward year
2000 readiness. Although these reports indicate that service providers are or
expect to be year 2000 compliant, there can be no assurance that this will be
the case in all instances or that year 2000 difficulties experienced by others
in the financial services industry will not impact the funds. In addition, there
can be no assurance that year 2000 difficulties will not have an adverse effect
on the funds' investments or on global markets or economies, generally. The
funds are not bearing any of the expenses incurred by their service providers in
preparing for the year 2000.
13 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS
CLASS Y SHARES
<PAGE>
ADDITIONAL INFORMATION
FINANCIAL HIGHLIGHTS
The tables that follow present performance information about the Class Y shares
of each fund. This information is intended to help you understand each fund's
financial performance for the past five years or, if shorter, the period of the
fund's operations. Some of this information reflects financial results for a
single fund share. Total returns in the tables represent the rate that you would
have earned or lost on an investment in a fund, assuming you reinvested all of
your dividends and distributions.
The information for the fiscal year ended September 30, 1999, has been audited
by Ernst & Young LLP, independent auditors, whose report, along with the funds'
financial statements, is included in the funds' annual report, which is
available upon request. The information for the fiscal periods ended on or
before September 30, 1998, has been audited by other auditors.
GOVERNMENT OBLIGATIONS FUND
<TABLE>
<CAPTION>
Fiscal year ended September 30,
1999 1998 1997 1996 1995
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value, Beginning of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net Investment Income 0.05 0.05 0.05 0.05 0.05
Dividends (from Net Investment Income) (0.05) (0.05) (0.05) (0.05) (0.05)
---------------------------------------------------------------
Net Asset Value, End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
===============================================================
Total Return 4.67% 5.30% 5.20% 5.24% 5.55%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000) $938,897 $1,000,043 $946,196 $777,594 $551,286
Ratio of Expenses to Average Net Assets 0.45% 0.45% 0.45% 0.45% 0.45%
Ratio of Net Investment Income to Average Net Assets 4.57% 5.18% 5.07% 5.10% 5.44%
Ratio of Expenses to Average Net Assets
(excluding waivers) 0.52% 0.52% 0.52% 0.54% 0.60%
Ratio of Net Investment Income to Average Net Assets
(excluding waivers) 4.50% 5.11% 5.00% 5.01% 5.29%
----------------------------------------------------------------------------------------------------------------------
</TABLE>
PRIME OBLIGATIONS FUND
<TABLE>
<CAPTION>
Fiscal year ended September 30,
1999 1998 1997 1996 1995
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value, Beginning of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net Investment Income 0.05 0.05 0.05 0.05 0.06
Dividends (from Net Investment Income) (0.05) (0.05) (0.05) (0.05) (0.06)
-------------------------------------------------------------------------
Net Asset Value, End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
=========================================================================
Total Return 4.89% 5.42% 5.32% 5.34% 5.64%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000) $6,228,207 $5,445,685 $3,615,873 $3,166,213 $2,911,055
Ratio of Expenses to Average Net Assets 0.45% 0.45% 0.45% 0.45% 0.45%
Ratio of Net Investment Income to Average Net Assets 4.78% 5.28% 5.19% 5.20% 5.53%
Ratio of Expenses to Average Net Assets
(excluding waivers) 0.51% 0.53% 0.52% 0.54% 0.60%
Ratio of Net Investment Income to Average Net Assets
(excluding waivers) 4.72% 5.20% 5.12% 5.11% 5.38%
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
14 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS
CLASS Y SHARES
<PAGE>
ADDITIONAL INFORMATION
FINANCIAL HIGHLIGHTS (CONTINUED)
TAX FREE OBLIGATIONS FUND(1)
<TABLE>
<CAPTION>
Fiscal year Fiscal period Fiscal period
ended ended ended
September 30, September 30, November 30, Fiscal year ended July 31,
1999 1998 1997 1997 1996 1995(2)
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value, Beginning of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net Investment Income 0.03 0.03 0.01 0.03 0.03 0.02
Dividends (from Net Investment Income) (0.03) (0.03) (0.01) (0.03) (0.03) (0.02)
---------------------------------------------------------------------------------
Net Asset Value, End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
=================================================================================
Total Return 2.82% 2.67% 1.08% 3.17% 3.22% 1.88%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000) $338,490 $272,995 $10,703 $9,137 $3,895 $1,264
Ratio of Expenses to Average Net Assets 0.45% 0.45%(3) 0.64%(3) 0.48% 0.41% 0.59%(3)
Ratio of Net Investment Income to Average
Net Assets 2.75% 3.13%(3) 3.09%(3) 3.13% 2.92% 3.38%(3)
Ratio of Expenses to Average Net Assets
(excluding waivers) 0.52% 0.58%(3) 0.97%(3) 0.83% 0.79% 0.94%(3)
Ratio of Net Investment Income to Average
Net Assets (excluding waivers) 2.68% 3.00%(3) 2.76%(3) 2.78% 2.54% 3.03%(3)
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The financial highlights for Tax Free Obligations Fund include the
historical financial highlights of the Qualivest Tax-Free Money Market Fund.
The assets of Qualivest Tax-Free Money Market Fund were acquired by Tax Free
Obligations Fund on November 25, 1997.
(2) Class Y shares have been offered since January 9, 1995.
(3) Annualized.
TREASURY OBLIGATIONS FUND
<TABLE>
<CAPTION>
Fiscal year ended September 30,
1999 1998 1997 1996 1995(1)
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value, Beginning of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net Investment Income 0.05 0.05 0.05 0.05 0.04
Dividends (from Net Investment Income) (0.05) (0.05) (0.05) (0.05) (0.04)
------------------------------------------------------------------
Net Asset Value, End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
==================================================================
Total Return 4.57% 5.26% 5.14% 5.15% 3.83%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000) $2,620,803 $1,803,608 $897,797 $317,392 $117,171
Ratio of Expenses to Average Net Assets 0.45% 0.45% 0.45% 0.45% 0.45%(2)
Ratio of Net Investment Income to Average Net Assets 4.49% 5.13% 5.03% 5.00% 5.50%(2)
Ratio of Expenses to Average Net Assets
(excluding waivers) 0.51% 0.51% 0.53% 0.55% 0.55%(2)
Ratio of Net Investment Income to Average Net Assets
(excluding waivers) 4.43% 5.07% 4.95% 4.90% 5.40%(2)
------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Class Y shares have been offered since January 24, 1995.
(2) Annualized.
15 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS
CLASS Y SHARES
<PAGE>
FOR MORE INFORMATION
More information about the funds is available in the funds' Statement of
Additional Information and annual and semiannual reports.
STATEMENT OF ADDITIONAL INFORMATION (SAI)
The SAI provides more details about the funds and their policies. A current SAI
is on file with the Securities and Exchange Commission (SEC) and is incorporated
into this prospectus by reference (which means that it is legally considered
part of this prospectus).
ANNUAL AND SEMIANNUAL REPORTS
Additional information about the funds' investments is available in the funds'
annual and semiannual reports to shareholders. In the funds' annual report, you
will find a discussion of the market conditions and investment strategies that
significantly affected the funds' performance during their last fiscal year.
You can obtain a free copy of the funds' SAI and/or free copies of the funds'
most recent annual or semiannual reports by calling Investor Services at
1-800-637-2548. The material you request will be sent by first-class mail or
other means designed to ensure equally prompt delivery, within three business
days of receipt of the request.
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC, or by sending your request and a duplicating fee to the SEC's
Public Reference Section, Washington, DC 20549-6009. For more information, call
1-800-SEC-0330.
Information about the funds is also available on the Internet. Text-only
versions of fund documents can be viewed online or down-loaded from the SEC's
Internet site at http://www.sec.gov.
SEC file number: 811-3313
FAF-1902 (11/1999)Y
<PAGE>
DECEMBER 1, 1999
MONEY MARKET FUNDS
CLASS D SHARES
Government Obligations Fund
Prime Obligations Fund
Tax Free Obligations Fund
Treasury Obligations Fund
FIRST AMERICAN
FUNDS, INC.
PROSPECTUS
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved the shares of these funds, or determined if the
information in this prospectus is accurate or complete. Any statement to the
contrary is a criminal offense.
[LOGO] FIRST AMERICAN(R)
THE POWER OF DISCIPLINED INVESTING(R)
<PAGE>
TABLE OF
CONTENTS
FUND SUMMARIES
- --------------------------------------------------------------------------------
Government Obligations Fund 2
- --------------------------------------------------------------------------------
Prime Obligations Fund 4
- --------------------------------------------------------------------------------
Tax Free Obligations Fund 6
- --------------------------------------------------------------------------------
Treasury Obligations Fund 8
- --------------------------------------------------------------------------------
POLICIES & SERVICES
- --------------------------------------------------------------------------------
Buying and Selling Shares 10
- --------------------------------------------------------------------------------
Managing Your Investment 11
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
Management 12
- --------------------------------------------------------------------------------
More About The Funds 13
- --------------------------------------------------------------------------------
Financial Highlights 14
- --------------------------------------------------------------------------------
FOR MORE INFORMATION Back Cover
- --------------------------------------------------------------------------------
<PAGE>
FUND SUMMARIES
INTRODUCTION
This section of the prospectus describes the objectives of the First American
Money Market Funds, summarizes the main investment strategies used by each fund
in trying to achieve its objectives, and highlights the risks involved with
these strategies. It also provides you with information about the performance,
fees and expenses of the funds.
AN INVESTMENT IN THE FUNDS IS NOT A DEPOSIT OF U.S. BANK NATIONAL ASSOCIATION
AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR
ANY OTHER GOVERNMENT AGENCY. ALTHOUGH THE FUNDS SEEK TO PRESERVE THE VALUE OF
YOUR INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN
THE FUNDS.
1 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS
CLASS D SHARES
<PAGE>
FUND SUMMARIES
GOVERNMENT OBLIGATIONS FUND
- --------------------------------------------------------------------------------
OBJECTIVE
Government Obligations Fund seeks maximum current income to the extent
consistent with the preservation of capital and maintenance of liquidity.
- --------------------------------------------------------------------------------
MAIN INVESTMENT STRATEGIES
Government Obligations Fund invests exclusively in short-term U.S. government
securities and repurchase agreements secured by U.S. government securities.
U.S. government securities are bonds or other debt obligations issued or
guaranteed as to principal and interest by the U.S. government or one of its
agencies or instrumentalities. U.S. Treasury securities and some obligations of
U.S. government agencies and instrumentalities are supported by the "full faith
and credit" of the United States government. Other U.S. government securities
are backed by the right of the issuer to borrow from the U.S. Treasury. Still
others are supported only by the credit of the issuer or instrumentality.
When selecting securities for the fund, the portfolio managers use a "top-down"
approach, looking first at general economic factors and market conditions, then
at individual securities.
To generate additional income, the fund may lend securities representing up to
one-third of the value of its total assets to broker-dealers, banks and other
institutions.
- --------------------------------------------------------------------------------
MAIN RISKS
The main risks of investing in this fund include:
o Although the fund seeks to preserve the value of your investment at $1.00
per share, it is possible to lose money by investing in the fund. A major
change in interest rates or a default on a security or repurchase agreement
held by the fund, or a securities lending agreement entered into by the
fund, could cause the value of your investment to decline.
o The level of income you receive from the fund will be affected by movements
in short-term interest rates.
o By investing solely in U.S. government securities and repurchase agreements
secured by those securities, the fund may offer less income than a money
market fund investing in other high-quality money market securities.
- --------------------------------------------------------------------------------
FUND PERFORMANCE
Illustrations on the next page provide you with information on the fund's
volatility and performance. Of course, past performance does not guarantee
future results.
The bar chart shows you how performance of the fund's shares has varied from
year to year. The table illustrates the fund's average annual total returns over
different time periods. Both the chart and the table assume that all
distributions have been reinvested.
2 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS
CLASS D SHARES
<PAGE>
FUND SUMMARIES
GOVERNMENT OBLIGATIONS FUND (CONTINUED)
- --------------------------------------------------------------------------------
FUND PERFORMANCE (CONTINUED)
ANNUAL TOTAL RETURNS AS OF 12/31 EACH YEAR(1) BEST QUARTER:
Quarter ending: 12/31/97
[BAR CHART] Total Return 1.28%
4.97% 5.10% 4.99%
- ------------------------------------------------ WORST QUARTER:
1996 1997 1998 Quarter ending: 12/31/98
Total Return 1.14%
AVERAGE ANNUAL TOTAL RETURNS Inception Since
AS OF 12/31/98 Date One Year Inception
- --------------------------------------------------------------------------------
Government Obligations Fund 1/21/95 4.99% 5.14%
- --------------------------------------------------------------------------------
(1) Total return for the period from 12/31/98 to 9/30/99 was 3.34%.
- --------------------------------------------------------------------------------
FEES AND EXPENSES
The fund does not impose any sales charges (loads) or other fees when you buy,
sell or exchange shares. However, when you hold shares of the fund you
indirectly pay a portion of the fund's operating expenses. These expenses are
deducted from fund assets. The figures below are based on expenses during the
fiscal year ended September 30, 1999.(1)
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SHAREHOLDER FEES
- --------------------------------------------------------------------------------
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON PURCHASES None
MAXIMUM DEFERRED SALES CHARGE (LOAD) None
ANNUAL FUND OPERATING EXPENSES AS A % OF AVERAGE NET ASSETS
- --------------------------------------------------------------------------------
Management Fees 0.40%
Distribution and Service (12b-1) Fees 0.15%
Other Expenses 0.12%
TOTAL 0.67%
- --------------------------------------------------------------------------------
(1) Actual expenses for the fiscal year were lower than those shown in the table
because of voluntary fee waivers by the advisor. See "Additional Information
-- Financial Highlights" for effective management fees after waivers. The
net expenses the fund actually paid after waivers for the fiscal year ended
September 30, 1999, were:
Waiver of Fund Expenses (0.07)%
TOTAL ACTUAL ANNUAL OPERATING EXPENSES (AFTER WAIVERS) 0.60%
THE ADVISOR INTENDS TO WAIVE FEES DURING THE CURRENT FISCAL YEAR SO THAT TOTAL
FUND OPERATING EXPENSES DO NOT EXCEED 0.60%. FEE WAIVERS MAY BE DISCONTINUED AT
ANY TIME.
- --------------------------------------------------------------------------------
EXAMPLE This example is intended to help you compare the cost of investing in
the fund with the cost of investing in other mutual funds. It assumes that you
invest $10,000 for the time periods indicated, that your investment has a 5%
return each year, and that the fund's operating expenses remain the same.
Although your actual costs and returns may differ, based on these assumptions
your costs would be:
- --------------------------------------------------------------------------------
1 year $ 68
3 years $214
5 years $373
10 years $835
3 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS
CLASS D SHARES
<PAGE>
FUND SUMMARIES
PRIME OBLIGATIONS FUND
- -----------------------------------------------------------------------------
OBJECTIVE
Prime Obligations Fund seeks maximum current income to the extent consistent
with preservation of capital and maintenance of liquidity.
- -----------------------------------------------------------------------------
MAIN INVESTMENT STRATEGIES
Prime Obligations Fund invests in high-quality short-term debt obligations,
including:
o securities issued by the U.S. government or one of its agencies or
instrumentalities;
o U.S. dollar-denominated obligations of domestic and foreign banks with total
assets of at least $500 million (including fixed and variable rate
certificates of deposit, time deposits and bankers' acceptances);
o commercial paper;
o non-convertible corporate debt securities;
o loan participation interests; and
o repurchase agreements for the securities in which the fund may invest.
When selecting securities for the fund, the portfolio managers use a "top-down"
approach, looking first at general economic factors and market conditions, then
at individual securities.
The fund may invest up to 25% of its total assets in dollar-denominated
obligations of U.S. branches of foreign banks which are subject to the same
regulation as U.S. banks. The fund also may invest up to 25% of its total
assets, collectively, in dollar-denominated obligations of foreign branches of
domestic banks, foreign banks and foreign corporations.
- --------------------------------------------------------------------------------
MAIN RISKS
The main risks of investing in this fund include:
o Although the fund seeks to preserve the value of your investment at $1.00
per share, it is possible to lose money by investing in the fund. A major
change in interest rates or a default on a security or repurchase agreement
held by the fund could cause the value of your investment to decline.
o The level of income you receive from the fund will be affected by movements
in short-term interest rates.
o Foreign securities in which the fund invests, although dollar denominated,
may present some additional risk. Political or social instability or
diplomatic developments could adversely affect the securities. There is also
the risk of possible withholding taxes, seizure of foreign deposits,
currency controls, interest limitations, or other governmental restrictions
which might affect the payment of principal or interest on securities owned
by the fund. In addition, there may be less public information available
about foreign corporations and foreign banks and their branches.
- --------------------------------------------------------------------------------
FUND PERFORMANCE
Illustrations on the next page provide you with information on the fund's
volatility and performance. Of course, past performance does not guarantee
future results.
The bar chart shows you how performance of the fund's shares has varied from
year to year. The table illustrates the fund's average annual total returns over
different time periods. Both the chart and the table assume that all
distributions have been reinvested.
4 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS
CLASS D SHARES
<PAGE>
FUND SUMMARIES
PRIME OBLIGATIONS FUND (CONTINUED)
- --------------------------------------------------------------------------------
FUND PERFORMANCE (CONTINUED)
ANNUAL TOTAL RETURNS AS OF 12/31 EACH YEAR(1) BEST QUARTER:
Quarter ending: 12/31/97
[BAR CHART] Total Return 1.32%
5.08% 5.23% 5.17%
- ------------------------------------------------ WORST QUARTER:
1996 1997 1998 Quarter ending: 12/31/98
Total Return 1.23%
AVERAGE ANNUAL TOTAL RETURNS Inception Since
AS OF 12/31/98 Date One Year Inception
- --------------------------------------------------------------------------------
Prime Obligations Fund 1/24/95 5.17% 5.27%
- --------------------------------------------------------------------------------
(1) Total return for the period from 12/31/98 to 9/30/99 was 3.46%.
- --------------------------------------------------------------------------------
FEES AND EXPENSES
The fund does not impose any sales charges (loads) or other fees when you buy,
sell or exchange shares. However, when you hold shares of the fund you
indirectly pay a portion of the fund's operating expenses. These expenses are
deducted from fund assets. The figures below are based on expenses during the
fiscal year ended September 30, 1999.(1)
- --------------------------------------------------------------------------------
SHAREHOLDER FEES
- --------------------------------------------------------------------------------
MAXIMUM SALES CHARGE (LOAD) None
MAXIMUM DEFERRED SALES CHARGE (LOAD) PROCEEDS, WHICHEVER IS LESS None
ANNUAL FUND OPERATING EXPENSES AS A % OF AVERAGE NET ASSETS
- --------------------------------------------------------------------------------
Management Fees 0.40%
Distribution and Service (12b-1) Fees 0.15%
Other Expenses 0.11%
TOTAL 0.66%
- --------------------------------------------------------------------------------
(1) Actual expenses for the fiscal year were lower than those shown in the table
because of voluntary fee waivers by the advisor. See "Additional Information
-- Financial Highlights" for effective management fees after waivers. The
net expenses the fund actually paid after waivers for the fiscal year ended
September 30, 1999, were:
Waiver of Fund Expenses (0.06)%
TOTAL ACTUAL ANNUAL OPERATING EXPENSES (AFTER WAIVERS) 0.60%
THE ADVISOR INTENDS TO WAIVE FEES DURING THE CURRENT FISCAL YEAR SO THAT TOTAL
FUND OPERATING EXPENSES DO NOT EXCEED 0.60%. FEE WAIVERS MAY BE DISCONTINUED AT
ANY TIME.
- --------------------------------------------------------------------------------
EXAMPLE This example is intended to help you compare the cost of investing in
the fund with the cost of investing in other mutual funds. It assumes that you
invest $10,000 for the time periods indicated, that your investment has a 5%
return each year, and that the fund's operating expenses remain the same.
Although your actual costs and returns may differ, based on these assumptions
your costs would be:
- --------------------------------------------------------------------------------
1 year $ 67
3 years $211
5 years $368
10 years $822
5 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS
CLASS D SHARES
<PAGE>
FUND SUMMARIES
TAX FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
OBJECTIVE
Tax Free Obligations Fund seeks maximum current income exempt from federal
income taxes consistent with the preservation of capital and maintenance of
liquidity.
- --------------------------------------------------------------------------------
MAIN INVESTMENT STRATEGIES
Tax Free Obligations Fund invests at least 80% of its total assets in
high-quality, short-term municipal securities that pay interest that is exempt
from federal income tax, including the federal alternative minimum tax.
Municipal securities are issued by state and local governments and certain U.S.
territorial possessions to finance public infrastructure projects such as
streets and highways, schools, water and sewer systems, hospitals, and airports.
They also may be issued to refinance outstanding obligations as well as to
obtain funds for general operating expenses and for loans to other public
institutions and facilities. There are two principal classifications of
municipal securities:
o general obligation bonds, which are backed by the full faith, credit and
taxing power of the issuer; and
o revenue bonds, which are payable only from the revenues generated by a
specific project or from another specific revenue source.
The balance of the fund's total assets may be invested in taxable money market
securities and municipal securities subject to the alternative minimum tax.
However, the fund currently does not intend to invest in these types of
securities.
When selecting securities for the fund, the portfolio managers use a "top-down"
approach, looking first at general economic factors and market conditions, then
at individual securities.
- --------------------------------------------------------------------------------
MAIN RISKS
The main risks of investing in this fund include:
o Although the fund seeks to preserve the value of your investment at $1.00
per share, it is possible to lose money by investing in the fund. A major
change in interest rates or a default on a security or repurchase agreement
held by the fund could cause the value of your investment to decline.
o The level of income you receive from the fund will be affected by movements
in short-term interest rates.
o The value of municipal securities owned by the fund may be adversely
affected by future changes in federal income tax laws, including rate
reductions or the imposition of a flat tax.
- --------------------------------------------------------------------------------
FUND PERFORMANCE
Illustrations on the next page provide you with information on the fund's
volatility and performance. Of course, past performance does not guarantee
future results.
The bar chart is intended to show you how performance of the fund's shares has
varied from year to year. Because Class D shares of the fund were first offered
in 1997, only one calendar year of performance information is presented. The
table illustrates the fund's average annual total returns over different time
periods. Both the chart and the table assume that all distributions have been
reinvested.
6 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS
CLASS D SHARES
<PAGE>
FUND SUMMARIES
TAX FREE OBLIGATIONS FUND (CONTINUED)
- --------------------------------------------------------------------------------
FUND PERFORMANCE (CONTINUED)
ANNUAL TOTAL RETURNS AS OF 12/31 EACH YEAR(1) BEST QUARTER:
Quarter ending: 6/30/98
[BAR CHART] Total Return 0.80%
2.95%
- ------------------------------------------------ WORST QUARTER:
1998 Quarter ending: 12/31/98
Total Return 0.70%
AVERAGE ANNUAL TOTAL RETURNS Inception Since
AS OF 12/31/98 Date One Year Inception
- --------------------------------------------------------------------------------
Tax Free Obligations Fund 11/26/97 2.95% 2.97%
- --------------------------------------------------------------------------------
(1) Total return for the period from 12/31/98 to 9/30/99 was 1.95%.
- --------------------------------------------------------------------------------
FEES AND EXPENSES
The fund does not impose any sales charges (loads) or other fees when you buy,
sell or exchange shares. However, when you hold shares of the fund you
indirectly pay a portion of the fund's operating expenses. These expenses are
deducted from fund assets. The figures below are based on expenses during the
fiscal year ended September 30, 1999.(1)
- --------------------------------------------------------------------------------
SHAREHOLDER FEES
- --------------------------------------------------------------------------------
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON PURCHASES None
MAXIMUM DEFERRED SALES CHARGE (LOAD) None
ANNUAL FUND OPERATING EXPENSES AS A % OF AVERAGE NET ASSETS
- --------------------------------------------------------------------------------
Management Fees 0.40%
Distribution and Service (12b-1) Fees 0.15%
Other Expenses 0.12%
TOTAL 0.67%
- --------------------------------------------------------------------------------
(1) Actual expenses for the fiscal year were lower than those shown in the table
because of voluntary fee waivers by the advisor. See "Additional Information
-- Financial Highlights" for effective management fees after waivers. The
net expenses the fund actually paid after waivers for the fiscal year ended
September 30, 1999, were:
Waiver of Fund Expenses (0.07)%
TOTAL ACTUAL ANNUAL OPERATING EXPENSES (AFTER WAIVERS) 0.60%
THE ADVISOR INTENDS TO WAIVE FEES DURING THE CURRENT FISCAL YEAR SO THAT TOTAL
FUND OPERATING EXPENSES DO NOT EXCEED 0.60%. FEE WAIVERS MAY BE DISCONTINUED AT
ANY TIME.
- --------------------------------------------------------------------------------
EXAMPLE This example is intended to help you compare the cost of investing in
the fund with the cost of investing in other mutual funds. It assumes that you
invest $10,000 for the time periods indicated, that your investment has a 5%
return each year, and that the fund's operating expenses remain the same.
Although your actual costs and returns may differ, based on these assumptions
your costs would be:
- --------------------------------------------------------------------------------
1 year $ 68
3 years $214
5 years $373
10 years $835
7 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS
CLASS D SHARES
<PAGE>
FUND SUMMARIES
TREASURY OBLIGATIONS FUND
- --------------------------------------------------------------------------------
OBJECTIVE
Treasury Obligations Fund seeks maximum current income consistent with the
preservation of capital and maintenance of liquidity.
- --------------------------------------------------------------------------------
MAIN INVESTMENT STRATEGIES
Treasury Obligations Fund invests exclusively in short-term U.S. Treasury
obligations and repurchase agreements secured by U.S. Treasury obligations. The
U.S. Treasury obligations in which the fund invests include U.S. Treasury bonds,
notes and bills. These types of Treasury securities are essentially the same
except for differences in interest rates, maturities and dates of issuance. U.S.
Treasury obligations are backed by the full faith and credit of the United
States government.
When selecting securities for the fund, the portfolio managers use a "top-down"
approach, looking first at general economic factors and market conditions, then
at individual securities.
- --------------------------------------------------------------------------------
MAIN RISKS
The main risks of investing in this fund include:
o Although the fund seeks to preserve the value of your investment at $1.00
per share, it is possible to lose money by investing in the fund. A major
change in interest rates or a default on a repurchase agreement held by the
fund could cause the value of your investment to decline.
o The level of income you receive from the fund will be affected by movements
in short-term interest rates.
o By investing solely in U.S. Treasury obligations and repurchase agreements
secured by those securities, the fund may offer less income than a money
market fund investing in other high-quality money market securities.
- --------------------------------------------------------------------------------
FUND PERFORMANCE
Illustrations on the next page provide you with information on the fund's
volatility and performance. Of course, past performance does not guarantee
future results.
The bar chart shows you how performance of the fund's shares has varied from
year to year. The table illustrates the fund's average annual total returns over
different time periods. Both the chart and the table assume that all
distributions have been reinvested.
8 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS
CLASS D SHARES
<PAGE>
FUND SUMMARIES
TREASURY OBLIGATIONS FUND (CONTINUED)
- --------------------------------------------------------------------------------
FUND PERFORMANCE (CONTINUED)
ANNUAL TOTAL RETURNS AS OF 12/31 EACH YEAR(1) BEST QUARTER:
Quarter ending: 6/30/95
[BAR CHART] Total Return 1.37%
3.62% 5.41% 4.89% 5.04% 4.94%
- ------------------------------------------------ WORST QUARTER:
1994 1995 1996 1997 1998 Quarter ending: 3/31/94
Total Return 0.66%
AVERAGE ANNUAL TOTAL RETURNS Inception Since
AS OF 12/31/98 Date One Year Five Years Inception
- --------------------------------------------------------------------------------
Treasury Obligations Fund 10/4/93 4.94% 4.78% 4.68%
- --------------------------------------------------------------------------------
(1) Total return for the period from 12/31/98 to 9/30/99 was 3.26%.
- --------------------------------------------------------------------------------
FEES AND EXPENSES
The fund does not impose any sales charges (loads) or other fees when you buy,
sell or exchange shares. However, when you hold shares of the fund you
indirectly pay a portion of the fund's operating expenses. These expenses are
deducted from fund assets. The figures below are based on expenses during the
fiscal year ended September 30, 1999.(1)
- --------------------------------------------------------------------------------
SHAREHOLDER FEES
- --------------------------------------------------------------------------------
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON PURCHASES None
MAXIMUM DEFERRED SALES CHARGE (LOAD) None
ANNUAL FUND OPERATING EXPENSES AS A % OF AVERAGE NET ASSETS
- --------------------------------------------------------------------------------
Management Fees 0.40%
Distribution and Service (12b-1) Fees 0.15%
Other Expenses 0.11%
TOTAL 0.66%
- --------------------------------------------------------------------------------
(1) Actual expenses for the fiscal year were lower than those shown in the table
because of voluntary fee waivers by the advisor. See "Additional Information
-- Financial Highlights" for effective management fees after waivers. The
net expenses the fund actually paid after waivers for the fiscal year ended
September 30, 1999, were:
Waiver of Fund Expenses (0.06)%
TOTAL ACTUAL ANNUAL OPERATING EXPENSES (AFTER WAIVERS) 0.60%
THE ADVISOR INTENDS TO WAIVE FEES DURING THE CURRENT FISCAL YEAR SO THAT TOTAL
FUND OPERATING EXPENSES DO NOT EXCEED 0.60%. FEE WAIVERS MAY BE DISCONTINUED AT
ANY TIME.
