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Previous: THIN FILM BATTERY INC, 8-K, EX-16.1, 2000-10-31 |
Next: HIBERNIA FUNDS, 485BPOS, EX-99.POWERATTY, 2000-10-31 |
1933 Act File No. 33-21321
1940 Act File No. 811-5536
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
------
Pre-Effective Amendment No. ....................
-------- ------
Post-Effective Amendment No. 25 .................... X
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
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Amendment No. 23 ................................... X
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HIBERNIA FUNDS
(formerly, Tower Mutual Funds)
(Exact Name of Registrant as Specified in Charter)
5800 Corporate Drive, Pittsburgh, Pennsylvania 15237-7010
(Address of Principal Executive Offices)
(412) 288-1900
(Registrant's Telephone Number)
John W. McGonigle, Esquire,
Federated Investors Tower,
1001 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b) X on OCTOBER 31, 2000 pursuant
to paragraph (b) _ 60 days after filing pursuant to paragraph (a) (i) on
pursuant to paragraph (a) (i) 75 days after filing pursuant to paragraph (a)(ii)
on _________________ pursuant to paragraph (a)(ii) of Rule 485.
If appropriate, check the following box:
This post-effective amendment designates a new effective date for a previously
filed post-effective amendment.
Copies to:
Matthew G. Maloney, Esquire
Dickstein Shapiro Morin & Oshinsky LLP
2101 L Street, N.W.
Washington, D.C. 20037
[Logo HIBERNIA FUNDS]
PROSPECTUS
Equity and Income Funds
Hibernia Capital Appreciation Fund--Class A Shares and Class B Shares
Hibernia Louisiana Municipal Income Fund
Hibernia Mid Cap Equity Fund--Class A Shares and Class B Shares
Hibernia Total Return Bond Fund
Hibernia U.S. Government Income Fund
Money Market Funds
Hibernia Cash Reserve Fund--Class A Shares and Class B Shares
Hibernia U.S. Treasury Money Market Fund
As with all mutual funds, the Securities and Exchange Commission (SEC) has not approved or disapproved these securities or passed upon the adequacy of this prospectus. Any representation to the contrary is a criminal offense.
<R>
| Fund Goals, Strategies, Performance and Risks | 1 | |
| Principal Risks of Investing in a Fund | 13 | |
| What are the Equity and Income Funds' Fees | 14 | |
| What are the Money Market Funds' Fees and Expenses? | 16 | |
| Principal Securities in Which the Funds Invest See Principal Securities in Which the Funds Invest | 17 | |
| What are the Specific Risks of Investing in a Fund? | 22 | |
| What do Shares Cost? | 24 | |
| How are the Funds Sold? | 27 | |
| How to Purchase Shares | 28 | |
| How to Redeem and Exchange Shares | 29 | |
| Account and Share Information | 31 | |
| Who Manages the Funds? | 33 | |
| Financial Information | 34 |
</R>
NOT FDIC INSURED
MAY LOSE VALUE
NO BANK GUARANTEE
<R>
</R>
Hibernia Funds offer seven portfolios, including two equity funds, three income funds and two money market funds. The following describes the investment goals, strategies and principal risks of each Fund. The investment goal of each Fund described in this section may be changed only upon the approval of a majority of the outstanding shares of the Fund which would be affected by the change.
All mutual funds take investment risks. Therefore, it is possible to lose money by investing in a Fund and there can be no assurance that a Fund will achieve its goal. The shares offered by this prospectus are not deposits or obligations of any bank, are not endorsed or guaranteed by Hibernia National Bank or its affiliates, and are not insured or guaranteed by the Federal Deposit Insurance Corporation, or any other government agency. An investment in money market funds is neither insured nor guaranteed by the Federal Deposit Insurance Corporation nor any government agency. Although money market funds seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in a money market fund.
The Fund's goal is to provide growth of capital and income.