- --------------------------------------------------------------------------------
EXAMPLE This example is intended to help you compare the cost of investing in
the fund with the cost of investing in other mutual funds. It assumes that you
invest $10,000 for the time periods indicated, that your investment has a 5%
return each year, and that the fund's operating expenses remain the same.
Although your actual costs and returns may differ, based on these assumptions
your costs would be:
- --------------------------------------------------------------------------------
1 year $ 67
3 years $211
5 years $368
10 years $822
9 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS
CLASS D SHARES
<PAGE>
POLICIES & SERVICES
BUYING AND SELLING SHARES
Class D shares are offered through banks and other financial institutions that
have entered into sales agreements with the funds' distributor and that hold the
shares in an omnibus account with the transfer agent. Class D shares are
available to certain accounts for which the financial institution acts in a
fiduciary, agency or custodial capacity, such as certain trust accounts and
investment advisory accounts. To find out whether you may purchase Class D
shares, contact your financial institution.
- --------------------------------------------------------------------------------
12b-1 FEES
Each fund has adopted a plan under rule 12b-1 of the Investment Company Act that
allows it to pay the fund's distributor an annual fee for the distribution and
sale of its shares and for services provided to shareholders. Each fund pays a
Rule 12b-1 shareholder servicing fee equal to 0.15% of its average daily net
assets.
Because these fees are paid out of a fund's assets on an ongoing basis, over
time these fees will increase the cost of your investment and may cost you more
than paying other types of sales charges.
The funds' distributor uses the shareholder servicing fee to compensate brokers,
participating institutions and "one-stop" mutual fund networks for providing
ongoing services to shareholder accounts. These institutions receive annual fees
equal to 0.15% of a fund's Class D share average daily net assets attributable
to shares sold through such institutions. The distributor may pay additional
fees to institutions out of its own assets, in exchange for sales and/or
administrative services performed on behalf of the institution's customers.
- --------------------------------------------------------------------------------
CALCULATING YOUR SHARE PRICE
Your purchase price will be equal to the fund's net asset value (NAV) per share,
which is generally calculated as of the close of regular trading on the New York
Stock Exchange (usually 3:00 p.m. Central time) every day the exchange and
federally chartered banks are open. As discussed below, your order must be
received by the funds by 11:30 a.m. Central time for Tax Free Obligations Fund,
and by 3:00 p.m. Central time for Government Obligations Fund, Prime Obligations
Fund and Treasury Obligations Fund, in order for shares to be priced at that
day's NAV.
A fund's NAV is equal to the market value of its investments and other assets,
less any liabilities, divided by the number of fund shares. The securities held
by the funds are valued on the basis of amortized cost. This involves valuing an
instrument at its cost and thereafter assuming a constant amortization of any
discount or premium until the instrument's maturity, rather than looking at
actual changes in the market value of the instrument. Each fund's net asset
value is normally expected to be $1 per share.
- --------------------------------------------------------------------------------
HOW TO BUY AND SELL SHARES
You may purchase or sell shares by calling your financial institution. Shares
may be purchased and sold only on days when both the New York Stock Exchange and
federally chartered banks are open. Purchases and sales of shares may also be
restricted in the event of an early or unscheduled close of the New York Stock
Exchange.
When purchasing shares, payment must be made by wire transfer, which can be
arranged by your financial institution.
Purchase orders and redemption requests must be received by your financial
institution by the time specified by the institution to be assured same day
processing. In order for shares to be purchased or sold at that day's price, the
funds must receive purchase orders or redemption requests by 11:30 a.m. Central
time for Tax Free Obligations Fund, and by 3:00 p.m. Central time for Government
Obligations Fund, Prime Obligations Fund and Treasury Obligations Fund. It is
the responsibility of your financial institution to promptly transmit orders to
the funds. In addition, a purchase order will be effective on the day given only
if the funds' custodian receives payment by wire before the close of business.
If the fund receives a redemption request by the time specified above, payment
will generally be made the same day by transfer of federal funds. Otherwise,
payment will generally be made on the next business day.
10 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS
CLASS D SHARES
<PAGE>
POLICIES & SERVICES
MANAGING YOUR INVESTMENT
- --------------------------------------------------------------------------------
STAYING INFORMED
SHAREHOLDER REPORTS
Shareholder reports are mailed twice a year, in November and May. They include
financial statements, performance information, a message from your portfolio
managers, and, on an annual basis, the auditors' report.
In an attempt to reduce shareholder costs and help eliminate duplication, the
funds will try to limit their mailings to one report for each address that lists
one or more shareholders with the same last name. If you would like additional
copies, please call 1-800-637-2548.
STATEMENTS AND CONFIRMATIONS
Statements summarizing activity in your account are mailed at least quarterly.
Confirmations are mailed following each purchase or sale of fund shares.
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS
Dividends from a fund's net investment income are declared daily, starting on
the day you purchase your shares, and paid monthly. You will not receive a
dividend for the day on which you sell shares. If you request that your
distributions be paid in cash but those distributions cannot be delivered
because of an incorrect mailing address, the undelivered distributions and all
future distributions will be reinvested in fund shares.
- --------------------------------------------------------------------------------
TAXES
Some of the tax consequences of investing in the funds are discussed below. More
information about taxes is in the Statement of Additional Information. However,
because everyone's tax situation is unique, always consult your tax professional
about federal, state and local tax consequences.
For Government Obligations Fund, Prime Obligations Fund and Treasury Obligations
Fund, dividends you receive from the fund are generally taxable as ordinary
income, whether you reinvest them or take them in cash. Dividends attributable
to income from U.S. government securities may be exempt from state personal
income taxes. You should consult your tax advisor for more information.
Tax Free Obligations Fund intends to meet certain federal tax requirements so
that distributions of tax-exempt interest income may be treated as
"exempt-interest dividends." These dividends are not subject to regular federal
tax. However, although it has no current intention of doing so, the fund may
invest up to 20% of its net assets in municipal securities the interest on which
is subject to the federal alternative minimum tax. Any portion of
exempt-interest dividends attributable to interest on these securities may
increase some shareholders' alternative minimum tax.
11 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS
CLASS D SHARES
<PAGE>
ADDITIONAL INFORMATION
MANAGEMENT
INVESTMENT ADVISOR
First American Asset Management
601 Second Avenue South
Minneapolis, Minnesota 55402
U.S. Bank National Association (U.S. Bank), acting through its First American
Asset Management division, is the funds' investment advisor. First American
Asset Management provides investment management services to individuals and
institutions, including corporations, foundations, pensions and retirement
plans. As of September 30, 1999, it had more than $78 billion in assets under
management, including investment company assets of more than $32 billion. As
investment advisor, First American Asset Management manages the funds' business
and investment activities, subject to the authority of the board of directors.
Each fund pays the investment advisor a monthly fee for providing investment
advisory services. During their most recent fiscal years after taking into
account fee waivers, the funds paid the following investment advisory fees to
First American Asset Management:
ADVISORY FEE
AS A % OF
AVERAGE DAILY
NET ASSETS
- --------------------------------------------------------------------------------
Government Obligations Fund 0.33%
Prime Obligations Fund 0.34%
Tax Free Obligations Fund 0.33%
Treasury Obligations Fund 0.34%
- --------------------------------------------------------------------------------
CUSTODIAN
U.S. Bank National Association
U.S. Bank Center
180 East Fifth Street
St. Paul, Minnesota 55101
ADMINISTRATOR*
U.S. Bank National Association
U.S. Bank Place
601 Second Avenue South
Minneapolis, Minnesota 55402
DISTRIBUTOR
SEI Investments Distribution Co.
Oaks, Pennsylvania 19456
*Effective January 1, 2000.
ADDITIONAL COMPENSATION
U.S. Bank and other affiliates of U.S. Bancorp may act as fiduciary with
respect to plans subject to the Employee Retirement Income Security Act of
1974 (ERISA) and other trust and agency accounts that invest in the funds. As
described above, U.S. Bank receives compensation for acting as the funds'
investment advisor. U.S. Bank and its affiliates also receive compensation in
connection with the following:
CUSTODY SERVICES. As compensation for acting as the funds' custodian, U.S. Bank
is paid monthly fees equal, on an annual basis, to 0.03% of a fund's average
daily net assets. In addition, U.S. Bank is reimbursed for its out-of-pocket
expenses incurred while providing custody services to the funds.
ADMINISTRATIVE SERVICES. U.S. Bank provides or compensates others to provide
administrative services to the funds including general administrative and
accounting services, transfer agency and dividend disbursing services, and
shareholder services. The funds pay U.S. Bank an asset-based monthly fee equal,
on an annual basis, to 0.07% of the aggregate average daily net assets of all
open-end mutual funds in the First American fund family up to $8 billion and
0.055% of the aggregate average daily net assets of all open-end mutual funds in
the First American fund family in excess of $8 billion. Additionally, the funds
pay U.S. Bank fees based upon the number of funds and accounts maintained.
SECURITIES LENDING SERVICES. In connection with lending its portfolio
securities, Government Obligations Fund pays administrative and custodial fees
to U.S. Bank which are equal to 40% of the funds' income from these securities
lending transactions.
BROKERAGE TRANSACTIONS. The funds purchase most of their portfolio securities
directly from the issuer or from an underwriter or market maker, and not from
a broker acting as agent. However, the funds may from time to time use
brokers when buying portfolio securities. The funds' investment advisor may
place trades through its affiliates, U.S. Bancorp Investments, Inc. and U.S.
Bancorp Piper Jaffray Inc., which will earn commissions on such transactions.
SALES OF FUND SHARES. U.S. Bancorp Investments, Inc. and U.S. Bancorp Piper
Jaffray Inc., broker-dealers affiliated with U.S. Bank, have entered into
agreements with the funds' distributor to sell fund shares and will earn
shareholder servicing fees in connection with these sales.
PORTFOLIO MANAGEMENT
Each fund's investments are managed by a team of persons associated with First
American Asset Management.
12 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS
CLASS D SHARES
<PAGE>
ADDITIONAL INFORMATION
MORE ABOUT THE FUNDS
- --------------------------------------------------------------------------------
INVESTMENT STRATEGIES
The funds' main investment strategies are discussed in the "Fund Summaries"
section. These are the strategies that the funds' investment advisor believes
are most likely to be important in trying to achieve the funds' objectives. You
should be aware that each fund may also use strategies and invest in securities
that are not described in this prospectus, but that are described in the
Statement of Additional Information (SAI). For a copy of the SAI, call Investor
Services at 1-800-637-2548.
In addition to the securities specified in the "Fund Summaries" section, each
fund may invest in other money market funds that invest in the same types of
securities as the respective fund, including money market funds advised by U.S.
Bank.
INVESTMENT APPROACH
Each fund complies with Securities and Exchange Commission regulations that
apply to money market funds. These regulations require that each fund's
investments mature within 397 days from the date of purchase, and that the
average maturity of each fund's investments (on a dollar-weighted basis) be 90
days or less. The funds may invest in securities with variable or floating
interest rates and securities with demand features. The maturities of these
securities are determined according to regulations which allow the funds to
consider some of these securities as having maturities shorter than their stated
maturity dates. All of the funds' investments must be in U.S. dollar-denominated
high quality securities which have been determined by the funds' advisor to
present minimal credit risks.
When selecting securities for the funds, the portfolio managers use a "top-down"
approach, looking first at general economic factors and market conditions, then
at individual securities. The portfolio managers look for value while adhering
to the credit and other restrictions on money market funds.
- --------------------------------------------------------------------------------
YEAR 2000 ISSUES
Like other mutual funds and business and financial organizations, the funds
could be adversely affected if the computer systems used by the funds' advisor,
other service providers and entities with computer systems that are linked to
fund records do not properly process and calculate date-related information from
and after January 1, 2000. While year 2000-related computer problems could have
a negative effect on the funds, the funds' administrator has undertaken a
program designed to assess and monitor the steps being taken by the funds'
service providers to address year 2000 issues. This program includes seeking
assurances from service providers that their systems are or will be year 2000
compliant and reviewing service providers' periodic reports to monitor their
status concerning their year 2000 readiness and compliance.
The administrator and the advisor also report regularly to the funds' board of
directors concerning their own and other service providers' progress toward year
2000 readiness. Although these reports indicate that service providers are or
expect to be year 2000 compliant, there can be no assurance that this will be
the case in all instances or that year 2000 difficulties experienced by others
in the financial services industry will not impact the funds. In addition, there
can be no assurance that year 2000 difficulties will not have an adverse effect
on the funds' investments or on global markets or economies, generally. The
funds are not bearing any of the expenses incurred by their service providers in
preparing for the year 2000.
13 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS
CLASS D SHARES
<PAGE>
ADDITIONAL INFORMATION
FINANCIAL HIGHLIGHTS
The tables that follow present performance information about the Class D shares
of each fund. This information is intended to help you understand each fund's
financial performance for the past five years or, if shorter, the period of the
fund's operations. Some of this information reflects financial results for a
single fund share. Total returns in the tables represent the rate that you would
have earned or lost on an investment in a fund, assuming you reinvested all of
your dividends and distributions.
The information for the fiscal year ended September 30, 1999, has been audited
by Ernst & Young LLP, independent auditors, whose report, along with the funds'
financial statements, is included in the funds' annual report, which is
available upon request. The information for the fiscal periods ended on or
before September 30, 1998, has been audited by other auditors.
GOVERNMENT OBLIGATIONS FUND
<TABLE>
<CAPTION>
Fiscal year ended September 30,
1999 1998 1997 1996 1995(1)
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value, Beginning of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net Investment Income 0.04 0.05 0.05 0.05 0.04
Dividends (from Net Investment Income) (0.04) (0.05) (0.05) (0.05) (0.04)
------------------------------------------------------------
Net Asset Value, End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
============================================================
Total Return 4.52% 5.15% 5.04% 5.08% 3.85%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000) $439,287 $384,143 $337,199 $269,382 $198,859
Ratio of Expenses to Average Net Assets 0.60% 0.60% 0.60% 0.60% 0.60%(2)
Ratio of Net Investment Income to Average
Net Assets 4.44% 5.03% 4.92% 4.96% 5.45%(2)
Ratio of Expenses to Average Net Assets
(excluding waivers) 0.67% 0.67% 0.67% 0.69% 0.70%(2)
Ratio of Net Investment Income to Average
Net Assets (excluding waivers) 4.37% 4.96% 4.85% 4.87% 5.35%(2)
--------------------------------------------------------------------------------------------------------
</TABLE>
(1) Class D shares have been offered since January 21, 1995.
(2) Annualized.
PRIME OBLIGATIONS FUND
<TABLE>
<CAPTION>
FISCAL YEAR ENDED SEPTEMBER 30,
1999 1998 1997 1996 1995(1)
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value, Beginning of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net Investment Income 0.05 0.05 0.05 0.05 0.04
Dividends (from Net Investment Income) (0.05) (0.05) (0.05) (0.05) (0.04)
-----------------------------------------------------------
Net Asset Value, End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
===========================================================
Total Return 4.73% 5.26% 5.16% 5.18% 3.86%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000) $426,004 $233,675 $113,064 $109,213 $9,735
Ratio of Expenses to Average Net Assets 0.60% 0.60% 0.60% 0.60% 0.60%(2)
Ratio of Net Investment Income to
Average Net Assets 4.62% 5.13% 5.02% 4.98% 5.51%(2)
Ratio of Expenses to Average Net Assets
(excluding waivers) 0.66% 0.68% 0.67% 0.69% 0.72%(2)
Ratio of Net Investment Income to
Average Net Assets (excluding waivers) 4.56% 5.05% 4.95% 4.89% 5.39%(2)
------------------------------------------------------------------------------------------------------
</TABLE>
(1) Class D shares have been offered since January 24, 1995.
(2) Annualized.
14 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS
CLASS D SHARES
<PAGE>
ADDITIONAL INFORMATION
FINANCIAL HIGHLIGHTS (CONTINUED)
TAX FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
Fiscal year Fiscal period Fiscal period
ended ended ended
September 30, September 30, November 30,
1999 1998 1997(1)
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE DATA
Net Asset Value, Beginning of Period $ 1.00 $ 1.00 $ 1.00
Net Investment Income 0.03 0.03 --
Dividends (from Net Investment Income) (0.03) (0.03) --
-------------------------------------------------
Net Asset Value, End of Period $ 1.00 $ 1.00 $ 1.00
=================================================
Total Return 2.66% 2.51% 0.04%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000) $33,464 $30,095 $ 1
Ratio of Expenses to Average Net Assets 0.60% 0.60%(2) 0.60%(2)
Ratio of Net Investment Income to Average Net Assets 2.62% 3.02%(2) 3.20%(2)
Ratio of Expenses to Average Net Assets (excluding
waivers) 0.67% 0.73%(2) 9.07%(2)
Ratio of Net Investment Income (Loss) to Average Net
Assets (excluding waivers) 2.55% 2.89%(2) (5.27)%(2)
--------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Class D shares have been offered since November 26, 1997.
(2) Annualized.
TREASURY OBLIGATIONS FUND
<TABLE>
<CAPTION>
Fiscal year ended September 30,
1999 1998 1997 1996 1995
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value, Beginning of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net Investment Income 0.04 0.05 0.05 0.05 0.05
Dividends (from Net Investment Income) (0.04) (0.05) (0.05) (0.05) (0.05)
-----------------------------------------------------------------------
Net Asset Value, End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
=======================================================================
Total Return 4.41% 5.10% 4.98% 5.00% 5.22%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000) $3,852,189 $3,854,933 $2,847,215 $1,616,130 $1,038,818
Ratio of Expenses to Average Net Assets 0.60% 0.60% 0.60% 0.60% 0.60%
Ratio of Net Investment Income to Average
Net Assets 4.32% 4.98% 4.88% 4.86% 5.13%
Ratio of Expenses to Average Net Assets
(excluding waivers) 0.66% 0.66% 0.68% 0.70% 0.70%
Ratio of Net Investment Income to Average
Net Assets (excluding waivers) 4.26% 4.92% 4.80% 4.76% 5.03%
-------------------------------------------------------------------------------------------------------------------
</TABLE>
15 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS
CLASS D SHARES
<PAGE>
FOR MORE INFORMATION
More information about the funds is available in the funds' Statement of
Additional Information and annual and semiannual reports.
STATEMENT OF ADDITIONAL INFORMATION (SAI)
The SAI provides more details about the funds and their policies. A current SAI
is on file with the Securities and Exchange Commission (SEC) and is incorporated
into this prospectus by reference (which means that it is legally considered
part of this prospectus).
ANNUAL AND SEMIANNUAL REPORTS
Additional information about the funds' investments is available in the funds'
annual and semiannual reports to shareholders. In the funds' annual report, you
will find a discussion of the market conditions and investment strategies that
significantly affected the funds' performance during their last fiscal year.
You can obtain a free copy of the funds' SAI and/or free copies of the funds'
most recent annual or semiannual reports by calling Investor Services at
1-800-637-2548. The material you request will be sent by first-class mail or
other means designed to ensure equally prompt delivery, within three business
days of receipt of the request.
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC, or by sending your request and a duplicating fee to the SEC's
Public Reference Section, Washington, DC 20549-6009. For more information, call
1-800-SEC-0330.
Information about the funds is also available on the Internet. Text-only
versions of fund documents can be viewed online or down-loaded from the SEC's
Internet site at http://www.sec.gov.
SEC file number: 811-3313
FAF-1903 (11/1999)D
<PAGE>
FIRST AMERICAN FUNDS, INC.
STATEMENT OF ADDITIONAL INFORMATION
DATED DECEMBER 1, 1999
GOVERNMENT OBLIGATIONS FUND
PRIME OBLIGATIONS FUND
TAX FREE OBLIGATIONS FUND
TREASURY OBLIGATIONS FUND
This Statement of Additional Information relates to the Class A,
Class Y and Class D Shares of Government Obligations Fund, Prime Obligations
Fund, Tax Free Obligations Fund and Treasury Obligations Fund and the Class B
and Class C Shares of Prime Obligations Fund (collectively, the "Funds"), each
of which is a series of First American Funds, Inc ("FAF"). This Statement of
Additional Information is not a prospectus, but should be read in conjunction
with the Funds' current Prospectuses dated December 1, 1999. The financial
statements included as part of the Funds' Annual Report to shareholders for the
fiscal year ended September 30, 1999 are incorporated by reference into this
Statement of Additional Information. This Statement of Additional Information is
incorporated into the Funds' Prospectuses by reference. To obtain copies of
Prospectuses or the Funds' Annual Report at no charge, write the Funds'
distributor, SEI Investments Distribution Co., Oaks, Pennsylvania 19456, or call
Investor Services at 1-800-637-2548. Please retain this Statement of Additional
Information for future reference.
<PAGE>
TABLE OF CONTENTS
PAGE
----
GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
INVESTMENT RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Government Obligations Fund . . . . . . . . . . . . . . . . . . 2
Prime Obligations Fund . . . . . . . . . . . . . . . . . . . . . 2
Tax Free Obligations Fund . . . . . . . . . . . . . . . . . . . 3
Treasury Obligations Fund . . . . . . . . . . . . . . . . . . . 5
ADDITIONAL RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 6
INVESTMENT OBJECTIVES AND POLICIES . . . . . . . . . . . . . . . . . . . . . 6
Municipal Securities . . . . . . . . . . . . . . . . . . . . . . 7
Loan Participations; Section 4(2) and Rule 144A Securities . . . 8
Securities of Foreign Banks and Branches . . . . . . . . . . . . 8
Foreign Securities. . . . . . . . . . . . . . . . . . . . . . . 8
United States Government Securities. . . . . . . . . . . . . . . 9
Repurchase Agreements. . . . . . . . . . . . . . . . . . . . . . 9
Credit Enhancement Agreements . . . . . . . . . . . . . . . . . 10
Put Options. . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Variable and Floating Rate Obligations . . . . . . . . . . . . . 10
Lending of Portfolio Securities. . . . . . . . . . . . . . . . . 11
When-Issued and Delayed Delivery Securities . . . . . . . . . . 11
Money Market Funds . . . . . . . . . . . . . . . . . . . . . . . 11
CFTC Information . . . . . . . . . . . . . . . . . . . . . . . 11
PORTFOLIO TURNOVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
DIRECTORS AND EXECUTIVE OFFICERS . . . . . . . . . . . . . . . . . . . . . . 12
Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Executive Officers . . . . . . . . . . . . . . . . . . . . . . . 13
Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . 14
INVESTMENT ADVISORY AND OTHER SERVICES . . . . . . . . . . . . . . . . . . . 16
Investment Advisor . . . . . . . . . . . . . . . . . . . . . . . 16
Distributor and Distribution Plans . . . . . . . . . . . . . . . 17
Administrator; Custodian; Counsel; Auditors . . . . . . . . . . 20
PORTFOLIO TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
CAPITAL STOCK. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
NET ASSET VALUE AND PUBLIC OFFERING PRICE . . . . . . . . . . . . . . . . . 26
VALUATION OF PORTFOLIO SECURITIES . . . . . . . . . . . . . . . . . . . . . 26
TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
CALCULATION OF PERFORMANCE DATA . . . . . . . . . . . . . . . . . . . . . . 28
ADDITIONAL INFORMATION ABOUT SELLING SHARES . . . . . . . . . . . . . . . . 30
By Telephone . . . . . . . . . . . . . . . . . . . . . . . . . . 30
By Mail. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
By Checking Account. . . . . . . . . . . . . . . . . . . . . . . 31
Redemption Before Purchase Instruments Clear . . . . . . . . . . 31
COMMERCIAL PAPER AND BOND RATINGS . . . . . . . . . . . . . . . . . . . . . 31
Commercial Paper Ratings . . . . . . . . . . . . . . . . . . . . 31
Corporate Bond Ratings . . . . . . . . . . . . . . . . . . . . . 32
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
i
<PAGE>
GENERAL INFORMATION
First American Funds, Inc. ("FAF") was incorporated under the name
"First American Money Fund, Inc." The Board of Directors and shareholders, at
meetings held December 6, 1989 and January 18, 1990, respectively, approved
amendments to the Articles of Incorporation providing that the name "First
American Money Fund, Inc." be changed to "First American Funds, Inc."
As set forth in the Prospectuses, FAF is organized as a series fund,
and currently issues its shares in four series. Each series of shares represents
a separate investment portfolio with its own investment objective and policies
(in essence, a separate mutual fund). The series' of FAF to which this Statement
of Additional Information relates are named on the cover. These series are
referred to in this Statement of Additional Information as the "Funds."
Shareholders may purchase shares of each Fund through separate
classes. Prime Obligations Fund offers its shares in five classes, Class A,
Class B, Class C, Class Y and Class D. Government Obligations Fund, Tax Free
Obligations Fund and Treasury Obligations Fund offer their shares in three
classes, Class A, Class Y and Class D. The various classes provide for
variations in distribution costs, voting rights and dividends. To the extent
permitted under the Investment Company Act of 1940 (the "1940 Act"), the Funds
may also provide for variations in other costs among the classes although they
have no present intention to do so. Except for differences among the classes
pertaining to distribution costs, each share of each Fund represents an equal
proportionate interest in that Fund. Each of the Funds are open-end diversified
companies.
FAF has prepared and will provide a separate Prospectus relating to
the Class A, Class B and Class C (the "Class A, Class B and Class C Shares
Prospectus"), the Class Y (the "Class Y Shares Prospectus") and the Class D
Shares (the "Class D Shares Prospectus"), of the Funds respectively. These
Prospectuses can be obtained by calling or writing SEI Investments Distribution
Co. at the address and telephone number set forth on the cover of this Statement
of Additional Information.
The Bylaws of FAF provide that meetings of shareholders be held only
with such frequency as required under Minnesota law and the 1940 Act. Minnesota
corporation law requires only that the Board of Directors convene shareholders'
meetings when it deems appropriate. In addition, Minnesota law provides that if
a regular meeting of shareholders has not been held during the immediately
preceding 15 months, a shareholder or shareholders holding 3% or more of the
voting shares of FAF may demand a regular meeting of shareholders by written
notice given to the chief executive officer or chief financial officer of FAF.
Within 30 days after receipt of the demand, the Board of Directors shall cause a
regular meeting of shareholders to be called, which meeting shall be held no
later than 40 days after receipt of the demand, all at the expense of FAF. In
addition, the 1940 Act requires a shareholder vote for all amendments to
fundamental investment policies and restrictions, for approval of all investment
advisory contracts and amendments thereto, and for all amendments to Rule 12b-1
distribution plans.
This Statement of Additional Information may also refer to
affiliated investment companies, including: First American Investment Funds,
Inc. ("FAIF"); First American Strategy Funds, Inc. ("FASF"); First American
Insurance Portfolios, Inc. ("FAIP"); and eleven separate closed-end funds
(American Strategic Income Portfolio Inc., American Strategic Income Portfolio
Inc.-II, American Strategic Income Portfolio Inc.-III, American Municipal Income
Portfolio Inc., Minnesota Municipal Income Portfolio Inc., American Select
Portfolio Inc., American Municipal Term Trust Inc., American Municipal Term
Trust Inc.-II, American Municipal Term Trust Inc.-III, Minnesota Municipal Term
Trust Inc., and Minnesota Municipal Term Trust Inc.-II) collectively referred to
as the First American Closed-End Funds ("FACEF").
1
<PAGE>
INVESTMENT RESTRICTIONS
GOVERNMENT OBLIGATIONS FUND
Government Obligations Fund has adopted the following investment
limitations and fundamental policies. These limitations cannot be changed by the
Fund without approval by the holders of a majority of the outstanding shares of
the Fund as defined in the 1940 Act (i.e., the lesser of the vote of (a) 67% of
the shares of the Fund at a meeting where more than 50% of the outstanding
shares are present in person or by proxy or (b) more than 50% of the outstanding
shares of the Fund). Government Obligations Fund may not:
1. Borrow money except from banks for temporary or
emergency purposes for the purpose of meeting redemption
requests which might otherwise require the untimely
disposition of securities. Borrowing in the aggregate
may not exceed 10% of the value of the Fund's total
assets (including the amount borrowed) valued at the
lesser of cost or market less liabilities (not including
the amount borrowed) at the time the borrowing is made.
The borrowings will be repaid before any additional
investments are made. Interest paid on borrowed funds
will decrease the net earnings of the Fund. The Fund
will not borrow to increase income (leveraging).