The Fund attempts to achieve its goal by investing primarily in a professionally managed, diversified portfolio of common stocks. The Adviser selects companies using traditional research techniques, including assessment of earnings and dividend growth prospects of the companies. Ordinarily, this investment management style focuses on companies with high revenue and dividend growth. However, other factors such as expected earnings and dividend growth and traditional valuation measures will also be considered. Under normal circumstances, at least 65% of the Fund's portfolio will be invested in common stocks.
The Fund's investment approach is based on the conviction that over the long term the economy will continue to expand and develop and that this economic growth will be reflected in the growth of the revenues and earnings of publicly held corporations. Given current market conditions of declining dividend yields, the Adviser will focus primarily on growth of capital with growth of income being of secondary importance.
The value of equity securities in the Fund's portfolio will rise and fall. These fluctuations could be a sustained trend or a drastic movement. The Fund's portfolio will reflect changes in prices of individual portfolio stocks or general changes in stock valuations. Consequently, the Fund's share price may decline. The Adviser attempts to manage market risk by limiting the amount the Fund invests in each company's equity securities. However, diversification will not protect the Fund against widespread or prolonged declines in the stock market. Other principal risks of investing in the Fund include the risks related to investing for growth; the risks posed by the fact that growth stocks in particular may experience a larger decline on a forecast of lower earnings, a negative fundamental development or an adverse market development.
[Graphic Representation Omitted--See Appendix]
<R>
The bar chart shows the variability of the Fund's Class A Shares' total returns on a calendar year-end basis.
</R>
The total returns displayed for the Fund' s Class A Shares do not reflect the payment of any sales charges or recurring shareholder account fees. If these charges or fees had been included, the returns shown would have been lower.
<R>
The Fund's Class A Shares' total return for the nine-month period from January 1, 2000 to September 30, 2000 was 1.67%.
Within the period shown in the Chart, the Fund's Class A Shares' highest quarterly return was 23.22% (quarter ended December 31, 1998). Its lowest quarterly return was (13.37%) (quarter ended September 30, 1990).
</R>
<R>
The following table represents the Fund's Average Annual Total Returns for the calendar periods ending December 31, 1999. The table shows the Fund's total returns averaged over a period of years relative to the Standard & Poor's 500 Composite Stock Price Index (S&P 500), a broad based market index. Total returns for the index shown do not reflect sales charges, expenses or other fees that the SEC requires to be reflected in the Fund's performance. Indexes are unmanaged, and it is not possible to invest directly in an index.
| Calendar Period | Class A | Class B | S&P 500 | |||
| 1 Year | 13.33% | 12.29% | 21.05% | |||
| 5 Year | 26.15% | N/A | 28.56% | |||
| 10 Year | 16.46% | N/A | 18.21% | |||
| Start of Performance 1 | N/A | 22.21% | N/A |
1 The Fund's Class A Shares' and Class B Shares' start of performance dates were October 14, 1988 and December 2, 1996, respectively.
</R>
Past performance does not necessarily predict future performance. This information provides you with historical performance information so that you can analyze whether the Fund's investment risks are balanced by its potential rewards.
The Fund's goal is to provide current income which is generally exempt from federal regular income tax and the personal income taxes imposed by the state of Louisiana. (Federal regular income tax does not include the federal individual alternative minimum tax or the federal alternative minimum tax for corporations.)
The Fund attempts to achieve its goal by investing in a portfolio primarily limited to Louisiana municipal securities. As a matter of policy, which cannot be changed without shareholder approval, the Fund will invest its assets so that, under normal circumstances, at least 80% of its annual interest income is exempt from federal regular and Louisiana state income taxes or at least 80% of its net assets are invested in obligations, the interest income from which is exempt from federal regular and Louisiana state income taxes. The Fund will generally purchase investment grade securities of a duration appropriate to current market conditions. In expected rising interest rate environments, the Adviser will generally choose securities of a shorter duration. In expected falling interest rate environments, the Adviser will generally choose securities of a longer duration.
As a matter of investment policy which may be changed without shareholder approval, at least 65% of the Fund's total assets will be invested in Louisiana municipal securities.