2. Issue any senior securities (as defined in the 1940
Act), except as set forth in investment restriction
number (1) above, and except to the extent that
purchasing or selling on a when-issued, delayed delivery
or forward commitment basis or using similar investment
strategies may be deemed to constitute issuing a senior
security.
3. Pledge, hypothecate, mortgage or otherwise encumber its
assets, except in an amount up to 15% of the value of
its total assets but only to secure borrowings for
temporary or emergency purposes.
4. Sell securities short or purchase securities on margin.
5. Underwrite the securities of other issuers except to the
extent the Fund may be deemed to be an underwriter,
under federal securities laws, in connection with the
disposition of portfolio securities.
6. Invest more than 10% of its net assets in illiquid
assets, including, without limitation, repurchase
agreements maturing in more than seven days.
7. Purchase or sell real estate, real estate investment
trust securities, commodities or commodity contracts, or
oil or gas interests.
8. Lend money to others except through purchase of debt
obligations of the type which the Fund is permitted to
purchase (see "Investment Objectives and Policies"
below).
PRIME OBLIGATIONS FUND
Prime Obligations Fund has adopted the following investment
limitations and fundamental policies. These policies and limitations cannot be
changed by the Fund without approval by the holders of a majority of the
outstanding shares of the Fund as defined in the 1940 Act. Prime Obligations
Fund may not:
1. Purchase common stocks, preferred stocks, warrants,
other equity securities, corporate bonds or debentures,
state bonds, municipal bonds, or industrial revenue
bonds (except through the purchase of obligations
referred to under "Investment Objectives and Policies"
below).
2. Borrow money except from banks for temporary or
emergency purposes for the purpose of meeting redemption
requests which might otherwise require the untimely
disposition of securities.
2
<PAGE>
Borrowing in the aggregate may not exceed 10% of the
value of the Fund's total assets (including the amount
borrowed) valued at the lesser of cost or market less
liabilities (not including the amount borrowed) at the
time the borrowing is made. The borrowings will be
repaid before any additional investments are made.
However, even with such authority to borrow money, there
is no assurance that the Fund will not have to dispose
of securities on an untimely basis to meet redemption
requests.
3. Issue any senior securities (as defined in the 1940
Act), except as set forth in investment restriction
number (2) above, and except to the extent that
purchasing or selling on a when-issued, delayed delivery
or forward commitment basis or using similar investment
strategies may be deemed to constitute issuing a senior
security.
4. Pledge, hypothecate, mortgage or otherwise encumber its
assets, except in an amount up to 15% of the value of
its total assets but only to secure borrowings for
temporary or emergency purposes.
5. Sell securities short or purchase securities on margin.
6. Write or purchase put or call options, except that the
Fund may write or purchase put or call options in
connection with the purchase of variable rate
certificates of deposit described below.
7. Underwrite the securities of other issuers except to the
extent the Fund may be deemed to be an underwriter,
under federal securities laws, in connection with the
disposition of portfolio securities, or purchase
securities with contractual or other restrictions on
resale.
8. Invest more than 10% of its net assets in illiquid
assets, including, without limitation, time deposits and
repurchase agreements maturing in more than seven days.
9. Purchase or sell real estate, real estate investment
trust securities, commodities or commodity contracts, or
oil and gas interests.
10. Lend money to others except through the purchase of debt
obligations of the type which the Funds are permitted to
purchase (see "Investment Objectives and Policies"
below).
11. Invest 25% or more of its assets in the securities of
issuers in any single industry; provided that there
shall be no limitation on the purchase of obligations
issued or guaranteed by the United States, its agencies
or instrumentalities, or obligations of domestic
commercial banks, excluding for this purpose, foreign
branches of domestic commercial banks. As to utility
companies, gas, electric, water, and telephone companies
are considered as separate industries. As to finance
companies, the following two categories are each
considered a separate industry: (A) business credit
institutions, such as Honeywell Finance Corporation and
General Electric Credit Corp., and (B) personal credit
institutions, such as Sears Roebuck Acceptance Corp. and
Household Finance Corporation.
12. Invest in companies for the purpose of exercising
control.
13. Purchase or retain the securities of any issuer if any
of the officers or directors of the Fund or its
investment advisor owns beneficially more than 1/2 of 1%
of the securities of such issuer and together own more
than 5% of the securities of such issuer.
TAX FREE OBLIGATIONS FUND
Tax Free Obligations Fund has adopted the following investment
limitations and fundamental policies. These policies and limitations cannot be
changed by the Fund without approval by the holders of a majority of the
outstanding shares of the Fund as defined in the 1940 Act. Tax Free Obligations
Fund may not:
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1. Purchase common stocks, preferred stocks, warrants,
other equity securities, corporate bonds or debentures,
state bonds, municipal bonds, or industrial revenue
bonds (except through the purchase of obligations
referred to under "Investment Objectives and Policies"
below).
2. Borrow money except from banks for temporary or
emergency purposes for the purpose of meeting redemption
requests which might otherwise require the untimely
disposition of securities. Borrowing in the aggregate
may not exceed 10% of the value of the Fund's total
assets (including the amount borrowed) valued at the
lesser of cost or market less liabilities (not including
the amount borrowed) at the time the borrowing is made.
The borrowings will be repaid before any additional
investments are made. However, even with such authority
to borrow money, there is no assurance that the Fund
will not have to dispose of securities on an untimely
basis to meet redemption requests. For the purpose of
this investment restriction, the use of options and
futures transactions and the purchase of securities on a
when-issued or delayed-delivery basis shall not be
deemed the borrowing of money.
3. Pledge, hypothecate, mortgage or otherwise encumber its
assets, except in an amount up to 15% of the value of
its total assets but only to secure borrowings for
temporary or emergency purposes.
4. Sell securities short or purchase securities on margin.
5. Write or purchase put or call options, except that the
Fund may write or purchase put or call options in
connection with the purchase of variable rate
certificates of deposit described below and as otherwise
permitted as provided under "Investment Objectives and
Policies" below.
6. Underwrite the securities of other issuers except to the
extent the Fund may be deemed to be an underwriter,
under federal securities laws, in connection with the
disposition of portfolio securities, or purchase
securities with contractual or other restrictions on
resale.
7. Purchase or sell real estate, real estate investment
trust securities, commodities or commodity contracts, or
oil and gas interests.
8. Lend money to others except through the purchase of debt
obligations of the type which the Fund is permitted to
purchase (see "Investment Objectives and Policies"
below).
9. Invest in companies for the purpose of exercising
control.
10. Issue any senior securities (as defined in the 1940
Act), except as set forth in investment restriction
number (2) above, and except to the extent that using
options, futures contracts and options on futures
contracts, purchasing or selling on a when-issued,
delayed delivery or forward commitment basis or using
similar investment strategies may be deemed to
constitute issuing a senior security.
11. Invest 25% or more of its total assets in the securities
of any industry; provided that there shall be no
limitation on the purchase of obligations issued or
guaranteed by the United States, its agencies or
instrumentalities, or obligations of domestic commercial
banks, excluding for this purpose, foreign branches of
domestic commercial banks. As to utility companies, gas,
electric, water, and telephone companies are considered
as separate industries. As to finance companies, the
following two categories are each considered a separate
industry: (A) business credit institutions, such as
Honeywell Finance Corporation and General Electric
Credit Corp., and (B) personal credit institutions, such
as Sears Roebuck Acceptance Corp. and Household Finance
Corporation.
As a non-fundamental policy, Tax Free Obligations Fund may not
invest more than 10% of its net assets in illiquid assets, including, without
limitation, time deposits and repurchase agreements maturing in more than seven
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days. The Funds may not invest in obligations of any affiliate of U.S. Bancorp,
including U.S. Bank National Association ("U.S. Bank" or the "Advisor").
TREASURY OBLIGATIONS FUND
Treasury Obligations Fund has adopted the following investment
limitations and fundamental policies. These limitations cannot be changed by the
Fund without approval by the holders of a majority of the outstanding shares of
the Fund as defined in the 1940 Act. Treasury Obligations Fund may not:
1. Borrow money except that the Fund may borrow from banks
or enter into reverse repurchase agreements for
temporary or emergency purposes, for the purpose of
meeting redemption requests which might otherwise
require the untimely disposition of securities in
aggregate amounts not exceeding 10% of the value of the
Fund's total assets (including the amount borrowed or
subject to reverse repurchase agreements) valued at the
lesser of cost or market less liabilities (not including
the amount borrowed or subject to reverse repurchase
agreements) at the time the borrowing or reverse
repurchase agreement is entered into. (As a
non-fundamental policy, the Fund will not make
additional investments while its borrowings exceed 5% of
total assets.) Any borrowings will be repaid before any
additional investments are made. During the period any
reverse repurchase agreements are outstanding, the Fund
will restrict the purchase of portfolio securities to
instruments maturing on or before the expiration date of
the reverse repurchase agreements, but only to the
extent necessary to assure completion of the reverse
repurchase agreements. Interest paid on borrowed funds
will decrease the net earnings of the Fund. The Fund
will not borrow or enter into reverse repurchase
agreements to increase income (leveraging).
2. Issue any senior securities (as defined in the 1940
Act), except as set forth in investment restriction
number (1) above, and except to the extent that
purchasing or selling on a when-issued, delayed delivery
or forward commitment basis or using similar investment
strategies may be deemed to constitute issuing a senior
security.
3. Pledge, hypothecate, mortgage or otherwise encumber its
assets, except in an amount up to 15% of the value of
its total assets but only to secure borrowings for
temporary or emergency purposes.
4. Sell securities short or purchase securities on margin.
5. Underwrite the securities of other issuers except to the
extent the Fund may be deemed to be an underwriter,
under federal securities laws, in connection with the
disposition of portfolio securities.
6. Invest 25% or more of its assets in the securities of
issuers in any single industry; provided that there
shall be no limitation on the purchase of obligations
issued or guaranteed by the United States, its agencies
or instrumentalities, or obligations of domestic
commercial banks, excluding for this purpose, for
branches of domestic commercial banks.
7. Purchase or sell real estate, real estate investment
trust securities, commodities or commodity contracts, or
oil and gas interests.
8. Lend money to others except through the purchase of debt
obligations of the type which the Fund is permitted to
purchase (see "Investment Objectives and Policies"
below).
As a non-fundamental policy, Treasury Obligations Fund will not
invest more than 10% of its net assets in illiquid assets, including, without
limitation, repurchase agreements maturing in more than seven days.
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As to investment restriction (6) above, utility companies are
considered four separate industries: gas, electric, water and telephone
companies; and as to finance companies, the following two categories are each
considered a separate industry:
A. business credit institutions, such as Honeywell Finance
Corporation and General Electric Credit Corp., and
B. personal credit institutions, such as Sears Roebuck
Acceptance Corp. and Household Finance Corporation.
ADDITIONAL RESTRICTIONS
Short-term investments and repurchase agreements may be entered into
on a joint basis by the Funds and other funds advised by the Advisor to the
extent permitted by Securities and Exchange Commission exemptive order.
The Funds are subject to the investment restrictions of Rule 2a-7
under the 1940 Act in addition to other policies and restrictions discussed
herein. Pursuant to Rule 2a-7, each Fund is required to invest exclusively in
securities that mature within 397 days from the date of purchase and to maintain
an average weighted maturity of not more than 90 days. Under Rule 2a-7,
securities which are subject to specified types of demand or put features may be
deemed to mature at the next demand or put date although they have a longer
stated maturity. Rule 2a-7 also requires that all investments by each Fund be
limited to United States dollar-denominated investments that (a) present
"minimal credit risk" and (b) are at the time of acquisition "Eligible
Securities." Eligible Securities include, among others, securities that are
rated by two Nationally Recognized Statistical Rating Organizations ("NRSROs")
in one of the two highest categories for short-term debt obligations, such as
A-1 or A-2 by Standard & Poor's Rating Services, a division of The McGraw-Hill
Companies, Inc. ("Standard & Poor's"), or Prime-1 or Prime-2 by Moody's
Investors Service, Inc. ("Moody's"). It is the responsibility of the Board of
Directors of FAF to determine that the Funds' investments present only "minimal
credit risk" and are Eligible Securities. The Board of Directors of FAF has
established written guidelines and procedures for the Advisor and oversees the
Advisor's determination that the Funds' portfolio securities present only
"minimal credit risk" and are Eligible Securities.
Rule 2a-7 requires, among other things, that each Fund may not
invest, other than in United States "Government Securities" (as defined in the
1940 Act), more than 5% of its total assets in securities issued by the issuer
of the security; provided that the applicable Fund may invest in First Tier
Securities (as defined in Rule 2a-7) in excess of that limitation for a period
of up to three business days after the purchase thereof provided that the Fund
may not make more than one such investment at any time. Rule 2a-7 also requires
that each Fund may not invest, other than in United States Government
securities, (a) more than 5% of its total assets in Second Tier Securities
(i.e., Eligible Securities that are not rated by two NRSROs in the highest
category such as A-1 and Prime-1) and (b) more than the greater of 1% of its
total assets or $1,000,000 in Second Tier Securities of any one issuer.
INVESTMENT OBJECTIVES AND POLICIES
The main investment strategies of the Funds are set forth in the
Funds' current Prospectuses under "Fund Summaries." This Section describes in
detail the Funds' main investment strategies and other secondary investment
strategies.
If a percentage limitation under this section or under "Investment
Restrictions" above is adhered to at the time of an investment, a later increase
or decrease in percentage resulting from changes in values of assets will not
constitute a violation of such limitation except in the case of the limitation
on illiquid investments.
The securities in which the Funds invest may not yield as high a
level of current income as longer term or lower grade securities. These other
securities may have less stability of principal, be less liquid, and fluctuate
more
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in value than the securities in which the Funds invest. All securities in each
Fund's portfolio are purchased with and payable in United States dollars.
MUNICIPAL SECURITIES
Tax Free Obligations Fund invests principally in municipal
securities such as municipal bonds and other debt obligations. These municipal
bonds and debt securities are issued by the states and by their local and
special-purpose political subdivisions. The term "municipal bond" as used in
this Section includes short-term municipal notes and other commercial paper
issued by the states and their political subdivision.
Two general classifications of municipal bonds are "general
obligation" bonds and "revenue" bonds. General obligation bonds are secured by
the governmental issuer's pledge of its faith, credit and taxing power for the
payment of principal and interest upon a default by the issuer of its principal
and interest payment obligation. They are usually paid from general revenues of
the issuing governmental entity. Revenue bonds, on the other hand, are usually
payable only out of a specific revenue source rather than from general revenues.
Revenue bonds ordinarily are not backed by the faith, credit or general taxing
power of the issuing governmental entity. The principal and interest on revenue
bonds for private facilities are typically paid out of rents or other specified
payments made to the issuing governmental entity by a private company which uses
or operates the facilities. Examples of these types of obligations are
industrial revenue bonds and pollution control revenue bonds. Industrial revenue
bonds are issued by governmental entities to provide financing aid to community
facilities such as hospitals, hotels, business or residential complexes,
convention halls and sport complexes. Pollution control revenue bonds are issued
to finance air, water and solids pollution control systems for privately
operated industrial or commercial facilities.
Revenue bonds for private facilities usually do not represent a
pledge of the credit, general revenues or taxing powers of the issuing
governmental entity. Instead, the private company operating the facility is the
sole source of payment of the obligation. Sometimes, the funds for payment of
revenue bonds come solely from revenue generated by operation of the facility.
Revenue bonds which are not backed by the credit of the issuing governmental
entity frequently provide a higher rate of return than other municipal
obligations, but they entail greater risk than obligations which are guaranteed
by a governmental unit with taxing power. Federal income tax laws place
substantial limitations on industrial revenue bonds, and particularly certain
specified private activity bonds issued after August 7, 1986. In the future,
legislation could be introduced in Congress which could further restrict or
eliminate the income tax exemption for interest on debt obligations in which the
Fund may invest.
Tax Free Obligations Fund's investment in municipal bonds and other
debt obligations that are purchased from financial institutions such as
commercial and investment banks, savings associations and insurance companies
may take the form of participations, beneficial interests in a trust,
partnership interests or any other form of indirect ownership that allows the
Fund to treat the income from the investment as exempt from federal income tax.
In addition, Tax Free Obligations Fund may invest in other federal
income tax-free securities such as (i) tax and revenue anticipation notes issued
to finance working capital needs in anticipation of receiving taxes or other
revenues, (ii) bond anticipation notes that are intended to be refinanced
through a later issuance of longer-term bonds, (iii) variable and floating rate
obligations including variable rate demand notes and (iv) participation, trust
and partnership interests in any of the foregoing obligations.
Tax Free Obligations Fund may also invest up to 20% of its total
assets in municipal securities, the interest on which is treated as an item of
tax preference that is included in alternative minimum taxable income for
purposes of calculating the alternative minimum tax.
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<PAGE>
LOAN PARTICIPATIONS; SECTION 4(2) AND RULE 144A SECURITIES
Prime Obligations Fund and Tax Free Obligations Fund may invest in
loan participation interests. A loan participation interest represents a pro
rata undivided interest in an underlying bank loan. Participation interests,
like the underlying loans, may have fixed, floating, or variable rates of
interest. The bank selling a participation interest generally acts as a mere
conduit between its borrower and the purchasers of interests in the loan. The
purchaser of an interest (for example, a Fund) generally does not have recourse
against the bank in the event of a default on the underlying loan. Therefore,
the credit risk associated with such instruments is governed by the
creditworthiness of the underlying borrowers and not by the banks selling the
interests. Loan participation interests that can be sold within a seven-day
period are deemed by the Advisor to be liquid investments. If a loan
participation interest is restricted from being sold within a seven-day period,
then Prime Obligations Fund (as a non-fundamental policy) and Tax Free
Obligations Fund (as a fundamental policy) will be limited, together with other
illiquid investments, to not more than 10% of the applicable Fund's net assets.
Commercial paper issued in reliance on the exemption from registration afforded
by Section 4(2) of the Securities Act of 1933 and corporate obligations
qualifying for resale to certain "qualified institutional buyers" pursuant to
Rule 144A under the Securities Act of 1933 that meet the criteria for liquidity
established by the Board of Directors are considered liquid. Consequently, Prime
Obligations Fund and Tax Free Obligations Fund do not intend to subject such
securities to the limitation applicable to restricted securities. Investing in
Rule 144A securities could have the effect of increasing the level of
illiquidity in a Fund to the extent that qualified institutional buyers become,
for a time, uninterested in purchasing these securities.
SECURITIES OF FOREIGN BANKS AND BRANCHES
Prime Obligations Fund and Tax Free Obligations Fund may invest in
obligations of foreign branches of United States banks and United States
branches of foreign banks. Various provisions of federal law governing the
establishment and operation of domestic branches do not apply to foreign
branches of domestic banks. Obligations of United States branches of foreign
banks may be general obligations of the parent bank in addition to the issuing
branch, or may be limited by the terms of a specific obligation and by federal
and state regulation as well as by governmental action in the country in which
the foreign bank has its head office.
Because the portfolios of Prime Obligations Fund's and Tax Free
Obligations Fund's investments in taxable money market securities may contain
securities of foreign branches of domestic banks, foreign banks, and United
States branches of foreign banks, such Funds may be subject to additional
investment risks that are different in some respects from those incurred by a
fund that invests only in debt obligations of United States banks. These risks
may include future unfavorable political and economic developments and possible
withholding taxes, seizure of foreign deposits, currency controls, interest
limitations, or other governmental restrictions which might affect the payment
of principal or interest on securities owned by such Fund. Additionally, there
may be less public information available about foreign banks and their branches.
The Advisor carefully considers these factors when making investments. The Funds
have agreed that, in connection with investment in securities issued by foreign
banks, United States branches of foreign banks, and foreign branches of domestic
banks, consideration will be given to the domestic marketability of such
securities in light of these factors.
FOREIGN SECURITIES
Prime Obligations Fund may invest up to 25% of its total assets
collectively in U.S. dollar-denominated obligations of foreign companies.
Investment in foreign securities is subject to special investment
risks that differ in some respects from those related to investments in
securities of United States domestic issuers. These risks include political,
social or economic instability in the country of the issuer, the difficulty of
predicting international trade patterns, the possibility of the imposition of
exchange controls, expropriation, limits on removal of currency or other assets,
nationalization of assets, foreign withholding and income taxation, and foreign
trading practices (including higher trading commissions, custodial charges and
delayed settlements). Foreign securities also may be subject to greater
fluctuations in price than securities issued by United States corporations. The
principal markets on which these
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securities trade may have less volume and liquidity, and may be more volatile,
than securities markets in the United States.
In addition, there may be less publicly available information about
a foreign company than about a United States domiciled company. Foreign
companies generally are not subject to uniform accounting, auditing and
financial reporting standards comparable to those applicable to United States
domestic companies. There is also generally less government regulation of
securities exchanges, brokers and listed companies abroad than in the United
States. Confiscatory taxation or diplomatic developments could also affect
investment in those countries.
UNITED STATES GOVERNMENT SECURITIES
Each Fund may invest in securities issued or guaranteed as to
principal or interest by the United States Government, or agencies or
instrumentalities of the United States Government. These investments include
direct obligations of the United States Treasury such as United States Treasury
bonds, notes, and bills. The Treasury securities are essentially the same except
for differences in interest rates, maturities, and dates of issuance. In
addition to Treasury securities, Government Obligations Fund, Prime Obligations
Fund and Tax Free Obligations Fund may invest in securities, such as notes,
bonds, and discount notes which are issued or guaranteed by agencies of the
United States Government and various instrumentalities which have been
established or sponsored by the United States Government. Except for United
States Treasury securities, these United States Government obligations, even
those which are guaranteed by federal agencies or instrumentalities, may or may
not be backed by the "full faith and credit" of the United States. In the case
of securities not backed by the full faith and credit of the United States, the
investor must look principally to the agency issuing or guaranteeing the
obligation for ultimate repayment and may not be able to assert a claim against
the United States itself in the event the agency or instrumentality does not
meet its commitment. The Advisor considers securities guaranteed by an
irrevocable letter of credit issued by a government agency to be guaranteed by
that agency.
United States Treasury obligations include bills, notes and bonds
issued by the United States Treasury and separately traded interest and
principal component parts of such obligations that are transferable through the
Federal book-entry system known as Separately Traded Registered Interest and
Principal Securities ("STRIPS"). STRIPS are sold as zero coupon securities,
which means that they are sold at a substantial discount and redeemed at face
value at their maturity date without interim cash payments of interest or
principal. This discount is accreted over the life of the security, and such
accretion will constitute the income earned on the security for both accounting
and tax purposes. Because of these features, such securities may be subject to
greater interest rate volatility than interest paying United States Treasury
obligations. A Fund's investments in STRIPS will be limited to components with
maturities of less than 397 days and the Funds will not actively trade such
components.
REPURCHASE AGREEMENTS
Each Fund may engage in repurchase agreements with respect to any of
its portfolio securities. In a repurchase agreement, a Fund buys a security at
one price and simultaneously promises to sell that same security back to the
seller at a mutually agreed upon time and price. Each Fund may engage in
repurchase agreements with any member bank of the Federal Reserve System or
dealer in United States Government securities. Repurchase agreements usually are
for short periods, such as under one week, not to exceed 30 days. In all cases,
the Advisor must be satisfied with the creditworthiness of the other party to
the agreement before entering into a repurchase agreement. In the event of
bankruptcy of the other party to a repurchase agreement, a Fund might experience
delays in recovering its cash. To the extent that, in the meantime, the value of
the securities the Fund purchased may have decreased, the Fund could experience
a loss.
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CREDIT ENHANCEMENT AGREEMENTS
Prime Obligations Fund and Tax Free Obligations Fund may arrange for
guarantees, letters of credit, or other forms of credit enhancement agreements
(collectively, "Guarantees") for the purpose of further securing the payment of
principal and/or interest on such Funds' investment securities. Although each
investment security, at the time it is purchased, must meet such Funds'
creditworthiness criteria, Guarantees sometimes are purchased from banks and
other institutions (collectively, "Guarantors") when the Advisor, through yield
and credit analysis, deems that credit enhancement of certain of such Funds'
securities is advisable. As a non-fundamental policy, Prime Obligations Fund and
Tax Free Obligations Fund will limit the value of all investment securities
issued or guaranteed by each Guarantor to not more than 10% of the value of such
Fund's total assets.
PUT OPTIONS
Tax Free Obligations Fund may purchase tax-exempt securities which
provide for the right to resell them to the issuer, a bank or a broker-dealer at
a specified price within a specified period of time prior to the maturity date
of such obligations. Such a right to resell, which is commonly known as a "put,"
may be sold, transferred or assigned only with the underlying security or
securities. The Fund may pay a higher price for a tax-exempt security with a put
than would be paid for the same security without a put. The primary purpose of
purchasing such securities with puts is to permit the Fund to be as fully
invested as practicable in tax-exempt securities while at the same time
providing the Fund with appropriate liquidity.
VARIABLE AND FLOATING RATE OBLIGATIONS
Certain of the obligations in which Tax Free Obligations Fund, Prime
Obligations Fund and Government Obligations Fund may invest may be variable or
floating rate obligations in which the interest rate is adjusted either at
predesignated periodic intervals (variable rate) or when there is a change in
the index rate of interest on which the interest rate payable on the obligation
is based (floating rate). Variable or floating rate obligations may include a
demand feature which is a put that entitles the holder to receive the principal
amount of the underlying security or securities and which may be exercised
either at any time on no more than 30 days' notice or at specified intervals not
exceeding 397 calendar days on no more than 30 days' notice. Variable or
floating rate instruments with a demand feature enable the Fund to purchase
instruments with a stated maturity in excess of 397 calendar days. The Fund
determines the maturity of variable or floating rate instruments in accordance
with Securities and Exchange Commission ("SEC") rules which allow the Fund to
consider certain of such instruments as having maturities that are less than the
maturity date on the face of the instrument.
In connection with Prime Obligation Fund's and Tax Free Obligations
Fund's purchase of variable rate certificates of deposit ("CDs"), it may enter
into agreements with banks or dealers allowing the Fund to resell the
certificates to the bank or dealer, at the Fund's option. Time deposits which
may be purchased by such Fund are deposits held in foreign branches of United
States banks which have a specified term or maturity. The Funds purchase CDs
from only those domestic savings and loan institutions which are regulated by
the Office of Thrift Supervision and the Federal Deposit Insurance Corporation
("FDIC"), and whose deposits are insured by either the Savings Association
Insurance Fund or the Bank Insurance Fund, each of which is administered by the
FDIC. However, because such Funds purchase large denomination CDs, they do not
expect to benefit materially from such insurance. The policies described in this
paragraph are non-fundamental and may be changed by the Board of Directors.
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LENDING OF PORTFOLIO SECURITIES
In order to generate additional income, each of the Funds may lend
portfolio securities representing up to one-third of the value of its total
assets to broker-dealers, bank or other institutional borrowers of securities.
If the Funds engage in securities lending, distributions paid to shareholders
from the resulting income will not be excludable from a shareholder's gross
income for income tax purposes. 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 securities fail financially. However, the
Funds will only enter into loan arrangements with broker-dealers, banks, or
other institutions which the Advisor has determined are creditworthy under
guidelines established by the Board of Directors. In these loan arrangements,
the Funds will receive 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 the securities loaned. Collateral is marked to market daily. When a
Fund lends portfolio securities, it continues to be entitled to the interest
payable on the loaned securities and, in addition, receives interest on the
amount of the loan at a rate negotiated with the borrower. The Funds will pay a
portion of the income earned on the lending transaction to the placing broker
and may pay administrative and custodial fees (including fees to an affiliate of
the Advisor) in connection with these loans which, in the case of U.S. Bank, are
40% of the Funds' income from such securities lending transactions. U.S. Bank
may act as securities lending agent for the Funds subject to U.S. Bank's
compliance with conditions contained in an SEC exemptive order permitting U.S.
Bank to provide such services and receive compensation.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES
Each Fund may purchase securities on a when-issued or delayed
delivery basis. The settlement dates for these types of transactions are
determined by mutual agreement of the parties and may occur a month or more
after the parties have agreed to the transaction. Securities purchased on a
when-issued or delayed delivery basis are subject to market fluctuation and no
interest accrues to the Fund during the period prior to settlement. At the time
a Fund commits to purchase securities on a when-issued or delayed delivery
basis, it will record the transaction and thereafter reflect the value, each
day, of such security in determining its net asset value. At the time of
delivery of the securities, the value may be more or less than the purchase
price. The Funds do not receive income from these securities until such
securities are delivered. Each Fund will also establish a segregated account
with its custodian in which it will maintain cash or cash equivalents or other
portfolio securities equal in value to commitments for such when-issued or
delayed delivery securities. A Fund will not purchase securities on a
when-issued or delayed delivery basis if, as a result thereof, more than 15% of
that Fund's net assets would be so invested.
MONEY MARKET FUNDS
Each of the Funds may invest, to the extent permitted by the 1940
Act, in securities issued by other money market funds, provided that the
permitted investments of such other money market funds constitute permitted
investments of the investing Fund. The money market funds in which the Funds may
invest include other money market funds advised by the Advisor. Investments by a
Fund in other money market funds advised by the Advisor are subject to certain
restrictions contained in an exemptive order issued by the SEC.