Prices of fixed income securities rise and fall in response to changes in the interest rate paid by similar securities. Generally, when interest rates rise, prices of fixed income securities fall. However, market factors, such as the demand for particular fixed income securities, may cause the price of certain fixed income securities to fall while the prices of other securities rise or remain unchanged.
Interest rate changes have a greater effect on the price of fixed income securities with longer durations. Duration measures the price sensitivity of a fixed income security to changes in interest rates.
The Fund is non-diversified. Compared to diversified mutual funds, it may invest a higher percentage of its assets among fewer issuers of portfolio securities. This increases the Fund's risk by magnifying the impact (positively or negatively) that any one issuer has on the Fund's Share price and performance.
[Graphic Representation Omitted--See Appendix]
The bar chart shows the variability of the Fund's total returns on a calendar year-end basis.
The total returns displayed for the Fund do not reflect the payment of any sales charges or recurring shareholder account fees. If these charges or fees had been included, the returns shown would have been lower.
<R>
The Fund's total return for the nine-month period from January 1, 2000 to September 30, 2000 was 7.04%.
</R>
Within the period shown in the Chart, the Fund's highest quarterly return was 6.51% (quarter ended March 31, 1995). Its lowest quarterly return was (4.86%) (quarter ended March 31, 1994).
<R>
The following table represents the Fund's Average Annual Total Returns for the calendar periods ending December 31, 1999. The table shows the Fund's total returns averaged over a period of years relative to the Lehman Ten Year Insured Index (LTYII), a broad based market index. Total returns for the index shown do not reflect sales charges, expenses or other fees that the Securities and Exchange Commission requires to be reflected in the Fund's performance. Indexes are unmanaged, and it is not possible to invest directly in an index.
| Calendar Period | Fund | LTYII | ||
| 1 Year | (6.02%) | (3.27%) | ||
| 5 Year | 5.45% | 7.04% | ||
| 10 Year | 6.04% | 7.12% |
</R>
Past performance does not necessarily predict future performance. This information provides you with historical performance information so that you can analyze whether the Fund's investment risks are balanced by its potential rewards.
The Fund's goal is total return.
<R>
Under normal market conditions, the Fund intends to invest at least 65% of its total assets in equity securities of companies that, at the time of acquisition, have a market value capitalization ranging from $500 million to $10 billion. The Fund attempts to select companies whose potential for capital appreciation exceeds that of larger capitalization stocks commensurate with increased risk. The Fund's Adviser will invest primarily in equity securities of companies with above-average earnings growth prospects or in companies where significant fundamental changes are taking place. These changes could include significant new products, services, or methods of distribution; restructuring or reallocating business; or significant share price appreciation.
</R>
All mutual funds take investment risks. Therefore, it is possible to lose money by investing in the Fund. The value of equity securities in the Fund's portfolio will rise and fall. These fluctuations could be a sustained trend or a drastic movement. The Fund's portfolio will reflect changes in prices of individual portfolio stocks or general changes in stock valuations. Consequently, the Fund's share price may decline. The Adviser attempts to manage market risk by limiting the amount the Fund invests in each company's equity securities. However, diversification will not protect the Fund against widespread or prolonged declines in the stock market.
Because the Fund invests primarily in medium capitalization stocks, there are some additional risk factors associated with investments in the Fund. In particular, stocks in the medium capitalization sector of the United States equity market tend to be slightly more volatile in price than larger capitalization stocks, such as those included in the Standard & Poor's 500 Composite Price Index (S&P 500). This is because, among other things, medium-sized companies have less certain growth prospects than larger companies; have a lower degree of liquidity in the equity market; and tend to have a greater sensitivity to changing economic conditions. Further, in addition to exhibiting slightly higher volatility, the stocks of medium-sized companies may, to some degree, fluctuate independently of the stocks of large companies. That is, the stocks of medium-sized companies may decline in price as the price of large company stocks rises or vice versa. You should expect that the Fund will be more volatile than, an d may fluctuate independently of, broad stock market indices such as the S&P 500.
Other risks of investing in the Fund include the risks related to investing for growth; the risks posed by the fact that growth stocks in particular may experience a larger decline on a forecast of lower earnings, a negative fundamental development or an adverse market development.