CFTC INFORMATION
The Commodity Futures Trading Commission (the "CFTC"), a federal
agency, regulates trading activity pursuant to the Commodity Exchange Act, as
amended. The CFTC requires the registration of "commodity pool operators," which
are defined as any person engaged in a business which is of the nature of an
investment trust, syndicate or a similar form of enterprise, and who, in
connection therewith, solicits, accepts or receives from others funds,
securities or property for the purpose of trading in any commodity for future
delivery on or subject to the rules of any contract market. The CFTC has adopted
Rule 4.5, which provides an exclusion from the definition of commodity pool
operator for any registered investment company which (i) will use commodity
futures or commodity options contracts solely for bona fide hedging purposes
(provided, however, that in the alternative, with respect to each long position
in a commodity future or commodity option contract, an investment company may
meet certain other tests set forth in Rule 4.5); (ii) will not enter into
commodity futures and commodity options
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contracts for which the aggregate initial margin and premiums exceed 5% of its
assets; (iii) will not be marketed to the public as a commodity pool or as a
vehicle for investing in commodity interests; (iv) will disclose to its
investors the purposes of and limitations on its commodity interest trading; and
(v) will submit to special calls of the CFTC for information. Any investment
company desiring to claim this exclusion must file a notice of eligibility with
both the CFTC and the National Futures Association. FAF has made such notice
filings with respect to those Funds which may invest in commodity futures or
commodity options contracts.
PORTFOLIO TURNOVER
The Funds generally intend to hold their portfolio securities to
maturity. In certain instances, however, a Fund may dispose of its portfolio
securities prior to maturity when it appears such action will be in the best
interest of the Fund because of changing money market conditions, redemption
requests, or otherwise. A Fund may attempt to maximize the total return on its
portfolio by trading to take advantage of changing money market conditions and
trends or to take advantage of what are believed to be disparities in yield
relationships between different money market instruments. Because each Fund
invests in short-term securities and manages its portfolio as described above in
"Investment Restrictions" and "Investment Objectives and Policies" and, as set
forth "Fund Summaries" sections of the Funds' Prospectuses, each Fund's
portfolio will turn over several times a year. Because brokerage commissions as
such are not usually paid in connection with the purchase or sale of the
securities in which the Funds invest and because the transactional costs are
small, the high turnover is not expected materially to affect net asset values
or yields. Securities with maturities of less than one year are excluded from
required portfolio turnover rate calculations, and, therefore, each Fund's
turnover rate for reporting purposes will be zero.
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of FAF are listed below,
together with their business addresses and their principal occupations during
the past five years. Directors who are "interested persons" (as that term is
defined in the 1940 Act) of FAF are identified with an asterisk.
DIRECTORS
Robert J. Dayton, 5140 Norwest Center, Minneapolis, Minnesota 55402:
Director of FAF since December 1994 and of FAIF since September 1994, of FASF
since June 1996 and of FAIP since August 1999; Chairman (1989-1993) and Chief
Executive Officer (1993-present), Okabena Company (private family investment
office). Age: 56.
Roger A. Gibson, 1020 15th Street, Ste. 41A, Denver, Colorado 80202:
Director of FAF, FAIF and FASF since October 1997, and of FAIP since August
1999; Vice President North America-Mountain Region for United Airlines since
June 1995; prior to his current position, served most recently as Vice President
Customer Service for United Airlines in the West Region in San Francisco and the
Mountain Region in Denver, Colorado; employee at United Airlines since 1967.
Age: 52.
Andrew M. Hunter III, 537 Harrington Road, Wayzata, Minnesota 55391:
Director of FAIF, FAF and FASF since January 1997, and of FAIP since August
1999; Chairman of Hunter, Keith Industries, a diversified manufacturing and
services management company, since 1975. Age: 51.
Leonard W. Kedrowski, 16 Dellwood Avenue, Dellwood, Minnesota 55110:
Director of FAF and FAIF since November 1993, of FASF since June 1996, and of
FAIP since August 1999; President and owner of Executive Management Consulting,
Inc., a management consulting firm; Vice President, Chief Financial Officer,
Treasurer, Secretary and Director of Anderson Corporation, a large
privately-held manufacturer of wood windows, from 1983 to October 1992. Age:
57.
12
<PAGE>
* John M. Murphy, Jr., 601 Second Avenue South, Minneapolis,
Minnesota 55402; Director of FAIF, FAF and FASF since June 1999, and of FAIP
since August 1999; Executive Vice President of U.S. Bancorp since January 1999;
Chairman and Chief Investment Officer of First American Asset Management and
U.S. Bank Trust, N.A., and Executive Vice President of U.S. Bancorp, from 1991
to 1999. Age 57.
* Robert L. Spies, 4715 Twin Lakes Avenue, Brooklyn Center,
Minnesota 55429: Director of FAIF, FAF and FASF since January 31, 1997, and of
FAIP since August 1999; employed by First Bank System, Inc. and subsidiaries
from 1957 to January 31, 1997, most recently as Vice President, First Bank
National Association. Age: 65.
Joseph D. Strauss, 8617 Edenbrook Crossing, # 443, Brooklyn Park,
Minnesota 55443: Director of FAF since 1984 and of FAIF since April 1991, of
FASF since June 1996, and of FAIP since August 1999; Chairman of FAF's and
FAIF's Boards from 1993 to September 1997 and of FASF's Board from June 1996 to
September 1997; President of FAF and FAIF from June 1989 to November 1989; Owner
and President, Strauss Management Company, since 1993; Owner and President,
Community Resource Partnerships, Inc., a community business retention survey
company, since 1992; attorney-at-law. Age: 58.
Virginia L. Stringer, 712 Linwood Avenue, St. Paul, Minnesota 55105:
Director of FAIF since August 1987, of FAF since April 1991, of FASF since June
1996, and of FAIP since August 1999; Chair of FAIF's, FAF's and FASF's Boards
since September 1997; Owner and President, Strategic Management Resources, Inc.
since 1993; formerly President and Director of The Inventure Group, a management
consulting and training company, President of Scott's, Inc., a transportation
company, and Vice President of Human Resources of The Pillsbury Company. Age:
54.
EXECUTIVE OFFICERS
Mark Nagle, SEI Investments Company, Oaks, Pennsylvania 19456;
President of FAIF, FAF and FASF since September 1998, and of FAIP since
September 1999; President and Senior Vice President of Fund Accounting and
Administration of the Sub-Administrator since 1998; Vice President of Fund
Accounting and Administration of the Sub-Administrator from 1996 to 1998; Vice
President of the Distributor since December 1997; Vice President of Fund
Accounting, BISYS Fund Services, Inc., from November 1995 to November 1996;
Senior Vice President, Fidelity Investments, prior to November 1995. Age: 41.
James F. Volk, SEI Investments Company, Oaks, Pennsylvania 19456;
Controller and Treasurer of FAIF, FAF, FASF and FAIP since September 1999;
Director, Investment Accounting Operations and Co-director, International Fund
Accounting Group, SEI Investments Mutual Funds Services since February 1996;
Assistant Chief Accountant, SEC's Division of Investment Management from 1993 to
1996; Senior Manager, Coopers & Lybrand, from 1984 to 1993. Age: 37.
Michael J. Radmer, 220 South Sixth Street, Minneapolis, Minnesota
55402; Secretary of FAIF since April 1991, and of FAF since 1981, and of FASF
since June 1996, and of FAIP since September 1999; Partner, Dorsey & Whitney
LLP, a Minneapolis-based law firm and general counsel of FAIF, FAF and FASF.
Age: 55.
James D. Alt, 220 South Sixth Street, Minneapolis, Minnesota 55402;
Assistant Secretary of FAF, FAIF and FASF since September 1998, and of FAIP
since September 1999; Partner, Dorsey & Whitney LLP, a Minneapolis- based law
firm. Age: 48.
Kathleen L. Prudhomme, 220 South Sixth Street, Minneapolis,
Minnesota 55402; Assistant Secretary of FAF, FAIF and FASF since September 1998,
and of FAIP since September 1999; Partner, Dorsey & Whitney LLP, a Minneapolis-
based law firm. Age: 46.
Kevin P. Robins, SEI Investments Company, Oaks, Pennsylvania 19456:
Vice President and Assistant Secretary of FAIF and FAF since April 1994, and of
FASF since June 1996 and of FAIP since September 1999; Senior Vice President and
General Counsel of the Sub-Administrator and Distributor since 1994. Vice
President of
13
<PAGE>
the Administrator and Distributor from 1992 to 1994. Associate, Morgan Lewis &
Bockius from 1988 to 1992. Age: 37.
Todd Cipperman, SEI Investments Company, Oaks, Pennsylvania 19456:
Vice President and Assistant Secretary of FAIF, FAF and FASF since December
1996, and of FAIP since September 1999; Vice President and Assistant Secretary
of the Sub-Administrator and the Distributor since 1995. Associate, Dewey
Ballantine from 1994 to 1995; Associate, Winston & Stawn from 1991 to 1994. Age:
33.
Lydia A. Gavalis, SEI Investments Company, Oaks, Pennsylvania 19456;
Vice President and Assistant Secretary of FAIF, FAF and FASF since January 1998,
and of FAIP since September 1999; Vice President and Assistant Secretary of the
Sub-Administrator and the Distributor each since January 1998. Assistant General
Counsel and Director of Arbitration, Philadelphia Stock Exchange from 1989 to
1998. Age: 37.
Lynda J. Streigel, SEI Investments Company, Oaks, Pennsylvania
19456; Vice President and Assistant Secretary of FAIF, FAF and FASF since
January 1998, and of FAIP since September 1999; Vice President and Assistant
Secretary of the Sub-Administrator and the Distributor since January 1998;
Senior Asset Management Counsel, Barnett Banks, Inc. from 1993 to 1997; Partner,
Groom and Nordberg, Chartered from 1996 to 1997; and Associate General Counsel,
Riggs Bank, N.A. from 1992 to 1995. Age: 53.
James R. Foggo, SEI Investments Company, Oaks, Pennsylvania 19456;
Vice President and Assistant Secretary of FAIF, FAF and FASF since September
1998, and of FAIP since September 1999; Vice President and Assistant Secretary
of the Administrator and Distributor since September 1998; Associate Attorney,
Paul, Weiss, Rifkind, Wharton and Garrison from January 1998 to August 1998;
Associate Attorney, Baker & McKenzie from January 1995 to January 1998. Age: 36.
Edward T. Searle, SEI Investments Company, Oaks, Pennsylvania
19456;Vice President and Assistant Secretary of FAF, FAIF, FASF and FAIP since
September 1999; Vice President and Assistant Secretary of the Administrator and
Distributor since August 1999; Associate, Drinker, Biddle, and Reath, LLP from
1998 to 1999; Associate, Ballard, Spahr, Andrews and Ingersoll, LLP from 1995 to
1998. Age: 45.
COMPENSATION
The First American Family of Funds, which includes FAIF, FAF, FASF,
FAIP and FACEF, currently pays only to directors of the funds who are not paid
employees or affiliates of the funds, a fee of $27,000 per year ($40,500 in the
case of the Chair) plus $4,000 ($6,000 in the case of the Chair) per meeting of
the Board attended and $1,200 per committee meeting attended ($1,800 in the case
of a committee chair) and reimburses travel expenses of directors and officers
to attend Board meetings. In the event of telephonic Board or committee
meetings, each director receives a fee of $500 per Board or committee meeting
($750 in the case of the Chair or committee chair). In addition, directors may
receive a per diem fee of $1,500 per day, plus travel expenses when directors
travel out of town on Fund business. However, directors do not receive the
$1,500 per diem amount plus the foregoing Board or committee fee for an
out-of-town committee or Board meeting but instead receive the greater of the
total per diem fee or meeting fee. Legal fees and expenses are also paid to
Dorsey & Whitney LLP, the law firm of which Michael J. Radmer, secretary of
FAIF, FAF, FASF, FAIP and FACEF, James D. Alt, assistant secretary of FAIF, FAF,
FASF, FAIP and FACEF, and Kathleen L. Prudhomme, assistant secretary of FAIF,
FAF, FASF, FAIP and FACEF, are partners. The following table sets forth
information concerning aggregate compensation paid to each director of FAF (i)
by FAF (column 2), and (ii) by FAIF, FAF, FASF and FACEF collectively (column 5)
during the fiscal year ended September 30, 1999 (no fees were paid by FAIP
during the fiscal year ended September 30, 1999). No executive officer or
affiliated person of FAF had aggregate compensation from FAF in excess of
$60,000 during such fiscal year:
14
<PAGE>
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
NAME OF PERSON, POSITION AGGREGATE PENSION OR ESTIMATED ANNUAL TOTAL COMPENSATION
COMPENSATION RETIREMENT BENEFITS UPON FROM REGISTRANT AND
FROM REGISTRANT BENEFITS ACCRUED RETIREMENT FUND COMPLEX PAID
AS PART OF FUND TO DIRECTORS
EXPENSES
<S> <C> <C> <C> <C>
Robert J. Dayton, Director $ 37,950.47 -0- -0- $ 64,750.00
Roger A. Gibson, Director 32,939.25 -0- -0- 56,200.00
Andrew M. Hunter III, Director 40,165.96 -0- -0- 68,530.00
Leonard W. Kedrowski, Director 36,455.90 -0- -0- 62,200.00
Robert L. Spies, Director 35,400.91 -0- -0- 60,400.00
John M. Murphy, Jr., Director 0 ______ ______ 0
Joseph D. Strauss, Director 42,850.34 -0- -0- 73,110.00
Virginia L. Stringer, Director 46,919.09 -0- -0- 80,052.00
</TABLE>
Effective January 1, 2000, the directors may elect to defer payment
of up to 100% of the fees they receive in accordance with a Deferred
Compensation Plan (the "Plan"). Under the Plan, a director may elect to have his
or her deferred fees treated as if they had been invested in the shares of one
or more funds and the amount paid to the director under the Plan will be
determined based on the performance of such investments. Distributions may be
taken in a lump sum or over a period years. The Plan will remain unfunded for
federal income tax purposes under the Internal Revenue Code of 1986, as amended.
Deferral of director fees in accordance with the Plan will have a negligible
impact on fund assets and liabilities and will not obligate the funds to retain
any director or pay any particular level of compensation.
Under Minnesota law, each director owes certain fiduciary duties to
the Funds and to their shareholders. Minnesota law provides that a director
"shall discharge the duties of the position of director in good faith, in a
manner the director reasonably believes to be in the best interest of the
corporation, and with the care an ordinarily prudent person in a like position
would exercise under similar circumstances." Fiduciary duties of a director of a
Minnesota corporation include, therefore, both a duty of "loyalty" (to act in
good faith and in a manner reasonably believed to be in the best interest of the
corporation) and a duty of "care" (to act with the care an ordinarily prudent
person in a like position would exercise under similar circumstances). In 1987,
Minnesota enacted legislation which authorizes corporations to eliminate or
limit the personal liability of a director to the corporation or its
shareholders for monetary damages for breach of the fiduciary duty of "care."
Minnesota law does not, however, permit a corporation to eliminate or limit the
liability of a director (a) for any breach of the director's duty of "loyalty"
to the corporation or its shareholders, (b) for acts or omissions not in good
faith or that involve intentional misconduct or a knowing violation of the law,
(c) for authorizing a dividend, stock repurchase or redemption, or other
distribution in violation of Minnesota law or for violation of certain
provisions of Minnesota securities laws, or (d) for any transaction from which
the director derived an improper personal benefit. FAF's Board of Directors and
shareholders, at meetings held December 10, 1987 and March 15, 1988,
respectively, approved an amendment to the Articles of Incorporation that limits
the liability of directors to the fullest extent permitted by the Minnesota
legislation and the 1940 Act.
Minnesota law does not eliminate the duty of "care" imposed on a
director. It only authorizes a corporation to eliminate monetary liability for
violations of that duty. Further, Minnesota law does not permit elimination or
limitation of liability of "officers" to the corporation for breach of their
duties as officers. Minnesota law does not permit elimination or limitation of
the availability of equitable relief, such as injunctive or rescissionary
relief. These remedies, however, may be ineffective in situations where
shareholders become aware of such a breach after a transaction has been
consummated and rescission has become impractical. Minnesota law does not permit
elimination or limitation of a director's liability under the Securities Act of
1933, as amended, or the Securities Exchange Act of 1934, as amended. The 1940
Act prohibits elimination or limitation of a director's liability for acts
involving willful malfeasance, bad faith, gross negligence, or reckless
disregard of the duties of a director.
15
<PAGE>
INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISOR
U.S. Bank National Association, 601 Second Avenue South,
Minneapolis, Minnesota 55402, serves as the investment advisor and manager of
the Funds through its First American Asset Management group. The Advisor is a
national banking association that has professionally managed accounts for
individuals, insurance companies, foundations, commingled accounts, trust funds,
and others for over 75 years. The Advisor is a subsidiary of U.S. Bancorp
("USB"), 601 Second Avenue South, Minneapolis, Minnesota 55402, which is a
regional, multi-state bank holding company headquartered in Minneapolis,
Minnesota. USB operates four banks and eleven trust companies with banking
offices in 16 contiguous states. USB also has various other subsidiaries engaged
in financial services. At September 30, 1999 on a pro forma combined basis, USB
and its consolidated subsidiaries had consolidated assets of more than $77
billion, consolidated deposits of more than $47 billion and shareholders' equity
of more than $6 billion.
Pursuant to an Investment Advisory Agreement, effective as of
January 20, 1995 (the "Advisory Agreement") between FAF, on behalf of each Fund,
and the Advisor, the Funds engage the Advisor to act as investment advisor for
and to manage the investment of the Funds' assets. The Advisory Agreement
requires each Fund to pay the Advisor a monthly fee equal, on an annual basis,
to .40 of 1% of the Fund's average daily net assets.
The Advisory Agreement requires the Advisor to arrange, if requested
by FAF, for officers or employees of the Advisor to serve without compensation
from the Funds as directors, officers, or employees of FAF if duly elected to
such positions by the shareholders or directors of FAF. The Advisor has the
authority and responsibility to make and execute investment decisions for the
Funds within the framework of the Funds' investment policies, subject to review
by the Board of Directors of FAF. The Advisor is also responsible for monitoring
the performance of the various organizations providing services to the Funds,
including the Funds' distributor, shareholder services agent, custodian, and
accounting agent, and for periodically reporting to FAF's Board of Directors on
the performance of such organizations. The Advisor will, at its own expense,
furnish the Funds with the necessary personnel, office facilities, and equipment
to service the Funds' investments and to discharge its duties as investment
advisor of the Funds.
In addition to the investment advisory fee, each Fund pays all of
its expenses that are not expressly assumed by the Advisor or any other
organization with which the Fund may enter into an agreement for the performance
of services. Each Fund is liable for such nonrecurring expenses as may arise,
including litigation to which the Fund may be a party. FAF may have an
obligation to indemnify its directors and officers with respect to such
litigation. The Advisor will be liable to the Funds under the Advisory Agreement
for any negligence or willful misconduct by the Advisor other than liability for
investments made by the Advisor in accordance with the explicit direction of the
Board of Directors or the investment objectives and policies of the Funds. The
Advisor has agreed to indemnify the Funds with respect to any loss, liability,
judgment, cost or penalty that a Fund may suffer due to a breach of the Advisory
Agreement by the Advisor.
The Advisor may, at its option, waive any or all of its fees, or
reimburse expenses, with respect to each of the Funds from time to time. Any
such waiver or reimbursement is voluntary and may be discontinued at any time
unless as otherwise set forth in the Prospectus. The Advisor also may absorb or
reimburse expenses of the Funds from time to time, in its discretion, while
retaining the ability to be reimbursed by the Funds for such amounts prior to
the end of the fiscal year. This practice would have the effect of lowering a
Fund's overall expense ratio and of increasing yield to investors, or the
converse, at the time such amounts are absorbed or reimbursed, as the case may
be.
16
<PAGE>
The following table sets forth total advisory fees before waivers
and after waivers for each of the Funds for the fiscal years ended September 30,
1997, September 30, 1998 and September 30, 1999:
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
September 30, 1997 September 30, 1998 September 30, 1999
Advisory Fee Advisory Fee Advisory Fee Advisory Fee Advisory Fee Advisory Fee
Before Waivers After Waivers Before Waivers After Waivers Before Waivers After Waivers
-------------- ------------- -------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Government Obligations Fund $ 4,856,530 $ 4,020,449 $ 6,013,155 $ 5,031,567 7,246,387 6,060,287
Prime Obligations Fund 14,885,761 12,400,673 25,709,852 20,468,245 42,361,239 36,048,136
Tax Free Obligations Fund 46,188(1) 1,174(1) 1,002,936(2) 674,436(2) 2,709,709 2,199,008
Treasury Obligations Fund 12,432,597 9,904,279 19,284,901 16,240,243 24,069,258 20,324,364
</TABLE>
(1) Information is for the four month period from August 1, 1997 to November
30, 1997.
(2) Information is for the ten month period from December 1, 1997 to September
30, 1998.
DISTRIBUTOR AND DISTRIBUTION PLANS
SEI Investments Distribution Co. (the "Distributor" ) serves as the
distributor for the Class A, Class B, Class C, Class Y and Class D Shares of the
Funds. The Distributor is a wholly-owned subsidiary of SEI Investments Company.
The Distributor serves as distributor for the Class A, Class Y and
Class D Shares pursuant to a Distribution Agreement effective as of January 20,
1995 between itself and the Funds, as the distributor for the Class B Shares
pursuant to a Distribution and Service Agreement dated January 20, 1995 (the
"Class B Distribution Agreement") between itself and the Funds, and as the
distributor for the Class C Shares pursuant to a Distribution and Service
Agreement dated December 9, 1998 (the "Class C Distribution Agreement") between
itself and the Funds. These agreements are referred to collectively as the
"Distribution Agreements."
Under the Distribution Agreements, the Distributor has agreed to
perform all distribution services and functions of the Funds to the extent such
services and functions are not provided to the Funds pursuant to another
agreement. The shares of the Funds are distributed through the Distributor and
through securities firms, financial institutions (including, without limitation,
banks) and other industry professionals (the "Participating Institutions") which
enter into sales agreements with the Distributor to perform share distribution
or shareholder support services.
Fund shares and other securities distributed by the Distributor are
not deposits or obligations of, or endorsed or guaranteed by, U.S. Bank or its
affiliates, and are not insured by the Bank Insurance Fund, which is
administered by the Federal Deposit Insurance Corporation.
U.S. Bancorp Investment Services, Inc. ("USBI"), a subsidiary of
the Advisor, and U.S. Bancorp Piper Jaffray Inc., a broker-dealer affiliated
with the Advisor ("Piper"), are Participating Institutions. The Advisor pays
USBI and Piper up to .25% of the portion of each Fund's average daily net assets
attributable to Class Y Shares for which USBI or Piper are responsible,
respectively, in connection with USBI's or Piper's provision of shareholder
17
<PAGE>
support services. Such amounts paid to USBI and Piper, by the Advisor will not
affect any agreement by the Advisor to limit expenses of each Fund.
The Class A Shares pay to the Distributor a shareholder servicing
fee at an annual rate of 0.25% of the average daily net assets of the Class A
Shares. The fee may be used by the Distributor to provide compensation for
shareholder servicing activities with respect to the Class A Shares. The
shareholder servicing fee is intended to compensate the Distributor for ongoing
servicing and/or maintenance of shareholder accounts and may be used by the
Distributor to provide compensation to institutions through which shareholders
hold their shares for ongoing servicing and/or maintenance of shareholder
accounts. This fee is calculated and paid each month based on average daily net
assets of Class A Shares of each Fund for that month.
The Class B shares pay to the Distributor a shareholder servicing
fee at the annual rate of 0.25% of the average daily net assets of the Class B
shares. The fee may be used by the Distributor to provide compensation for
shareholder activities with respect to the Class B shares beginning one year
after purchase. The Class B shares also pay to the Distributor a distribution
fee at the annual rate of 0.75% of the average daily net assets of the Class B
shares. The distribution fee is intended to compensate the distributor for
advancing a commission to institutions purchasing Class B shares.
The Class C shares pay to the Distributor a shareholder servicing
fee at the annual rate of 0.25% of the average daily net assets of the Class C
shares. The fee may be used by the Distributor to provide compensation for
shareholder activities with respect to the Class C shares. This fee is
calculated and paid each month based on average daily net assets of the Class C
shares. The Class C shares also pay to the Distributor a distribution fee at the
annual rate of 0.75% of the average daily net assets of the Class C shares. The
Distributor may use the distribution fee to provide compensation to institutions
through which shareholders hold their shares beginning one year after purchase.
The Class D Shares of each Fund pay a shareholder servicing fee to
the Distributor monthly at the annual rate of 0.15% of each Fund's Class D
average daily net assets. The fee may be used by the Distributor to provide
compensation for shareholder servicing activities with respect to the Class D
Shares of the kinds described in the Class D Shares Prospectus. This fee is
calculated and paid each month based on average daily net assets of Class D
Shares of each Fund for that month.
The Distributor receives no compensation for distribution of the
Class Y Shares.
The Distribution Agreements provide that they will continue in
effect for a period of more than one year from the date of their execution only
so long as such continuance is specifically approved at least annually by the
vote of a majority of the Board members of FAF and by the vote of the majority
of those Board members of FAF who are not interested persons of FAF and who have
no direct or indirect financial interest in the operation of FAF's Rule 12b-1
Plans of Distribution or in any agreement related to such plans.
18
<PAGE>
SEI Investments Distribution Co., the Fund's underwriter, received
the following compensation from each Fund during its most recent fiscal year.
<TABLE>
<CAPTION>
Net Underwriting and Compensation on Brokerage Other Compensation
Commissions Redemptions and Commissions
Repurchases
-------------------- --------------- ----------- ------------------
<S> <C> <C> <C> <C>
Government Obligations Fund None None None None
Prime Obligations Fund None None None None
Tax Free Obligations Fund None None None None
Treasury Obligations Fund None None None None
</TABLE>
FAF has adopted Plans of Distribution (the "Plans") with respect to
Class A, Class B, Class C and Class D Shares of the Funds, respectively,
pursuant to Rule 12b-1 under the 1940 Act. Rule 12b-1 provides in substance that
a mutual fund may not engage directly or indirectly in financing any activity
which is primarily intended to result in the sale of shares, except pursuant to
a plan adopted under the Rule. The Plans authorize the Funds to pay the
Distributor fees for the services it performs for the Funds as described in the
preceding paragraphs. The Class B Plan and Class C Plan also authorize the
Distributor to retain the contingent deferred sales charge applied on
redemptions of Class B Shares and Class C Shares, respectively. The Plans
recognize that the Advisor, the Administrator, the Distributor, and any
Participating Institution, in their discretion, may use their own assets to pay
for certain additional costs of distributing shares of the Funds. Any such
arrangement to pay such additional costs may be commenced or discontinued by the
Advisor, the Administrator, the Distributor, or any Participating Institution at
any time.
Each Plan is a "compensation-type" plan under which the Distributor
is entitled to receive the distribution fee regardless of whether its actual
distribution expenses are more or less than the amount of the fee. If, after
payments by the Distributor for advertising, marketing, and distribution, there
are any remaining fees, these may be used as the Distributor may elect. Because
the amounts payable under the Plans will be commingled with the Distributor's
general funds, including the revenues it receives in the conduct of its
business, it is possible that certain of the Distributor's overhead expenses
will be paid out of Plan fees and that these expenses may include items which
the SEC Staff has noted, for example, the costs of leases, depreciation,
communications, salaries, training, and supplies. The Funds believe that such
expenses, if paid, will be paid only indirectly out of the fees being paid under
the Plans.
The following tables set forth the total Rule 12b-1 fees, after
waivers, paid by each class of the Funds for the fiscal years ended September
30, 1997, September 30, 1998 and September 30, 1999.
Year Ended September 30, 1997
Class A Class B Class Y Class D
--------- --------- --------- -----------
Government Obligations Fund $ * $ * $ 0 $ 484,747
Prime Obligations Fund 432,465 31,045 0 222,621
Tax Free Obligations Fund (1) 39,839 * 4,123 *
Treasury Obligations Fund * * 0 3,609,010
19
<PAGE>
Year Ended September 30, 1998
Class A Class B Class Y Class D
----------- -------- -------- -----------
Government Obligations Fund $ 166,887(3) $ * $ 0 $ 621,492
Prime Obligations Fund 3,214,942 20,640 0 392,629
Tax Free Obligations Fund 203,999(4) * 0 21,952(4)
Treasury Obligations Fund 176,091(2) * 0 5,046,268
Year Ended September 30, 1999
Class A Class B Class C Class Y Class D
----------- ------- ------- ------- ----------
Government Obligations Fund $ 1,096,656 $ * $ * $ 0 $ 571,999
Prime Obligations Fund $10,280,070 $37,546 $904 0 538,850
Tax Free Obligations Fund $ 718,454 * * 0 45,542
Treasury Obligations Fund $ 99,338 * * 0 5,947,592
* The Fund was not in operation during this fiscal year.