[Graphic Representation Omitted--See Appendix]
<R>
The bar chart shows the variability of the Fund's Class A Shares' total returns on a calendar year-end basis.
The total returns displayed for the Fund's Class A Shares' do not reflect the payment of any sales charges or recurring shareholder account fees. If these charges or fees had been included, the returns shown would have been lower.
The Fund's Class A Shares' total return for the nine-month period from January 1, 2000 to September 30, 2000 was 25.19%.
Within the period shown in the Chart, the Fund's Class A Shares' highest quarterly return was 47.40% (quarter ended March 31, 1998). Its lowest quarterly return was (6.23%) (quarter ended December 31, 1994).
The following table represents the Fund's Average Annual Total Returns for the calendar periods ending December 31, 1999. The table shows the Fund's total returns averaged over a period of years relative to the Standard & Poor's 400 Mid Cap Index (S&P 400), a broad based market index. Total returns for the index shown do not reflect sales charges, expenses or other fees that the Securities and Exchange Commission requires to be reflected in the Fund's performance. Indexes are unmanaged, and it is not possible to invest directly in an index.
| Calendar Period | Class A | Class B | S&P 400 | |||
| 1 Year | 11.34% | 10.59% | 14.74% | |||
| 5 Year | 22.84% | N/A | 23.05% | |||
| 10 Year | 17.76% | N/A | 17.32% | |||
| Start of Performance 2 | N/A | 15.24% | N/A |
1 Hibernia Mid Cap Equity Fund, Class A Shares is the successor to a collective trust fund. The quoted performance data includes performance of the collective trust fund for the period from 8/31/90 to 7/12/98 when the Fund commenced operation, as adjusted to reflect the Fund's anticipated expenses. The collective trust fund was not registered under the Investment Company Act of 1940 ("1940 Act") and therefore was not subject to certain investment restrictions imposed by the 1940 Act. If the collective trust fund had been registered under the 1940 Act, the performance may have been adversely affected.
2 The Fund's Class A Shares' and Class B Shares' start of performance dates were May 1, 1986 and July 13, 1998, respectively.
</R>
Past performance does not necessarily predict future performance. This information provides you with historical performance information so that you can analyze whether the Fund's investment risks are balanced by its potential rewards.
The Fund's goal is to maximize total return.
<R>
The Fund attempts to achieve its goal by investing in a diversified portfolio of investment grade U.S. government, mortgage backed, asset backed and corporate securities, as well as collateralized mortgage obligations. Under normal circumstances, the Fund will attempt to invest at least 65% of its assets in bonds. The Adviser allocates the Fund's portfolio among business sectors and adjusts the credit quality of the portfolio by analyzing current economic and securities market conditions, particularly changes in interest rates and expected trends in corporate earnings. These factors also guide the selection of maturity and duration of portfolio securities. The Fund may invest in securities of any duration although generally, under normal conditions, the Fund's average duration would tend toward the overall U.S. market average which is roughly 4.85 years at present. The Fund will attempt to achieve the capital appreciation component of total return by manipulating the duration of the portfolio, within certain parameters, in response to expected changes in interest rates.
</R>
Prices of fixed income securities rise and fall in response to changes in the interest rate paid by similar securities. Generally, when interest rates rise, prices of fixed income securities fall. However, market factors, such as the demand for particular fixed income securities, may cause the price of certain fixed income securities to fall while the prices of other securities rise or remain unchanged.
Interest rate changes have a greater effect on the price of fixed income securities with longer durations. Duration measures the price sensitivity of a fixed income security to changes in interest rates.
Other factors that may affect the Fund's returns include bond defaults or increase in the risk of defaults, or early redemptions of portfolio securities. Risk of prepayment on asset backed and mortgage backed securities will also affect Fund returns.
[Graphic Representation Omitted--See Appendix]
The bar chart shows the variability of the Fund's total returns on a calendar year-end basis.