(1) Information is for the period from August 1, 1997 to November 30, 1997. Of
these amounts, $38,857 and $4,123 are distribution fees from the Class A
and Class Q shares of the Qualivest Tax-Free Money Market Fund,
respectively. On November 25, 1997 Tax Free Obligations Fund acquired the
assets of the Qualivest Tax-Free Money Market Fund. In connection with
such acquisition, Class A shares of the Qualivest Tax-Free Money Market
Fund were exchanged for Class A shares of Tax Free Obligations Fund, and
Class Q and Y shares of the Qualivest Tax-Free Money Market Fund were
exchanged for former Class C Shares (now designated Class Y Shares) of Tax
Free Obligations Fund.
(2) For the period from November 3, 1997 to September 30, 1998.
(3) For the period from April 29, 1998 to September 30, 1998.
(4) For the ten month period from December 1, 1997 to September 30, 1998.
ADMINISTRATOR; CUSTODIAN; COUNSEL; AUDITORS
ADMINISTRATOR. Effective January 1, 2000 U.S. Bank National
Association (the "Administrator"), 601 Second Avenue South, Minneapolis,
Minnesota 55402, serves as the Administrator for the Funds pursuant to an
Administration Agreement between it and the Funds. The Administrator is a
subsidiary of USB. Under the Administration Agreement, the Administrator
provides, or compensates others to provide, services to the Funds. These
services include various oversight and legal services, accounting services,
transfer agency and dividend disbursing services and shareholder services. The
Funds pay U.S. Bank monthly an asset-based at an annual rate, which is
calculated daily and paid monthly, equal to each fund's pro rata share of an
amount equal to 0.070% of the aggregate average daily assets of all open-end
mutual funds in the First American fund family up to $8 billion, and 0.055% of
the aggregate average daily net assets of all open-end mutual funds in the First
American fund family in excess of $8 billion. (For the purposes of this
Agreement, the First American fund family includes all series of FAF, FASF, FAIF
and FAIP.) In addition, the Funds pay U.S. Bank annual fees of $18,500 per
CUSIP, shareholder account maintenance fees of $9 to $15 per account and closed
account fees of $3.50 per account.
Prior to January 1, 2000, SEI Investments Management Corporation
served as the administrator for the Funds. SEI Investments Management
Corporation is a wholly-owned subsidiary of SEI Investments Company, which also
owns the Funds' Distributor. See "- Distributor and Distribution Plans" below.
The Funds paid to SEI Investment Management a fee equal to (i) 0.070% of each
Fund's average daily net assets until aggregate net assets of all Funds exceeded
$8 billion and (ii) 0.055% to the extent aggregate net assets of all Funds
exceeded $8 billion.
The following table sets forth total administrative fees, after
waivers, paid by each of the Funds for the fiscal years ended September 30,
1997, September 30, 1998 and September 30, 1999:
20
<PAGE>
Year Ended Year Ended Year Ended
September 30, 1997 September 30, 1998 September 30, 1999
------------------ ------------------ ------------------
Government Obligations Fund $ 775,846 $ 915,374 $1,067,565
Prime Obligations Fund 2,375,994 3,868,312 6,234,662
Tax Free Obligations Fund 16,689(1) 149,868(2) 399,068
Treasury Obligations Fund 1,976,528 2,904,106 3,543,123
(1) For the four month period from August 1, 1997 to November 30, 1997.
(2) For the ten month period from December 1, 1997 to September 30, 1998.
CUSTODIAN. U.S. Bank National Association (the "Custodian") acts as
custodian of the Funds' assets and portfolio securities pursuant to a Custodian
Agreement between First Trust National Association and the Funds. First Trust's
rights and obligations under the Custodian Agreement were assigned to U.S. Bank
pursuant to an Assignment and Assumption Agreement between First Trust and U.S.
Bank. The Custodian takes no part in determining the investment policies of the
Funds or in deciding which securities are purchased or sold by the Funds. The
duties of the Custodian are limited to receiving and safeguarding the assets and
securities of the Funds and to delivering or disposing of them pursuant to the
Funds' order. The Custodian is granted a lien for unpaid compensation upon any
cash or securities held by it for the Funds.
As compensation for its services to the Funds, the Custodian is paid
a monthly fee calculated on an annual basis equal to 0.03% of each Fund's
average daily net assets. In addition, the Custodian is reimbursed for its
out-of-pocket expenses incurred while providing its services to the Funds. The
Custodian continues to serve so long as its appointment is approved at least
annually by the Board of Directors including a majority of the directors who are
not interested persons (as defined under the 1940 Act) of FAF.
COUNSEL. Dorsey & Whitney LLP, 220 South Sixth Street, Minneapolis,
Minnesota 55402, is independent general counsel for the Funds.
AUDITORS. Ernst & Young LLP, 1400 Pillsbury Center, Minneapolis,
Minnesota 55402, serves as the Funds' independent auditors, providing audit
services, including audits of the annual financial statements and assistance and
consultation in connection with SEC filings for the year ended September 30,
1999.
KPMG LLP, 90 South Seventh Street, Minneapolis, Minnesota 55402,
acted as the Funds' independent auditors, providing audit services including
audits of the annual financial statements and assistance and consultation in
connection with SEC filings for the fiscal periods ended as of September 30,
1998.
PORTFOLIO TRANSACTIONS
As the Funds' portfolios are exclusively composed of debt, rather
than equity securities, most of the Funds' portfolio transactions are effected
with dealers without the payment of brokerage commissions but at net prices,
which usually include a spread or markup. In effecting such portfolio
transactions on behalf of the Funds, the Advisor seeks the most favorable net
price consistent with the best execution. The Advisor may, however, select a
dealer to effect a particular transaction without communicating with all dealers
who might be able to effect such transaction because of the volatility of the
money market and the desire of the Advisor to accept a particular price for a
security because the price offered by the dealer meets guidelines for profit,
yield, or both. The Funds may authorize the Advisor to place brokerage orders
with some brokers who help distribute the Funds' shares, if the Advisor
reasonably believes that transaction quality and commissions, if any, are
comparable to that available from other qualified brokers.
Decisions with respect to placement of the Funds' portfolio
transactions are made by the Advisor. The primary consideration in making these
decisions is efficiency in executing orders and obtaining the most favorable net
prices for the Funds. Most Fund transactions are with the issuer or with major
dealers acting for their own account and not as brokers. When consistent with
these objectives, business may be placed with broker-dealers who furnish
investment research services to the Advisor. Such research services would
include advice, both directly and in writing, as to the value of securities, the
advisability of investing in, purchasing, or selling securities, and the
21
<PAGE>
availability of securities or purchasers or sellers of securities, as well as
analyses and reports concerning issues, industries, securities, economic factors
and trends, portfolio strategy, and the performance of accounts.
The research services may allow the Advisor to supplement its own
investment research activities and enable the Advisor to obtain the views and
information of individuals and research staffs of many different securities
firms prior to making investment decisions for the Funds. To the extent
portfolio transactions are effected with broker-dealers who furnish research
services, the Advisor would receive a benefit, which is not capable of
evaluation in dollar amounts, without providing any direct monetary benefit to
the Funds from these transactions.
The Advisor has not entered into any formal or informal agreements
with any broker-dealers, and does not maintain any "formula" that must be
followed in connection with the placement of Fund portfolio transactions in
exchange for research services provided to the Advisor, except as noted below.
The Advisor may, from time to time, maintain an informal list of broker-dealers
that will be used as a general guide in the placement of Fund business in order
to encourage certain broker-dealers to provide the Advisor with research
services, which the Advisor anticipates will be useful to it. Any list, if
maintained, would be merely a general guide, which would be used only after the
primary criteria for the selection of broker-dealers (discussed above) has been
met, and, accordingly, substantial deviations from the list could occur. While
it is not expected that any Fund will pay brokerage commissions, if it does, the
Advisor would authorize the Fund to pay an amount of commission for effecting a
securities transaction in excess of the amount of commission another
broker-dealer would have charged only if the Advisor determined in good faith
that such amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such broker-dealer, viewed in terms
of either that particular transaction or the overall responsibilities of the
Advisor with respect to the Funds.
No Fund effects brokerage transactions in its portfolio securities
with any broker-dealer affiliated directly or indirectly with its Advisor or
Distributor unless such transactions, including the frequency thereof, the
receipt of commissions payable in connection therewith, and the selection of the
affiliated broker-dealer effecting such transactions are not unfair or
unreasonable to the shareholders of the Fund, as determined by the Board of
Directors. Any transactions with an affiliated broker-dealer must be on terms
that are both at least as favorable to the Fund as such Fund can obtain
elsewhere and at least as favorable as such affiliate broker-dealer normally
gives to others.
When two or more clients of the Advisor are simultaneously engaged
in the purchase or sale of the same security, the prices and amounts are
allocated in accordance with a formula considered by the Advisor to be equitable
to each client. In some cases, this system could have a detrimental effect on
the price or volume of the security as far as each client is concerned. In other
cases, however, the ability of the clients to participate in volume transactions
will produce better executions for each client.
During the fiscal year ended September 30, 1999, Government
Obligations Fund, Prime Obligations Fund and Treasury Obligations Fund paid no
brokerage commissions to SEI Investments Distribution Co. ("SIDCO"). SIDCO also
acts as the Funds' Distributor and is under common control with the Funds'
Administrator.
At September 30, 1999, Prime Obligations Fund held securities of
broker-dealers which are deemed to be "regular brokers or dealers" of the Funds
under the 1940 Act (or of such broker-dealers' parent companies) in the
following amounts:
Goldman Sachs commercial paper $ 49,023,000
Goldman Sachs notes $ 188,000,000
Merrill Lynch commercial paper $ 199,794,000
Morgan Stanley Dean Witter commercial paper $ 200,000,000
Salomon SmithBarney commercial paper $ 299,943,000
22
<PAGE>
CAPITAL STOCK
Each share of the Funds' $.01 par value common stock is fully paid,
nonassessable, and transferable. Shares may be issued as either full or
fractional shares. Fractional shares have pro rata the same rights and
privileges as full shares. Shares of the Funds have no preemptive or conversion
rights.
Each share of the Funds has one vote. On some issues, such as the
election of directors, all shares of all FAF Funds vote together as one series.
The shares do not have cumulative voting rights. Consequently, the holders of
more than 50% of the shares voting for the election of directors are able to
elect all of the directors if they choose to do so. On issues affecting only a
particular Fund or class, the shares of that Fund or class will vote as a
separate series. Examples of such issues would be proposals to alter a
fundamental investment restriction pertaining to a Fund or to approve,
disapprove or alter a distribution plan pertaining to a class.
The Bylaws of FAF provide that annual shareholders' meetings are not
required and that meetings of shareholders need be held only with such frequency
as required under Minnesota law and the 1940 Act.
As of November 1, 1999, the directors of FAF directly owned shares
of FAF, FAIF and FASF with an aggregate net asset value of $4.4 million. As of
November 1, 1999 the directors and officers of FAF as a group owned less than
one percent of each class of each Fund's outstanding shares. As of November 1,
1999, the Funds were aware that the following persons owned of record five
percent or more of the outstanding shares of each class of stock of the Funds.
Percentage of Outstanding Shares
---------------------------------------
Class A Class B Class C Class D Class Y
- --------------------------------------------------------------------------------
Treasury Obligations Fund
- -----------------------------------------
US Bank National Association Cust
Daily Valued Retirement Programs
Attn Reconciliation SPFT0401
180 East 5th St.
St. Paul, MN 55101-2667 18.74%
Peter E Werner DMD PC TR
Peter E Werner PSP
DTD 03 22 1996
1769 SW Parkway Dr
Redmond OR 97756-2550 7.57%
Walter Kellogg III
867 Homestake Ct
Castle Rock, CO 80104-9081 29.81%
Francis X Serio
156 SE 39th Ave.
Portland, OR 97214-2002 15.38%
- -----------------------------------------
Government Obligations Fund
- -----------------------------------------
US Bank National Association Cust
Daily Valued Retirement Programs
Attn Reconciliation SPFT0401
180 East 5th St.
St. Paul, MN 55101-2667 68.72%
Chicago GO Tender NTS 98 Note Fund
Attn: Dept of Planning and Development
121 N La Salle St. Rm 1000
Chicago, IL 60602 11.97%
23
<PAGE>
Percentage of Outstanding Shares
---------------------------------------
Class A Class B Class C Class D Class Y
---------------------------------------
Plaza Drive Prop 6 7% SEC NT COMPL
Attn Lease Administration
475 South Street
Morristown, NJ 07962 14.64%
Dain Rauscher Inc
FBO Bruce Stillman
A/C #2
11619 Live Oak Drive
Minnetonka, MN 55305-2591 11.47%
- -----------------------------------------
Prime Obligations
- -----------------------------------------
Harold Grossman
1200 W 141st St.
Burnsville, MN 55337-4437 11.96%
Bear Stearns Securities Corp.
FBO 102-20390-18
1 Metrotech Center North
Brooklyn, NY 11201-3870 5.51%
Yuan Hsin Wang
TOD Hui Chen Huang
Sudject to DST TOD Rules
18004 NE Anastasia Dr.
Portland, OR 97229-8505 6.62%
U S Bancorp Investments Inc.
FBO 531855831
100 South Fifth St. Suite 1400
Minneapolis, MN 55402-1217 7.69%
Piper Jaffray as Cust
FBO Benjamin Bauer
IRA 200162999
222 So 9th St.
Minneapolis, MN 5402-3389 14.37%
Donaldson Lufkin Jenrette
Securities Corp Inc.
P.O. Box 2052
Jersey City, NJ 07303-2052 12.05%
Raymond James & Associates Inc.
FBO Elite Acct # 80360772
FAO Azhar Waseem & Zartaj Waseem JT/WROS
551 Timber Ridge Dr
Longwood, FL 32779-2646 29.87%
Raymond James & Assoc Inc Cust
Azhar Waseem IRA
551 Timber Ridge Dr.
Longwood, FL 32779-2646 9.91%
US Bank Natl Assn Cust
IRA A/C Katherine Hannagan
1 Ryland Rd
White Hse Sta, NJ 08889-3800 9.06%
24
<PAGE>
Percentage of Outstanding Shares
---------------------------------------
Class A Class B Class C Class D Class Y
---------------------------------------
MFN Nextlink
Attn: Doug McFarland
155 108th Ave NE
Bellevue, WA 98004 13.00%
WHCFA SOP '99 Project Account
Attn: Ms. Sue Painter
P.O. Box 11038
Seattle, WA 98111 5.02%
Wilbur L Tegreene
17546 Bridle Ct.
Jupiter, FL 33478-4716 11.04%
- -----------------------------------------
Tax Free
- -----------------------------------------
Matie A Eberle TOD
Gayle Spletstoser
Subject to DST TOD Rules
2450 Aurora Ave. N Apt. 219
Seattle, WA 98109-2269 75.71%
SU-DAN Co SRS 1999 Project Fund
Attn: Dennis J Keat
1853 Rochester Industrial Court
Rochester Hills, MI 48309 15.51%
MSF Numaco LLC Project Fund
D/B/A Arrowsmith International Inc.
Attn Mary E Greenbury
23811 Telegraph Road
Southfield, MI 48037 9.19%
Excaliber Acq/Sellers Escrow
Attn: Charles E Emmenegger
15480 Clayton Road
Ballwin, MO 63011 6.00%
Patterson Dental/First bank ESC
Attn: Darryl Koep
1031 Mendota Heights Road
St. Paul, MN 55120 14.05%
IDG Books Worldwide Inc. Escrow
Attn: Chief Financial Officer
919 East Hillsdale Blvd Suite 400
Foster City, CA 94404 5.23%
CSCDA M/F 98MM (PASEO) Program Fund
Attn Rick Novak
451 Dela Vina Suite 203
Monterey, CA 93940 8.52%
CEDFA Applied Aerospace '98 Project
Attn: Jerry Ostrander
P.O. Box 6189-0189
Stockton, CA 95206 5.40%
Kenneth J McQueen & Carole D McQueen JTWROS
1424 S 117th St.
Omaha, NE 68144-1722 17.99%
25
<PAGE>
NET ASSET VALUE AND PUBLIC OFFERING PRICE
The public offering price of the shares of a Fund generally equals
the Fund's net asset value plus any applicable sales change. A summary of any
applicable sales charge assessed on Fund share purchases is set forth in the
Fund's Prospectuses. Each Fund is open for business and its net asset value per
share is calculated on every day the New York Stock Exchange and
federally-chartered banks are open for business. The New York Stock Exchange is
not open for business on the following holidays (or on the nearest Monday or
Friday if the holiday falls on a weekend): New Year's Day, Martin Luther King,
Jr. Day, Washington's Birthday (observed), Good Friday, Memorial Day (observed),
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day. Each year the
New York Stock Exchange may designate different dates for the observance of
these holidays as well as designate other holidays for closing in the future. To
the extent that the securities of a Fund are traded on days that the Fund is not
open for business, the Funds' net asset value per share may be affected on days
when investors may not purchase or redeem shares. On September 30, 1999, the net
asset value per share for the Funds was calculated as set forth below.
Net Assets / Shares Net Asset
(In Dollars) Outstanding Value Per Share
(In Dollars)
-------------- -------------- ---------------
GOVERNMENT OBLIGATIONS FUND
Class A $ 435,226,648 $ 435,210,199 $ 1.00
Class Y 938,896,873 939,115,927 1.00
Class D 439,287,417 439,357,863 1.00
PRIME OBLIGATIONS FUND
Class A $ 4,170,881,283 4,170,782,271 1.00
Class B 4,007,410 4,008,967 1.00
Class C 340,930 340,920 1.00
Class Y 6,228,207,012 6,228,467,827 1.00
Class D 426,003,650 426,018,495 1.00
TAX FREE OBLIGATIONS FUND
Class A $ 268,625,883 268,657,539 1.00
Class Y 338,490,482 338,508,584 1.00
Class D 33,464,192 33,466,554 1.00
TREASURY OBLIGATIONS FUND
Class A 23,496,075 23,470,543 1.00
Class Y 2,620,803,008 2,620,822,494 1.00
Class D 3,852,189,232 3,852,195,829 1.00
VALUATION OF PORTFOLIO SECURITIES
The Funds' portfolio securities are valued on the basis of the
amortized cost method of valuation. This involves valuing an instrument at its
cost and thereafter assuming a constant amortization to maturity of any discount
or premium, regardless of the impact of fluctuating interest rates on the market
value of the instrument. While this method provides certainty in valuation, it
may result in periods during which value, as determined by amortized cost, is
higher or lower than the price a Fund would receive if it sold the instrument.
During periods of declining interest rates, the daily yield on shares of a Fund
computed as described above may tend to be higher than a like computation made
by a fund with identical investments utilizing a method of valuation based upon
market prices and estimates of market prices for all of its portfolio
instruments. Thus, if the use of amortized cost by a Fund resulted in a lower
aggregate portfolio value on a particular day, a prospective investor in the
Fund would be able to obtain a somewhat higher yield than would result from
investment in a fund utilizing solely market values, and existing investors in
the Fund would receive less investment income. The converse would apply in a
period of rising interest rates.
The valuation of the Funds' portfolio instruments based upon their
amortized cost and the concomitant maintenance of the Funds' per share net asset
value of $1.00 is permitted in accordance with Rule 2a-7 under the 1940 Act,
under which the Funds must adhere to certain conditions. The Funds must maintain
a dollar-weighted average portfolio maturity of 90 days or less, purchase only
instruments having remaining maturities of 397 days or
26
<PAGE>
less from the date of purchase, and invest only in securities determined by the
Board of Directors to present minimal credit risks and which are of high quality
as determined by major rating services, or, in the case of any instrument which
is not so rated, which are of comparable quality as determined by the Board of
Directors. The maturities of variable rate demand instruments held in the Funds'
portfolio will be deemed to be the longer of the demand period, or the period
remaining until the next interest rate adjustment, although stated maturities
may be in excess of one year. It is the normal practice of the Funds to hold
portfolio securities to maturity and realize par therefor unless such sale or
other disposition is mandated by redemption requirements or other extraordinary
circumstances. The Board of Directors must establish procedures designed to
stabilize, to the extent reasonably possible, the Funds' price per share as
computed for the purpose of sales and redemptions at a single value. It is the
intention of the Funds to maintain a per share net asset value of $1.00. Such
procedures will include review of the Funds' portfolio holdings by the Directors
at such intervals as they may deem appropriate, to determine whether the Funds'
net asset value calculated by using available market quotations deviates from
$1.00 per share and, if so, whether such deviation may result in material
dilution or is otherwise unfair to existing shareholders. In the event the Board
of Directors determines that such a deviation exists, they will take such
corrective action as they regard as necessary and appropriate, such as selling
portfolio instruments prior to maturity to realize capital gains or losses or to
shorten average portfolio maturity, withholding dividends, or establishing a net
asset value per share by using available market quotations.
TAXES
Each Fund intends to elect each year to be taxed as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"). If so qualified, each Fund will not be liable for federal
income taxes to the extent it distributes its taxable income to its
shareholders.
Each Fund expects to distribute net realized short-term gains (if
any) once each year, although it may distribute them more frequently, if
necessary in order to maintain the Funds' net asset value at $1.00 per share.
Distributions of net investment income and net short-term capital gains are
taxable to investors as ordinary income.
Under the Code, each Fund is required to withhold 31% of reportable
payments (including dividends, capital gain distributions, if any, and
redemptions) paid to certain shareholders who have not certified that the social
security number or taxpayer identification number supplied by them is correct
and that they are not subject to backup withholding because of previous under
reporting to the IRS. These backup withholding requirements generally do not
apply to shareholders that are corporations or governmental units or certain
tax-exempt organizations.
Under the Code, interest on indebtedness incurred or continued to
purchase or carry shares of an investment company paying exempt-interest
dividends, such as Tax Free Obligations Fund, will not be deductible by a
shareholder in proportion to the ratio of exempt-interest dividends to all
dividends other than those treated as long-term capital gains. Indebtedness may
be allocated to shares of Tax Free Obligations Fund even though not directly
traceable to the purchase of such shares. Federal tax law also restricts the
deductibility of other expenses allocable to shares of Tax Free Obligations
Fund.
For shareholders who are or may become recipients of Social Security
benefits, exempt-interest dividends are includable in computing "modified
adjusted gross income" for purposes of determining the amount of Social Security
benefits, if any, that is required to be included in gross income. The maximum
amount of Social Security benefits includable in gross income is 85%.
The Code imposes requirements on certain tax-exempt bonds which, if
not satisfied, could result in loss of tax-exemption for interest on such bonds,
even retroactively to the date of issuance of the bonds. Proposals may be
introduced before Congress in the future, the purpose of which will be to
further restrict or eliminate the federal income tax exemption for certain
tax-exempt securities. Tax Free Obligations Fund cannot predict what additional
legislation may be enacted that may affect shareholders. The Fund will avoid
investment in such tax-exempt securities which, in the opinion of the Advisor,
pose a material risk of the loss of tax exemption. Further, if such
27
<PAGE>
tax-exempt security in the Fund's portfolio loses its exempt status, the Fund
will make every effort to dispose of such investment on terms that are not
detrimental to the Fund.
CALCULATION OF PERFORMANCE DATA
The Funds may issue current yield quotations. Simple yields are
computed by determining the net change, exclusive of capital changes, in the
value of a hypothetical pre-existing account having a balance of one share at
the beginning of a recent seven calendar day period, subtracting a hypothetical
charge reflecting deductions from shareholder accounts, and dividing the
difference by the value of the account at the beginning of the base period to
obtain the base period return, and then multiplying the base period return by
365/7. The resulting yield figure will be carried to at least the nearest
hundredth of one percent. Effective yields are computed by determining the net
change, exclusive of capital changes, in the value of a hypothetical
pre-existing account having a balance of one share at the beginning of a recent
seven calendar day period, subtracting a hypothetical charge reflecting
deductions from shareholder accounts, and dividing the difference by the value
of the account at the beginning of the base period to obtain the base period
return, and then compounding the base period return by adding 1, raising the sum
to a power equal to 365 divided by 7, and subtracting 1 from the result,
according to the following formula:
EFFECTIVE YIELD -- [(BASE PERIOD RETURN + 1)365/7]-1
When calculating the foregoing yield or effective yield quotations,
the calculation of net change in account value will include the value of
additional shares purchased with dividends from the original share and dividends
declared on both the original share and any such additional shares, and all
fees, other than nonrecurring accounts or sales charges that are charged to all
shareholder accounts in proportion to the length of the base period. Realized
gains and losses from the sale of securities and unrealized appreciation and
depreciation are excluded from the calculation of yield and effective yield.
From time to time, a Fund may advertise its "yield" and "effective
yield." These yield figures are based upon historical earnings and are not
intended to indicate future performance. The "yield" of a Fund refers to the
income generated by an investment in the Fund over a seven-day period (which
period will be stated in the advertisement). This income is then "annualized,"
that is, the amount of income generated by the investment during that week is
assumed to be generated each week over a 52-week period and is shown as a
percentage of the investment. The "effective yield" is calculated similarly but,
when annualized, the income earned by an investment in the Fund is assumed to be
reinvested. The "effective yield" will be slightly higher than the "yield"
because of the compounding effect of this assumed reinvestment. For the
seven-day period ended September 30, 1999, the yield and effective yield,
respectively, for the Funds were as set forth below.
28
<PAGE>
Yield Effective Yield
------------------- --------------------
GOVERNMENT OBLIGATIONS FUND
Class A 4.57% 4.67%
Class Y 4.88 5.00
Class D 4.73 4.84
PRIME OBLIGATIONS FUND
Class A 4.60 4.71
Class B 4.02 4.10
Class C 4.02 4.10
Class Y 5.02 5.14
Class D 4.87 4.99
TAX FREE OBLIGATIONS FUND
Class A 2.91 2.95
Class Y 3.23 3.28
Class D 3.08 3.13
TREASURY OBLIGATIONS FUND
Class A 4.51 4.61
Class Y 4.76 4.87
Class D 4.61 4.71
Tax Free Obligations Fund may also advertise its tax equivalent
yield. This yield will be computed by dividing that portion of the seven-day
yield or effective yield of the Fund (computed as set forth above) which is
tax-exempt by one minus the maximum federal income tax rate and adding the
product of that portion, if any, of the yield of the Fund that is not
tax-exempt. For the seven day period ended September 30, 1999, the
tax-equivalent yield for Tax Free Obligations Fund was as follows:
Yield Effective Yield
------------------- --------------------
TAX FREE OBLIGATIONS FUND
Class A 4.82% 4.88%
Class Y 5.35 5.43
Class D 5.10 5.18
Yield information may be useful in reviewing the Funds' performance
and for providing a basis for comparison with other investment alternatives.
However, yields fluctuate, unlike investments which pay a fixed yield for a
stated period of time. Yields for the Funds are calculated on the same basis as
other money market funds as required by applicable regulations. Investors should
give consideration to the quality and maturity of the portfolio securities of
the respective investment companies when comparing investment alternatives.
Investors should recognize that in periods of declining interest
rates the Funds' yields will tend to be somewhat higher than prevailing market
rates, and in periods of rising interest rates the Funds' yields will tend to be
somewhat lower. Also, when interest rates are falling, the inflow of net new
money to a Fund from the continuous sale of its shares will likely be invested
in portfolio instruments producing lower yields than the balance of the Funds'
portfolio, thereby reducing the current yield of the Fund. In periods of rising
interest rates, the opposite can be expected to occur.
Should a Fund incur or anticipate any unusual expense, loss, or
depreciation which would adversely affect its net asset values per share or
income for a particular period, the Directors would at that time consider
whether to adhere to the present dividend policy described above or revise it in
light of the then prevailing circumstances. For example, if a Fund's net asset
value per share were reduced, or were anticipated to be reduced, below $1.00,
the Directors may suspend further dividend payments until net asset value
returned to $1.00. Thus, such expenses or losses or depreciation may result in
the investor receiving upon redemption a price per share lower than that which
the investor paid.
29
<PAGE>
ADDITIONAL INFORMATION ABOUT SELLING SHARES
BY TELEPHONE
A shareholder may redeem shares of a Fund, if he or she elects the
privilege on the initial shareholder application, by calling his or her
financial institution to request the redemption. Shares will be redeemed at the
net asset value next determined after the Fund receives the redemption request
from the financial institution (less the amount of any applicable contingent
deferred sales charge). Redemption requests must be received by the financial
institution by the time specified by the institution to be assured same day
processing and redemption requests must be transmitted to and received by the
Funds by 3:00 p.m. Central Time (for Government Obligations Fund, Prime
Obligations Fund and Treasury Obligations Fund) and by 11:30 a.m. Central Time
(for Tax Free Obligations Fund), for same day processing. Pursuant to
instructions received from the financial institution, redemptions will be made
by check or by wire transfer. It is the financial institution's responsibility
to transmit redemption requests promptly. Redemptions processed by 3:00 p.m.
Central Time (for Government Obligations Fund, Prime Obligations Fund and
Treasury Obligations Fund) and by 11:30 a.m. Central Time (for Tax Free
Obligations Fund) will not receive that day's dividend. Redemption requests
placed after that respective time will earn that day's dividend, but will
generally not receive proceeds until the following day.
Shareholders who did not purchase their shares through a financial
institution may redeem Fund shares by telephoning (800) 637-2548. At the
shareholder's request, redemption proceeds will be paid by check and mailed to
the shareholder's address of record or wire transferred to the shareholder's
account at a domestic commercial bank that is a member of the Federal Reserve
System, normally within one business day, but in no event longer than seven days
after the request. Wire instructions must be previously established in the
account or provided in writing. The minimum amount for a wire transfer is
$1,000. If at any time a Fund determines it necessary to terminate or modify
this method of redemption, shareholders will be promptly notified.
In the event of drastic economic or market changes, a shareholder
may experience difficulty in redeeming by telephone. If such a case should
occur, another method of redemption should be considered. Neither the Transfer
Agent nor any Fund will be responsible for any loss, liability, cost or expense
for acting upon wire instructions or upon telephone instructions that it
reasonably believes to be genuine. The Transfer Agent and the Funds will each
employ reasonable procedures to confirm that instructions communicated are
genuine. These procedures may include taping of telephone conversations. To
ensure authenticity of redemption or exchange instructions received by
telephone, the Transfer Agent examines each shareholder request by verifying the
account number and/or taxpayer identification number at the time such request is
made. The Transfer Agent subsequently sends confirmations of both exchange sales
and exchange purchases to the shareholder for verification. If reasonable
procedures are not employed, the Transfer Agent and the Funds may be liable for
any losses due to unauthorized or fraudulent telephone transactions.
BY MAIL
Any shareholder may redeem Fund shares by sending a written request
to the Transfer Agent, shareholder servicing agent, or financial institution.
The written request should include the shareholder's name, the Fund name, the
account number, and the share or dollar amount requested to be redeemed, and
should be signed exactly as the shares are registered. Shareholders should call
the Funds, shareholder servicing agent or financial institution for assistance
in redeeming by mail. A check for redemption proceeds normally is mailed within
one business day, but in no event more than seven business days, after receipt
of a proper written redemption request.
Shareholders requesting a redemption of $50,000 or more, a
redemption of any amount to be sent to an address other than that on record with
the Funds, or a redemption payable other than to the shareholder of record, must
have signatures on written redemption requests guaranteed by:
30
<PAGE>
* a trust company or commercial bank, the deposits of
which are insured by the Bank Insurance Fund, which is
administered by the Federal Deposit Insurance
Corporation ("FDIC");
* a member firm of the New York, American, Boston,
Midwest, or Pacific Stock Exchanges or the National
Association for Securities Dealers;
* a savings bank or savings and loan association the
deposits of which are insured by the Savings Association
Insurance Fund, which is administered by the FDIC; or
* any other "eligible guarantor institution," as defined
in the Securities Exchange Act of 1934.
The Funds do not accept signatures guaranteed by a notary public.
The Funds and the Transfer Agent have adopted standards for
accepting signature guarantees from the above institutions. The Funds may elect
in the future to limit eligible signature guarantees to institutions that are
members of a signature guarantee program. The Funds and the Transfer Agent
reserve the right to amend these standards at any time without notice.
BY CHECKING ACCOUNT
At the shareholder's request, the Transfer Agent will establish a
checking account for redeeming Fund shares. With a Fund checking account, shares
may be redeemed simply by writing a check for $100 or more. The redemption will
be made at the net asset value on the date that the Transfer Agent presents the
check to a Fund. A check may not be written to close an account. If a
shareholder wishes to redeem shares and have the proceeds available, a check may
be written and negotiated through the shareholder's bank. Checks should never be
sent to the Transfer Agent to redeem shares. Copies of canceled checks are
available upon request. [A fee is charged for this service.] For further
information, contact the Funds.
REDEMPTION BEFORE PURCHASE INSTRUMENTS CLEAR
When shares are purchased by check or with funds transferred through
the Automated Clearing House, the proceeds of redemption of those shares are not
available until the Transfer Agent is reasonably certain that the purchase
payment has cleared, which could take up to ten calendar days from the purchase
date.
COMMERCIAL PAPER AND BOND RATINGS
COMMERCIAL PAPER RATINGS
Standard & Poor's Rating Services, a division of The McGraw-Hill
Companies, Inc. ("Standard & Poor's") commercial paper ratings are graded into
four categories, ranging from "A" for the highest quality obligations to "D" for
the lowest. Issues assigned the A rating are regarded as having the greatest
capacity for timely payment. Issues in this category are further defined with
the designation 1, 2 and 3 to indicate the relative degree of safety. The "A-1"
designation indicates that the degree of safety regarding timely payment is
either overwhelming or very strong. Those issues determined to possess
overwhelming safety characteristics will be denoted with a plus sign
designation.
Moody's Investors Service, Inc. ("Moody's") commercial paper ratings
are opinions of the ability of the issuers to repay punctually promissory
obligations not having an original maturity in excess of nine months. Moody's
makes no representation that such obligations are exempt from registration under
the Securities Act of 1933, and it does not represent that any specific note is
a valid obligation of a rated issuer or issued in conformity
31
<PAGE>
with any applicable law. Moody's employs the following three designations, all
judged to be investment grade, to indicate the relative repayment capacity of
rated issuers:
PRIME-1............. Superior capacity for repayment
PRIME-2............. Strong capacity for repayment
PRIME-3............. Acceptable capacity for repayment
CORPORATE BOND RATINGS
Standard & Poor's ratings for corporate bonds include the following:
Bonds rated "AAA" have the highest rating assigned by Standard &
Poor's to a debt obligation. Capacity to pay interest and repay
principal is extremely strong.
Bonds rated "AA" have a very strong capacity to pay interest and
repay principal and differ from the highest-rated issues only in
small degree.
Moody's ratings for corporate bonds include the following:
Bonds rated "Aaa" are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin, and principal is secure. While the
various protective elements are likely to change, such changes as
can be visualized are most unlikely to impair the fundamentally
strong position of such issues.
Bonds rated "Aa" are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known
as high-grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa
securities, or fluctuation of protective elements may be of greater
amplitude, or there may be other elements present that make the
long-term risks appear somewhat larger than the Aaa securities.
FINANCIAL STATEMENTS
The financial statements of FAF included in its annual report to
shareholders dated September 30, 1999 is incorporated herein by reference.
32
<PAGE>
FIRST AMERICAN FUNDS, INC.
PART C -- OTHER INFORMATION
ITEM 23. EXHIBITS
(a)(1) Amended and Restated Articles of Incorporation, as amended
through October 2, 1997 (Incorporated by reference to Exhibit
(1) to Post-Effective Amendment No. 22, Exhibit (1)(b) to
Post-Effective Amendment No. 25 and Exhibit (1)(b) to
Post-Effective Amendment No. 28.)
(a)(2) Certificate of Designation designating Class C Shares
(Incorporated by Reference to Exhibit (a)(2) to Post-Effective
Amendment No. 31)
* (b) Bylaws, as amended through February 23, 1999.
(c) Not applicable
(d)(1) Investment Advisory Agreement, dated January 20, 1995, between
the Registrant and First Bank National Association
(Incorporated by reference to Exhibit (5) to Post-Effective
Amendment No. 22.)
(d)(2) Amendment to Exhibit A to Investment Advisory Agreement
(Incorporated by reference to Exhibit (5)(b) to Post-Effective
Amendment No. 27)
(e)(1) Distribution Agreement and Service Agreement relating to the
Class B Shares, dated January 20, 1995, between the Registrant
and SEI Financial Services Company (Incorporated by reference
to Exhibit (6)(a) to Post-Effective Amendment No. 22.)
(e)(2) Distribution Agreement relating to the Class A, Class Y and
Class D Shares, dated January 20, 1995, between the Registrant
and SEI Financial Services Company (Incorporated by reference
to Exhibit (6)(b) to Post-Effective Amendment No. 22.)
(e)(3) Distribution and Service Agreement relating to the Class C
Shares, dated December 9, 1998, between the Registrant and SEI
Investments Distribution Co. (Incorporated by Reference to
Exhibit (a)(2) to Post-Effective Amendment No. 31)
(f) Not applicable
(g)(1) Custodian Agreement dated September 20, 1993, between the
Registrant and First Trust National Association (Incorporated
by reference to Exhibit (8)(a) to Post-Effective Amendment No.
22.)
(g)(2) Compensation Agreement, dated January 20, 1995, pursuant to
Custodian Agreement(Incorporated by reference to Exhibit (8)(b)
to Post-Effective Amendment No. 22.)
<PAGE>
(g)(3) Compensation Agreement dated October 8, 1997, pursuant to
Custodian Agreement (Incorporated by reference to Exhibit
(5)(b) to Post-Effective Amendment No. 27.)
(g)(4) Assignment of Custodian Agreements and Security Lending Agency
Agreement to U.S. Bank National Association, dated May 1, 1998
(Incorporated by reference to Exhibit (g)(4) to Post-Effective
Amendment No. 30.)
* (g)(5) Form of Supplement to Custodian Agreement dated December 8,
1999.
* (h)(1) Form of Administration Agreement dated December 8, 1999, by and
between U.S. Bank National Association and First American
Funds, Inc.
(i)(1) Opinion and Consent of Dorsey & Whitney, dated January 26, 1982
(Incorporated by reference to Exhibit (10)(a) to Post-Effective
Amendment No. 22.)
(i)(2) Opinion and Consent of William N. Koster, Esq., dated November
5, 1981 (Incorporated by reference to Exhibit (10)(b) to
Post-Effective Amendment No. 22.)
(j)(1) Opinion and Consent of Melissa R. Fogelberg, dated February 6,
1985 (Incorporated by reference to Exhibit (11)(b) to
Post-Effective Amendment No. 22.)
(j)(2) Opinion and Consent of Dorsey & Whitney, dated November 25,
1991 (Incorporated by reference to Exhibit (11)(c) to
Post-Effective Amendment No. 22.)
* (j)(3) Consent of Ernst & Young LLP.
* (j)(4) Consent of KPMG LLP.
(k) Not applicable
(l) Letter of Investment Intent, dated November 3, 1981
(Incorporated by reference to Exhibit (13) to Post-Effective
Amendment No. 22.)
(m)(1) Distribution Plan for Class A Shares (Incorporated by reference
to Exhibit (15)(a) to Post-Effective Amendment No. 22.)
(m)(2) Distribution Plan for Class B Shares (Incorporated by reference
to Exhibit (15)(b) to Post-Effective Amendment No. 22.)
(m)(3) Distribution Plan for Class D Shares (Incorporated by reference
to Exhibit (15)(c) to Post-Effective Amendment No. 22.)
(m)(4) Distribution Plan for Class C Shares (Incorporated by Reference
to Exhibit (a)(2) to Post-Effective Amendment No. 31)
<PAGE>
(m)(5) Service Plan for Class B Shares (Incorporated by reference to
Exhibit (15)(d) to Post-Effective Amendment No. 22.)
(m)(6) Service Plan for Class C Shares (Incorporated by Reference to
Exhibit (a)(2) to Post-Effective Amendment No. 31)
(n) Multiple Class Plan Pursuant to Rule 18f-3 (Incorporated by
reference to Exhibit (18) to Post-Effective Amendment No. 22.)
* Filed herewith
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Not applicable.
ITEM 25. INDEMNIFICATION
The Registrant's Articles of Incorporation and Bylaws provide that
the Registrant shall indemnify such persons for such expenses and liabilities,
in such manner, under such circumstances, and to the full extent as permitted by
Section 302A.521 of the Minnesota Statutes, as now enacted or hereafter amended;
provided, however, that no such indemnification may be made if it would be in
violation of Section 17(h) of the Investment Company Act of 1940, as now enacted
or hereafter amended, and any rules, regulations, or releases promulgated
thereunder.
Section 302A.521 of the Minnesota Statutes, as now enacted, provides
that a corporation shall indemnify a person made or threatened to be made a
party to a proceeding by reason of the former or present official capacity of
the person against judgments, penalties, fines, settlements and reasonable
expenses, including attorneys' fees and disbursements, incurred by the person in
connection with the proceeding if, with respect to the acts or omissions of the
person complained of in the proceeding, the person has not been indemnified by
another organization for the same judgments, penalties, fines, settlements, and
reasonable expenses incurred by the person in connection with the proceeding
with respect to the same acts or omissions; acted in good faith, received no
improper personal benefit, and the Minnesota Statutes dealing with directors'
conflicts of interest, if applicable, have been satisfied; in the case of a
criminal proceeding, had no reasonable cause to believe that the conduct was
unlawful; and reasonably believed that the conduct was in the best interests of
the corporation or, in certain circumstances, reasonably believed that the
conduct was not opposed to the best interests of the corporation.
The Registrant undertakes that no indemnification or advance will be
made unless it is consistent with Sections 17(h) or 17(i) of the Investment
Company Act of 1940, as now enacted or hereafter amended, and Securities and
Exchange Commission rules, regulations, and releases (including, without
limitation, Investment Company Act of 1940 Release No. 11330, September 2,
1980).
Insofar as the indemnification for liability arising under the
Securities Act of 1933, as amended, may be permitted to directors, officers, and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy
<PAGE>
as expressed in such Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer, or
controlling person of the Registrant in the successful defense of any action,
suit, or proceeding) is asserted by such director, officer, or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933, as amended, and will be governed by the final
adjudication of such issue.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Information on the business of the Registrant's investment adviser,
U.S. Bank National Association (the "Manager"), is described in the section of
each series' Statement of Additional Information, filed as part of this
Registration Statement, entitled "Investment Advisory and Other Services." The
directors and officers of the Manager are listed below, together with their
principal occupation or other positions of a substantial nature during the past
two fiscal years. This information is as of October 25, 1999.
<TABLE>
<CAPTION>
POSITIONS AND OFFICES OTHER POSITIONS AND OFFICES
NAME WITH THE MANAGER AND PRINCIPAL BUSINESS ADDRESS
---- ---------------- ------------------------------
<S> <C> <C>
John F. Grundhofer Chairman and Chief Executive Officer Chairman and Chief
Executive Officer of U.S. Bancorp*
Richard A. Zona Director and Vice Chairman Vice Chairman--Finance of U.S. Bancorp*
Philip G. Heasley Director, President and Chief President and Chief Operating Officer of
Operating Officer U.S. Bancorp*
J. Robert Hoffmann Director, Executive Vice President Executive Vice President and Chief Credit
and Chief Credit Officer Officer of U.S. Bancorp*
Lee R. Mitau Director, Executive Vice President, Executive Vice President, General Counsel
Secretary and General Counsel and Secretary of U.S. Bancorp*
Susan E. Lester Director, Executive Vice President Executive Vice President and Chief
and Chief Financial Officer Financial Officer of U.S. Bancorp*
Gary T. Duim Director and Vice Chairman Vice Chairman of U.S. Bancorp*
Peter E. Raskind Director, Executive Vice President Head of Branch Channel*
</TABLE>
- -----------------------
* Address: 601 Second Avenue South, Minneapolis, Minnesota 55402.
<PAGE>
ITEM 27. PRINCIPAL UNDERWRITERS:
(a) State the name of each investment company (other than the
Registrant) for which each principal underwriter currently distributing the
Registrant's securities also acts as a principal underwriter, distributor or
investment adviser:
Registrant's distributor, SEI Investments Distribution Co. (the
"Distributor") acts as distributor for SEI Liquid Asset Trust, SEI Daily Income
Trust, SEI Tax Exempt Trust, SEI Index Funds, SEI Institutional Managed Trust,
SEI Institutional International Trust, The Advisors' Inner Circle Fund, The
Pillar Funds, CUFund, STI Classic Funds, First American Funds, Inc., First
American Investment Funds, Inc., The Arbor Fund, Boston 1784 Funds, The PBHG
Funds, Inc., The Achievement Funds Trust, Bishop Street Funds, STI Classic
Variable Trust, ARK Funds, Huntington Funds, SEI Asset Allocation Trust, TIP
Funds, SEI Institutional Investments Trust, First American Strategy Funds, Inc.,
Highmark Funds, Armada Funds, PBHG Insurance Series Fund, Inc., Expedition
Funds, Alpha Select Funds, Oak Associates Funds, The Nevis Funds, Inc., The
Parkstone Group of Funds, CNI Charter Funds, The Parkstone Advantage Funds and
Ameriund Funds, Inc. pursuant to distribution agreements dated November 29,
1982, July 15, 1982, December 3, 1982, July 10, 1985, January 22, 1987, August
30, 1988, November 14, 1991, February 28, 1992, May 1, 1992, May 29, 1992,
November 1, 1992, November 1, 1992, January 28, 1993, June 1, 1993, July 16,
1993, December 27, 1994, January 27, 1995, March 1, 1995, August 18, 1995,
November 1, 1995, January 11, 1996, April 1, 1996, April 28, 1996, June 14,
1996, October 1, 1996, February 15, 1997, March 8, 1997, April 1, 1997, June 9,
1997, January 1, 1998, February 27, 1998, June 29, 1998, September 14, 1998,
April 1, 1999, May 1, 1999 and July 13, 1999, respectively.
The Distributor provides numerous financial services to investment
managers, pension plan sponsors, and bank trust departments. These services
include portfolio evaluation, performance measurement, and consulting services
("Funds Evaluation") and automated execution, clearing and settlement of
securities transactions ("MarketLink").
(b) Provide the information required by the following table for each
director, officer, or partner of each principal underwriter named in the
response to Item 20. Unless otherwise noted, the business address of each
director or officer is One Freedom Valley Drive, Oaks, Pennsylvania 19456.
<TABLE>
<CAPTION>
POSITIONS AND OFFICES WITH POSITIONS AND OFFICES WITH
NAME UNDERWRITER REGISTRANT
---- ------------------- ------------------
<S> <C> <C>
Alfred P. West, Jr. Director, Chairman & Chief Executive Officer --
Richard B. Lieb Director, Executive Vice President --
Carmen V. Romeo Director --
Mark J. Held President & Chief Operating Officer --
Gilbert L. Beebower Executive Vice President --
Dennis J. McGonigle Executive Vice President --
Robert M. Silvestri Chief Financial Officer & Treasurer --
Leo J. Dolan, Jr. Senior Vice President --
Carl A. Guarino Senior Vice President --
Larry Hutchinson Senior Vice President --
Jack May Senior Vice President --
Hartland J. McKeown Senior Vice President --
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Kevin P. Robins Senior Vice President & General Counsel Vice President & Assistant Secretary
Patrick K. Walsh Senior Vice President --
Ronert Aller Vice President --
Gordon W. Carpenter Vice President --
Todd Cipperman Vice President & Assistant Secretary --
S. Courtney E. Collier Vice President & Assistant Secretary Vice President & Assistant Secretary
Richard Deak Vice President & Assistant Secretary
Robert Crudup Vice President & Managing Director --
Barbara Doyne Vice President --
Jeff Drennen Vice President --
James R. Foggo Vice President & Assistant Secretary --
Vic Galef Vice President & Managing Director --
Lydia A. Gavalis Vice President & Assistant Secretary Vice President & Assistant Secretary
Kathy Heilig Vice President
Greg Gettinger Vice President & Assistant Secretary --
Jeff Jacobs Vice President --
Samuel King Vice President --
Kim Kirk Vice President & Managing Director --
John Krzeminski Vice President & Managing Director --
Carolyn McLaurin Vice President & Managing Director --
Mark Nagle Vice President President
Joanne Nelson Vice President --
Cynthia M. Parrish Vice President & Assistant Secretary --
Kim Rainey Vice President --
Rob Redecan Vice President --
Maria Rinehart Vice President --
Edward Searle Vice President & Assistant Secretary
Steve Smith Vice President --
Daniel Spaventa Vice President --
Kathryn L. Stanton Vice President & Assistant Secretary --
Lynda J. Striegel Vice President & Assistant Secretary Vice President & Assistant Secretary
Lori L. White Vice President & Assistant Secretary --
Wayne M. Withrow Vice President & Managing Director --
</TABLE>
<PAGE>
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS
All accounts, books, and other documents required to be maintained
by Section 31(a) of the Investment Company Act of 1940 and the rules promulgated
thereunder are maintained by SEI Investments Distribution Co., Oaks,
Pennsylvania 19456.
ITEM 29. MANAGEMENT SERVICES
Not applicable.
ITEM 30. UNDERTAKINGS
Not applicable.
SIGNATURES
As required by the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, the Registrant certifies that it
meets all of the requirements for effectiveness of this Registration Statement
under Rule 485(b) of the Securities Act of 1933, as amended, and has duly caused
this Post-Effective Amendment to its Registration Statement No. 2-74747 to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Oaks, Commonwealth of Pennsylvania, on the 26th day of November, 1999.
FIRST AMERICAN FUNDS, INC.
ATTEST: /s/ James Volk By: /s/ James R. Foggo
-------------------------------- --------------------------------
James Volk James R. Foggo
Vice President
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Amendment to the Registration Statement has been signed below by
the following persons in the capacity and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ James Volk Controller (Principal **
- ----------------------------- Financial and Accounting Officer)
James Volk
* Director **
- -----------------------------
John M. Murphy, Jr.
* Director **
- -----------------------------
Robert J. Dayton
<PAGE>
* Director **
- -----------------------------
Andrew M. Hunter III
* Director **
- -----------------------------
Leonard W. Kedrowski
* Director **
- -----------------------------
Robert L. Spies
* Director **
- -----------------------------
Joseph D. Strauss
* Director **
- -----------------------------
Virginia L. Stringer
* Director **
- -----------------------------
Roger A. Gibson
* By: /s/ James R. Foggo
------------------------
James R. Foggo
Attorney-in-Fact
** November 26, 1999
<PAGE>
Exhibit (b)
As approved at Board of Directors Meeting on December 4, 1990; Amendment to
Section 1.01 approved at Board of Directors Meeting on 6/1/93; Amendments to
Article IV approved at Board of Directors Meeting on 9/7/93; Amendments to
Section 1.01 approved at Board of Directors Meeting on 12/7/94; Amendments to
Section 1.01 approved at Board of Directors Meeting on 6/4/97; Amendment to
Section 1.01 approved at Board of Directors Meeting on 2/23/98; Amendment to
Section 1.01 approved at Board of Directors Meeting on 12/9/98; Amendment to
Section 3.13 approved at Board of Directors Meeting on 2/23/99.
BYLAWS
OF
FIRST AMERICAN FUNDS, INC.
ARTICLE I.
OFFICES, CORPORATE SEAL
Section 1.01. Name. The name of the corporation is "FIRST AMERICAN
FUNDS, INC." The names of the series represented by the series of shares
designated in the corporation's articles of incorporation shall be as follows:
Series B, Class One: Prime Obligations Fund, "Class Y."
Series B, Class Two: Prime Obligations Fund, "Class D."
Series B, Class Three: Prime Obligations Fund, "Class A."
Series B, Class Four: Prime Obligations Fund, "Class B."
Series B, Class Five: Prime Obligations Fund, "Class C."
Series C, Class One: Government Obligations Fund, "Class Y."
Series C, Class Two: Government Obligations Fund, "Class D."
Series C, Class Three: Government Obligations Fund, "Class A."
Series D, Class One: Treasury Obligations Fund, "Class Y."
Series D, Class Two: Treasury Obligations Fund, "Class D."
Series D, Class Three: Treasury Obligations Fund, "Class A."
Series F, Class One: Tax Free Money Market Fund, "Class A."
Series F, Class Two: Tax Free Money Market Fund, "Class B."
Series F, Class Three: Tax Free Money Market Fund, "Class Y."
Series F, Class Four: Tax Free Money Market Fund, "Class D."
Section 1.02. Registered Office. The registered office of the
corporation in Minnesota shall be that set forth in the Articles of
Incorporation or in the most recent amendment of the Articles of Incorporation
or resolution of the directors filed with the Secretary of State of Minnesota
changing the registered office.
Section 1.03. Other Offices. The corporation may have such other
offices, within or without the State of Minnesota, as the directors shall, from
time to time, determine.
<PAGE>
Section 1.04. Corporate Seal. The corporate seal shall be circular
in form and shall have inscribed thereon the name of the corporation and the
word "Minnesota" and the words "Corporate Seal." The form of the seal shall be
subject to alteration by the Board of Directors, and the seal may be used by
causing it or a facsimile to be impressed or affixed or printed or otherwise
reproduced. Any officer or director of the corporation shall have authority to
affix the corporate seal of the corporation to any document requiring the same.
ARTICLE II.
MEETINGS OF SHAREHOLDERS
Section 2.01. Place and Time of Meeting. Except as provided
otherwise by Minnesota Statutes Chapter 302A, meetings of the shareholders may
be held at any place, within or without the State of Minnesota, designated by
the directors and, in the absence of such designation, shall be held at the
registered office of the corporation in the State of Minnesota. The directors
shall designate the time of day for each meeting and, in the absence of such
designation, every meeting of shareholders shall be held at ten o'clock a.m.
Section 2.02. Regular Meetings. Annual meetings of shareholders are
not required by these Bylaws. Regular meetings shall be held only with such
frequency and at such times and places as provided in and required by Minnesota
Statutes Section 302A.431.
Section 2.03. Special Meetings. Special meetings of the shareholders
may be held at any time and for any purpose and may be called by the Chairman of
the Board, the President, any two directors, or by one or more shareholders
holding ten percent (10%) or more of the shares entitled to vote on the matters
to be presented to the meeting.
Section 2.04. Quorum, Adjourned Meetings. The holders of ten percent
(10%) of the shares outstanding and entitled to vote shall constitute a quorum
for the transaction of business at any regular or special meeting. In case a
quorum shall not be present at a meeting, those present in person or by proxy
shall adjourn the meeting to such day as they shall, by majority vote, agree
upon without further notice other than by announcement at the meeting at which
such adjournment is taken. If a quorum is present, a meeting may be adjourned
from time to time without notice other than announcement at the meeting. At
adjourned meetings at which a quorum is present, any business may be transacted
which might have been transacted at the meeting as originally noticed. If a
quorum is present, the shareholders may continue to transact business until
adjournment notwithstanding the withdrawal of enough shareholders to leave less
than a quorum.
Section 2.05. Voting. At each meeting of the shareholders, every
shareholder having the right to vote shall be entitled to vote either in person
or by proxy. Each shareholder, unless the Articles of Incorporation provide
otherwise, shall have one vote for each share having voting power registered in
his name on the books of the corporation. Except as otherwise specifically
provided by these Bylaws or as required by provisions of the Investment Company
Act of 1940 or other applicable laws, all questions shall be decided by a
majority vote of the number of shares entitled to vote and represented at the
meeting at the time of the vote. If the matter(s) to
<PAGE>
be presented at a regular or special meeting relates only to particular classes
or series of the corporation, then only the shareholders of such classes or
series are entitled to vote on such matter(s).
Section 2.06. Voting - Proxies. The right to vote by proxy shall
exist only if the instrument authorizing such proxy to act shall have been
executed in writing by the shareholder himself or by his attorney thereunto duly
authorized in writing. No proxy shall be voted after eleven months from its date
unless it provides for a longer period.
Section 2.07. Closing of Books. The Board of Directors may fix a
time, not exceeding sixty (60) days preceding the date of any meeting of
shareholders, as a record date for the determination of the shareholders
entitled to notice of, and to vote at, such meeting, notwithstanding any
transfer of shares on the books of the corporation after any record date so
fixed. The Board of Directors may close the books of the corporation against the
transfer of shares during the whole or any part of such period. If the Board of
Directors fails to fix a record date for determination of the shareholders
entitled to notice of, and to vote at, any meeting of shareholders, the record
date shall be the thirtieth (30th) day preceding the date of such meeting.
Section 2.08. Notice of Meetings. There shall be mailed to each
shareholder, shown by the books of the corporation to be a holder of record of
voting shares, at his address as shown by the books of the corporation, a notice
setting out the date, time and place of each regular meeting and each special
meeting, except where the meeting is an adjourned meeting and the date, time and
place of the meeting were announced at the time of adjournment, which notice
shall be mailed within the period required by law. Every notice of any special
meeting shall state the purpose or purposes for which the meeting has been
called, pursuant to Section 2.03, and the business transacted at all special
meetings shall be confined to the purpose stated in such notice.
Section 2.09. Waiver of Notice. Notice of any regular or special
meeting may be waived either before, at or after such meeting orally or in a
writing signed by each shareholder or representative thereof entitled to vote
the shares so represented. A shareholder by his attendance at any meeting of
shareholders, shall be deemed to have waived notice of such meeting, except
where the shareholder objects at the beginning of the meeting to the transaction
of business because the item may not lawfully be considered at that meeting and
does not participate at that meeting in the consideration of the item at that
meeting.
Section 2.10. Written Action. Any action which might be taken at a
meeting of the shareholders may be taken without a meeting if done in writing
and signed by all of the shareholders entitled to vote on that action. If the
action to be taken relates to particular classes or series of the corporation,
then only shareholders of such classes or series are entitled to vote on such
action.
ARTICLE III.
DIRECTORS
<PAGE>
Section 3.01. Number, Qualification and Term of Office. Until the
first meeting of shareholders, the number of directors shall be the number named
in the Articles of Incorporation. Thereafter, the number of directors shall be
established by resolution of the shareholders (subject to the authority of the
Board of Directors to increase or decrease the number of directors as permitted
by law). In the absence of such shareholder resolution, the number of directors
shall be the number last fixed by the shareholders, the Board of Directors or
the Articles of Incorporation. Directors need not be shareholders. Each of the
directors shall hold office until the regular meeting of shareholders next held
after his election and until his successor shall have been elected and shall
qualify, or until the earlier death, resignation, removal or disqualification of
such director.
Section 3.02. Election of Directors. Except as otherwise provided in
Sections 3.11 and 3.12 hereof, the directors shall be elected at the regular
shareholders' meeting. In the event that directors are not elected at a regular
shareholders' meeting, then directors may be elected at a special shareholders'
meeting, provided that the notice of such meeting shall contain mention of such
purpose. At each shareholders' meeting for the election of directors, the
directors shall be elected by a plurality of the votes validly cast at such
election. Each holder of shares of each class or series of stock of the
corporation shall be entitled to vote for directors and shall have equal voting
power for each share of each class or series of the corporation.
Section 3.03. General Powers.
(a) Except as otherwise permitted by statute, the property, affairs
and business of the corporation shall be managed by the Board of Directors,
which may exercise all the powers of the corporation except those powers vested
solely in the shareholders of the corporation by statute, the Articles of
Incorporation or these Bylaws, as amended.
(b) All acts done by any meeting of the Directors or by any person
acting as a director, so long as his successor shall not have been duly elected
or appointed, shall, notwithstanding that it be afterwards discovered that there
was some defect in the election of the directors or such person acting as
aforesaid or that they or any of them were disqualified, be as valid as if the
directors or such other person, as the case may be, had been duly elected and
were or was qualified to be directors or a director of the corporation.
Section 3.04. Power to Declare Dividends.
(a) The Board of Directors, from time to time as they may deem
advisable, may declare and pay dividends in cash or other property of the
corporation, out of any source available for dividends, to the shareholders of
each class or series of stock of the corporation according to their respective
rights and interests in the investment portfolio of the corporation issuing such
class or series of stock.
(b) The Board of Directors shall cause to be accompanied by a
written statement any dividend payment wholly or partly from any source other
than
<PAGE>
(i) the accumulated and accrued undistributed net income of each class or series
(determined in accordance with generally accepted accounting practice and the
rules and regulations of the Securities and Exchange Commission then in effect)
and not including profits or losses realized upon the sale of securities or
other properties; or
(ii) the net income of each class or series so determined for the current or
preceding fiscal year. Such statement shall adequately disclose the source or
sources of such payment and the basis of calculation and shall be in such form
as the Securities and Exchange Commission may prescribe.
(c) Notwithstanding the above provisions of this Section 3.04, the
Board of Directors may at any time declare and distribute pro rata among the
shareholders of each class or series of stock a "stock dividend" out of the
authorized but unissued shares of stock of each class or series, including any
shares previously purchased by a class or series of the corporation.
Section 3.05. Board Meetings. Meetings of the Board of Directors may
be held from time to time at such time and place within or without the State of
Minnesota as may be designated in the notice of such meeting.
Section 3.06. Calling Meetings, Notice. A director may call a board
meeting by giving ten (10) days notice to all directors of the date, time and
place of the meeting; provided that if the day or date, time and place of a
board meeting have been announced at a previous meeting of the board, no notice
is required.
Section 3.07. Waiver of Notice. Notice of any meeting of the Board
of Directors may be waived by any director either before, at or after such
meeting orally or in a writing signed by such director. A director, by his
attendance and participation in the action taken at any meeting of the Board of
Directors, shall be deemed to have waived notice of such meeting, except where
the director objects at the beginning of the meeting to the transaction of
business because the item may not lawfully be considered at that meeting and
does not participate at that meeting in the consideration of the item at that
meeting.
Section 3.08. Quorum. A majority of the directors holding office
immediately prior to a meeting of the Board of Directors shall constitute a
quorum for the transaction of business at such meeting; provided however,
notwithstanding the above, if the Board of Directors is taking action pursuant
to the Investment Company Act of 1940, as now enacted or hereafter amended, a
majority of directors who are not "interested persons" (as defined by the
Investment Company Act of 1940, as now enacted or hereafter amended) of the
corporation shall constitute a quorum for taking such action.
Section 3.09. Advance Consent or Opposition. A director may give
advance written consent or opposition to a proposal to be acted on at a meeting
of the Board of Directors. If such director is not present at the meeting,
consent or opposition to a proposal does not constitute presence for purposes of
determining the existence of a quorum, but consent or opposition shall be
counted as a vote in favor of or against the proposal and shall be entered in
the minutes or other record of action at the meeting, if the proposal acted on
at the meeting is substantially the same or has substantially the same effect as
the proposal to which the director
<PAGE>
has consented or objected. This procedure shall not be used to act on any
investment advisory agreement or plan of distribution adopted under Rule 12b-1
of the Investment Company Act of 1940, as amended.
Section 3.10. Conference Communications. Any or all directors may
participate in any meeting of the Board of Directors, or of any duly constituted
committee thereof, by any means of communication through which the directors may
simultaneously hear each other during such meeting. For the purposes of
establishing a quorum and taking any action at the meeting, such directors
participating pursuant to this Section 3.11 shall be deemed present in person at
the meeting, and the place of the meeting shall be the place of origination of
the conference communication. This procedure shall not be used to act on any
investment advisory agreement or plan of distribution adopted under Rule 12b-1
of the Investment Company Act of 1940, as amended.
Section 3.11. Vacancies; Newly Created Directorships. Vacancies in
the Board of Directors of this corporation occurring by reason of death,
resignation, removal or disqualification shall be filled for the unexpired term
by a majority of the remaining directors of the Board although less than a
quorum; newly created directorships resulting from an increase in the authorized
number of directors by action of the Board of Directors as permitted by Section
3.01 may be filled by a two-thirds (2/3) vote of the directors serving at the
time of such increase; and each person so elected shall be a director until his
successor is elected by the shareholders at their next regular or special
meeting; provided, however, that no vacancy can be filled as provided above if
prohibited by the provisions of the Investment Company Act of 1940.
Section 3.12. Removal. The entire Board of Directors or an
individual director may be removed from office, with or without cause, by a vote
of the shareholders holding a majority of the shares entitled to vote at an
election of directors. In the event that the entire Board or any one or more
directors be so removed, new directors shall be elected at the same meeting, or
the remaining directors may, to the extent vacancies are not filled at such
meeting, fill any vacancy or vacancies created by such removal. A director named
by the Board of Directors to fill a vacancy may be removed from office at any
time, with or without cause, by the affirmative vote of the remaining directors
if the shareholders have not elected directors in the interim between the time
of the appointment to fill such vacancy and the time of the removal.
Section 3.13. Committees. A resolution approved by the affirmative
vote of a majority of the Board of Directors may establish committees having the
authority of the board in the management of the business of the corporation to
the extent provided in the resolution. A committee shall consist of one or more
persons, who need not be directors, appointed by affirmative vote of a majority
of the directors present. Committees are subject to the direction and control
of, and vacancies in the membership thereof shall be filled by, the Board of
Directors.
Except as set forth in the following paragraph, a majority of the
members of the committee present at a meeting is a quorum for the transaction of
business, unless a larger or smaller proportion or number is provided in a
resolution approved by the affirmative vote of a majority of the directors
present.
<PAGE>
If a Pricing Committee is appointed, a quorum of such committee
shall consist of one member of the committee.
Section 3.14. Written Action. Any action which might be taken at a
meeting of the Board of Directors, or any duly constituted committee thereof,
may be taken without a meeting if done in writing and signed by all of the
directors or committee members.
Section 3.15. Compensation. Directors shall receive such fixed sum
per meeting attended or such fixed annual sum as shall be determined, from time
to time, by resolution of the Board of Directors. All directors shall receive
their expenses, if any, of attendance at meetings of the Board of Directors or
any committee thereof. Nothing herein contained shall be construed to preclude
any director from serving this corporation in any other capacity and receiving
proper compensation therefor.
ARTICLE IV.
OFFICERS AND CHAIRMAN OF THE BOARD OF DIRECTORS
Section 4.01. Number. The officers of the corporation shall consist
of the President, one or more Vice Presidents (if desired by the Board), a
Secretary, a Treasurer and such other officers and agents as may, from time to
time, be elected by the Board of Directors. Any number of offices may be held by
the same person.
Section 4.02. Election, Term of Office and Qualifications. The Board
of Directors shall elect, from within or without their number, the officers
referred to in Section 4.01 of these Bylaws, each of whom shall have the powers,
rights, duties, responsibilities and terms in office provided for in these
Bylaws or a resolution of the Board not inconsistent therewith. The President
and all other officers who may be directors shall continue to hold office until
the election and qualification of their successors, notwithstanding an earlier
termination of their directorship.
Section 4.03. Resignation. Any officer (or the Chairman of the Board
of Directors) may resign his office at any time by delivering a written
resignation to the corporation. Unless otherwise specified therein, such
resignation shall take effect upon delivery.
Section 4.04. Removal and Vacancies. Any officer (or the Chairman of
the Board of Directors) may be removed from his office by a majority of the
Board of Directors with or without cause. Such removal, however, shall be
without prejudice to the contract rights of the person so removed. If there be a
vacancy among the officers (or the Chairman of the Board of Directors) of the
corporation by reason of death, resignation or otherwise, such vacancy shall be
filled for the unexpired term by the Board of Directors.
Section 4.05. Chairman of the Board. The Board of Directors may
elect one of its members as Chairman of the Board. The Chairman of the Board, if
one is elected, shall preside at all meetings of the shareholders and directors
and shall have such other duties as may be prescribed, from time to time, by the
Board of Directors. The Chairman of the Board of
<PAGE>
Directors will under no circumstances be deemed to be an "officer" of the
corporation, and an individual serving as Chairman of the Board of Directors
will not be deemed to be an "affiliated person" with respect to the corporation
(under the Investment Company Act of 1940, as amended) solely by virtue of such
person's position as Chairman of the Board of Directors of the corporation.
Section 4.06. President. The President shall have general active
management of the business of the corporation. In the absence of the Chairman of
the Board, he shall preside at all meetings of the shareholders and directors.
He shall be the chief executive officer of the corporation and shall see that
all orders and resolutions of the Board of Directors are carried into effect. He
shall be ex officio a member of all standing committees. He may execute and
deliver, in the name of the corporation, any deeds, mortgages, bonds, contracts
or other instruments pertaining to the business of the corporation and, in
general, shall perform all duties usually incident to the office of the
President. He shall have such other duties as may, from time to time, be
prescribed by the Board of Directors.
Section 4.07. Vice President. Each Vice President shall have such
powers and shall perform such duties as may be specified in the Bylaws or
prescribed by the Board of Directors or by the President. In the event of
absence or disability of the President, Vice Presidents shall succeed to his
power and duties in the order designated by the Board of Directors.
Section 4.08. Secretary. The Secretary shall be secretary of, and
shall attend, all meetings of the shareholders and Board of Directors and shall
record all proceedings of such meetings in the minute book of the corporation.
He shall give proper notice of meetings of shareholders and directors. He shall
keep the seal of the corporation and shall affix the same to any instrument
requiring it and may, when necessary, attest the seal by his signature. He shall
perform such other duties as may, from time to time, be prescribed by the Board
of Directors or by the President.
Section 4.09. Treasurer. The Treasurer shall be the chief financial
officer and shall keep accurate accounts of all money of the corporation
received or disbursed. He shall deposit all moneys, drafts and checks in the
name of, and to the credit of, the corporation in such banks and depositories as
a majority of the Board of Directors shall, from time to time, designate. He
shall have power to endorse, for deposit, all notes, checks and drafts received
by the corporation. He shall disburse the funds of the corporation, as ordered
by the Board of Directors, making proper vouchers therefor. He shall render to
the President and the directors, whenever required, an account of all his
transactions as Treasurer and of the financial condition of the corporation, and
shall perform such other duties as may, from time to time, be prescribed by the
Board of Directors or by the President.
Section 4.10. Assistant Secretaries. At the request of the
Secretary, or in his absence or disability, any Assistant Secretary shall have
power to perform all the duties of the Secretary, and, when so acting, shall
have all the powers of, and be subject to all restrictions upon, the Secretary.
The Assistant Secretaries shall perform such other duties as from time to time
may be assigned to them by the Board of Directors or the President.
<PAGE>
Section 4.11. Assistant Treasurers. At the request of the Treasurer,
or in his absence or disability, any Assistant Treasurer shall have power to
perform all the duties of the Treasurer, and when so acting, shall have all the
powers of, and be subject to all the restrictions upon, the Treasurer. The
Assistant Treasurers shall perform such other duties as from time to time may be
assigned to them by the Board of Directors or the President.
Section 4.12. Compensation. The officers (and the Chairman of the
Board of Directors) of this corporation shall receive such compensation for
their services as may be determined, from time to time, by resolution of the
Board of Directors.
Section 4.13. Surety Bonds. The Board of Directors may require any
officer or agent of the corporation to execute a bond (including, without
limitation, any bond required by the Investment Company Act of 1940 and the
rules and regulations of the Securities and Exchange Commission) to the
corporation in such sum and with such surety or sureties as the Board of
Directors may determine, conditioned upon the faithful performance of his duties
to the corporation, including responsibility for negligence and for the
accounting of any of the corporation's property, funds or securities that may
come into his hands. In any such case, a new bond of like character shall be
given at least every six years, so that the dates of the new bond shall not be
more than six years subsequent to the date of the bond immediately preceding.
ARTICLE V.
SHARES AND THEIR TRANSFER AND REDEMPTION
Section 5.01. Certificate for Shares.
(a) The corporation may have certificated or uncertificated shares,
or both, as designated by resolution of the Board of Directors. Every owner of
certificated shares of the corporation shall be entitled to a certificate, to be
in such form as shall be prescribed by the Board of Directors, certifying the
number of shares of the corporation owned by him. Within a reasonable time after
the issuance or transfer of uncertificated shares, the corporation shall send to
the new shareholder the information required to be stated on certificates.
Certificated shares shall be numbered in the order in which they shall be issued
and shall be signed, in the name of the corporation, by the President or a Vice
President and by the Secretary or an Assistant Secretary or by such officers as
the Board of Directors may designate. Such signatures may be by facsimile if
authorized by the Board of Directors. Every certificate surrendered to the
corporation for exchange or transfer shall be cancelled, and no new certificate
or certificates shall be issued in exchange for any existing certificate until
such existing certificate shall have been so cancelled, except in cases provided
for in Section 5.08.
(b) In case any officer, transfer agent or registrar who shall have
signed any such certificate, or whose facsimile signature has been placed
thereon, shall cease to be such an officer (because of death, resignation or
otherwise) before such certificate is issued, such certificate may be issued and
delivered by the corporation with the same effect as if he were such officer,
transfer agent or registrar at the date of issue.
<PAGE>
Section 5.02. Issuance of Shares. The Board of Directors is
authorized to cause to be issued shares of the corporation up to the full amount
authorized by the Articles of Incorporation in such classes or series and in
such amounts as may be determined by the Board of Directors and as may be
permitted by law. No shares shall be allotted except in consideration of cash or
other property, tangible or intangible, received or to be received by the
corporation under a written agreement, of services rendered or to be rendered to
the corporation under a written agreement, or of an amount transferred from
surplus to stated capital upon a share dividend. At the time of such allotment
of shares, the Board of Directors making such allotments shall state, by
resolution, their determination of the fair value to the corporation in monetary
terms of any consideration other than cash for which shares are alloted. No
shares of stock issued by the corporation shall be issued, sold or exchanged by
or on behalf of the corporation for any amount less than the net asset value per
share of the shares outstanding as determined pursuant to Article X hereunder.
Section 5.03. Redemption of Shares. Upon the demand of any
shareholder, this corporation shall redeem any share of stock issued by it held
and owned by such shareholder at the net asset value thereof as determined
pursuant to Article X hereunder. The Board of Directors may suspend the right of
redemption or postpone the date of payment during any period when: (a) trading
on the New York Stock Exchange is restricted or such Exchange is closed for
other than weekends or holidays; (b) the Securities and Exchange Commission has
by order permitted such suspension; or (c) an emergency as defined by rules of
the Securities and Exchange Commission exists, making disposal of portfolio
securities or valuation of net assets of the corporation not reasonably
practicable.
If following a redemption request by any shareholder of this
corporation, the value of such shareholder's interest in the corporation falls
below the required minimum investment, as may be set from time to time by the
Board of Directors, the corporation's officers are authorized, in their
discretion and on behalf of the corporation, to redeem such shareholder's entire
interest and remit such amount, provided that such a redemption will only be
effected by the corporation following: (a) a redemption by a shareholder, which
causes the value of such shareholder's interest in the corporation to fall below
the required minimum investment; (b) the mailing by the corporation to such
shareholder of a "notice of intention to redeem"; and (c) the passage of at
least sixty (60) days from the date of such mailing, during which time the
shareholder will have the opportunity to make an additional investment in the
corporation to increase the value of such shareholder's account to at least the
required minimum investment.
Section 5.04. Transfer of Shares. Transfer of shares on the books of
the corporation may be authorized only by the shareholder named in the
certificate, or the shareholder's legal representative, or the shareholder's
duly authorized attorney-in-fact, and upon surrender of the certificate or the
certificates for such shares or a duly executed assignment covering shares held
in unissued form. The corporation may treat, as the absolute owner of shares of
the corporation, the person or persons in whose name shares are registered on
the books of the corporation.
<PAGE>
Section 5.05. Registered Shareholders. The corporation shall be
entitled to treat the holder of record of any share or shares of stock as the
holder in fact thereof and accordingly shall not be bound to recognize any
equitable or other claim to or interest in such share on the part of any other
person, whether or not it shall have express or other notice thereof, except as
otherwise expressly provided by the laws of Minnesota.
Section 5.06. Transfer of Agents and Registrars. The Board of
Directors may from time to time appoint or remove transfer agents and/or
registrars of transfers of shares of stock of the corporation, and it may
appoint the same person as both transfer agent and registrar. Upon any such
appointment being made all certificates representing shares of capital stock
thereafter issued shall be countersigned by one of such transfer agents or by
one of such registrars of transfers or by both and shall not be valid unless so
countersigned. If the same person shall be both transfer agent and registrar,
only one countersignature by such person shall be required.
Section 5.07. Transfer Regulations. The shares of stock of the
corporation may be freely transferred, and the Board of Directors may from time
to time adopt rules and regulations with reference to the method of transfer of
shares of stock of the corporation.
Section 5.08. Lost, Stolen, Destroyed and Mutilated Certificates.
The holder of any stock of the corporation shall immediately notify the
corporation of any loss, theft, destruction or mutilation of any certificate
therefor, and the Board of Directors may, in its discretion, cause to be issued
to him a new certificate or certificates of stock, upon the surrender of the
mutilated certificate or in case of loss, theft or destruction of the
certificate upon satisfactory proof of such loss, theft or destruction. A new
certificate or certificates of stock will be issued to the owner of the lost,
stolen or destroyed certificate only after such owner, or his legal
representatives, gives to the corporation and to such registrar or transfer
agent as may be authorized or required to countersign such new certificate or
certificates a bond, in such sum as they may direct, and with such surety or
sureties, as they may direct, as indemnity against any claim that may be made
against them or any of them on account of or in connection with the alleged
loss, theft or destruction of any such certificate.
ARTICLE VI.
DIVIDENDS
Section 6.01. The net investment income of each class or series of
the corporation will be determined, and its dividends shall be declared and made
payable at such time(s) as the Board of Directors shall determine; dividends
shall be payable to shareholders of record as of the date of declaration.
It shall be the policy of each class or series of the corporation to
qualify for and elect the tax treatment applicable to regulated investment
companies under the Internal Revenue Code, so that such class or series will not
be subjected to federal income tax on such part of its income or capital gains
as it distributes to shareholders.
<PAGE>
ARTICLE VII.
BOOKS AND RECORDS, AUDIT, FISCAL YEAR
Section 7.01. Share Register. The Board of Directors of the
corporation shall cause to be kept at its principal executive office, or at
another place or places within the United States determined by the board:
(1) a share register not more than one year old, containing the
names and addresses of the shareholders and the number and
classes or series of shares held by each shareholder; and
(2) a record of the dates on which certificates or transaction
statements representing shares were issued.
Section 7.02. Other Books and Records. The Board of Directors shall
cause to be kept at its principal executive office, or, if its principal
executive office is not in Minnesota, shall make available at its registered
office within ten days after receipt by an officer of the corporation of a
written demand for them made by a shareholder or other person authorized by
Minnesota Statutes Section 302A.461, originals or copies of:
(1) records of all proceedings of shareholders for the last three
years;
(2) records of all proceedings of the Board of Directors for the
last three years;
(3) its articles and all amendments currently in effect;
(4) its bylaws and all amendments currently in effect;
(5) financial statements required by Minnesota Statutes Section
302A.463 and the financial statement for the most recent
interim period prepared in the course of the operation of the
corporation for distribution to the shareholders or to a
governmental agency as a matter of public record;
(6) reports made to shareholders generally within the last three
years;
(7) a statement of the names and usual business addresses of its
directors and principal officers;
(8) any shareholder voting or control agreements of which the
corporation is aware; and
(9) such other records and books of account as shall be necessary
and appropriate to the conduct of the corporate business.
<PAGE>
Section 7.03. Audit; Accountant.
(a) The Board of Directors shall cause the records and books of
account of the corporation to be audited at least once in each fiscal year and
at such other times as it may deem necessary or appropriate.
(b) The corporation shall employ an independent public accountant or
firm of independent public accountants as its Accountant to examine the accounts
of the corporation and to sign and certify financial statements filed by the
corporation. The Accountant's certificates and reports shall be addressed both
to the Board of Directors and to the shareholders.
(c) A majority of the members of the Board of Directors shall select
the Accountant annually at a meeting held within thirty (30) days before or
after the beginning of the fiscal year of the corporation or before the regular
shareholders' meeting in that year. Such selection shall be submitted for
ratification or rejection at the next succeeding regular shareholders' meeting.
If such meeting shall reject such selection, the Accountant shall be selected by
majority vote, either at the meeting at which the rejection occurred or at a
subsequent meeting of shareholders called for the purpose.
(d) Any vacancy occurring between annual meetings, due to the death,
resignation or otherwise of the Accountant, may be filled by the Board of
Directors.
Section 7.04. Fiscal Year. The fiscal year of the corporation shall
be determined by the Board of Directors.
ARTICLE VIII.
INDEMNIFICATION OF CERTAIN PERSONS
Section 8.01. The corporation shall indemnify such persons, for such
expenses and liabilities, in such manner, under such circumstances, and to such
extent as permitted by Section 302A.521 of the Minnesota Statutes, as now
enacted or hereafter amended, provided, however, that no such indemnification
may be made if it would be in violation of Section 17(h) of the Investment
Company Act of 1940, as now enacted or hereinafter amended.
ARTICLE IX.
VOTING OF STOCK HELD
Section 9.01. Unless otherwise provided by resolution of the Board
of Directors, the President, any Vice President, the Secretary or the Treasurer,
may from time to time appoint an attorney or attorneys or agent or agents of the
corporation, in the name and on behalf of the corporation, to cast the votes
which the corporation may be entitled to cast as a stockholder or otherwise in
any other corporation or association, any of whose stock or securities may be
held by the corporation, at meetings of the holders of the stock or other
securities of any such other corporation or
<PAGE>
association, or to consent in writing to any action by any such other
corporation or association, and may instruct the person or persons so appointed
as to the manner of casting such votes or giving such consent, and may execute
or cause to be executed on behalf of the corporation and under its corporate
seal, or otherwise, such written proxies, consents, waivers or other instruments
as it may deem necessary or proper; or any of such officers may themselves
attend any meeting of the holders of stock or other securities of any such
corporation or association and thereat vote or exercise any or all other rights
of the corporation as the holder of such stock or other securities of such other
corporation or association, or consent in writing to any action by any such
other corporation or association.
ARTICLE X.
VALUATION OF NET ASSET VALUE
10.01. The net asset value per share of each class or series of
stock of the corporation shall be determined in good faith by or under
supervision of the officers of the corporation as authorized by the Board of
Directors as often and on such days and at such time(s) as the Board of
Directors shall determine, or as otherwise may be required by law, rule,
regulation or order of the Securities and Exchange Commission.
ARTICLE XI.
CUSTODY OF ASSETS
Section 11.01. All securities and cash owned by this corporation
shall, as hereinafter provided, be held by or deposited with a bank or trust
company having (according to its last published report) not less than Two
Million Dollars ($2,000,000) aggregate capital, surplus and undivided profits
(the "Custodian").
This corporation shall enter into a written contract with the
custodian regarding the powers, duties and compensation of the Custodian with
respect to the cash and securities of this corporation held by the Custodian.
Said contract and all amendments thereto shall be approved by the Board of
Directors of this corporation. In the event of the Custodian's resignation or
termination, the corporation shall use its best efforts promptly to obtain a
successor Custodian and shall require that the cash and securities owned by this
corporation held by the Custodian be delivered directly to such successor
Custodian.
ARTICLE XII.
AMENDMENTS
Section 12.01. These Bylaws may be amended or altered by a vote of
the majority of the Board of Directors at any meeting provided that notice of
such proposed amendment shall have been given in the notice given to the
directors of such meeting. Such authority in the Board of Directors is subject
to the power of the shareholders to change or repeal such bylaws by a majority
vote of the shareholders present or represented at any regular or special
meeting of shareholders called for such purpose, and the Board of Directors
shall not make or alter any Bylaws fixing a quorum for meetings of shareholders,
prescribing procedures
<PAGE>
for removing directors or filling vacancies in the Board of Directors, or fixing
the number of directors or their classifications, qualifications or terms of
office, except that the Board of Directors may adopt or amend any Bylaw to
increase or decrease their number.
ARTICLE XIII.
MISCELLANEOUS
Section 13.01. Interpretation. When the context in which words are
used in these Bylaws indicates that such is the intent, singular words will
include the plural and vice versa, and masculine words will include the feminine
and neuter genders and vice versa.
Section 13.02. Article and Section Titles. The titles of Sections
and Articles in these Bylaws are for descriptive purposes only and will not
control or alter the meaning of any of these Bylaws as set forth in the text.
<PAGE>
Exhibit (g)(5)
SUPPLEMENT TO CUSTODIAN AGREEMENT
FIRST AMERICAN FUNDS, INC.
U.S. BANK NATIONAL ASSOCIATION
WHEREAS, First American Funds, Inc., a mutual fund organized as a
Minnesota corporation (hereinafter called the "Fund"), and First Trust National
Association, a national banking association organized and existing under the
laws of the United States of America, previously entered into that Custodian
Agreement dated September 20, 1993. (the "Custodian Agreement"); and
WHEREAS, First Trust National Association, with the consent of the
Fund, assigned its rights and obligations under the Custodian Agreement to U.S.
Bank National Association, a national banking association organized and existing
under the laws of the United States of America (the "Custodian") by an
Assignment and Assumption Agreement dated as of May 1, 1998; and
WHEREAS, the Fund and the Custodian wish to supplement the Custodian
Agreement as set forth herein.
NOW, THEREFORE, the Fund and the Custodian hereby agree that:
1. Custodian shall hold harmless and indemnify Fund from and
against any claims, loss, liability or expense (collectively a
"Claim") arising out of Custodian's failure to comply with the
terms of this Agreement or arising out of Custodian's
negligence, willful misconduct, or bad faith. Custodian shall
not be liable for consequential, special or punitive damages.
Custodian may reasonably request and obtain the advice and
opinion of counsel for Fund, or of its own counsel with
respect to questions or matters of law, and it shall be
without liability to Fund for any action taken or omitted by
it in good faith, in conformity with such advice or opinion.
2. The Fund agrees to indemnify and hold the Custodian harmless
from and against any Claim arising from the Custodian's
performance of its duties hereunder or its actions taken at
the direction of the Fund, provided that the Custodian shall
not be indemnified for any Claim arising out of Custodian's
failure to comply with the terms of this Agreement or arising
out of Custodian's negligence, bad faith or willful
misconduct. Fund shall not be liable for consequential,
special or punitive damages.
3. Custodian may rely upon the advice of Fund and upon statements
of Fund's accountants and other persons believed by it in good
faith, to be expert in matters upon which they are consulted,
and Custodian shall not be liable for any actions taken, in
good faith without negligence upon such statements.
<PAGE>
4. If Fund requires Custodian in any capacity to take, with
respect to any securities, any action which involves the
payment of money by it, or which in Custodian's opinion might
make it or its nominee liable for payment of monies or in any
other way, Custodian, upon notice to Fund given prior to such
actions, shall be and be kept indemnified by Fund in an amount
and form satisfactory to Custodian against any liability on
account of such action.
5. Custodian shall be entitled to receive, and Fund agrees to pay
to Custodian, on demand, reimbursement for such cash
disbursements, costs and expenses as may be agreed upon from
time to time by Custodian and Fund.
6. Custodian shall be protected in acting as custodian hereunder
upon any instructions, advice, notice, request, consent,
certificate or other instrument or paper reasonably appearing
to it to be genuine and to have been properly executed and
shall, unless otherwise specifically provided herein, be
entitled to receive as conclusive proof of any fact or matter
required to be ascertained from Fund hereunder, a certificate
signed by the Fund's President, or other officer specifically
authorized for such purpose.
7. Without limiting the generality of the foregoing, Custodian
shall be under no duty or obligation to inquire into, and
shall not be liable for:
a. The validity of the issue of any securities purchased by
or for Fund, the legality of the purchase thereof or
evidence of ownership required by Fund to be received by
Custodian, or the propriety of the decision to purchase
or amount paid therefore; or
b. The legality of the sale of any securities by or for
Fund, or the propriety of the amount for which the same
are sold.
8. Custodian shall not be liable for any loss or diminution of
securities by reason of investment experience or for its
actions taken in reliance upon an instruction from Fund.
9. Custodian shall not be liable for, or considered to be
Custodian of, any money represented by any check, draft, wire
transfer, clearing house funds, uncollected funds, or
instrument for the payment or money received by it on behalf
of Fund, until Custodian actually receives such money,
provided only that it shall advise Fund promptly if it fails
to receive any such money in the ordinary course of business,
and use its best efforts and cooperate with Fund toward the
end that such money shall be received.
10. Custodian shall not be responsible for loss occasioned by the
acts, neglect, defaults or insolvency of any broker, bank
trust company, or any other person with whom
<PAGE>
Custodian may deal in the absence of negligence, or bad faith
on the part of Custodian. IN WITNESS WHEREOF, the parties have
caused this Supplement to be duly executed and delivered as of
______________, _____.
FIRST AMERICAN FUNDS, INC.
By
--------------------------------------
Its
----------------------------------
U.S. BANK NATIONAL ASSOCIATION
By
--------------------------------------
Its
----------------------------------
<PAGE>
Exhibit (h)(1)
ADMINISTRATION AGREEMENT
THIS AGREEMENT, made as of this ___ day of ____________, by and
between First American Funds, Inc., a Minnesota corporation (the "Fund"), and
U.S. Bank National Association, a national banking association organized and
existing under the laws of the United States of America (the "Administrator").
WHEREAS, the Fund is an open-end diversified management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act"), consisting of several series of shares of Common Stock; and
WHEREAS, the Fund desires the Administrator to provide, and the
Administrator is willing to provide, administrative and other services as set
forth herein to such portfolios of the Fund as the Fund and the Administrator
may agree ("Portfolios") and as listed on the schedules attached hereto
("Schedules") and made a part of this Agreement, on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Fund and the Administrator hereby agree as follows:
ARTICLE 1. Retention of the Administrator. The Fund hereby retains
the Administrator to act as the administrator of the Portfolios and to furnish
the Portfolios with the administrative and other services set forth in Article 2
below. The Administrator hereby accepts such employment to perform the duties
set forth below.
The Administrator shall, for all purposes herein, be deemed to be an
independent contractor and, unless otherwise expressly provided or authorized,
shall have no authority to act for or represent the Fund in any way and shall
not be deemed an agent of the Fund.
ARTICLE 2. Administrative Services. The Administrator shall perform,
or supervise the performance by others of, administrative and other services as
set forth herein in connection with the operations of the Portfolios. The
Administrator is authorized to appoint and compensate from its resources one or
more other entities to perform such services on a subcontracted basis in
connection with the operations of the Portfolios and, on behalf of the Fund,
will investigate, assist in the selection of and conduct relations with
custodians, depositories, accountants, legal counsel, underwriters, brokers and
dealers, corporate fiduciaries, insurers, banks and persons in any other
capacity deemed to be necessary or desirable for the Portfolios' operations. If
the Administrator appoints one or more other entities to perform services called
for by this Agreement on a subcontracted basis as aforesaid, the Administrator
nevertheless shall remain liable to the Fund and the Portfolios for the acts and
omissions of such other entities as if the Administrator itself performed such
services.
(A) Administrative and Accounting Services. The Administrator shall
provide the Fund with regulatory reporting, fund accounting and related
portfolio accounting services, all
<PAGE>
necessary office space, equipment, personnel, compensation and facilities
(including facilities for Shareholders' and Directors' meetings) for handling
the affairs of the Portfolios and such other services as the Administrator
shall, from time to time, determine to be necessary to perform its obligations
under this Agreement. In addition, at the request of the Board of Directors, the
Administrator shall make reports to the Fund's Directors concerning the
performance of its obligations hereunder including such activities as are set
forth on Exhibit A hereto, as amended by agreement of the parties from time to
time.
Without limiting the generality of the foregoing, the Administrator shall:
(a) calculate Fund expenses and control all disbursements for the Fund,
and as appropriate compute the Fund's yields, total return, expense
ratios, portfolio turnover rate and, if required, portfolio average
dollar-weighted maturity;
(b) assist outside Fund counsel with preparation of prospectuses,
statements of additional information, registration statements and
proxy materials;
(c) prepare such reports, applications and documents (including reports
regarding the sale and redemption of shares as may be required in
order to comply with Federal and state securities law) as may be
necessary or desirable to register the Fund's shares with state
securities authorities, monitor sale of Fund shares for compliance
with state securities laws, and file with the appropriate securities
authorities the registration statements and reports for the Fund and
the Fund's shares and all amendments thereto, as may be necessary or
convenient to register and keep effective the Fund and the Fund's
shares with state securities authorities to enable the Fund to make
a continuous offering of its shares;
(d) develop and prepare communications to shareholders, including the
annual report to shareholders, coordinate mailing prospectuses,
notices, proxy statements, proxies and other reports to Fund
shareholders, and supervise and facilitate the solicitation of
proxies solicited by the Fund for all shareholder meetings,
including the tabulation process for shareholder meetings;
(e) prepare, negotiate, and administer contracts on behalf of the Fund
with, among others, the Fund's distributor, subject to any approvals
or reapprovals by the Fund's Board of Directors required by
applicable law or Board procedures;
(f) maintain the Fund's general ledger and prepare the Fund's financial
statements, including expense accruals and payments, determine the
net asset value of the Fund's assets and of the Fund's shares, and
provide for the payment of dividends and other distributions to
shareholders;
(g) calculate performance data of the Fund and the Portfolios for
dissemination to information services covering the investment
company industry;
(h) coordinate and supervise the preparation and filing of the Fund's
tax returns;
<PAGE>
(i) examine and review the operations and performance of the various
organizations providing services to the Fund or any Portfolio
directly or on a subcontracted basis as provided for herein
including, without limitation, the Fund's distributor, transfer
agent, accounting services agent, outside Fund counsel and
independent public accountants, and at the request of the Board of
Directors, report to the Board on the performance of such
organizations;
(j) provide for and coordinate the layout and printing of publicly
disseminated prospectuses and the Fund's semi-annual and annual
reports to shareholders;
(k) provide internal legal and administrative services as requested by
the Fund from time to time;
(l) provide for and coordinate the design, development, and operation of
the Fund, including new portfolio and class investment objectives,
policies and structure;
(m) provide individuals reasonably acceptable to the Fund's Board of
Directors for nomination, appointment, or election as officers of
the Fund, who will be responsible for the management of certain of
the Fund's affairs as determined by the Fund's Board of Directors;
(n) advise the Fund and its Board of Directors on matters concerning the
Fund and its affairs;
(o) obtain and keep in effect fidelity bonds and directors and
officers/errors and omissions insurance policies for the Fund in
accordance with the requirements of Rules 17g-1 and 17d-1(7) under
the 1940 Act as such bonds and policies are approved by the Fund's
Board of Directors;
(p) monitor and advise the Fund and the Portfolios on their registered
investment company status under the Internal Revenue Code of 1986,
as amended;
(q) perform all administrative services and functions required for the
operation of the Fund and each Portfolio to the extent such
administrative services and functions are not provided to the Fund
or such Portfolio pursuant to the Fund's or such Portfolio's
investment advisory agreement, distribution agreement and custodian
agreement;
(r) furnish advice and recommendations with respect to other aspects of
the business and affairs of the Portfolios as the Fund and the
Administrator shall determine desirable; and
(s) prepare and file with the SEC the semi-annual reports for the Fund
on Form N-SAR and all required notices pursuant to Rule 24f-2.
<PAGE>
Also, the Administrator will perform other services for the Fund as agreed from
time to time at the request of the Board of Directors, including, but not
limited to, performing internal audit examinations; mailing annual reports of
the Portfolios; preparing a list of shareholders; and mailing notices of
shareholders' meetings, proxies and proxy statements, for all of which the Fund
will pay the Administrator's out-of-pocket expenses.
(B) Transfer Agency and Dividend Disbursing Services. The
Administrator agrees to perform the usual and ordinary services of transfer
agent and dividend disbursing agent including, without limitation, the
following: maintaining all shareholder accounts; preparing shareholder meeting
lists; mailing shareholder reports and prospectuses; tracking shareholder
accounts for Blue Sky and Rule 12b-1 purposes; withholding taxes on non-resident
alien and foreign corporation accounts; preparing and mailing checks for
disbursement of income dividends and capital gains distributions; preparing and
filing U.S. Treasury Department Form 1099 for all shareholders; preparing and
mailing confirmation forms to shareholders and dealers with respect to all
purchases, exchanges and liquidations of Fund shares and other transactions in
shareholder accounts for which confirmations are required; recording
reinvestments of dividends and distributions in Fund shares; recording
redemptions and Fund shares; and preparing and mailing checks for payments upon
redemption and for disbursements to withdrawal plan holders. The Administrator
has and will maintain all registrations required under applicable law in order
for it to perform such transfer agency services and maintains and will maintain
such records as are required under applicable law in connection with the
provision of such services.
(C) Shareholder Services. The Administrator may provide the Fund
with other services to shareholders not otherwise the subject of this Article 2.
These shareholder services may include personal services provided to
shareholders, such as answering shareholder inquiries regarding a Portfolio and
providing reports and other information and services related to the maintenance
of shareholder accounts. The Fund hereby also authorizes the Administrator to
contract with qualifying broker-dealers, financial institutions and other such
entities for the provision of such services to Fund shareholders. Any such
arrangements shall be outside any shareholder servicing plans or agreements
entered into by the Fund, and the Administrator shall pay the amounts due to
such qualifying broker-dealers, financial institutions and other entities under
any such arrangements from the Administrator's own resources.
ARTICLE 3. Allocation of Charges and Expenses.
(A) The Administrator. The Administrator shall furnish at its own
expense the executive, supervisory and clerical personnel necessary to perform
its obligations under this Agreement. The Administrator shall also provide the
items which it is obligated to provide under this Agreement, and shall pay all
compensation, if any, of officers of the Fund as well as all Directors of the
Fund who are officers or employees of the Administrator or any affiliated
corporation of the Administrator; provided, however, that unless otherwise
specifically provided, the Administrator shall not be obligated to pay the
compensation of any employee of the Fund retained by the Directors of the Fund
to perform services on behalf of the Fund.
<PAGE>
(B) The Fund. The Fund assumes and shall pay or cause to be paid all
other expenses of the Fund not otherwise allocated herein, including, without
limitation, organizational costs, taxes, expenses for outside Fund counsel and
independent auditing services, the expenses of preparing (including
typesetting), printing and mailing reports, prospectuses, statements of
additional information, proxy solicitation material and notices to existing
shareholders, all expenses incurred in connection with issuing and redeeming
shares, the costs of custodial services, reasonable disbursements in connection
with providing transfer agency services including, without limitation, postage
and telephone communications expense, the cost of initial and ongoing
registration of the shares under Federal and state securities laws, fees and
out-of-pocket expenses of Directors who are not affiliated officers or employees
of the Administrator or any affiliated corporation of the Administrator,
insurance, interest, brokerage costs, dues and other expenses incident to the
Fund's membership in the Investment Company Institute and other like
associations, shareholder meetings, corporate reports and reports and notices to
shareholders, litigation and other extraordinary or nonrecurring expenses, and
all fees and charges of investment advisers to the Fund. The Administrator shall
provide such information to the Board at such times as the Board may reasonably
request to enable the Board to monitor such Fund expenses.
ARTICLE 4. Compensation of the Administrator.
(A) Administration Fee. For the services to be rendered, the
facilities furnished and the expenses assumed by the Administrator pursuant to
this Agreement, the Fund shall pay to the Administrator compensation at an
annual rate specified in the Schedule. Such compensation shall be calculated and
accrued daily, and paid to the Administrator monthly. The Fund shall also
reimburse the Administrator for its reasonable out-of-pocket expenses including
the travel and lodging expenses incurred by officers and employees of the
Administrator in connection with attendance at Board meetings.
If this Agreement becomes effective subsequent to the first day of a
month or terminates before the last day of a month, the Administrator's
compensation for that part of the month in which this Agreement is in effect
shall be prorated in a manner consistent with the calculation of the fees as set
forth above. Payment of the Administrator's compensation for the preceding month
shall be made promptly.
(B) Compensation from Transactions. The Fund hereby authorizes any
entity or person associated with the Administrator which is a member of a
national securities exchange to effect any transaction on the exchange for the
account of the Fund which is permitted by Section 11(a) of the Securities
Exchange Act of 1934 and Rule 11a2-2(T) thereunder, and the Fund hereby consents
to the retention of compensation for such transactions in accordance with Rule
11a2-2(T)(a)(2)(iv).
(C) Survival of Compensation Rates. All rights of compensation under
this Agreement for services performed as of the termination date shall survive
the termination of this Agreement.
<PAGE>
ARTICLE 5. Limitation of Liability of the Administrator. The duties
of the Administrator shall be confined to those expressly set forth herein, and
no implied duties are assumed by or may be asserted against the Administrator
hereunder. The Administrator shall not be liable for any error of judgment or
mistake of law or for any loss arising out of any investment or for any act or
omission in carrying out its duties hereunder, except a loss resulting from
willful misfeasance, bad faith or negligence in the performance of its duties,
or by reason of reckless disregard of its obligations and duties hereunder,
except as may otherwise be provided under provisions of applicable law which
cannot be waived or modified hereby. (As used in this Article 5, the term
"Administrator" shall include directors, officers, employees and other corporate
agents of the Administrator as well as that corporation itself.)
So long as the Administrator acts in good faith and with due
diligence and without negligence, the Fund assumes full responsibility and shall
indemnify the Administrator and hold it harmless from and against any and all
actions, suits and claims, whether groundless or otherwise, and from and against
any and all losses, damages, costs, charges, reasonable counsel fees and
disbursements, payments, expenses and liabilities (including reasonable
investigation expenses) arising directly or indirectly out of said
administration, transfer agency, and dividend disbursing relationships to the
Fund or any other service rendered to the Fund hereunder. The indemnity and
defense provisions set forth herein shall indefinitely survive the termination
of this Agreement.
The rights hereunder shall include the right to reasonable advances
of defense expenses in the event of any pending or threatened litigation with
respect to which indemnification hereunder may ultimately be merited; provided,
however, that in the event that it is ultimately determined that indemnification
is not warranted, any such amounts advanced hereunder shall be repaid. In order
that the indemnification provision contained herein shall apply, however, it is
understood that if in any case the Fund may be asked to indemnify or hold the
Administrator harmless, the Fund shall be fully and promptly advised of all
pertinent facts concerning the situation in question, and it is further
understood that the Administrator will use all reasonable care to identify and
notify the Fund promptly concerning any situation which presents or appears
likely to present the probability of such a claim for indemnification against
the Fund, but failure to do so in good faith shall not affect the rights
hereunder.
The Fund shall be entitled to participate at its own expense or, if
it so elects, to assume the defense of any suit brought to enforce any claims
subject to this indemnity provision. If the Fund elects to assume the defense of
any such claim, the defense shall be conducted by counsel chosen by the Fund and
satisfactory to the Administrator, whose approval shall not be unreasonably
withheld. In the event that the Fund elects to assume the defense of any suit
and retain counsel, the Administrator shall bear the fees and expenses of any
additional counsel retained by it. If the Fund does not elect to assume the
defense of a suit, it will reimburse the Administrator for the reasonable fees
and expenses of any counsel retained by the Administrator.
The Administrator may apply to the Fund at any time for instructions
and may consult outside counsel for the Fund or its own counsel and with
accountants and other experts with respect to any matter arising in connection
with the Administrator's duties, and the Administrator
<PAGE>
shall not be liable or accountable for any action taken or omitted by it in good
faith in accordance with such instruction or with the opinion of such counsel,
accountants or other experts.
Also, the Administrator shall be protected in acting upon any
document which it reasonably believes to be genuine and to have been signed or
presented by the proper person or persons.
ARTICLE 6. Activities of the Administrator. The services of the
Administrator rendered to the Fund are not to be deemed to be exclusive. The
Administrator is free to render such services to others and to have other
businesses and interests. It is understood that directors, officers, employees
and shareholders of the Fund are or may be or become interested in the
Administrator, as directors, officers, employees and shareholders or otherwise
and that directors, officers, employees and shareholders of the Administrator
are or may be or become similarly interested in the Fund, and that the
Administrator may be or become interested in the Fund as a shareholder or
otherwise.
ARTICLE 7. Duration of this Agreement. The Term of this Agreement
shall be as specified in the Schedule.
This Agreement shall not be assignable by either party without the
written consent of the other party.
ARTICLE 8. Amendments. This Agreement may be amended by the parties
hereto only if such amendment is specifically approved (i) by the vote of a
majority of the Directors of the Fund, and (ii) by the vote of a majority of the
Directors of the Fund who are not parties to this Agreement or interested
persons of any such party, cast in person at a Board of Directors meeting called
for the purpose of voting on such approval.
ARTICLE 9. Certain Records. The Administrator shall maintain
customary records in connection with its duties as specified in this Agreement.
Any records required to be maintained and preserved pursuant to Rules 31a-1 and
31a-2 under the 1940 Act which are prepared or maintained by the Administrator
on behalf of the Fund shall be prepared and maintained at the expense of the
Administrator, but shall be the property of the Fund and will be made available
to or surrendered promptly to the Fund on request.
In case of any request or demand for the inspection of such records
by another party, the Administrator shall notify the Fund and follow the Fund's
instructions as to permitting or refusing such inspection; provided that the
Administrator may exhibit such records to any person in any case where it is
advised by its counsel that it may be held liable for failure to do so, unless
(in cases involving potential exposure only to civil liability) the Fund has
agreed to indemnify the Administrator against such liability.
ARTICLE 10. Definitions of Certain Terms. The terms "interested
person" and "affiliated person", when used in this Agreement, shall have the
respective meanings specified in the 1940 Act and the rules and regulations
thereunder, subject to such exemptions as may be granted by the Securities and
Exchange Commission.
<PAGE>
ARTICLE 11. Notice. Any notice required or permitted to be given by
either party to the other shall be deemed sufficient if sent by registered or
certified mail, postage prepaid, addressed by the party giving notice to the
other party (a) in the case of notice to the Fund, to the Chair of the Board of
Directors of the Fund at the last address furnished by such person or, if the
Chair is an affiliated person or interested person of the Administrator, to the
Directors of the Fund who are not such affiliated persons or interested persons
at the last addresses furnished by such persons, and (b) in the case of notice
to the Administrator, to the last address furnished by the Administrator for
such purpose.
ARTICLE 12. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of Minnesota and the applicable provisions
of the 1940 Act. To the extent that the applicable laws of the State of
Minnesota, or any of the provisions herein, conflict with the applicable
provisions of the 1940 Act, the latter shall control.
ARTICLE 13. Multiple Originals. This Agreement may be executed in
two or more counterparts, each of which when so executed shall be deemed to be
an original, but such counterparts shall together constitute but one and the
same instrument.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the day and year first above written.
FIRST AMERICAN FUNDS, INC.
By
--------------------------------------
Its
----------------------------------
U.S. BANK NATIONAL ASSOCIATION
By
--------------------------------------
Its
----------------------------------
<PAGE>
SCHEDULE TO THE
ADMINISTRATION AGREEMENT
DATED AS OF JANUARY 1, 2000
BETWEEN
FIRST AMERICAN FUNDS, INC.
AND
U.S. BANK NATIONAL ASSOCIATION
Portfolios: This Agreement shall apply to all Portfolios of First American
Funds, Inc., either now or hereafter created (collectively,
the "Portfolios").
Fees: Pursuant to Article 4, the Fund shall pay the Administrator
compensation for services rendered to the Portfolios at an
annual rate, which is calculated daily and paid monthly, equal
to such Portfolio's pro rata share of an amount equal to (i)
.07% of the aggregate average daily net assets of all mutual
funds in the First American family of funds ("First American
Fund Family") up to $8 billion, and (ii) .055% of the
aggregate average daily net assets of the First American Fund
Family in excess of $8 billion. For the purposes of this
provision, the First American Fund Family includes all series
of First American Funds, Inc., First American Investment
Funds, Inc., First American Strategy Funds, Inc., and First
American Insurance Portfolios, Inc.
In addition, the Fund shall pay the Administrator the
following fees for transfer agency and dividend disbursing
services:
Annual CUSIP Fee: $18,500/CUSIP/year
Open Account Fee:
* Internal Accounts $9.00/account/year
* Third Party/External Accounts $15.00/account/year
* IRA Accounts $15.00/account/year
* Certificate Processing N/A
Closed Account Fee:
* Internal Accounts N/A
* Third Party/External Accounts $3.50/account/year
Term: Pursuant to Article 7, the term of this Agreement, unless
sooner terminated as specified under the heading "Termination"
below, shall commence on January 1, 2000 and shall remain in
effect through December 31, 2002 ("Initial Term") and the
Initial Term shall be automatically extended on January 1,
2002 for one successive two-year period (i.e., through
December 31, 2004) if the Administrator has met or exceeded
the written service level standards set forth on Exhibit A to
this Agreement (the "Service Standards") on no less than 90%
of such Service Standards on a cumulative basis during the
period commencing January 1, 2000 and ending on December 31,
2001. The Initial Term (as
<PAGE>
extended) shall thereafter be automatically extended on
January 1 of each year commencing with January 1, 2004, (the
"Extension Date") for successive one-year periods (e.g., in
the instance where the Extension Date is January 1, 2004,
through December 31, 2005) if the Administrator has met or
exceeded at least 90% of the Service Standards on a cumulative
basis during the prior two-year period ending on the
applicable Extension Date. Calculation of compliance with the
Service Standards will be measured monthly, and reported to
the Board of Directors of First American Funds, Inc.
quarterly, as a fraction, the numerator of which is the number
of Service Standard events that were met in such month and the
denominator of which is the number of Service Standard events
to be completed for such month ("Service Level Percentage").
The Administrator will calculate the compliance percentage,
and Ernst & Young will review such calculation, on a quarterly
basis. Any disagreements will be reported to the Board of
Directors of the First American Funds, Inc. for resolution, in
the Board's good faith judgment.
Termination: The Administration Agreement will be terminable by the
Portfolios by delivery to the Administrator of written notice:
(i) for any reason on six months prior written notice to the
Administrator; (ii) in the event of the Administrator's
bankruptcy or insolvency; (iii) in the event of a conviction
of the Administrator for corporate criminal activity; (iv) if
in any consecutive six-month period the average cumulative
Service Level Percentage is less than 50%; or (v) if the
Administrator has materially failed to perform its
responsibilities as administrator under this Agreement, and
such material failure has not been cured within 45 days after
written notice is received by the Administrator specifying the
nature of the failure. The Administration Agreement will be
terminable by the Administrator by delivery to the Portfolios
of written notice of termination delivered no less than 180
days prior to the end of the Initial Term (as extended if
applicable).
Agreed to and accepted Agreed to and accepted
FIRST AMERICAN FUNDS, INC. U.S. BANK NATIONAL ASSOCIATION
By By
------------------------------------ ------------------------------------
Its Its
-------------------------------- --------------------------------
Date Date
--------------------------- ---------------------------
<PAGE>
EXHIBIT A
TO THE
ADMINISTRATION AGREEMENTS
DATED AS OF JANUARY 1, 2000
BETWEEN
U.S. BANK NATIONAL ASSOCIATION
AND
<TABLE>
<S> <C>
FIRST AMERICAN FUNDS, INC. AMERICAN MUNICIPAL INCOME PORTFOLIO INC
FIRST AMERICAN INVESTMENT FUNDS, INC. MINNESOTA MUNICIPAL INCOME PORTFOLIO INC
FIRST AMERICAN STRATEGY FUNDS, INC. AMERICAN MUNICIPAL TERM TRUST INC
FIRST AMERICAN INSURANCE PORTFOLIOS, INC. AMERICAN MUNICIPAL TERM TRUST INC II
AMERICAN STRATEGIC INCOME PORTFOLIO INC AMERICAN MUNICIPAL TERM TRUST INC III
AMERICAN STRATEGIC INCOME PORTFOLIO INC II MINNESOTA MUNICIPAL TERM TRUST INC
AMERICAN STRATEGIC INCOME PORTFOLIO INC III MINNESOTA MUNICIPAL TERM TRUST INC II
AMERICAN SELECT PORTFOLIO INC
</TABLE>
The following Exhibit sets forth the service standards for U.S. Bank
National Association under its Administration Agreement with the Funds listed
above. This Exhibit is intended to be modified by written agreement of the Funds
and U.S. Bank.
<PAGE>
CUMULATIVE MEASUREMENT OF FIRST AMERICAN SERVICE STANDARDS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SERVICE TOTAL TOTAL JAN FEB MAR APRIL MAY JUNE
TASK STANDARD POSSIBILITIES-1/00 SUCCESSES 2000 2000 2000 2000 2000 2000
THRU 1/00 THRU
- ------------------------------------------------------------------------------------------------------------------------------------
Measurement Success rate per task, per month:
period 1st column = success
2nd column = total task
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Abandon rate on inbound calls 2% or less Monthly
- ------------------------------------------------------------------------------------------------------------------------------------
Average speed to answer 20 seconds or Monthly
less
- ------------------------------------------------------------------------------------------------------------------------------------
Monitoring of calls by supervisor 1 per rep/per Monthly
week
- ------------------------------------------------------------------------------------------------------------------------------------
Annual shopping of investor and Satisfactory 1/yr.
broker support phone lines rating
- ------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value pricing 98% or greater Each
business day
- ------------------------------------------------------------------------------------------------------------------------------------
% of prices reported to 98% or greater Avg/monthly
NASDAQ timely
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL TASKS
- ------------------------------------------------------------------------------------------------------------------------------------
Overall performance percentage
- ------------------------------------------------------------------------------------------------------------------------------------
Cumulative Monthly percentage
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Exhibit (j)(3)
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the references to our firm under the captions "Financial
Highlights" in the Prospectuses and "Administrator; Custodian; Counsel;
Auditors" in the Statement of Additional Information and to the incorporation by
reference in this Post-Effective Amendment Number 32 to the Registration
Statement (Form N-1A) (Nos. 2-74747/811-3313) of First American Funds, Inc. of
our report dated November 2, 1999, included in the 1999 Annual Report to
shareholders.
/s/ Ernst & Young LLP
Minneapolis, Minnesota
November 22, 1999
<PAGE>
Exhibit (j)(4)
Independent Auditors' Consent
The Board of Directors
First American Funds, Inc.:
We consent to the use of our report dated November 13, 1998, included herein,
and to the reference to our Firm under the heading "Administrator; Custodian;
Counsel; Auditors" in Part B of the Registration Statement.
KPMG LLP
Minneapolis, Minnesota
November 22, 1999
<PAGE>
The Board of Directors and Shareholders
First American Funds, Inc.
We have audited the statements of changes in net assets of Government
Obligations Fund, Prime Obligations Fund, and Treasury Obligations Fund for the
year ended September 30, 1998 and of Tax Free Obligations Fund for the periods
from December 1, 1997 to September 30, 1998 and August 1, 1997 to November 30,
1997 and the financial highlights of Government Obligations Fund, Prime
Obligations Fund and Treasury Obligations Fund for each of the years in the
four-year period ended September 30, 1998 and of Tax Free Obligations Fund for
the periods from December 1, 1997 to September 30, 1998 and August 1, 1997 to
November 30, 1997. 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 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. 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 statements of and the financial highlights referred to above
present fairly, in all material respects, the changes in net assets and the
financial highlights of the Government Obligations Fund, Prime Obligations Fund,
Treasury Obligations Fund and Tax Free Obligations Fund for each of the periods
described above, in conformity with generally accepted accounting principles.
KPMG LLP
Minneapolis, Minnesota
November 13, 1998