The total returns displayed for the Fund do not reflect the payment of any sales charges or recurring shareholder account fees. If these charges or fees had been included, the returns shown would have been lower.
<R>
The Fund's total return for the nine-month period from January 1, 2000 to September 30, 2000 was 5.80%.
</R>
Within the period shown in the Chart, the Fund's highest quarterly return was 6.10% (quarter ended June 30, 1995). Its lowest quarterly return was (2.67%) (quarter ended March 31, 1996).
<R>
The following table represents the Fund's Average Annual Total Returns for the calendar periods ending December 31, 1999. The table shows the Fund's total returns averaged over a period of years relative to the Salomon Brothers Broad Investment Grade Bond Index (SBBIGBI), a broad based market index. Total returns for the index shown do not reflect sales charges, expenses or other fees that the Securities Exchange Commission requires to be reflected in the Fund's performance. Indexes are unmanaged, and it is not possible to invest directly in an index.
| Calendar Period | Fund | SBBIGBI | ||
| 1 Year | (4.51%) | (.83%) | ||
| 5 Year | 5.76% | 7.74% | ||
| Start of Performance1 | 5.00% | 6.81% |
</R>
1 The Fund's start of performance date was November 2, 1992.
Past performance does not necessarily predict future performance. This information provides you with historical performance information so that you can analyze whether the Fund's investment risks are balanced by its potential rewards.
The Fund's goal is to provide current income.
Current income includes, in general, discount earned on U.S. Treasury bills and agency discount notes, interest earned on all other U.S. government securities and mortgage-related securities, and short-term capital gains. The Fund attempts to achieve its investment objective by investing in investment grade securities which are guaranteed as to payment of principal and interest by the U.S. government or U.S. government agencies or instrumentalities. Under normal circumstances, at least 65% of the Fund's total assets will be invested in such U.S. government securities. Under normal circumstances, the average duration of the Fund's holdings will be 3-5 years. The Fund may also invest in corporate bonds, asset backed securities and certain privately issued mortgage-related securities, such as investment banking firms and companies related to the construction industry. The mortgage-related securities in which the Fund may invest may be: (i) privately issued securities which are collateralized by pools of mortgages in which each mortgage is guaranteed as to payment of principal and interest by an agency or instrumentality of the U.S. government; (ii) privately issued securities which are collateralized by pools of mortgages in which payment of principal and interest are guaranteed by the issuer and such guarantee is collateralized by U.S. government securities; and (iii) other privately issued securities in which the proceeds of the issuance are invested in mortgage-backed securities and payment of the principal and interest are supported by the credit of any agency or instrumentality of the U.S. government.
The mortgage-related securities provide for a periodic payment consisting of both interest and principal. The interest portion of these payments will be distributed by the Fund as income, and the capital portion will be reinvested.
Prices of fixed income securities rise and fall in response to changes in the interest rate paid by similar securities. Generally, when interest rates rise, prices of fixed income securities fall. However, market factors, such as the demand for particular fixed income securities, may cause the price of certain fixed income securities to fall while the prices of other securities rise or remain unchanged.
Interest rate changes have a greater effect on the price of fixed income securities with longer durations. Duration measures the price sensitivity of a fixed income security to changes in interest rates.
Other factors that may affect the Fund's returns include bond defaults or increase in the risk of defaults, or early redemptions of portfolio securities. Risk of prepayment on asset backed and mortgage backed securities will also affect Fund returns.
[Graphic Representation Omitted--See Appendix]
The bar chart shows the variability of the Fund's total returns on a calendar year-end basis.
The total returns displayed for the Fund do not reflect the payment of any sales charges or recurring shareholder account fees. If these charges or fees had been included, the returns shown would have been lower.
<R>
The Fund's total return for the nine-month period from January 1, 2000 to September 30, 2000 was 6.43%.
Within the period shown in the Chart, the Fund's highest quarterly return was 5.42% (quarter ended September 30, 1991). Its lowest quarterly return was (2.57%) (quarter ended March 31, 1994).
</R>
<R>
The following table represents the Fund's Average Annual Total Returns for the calendar periods ending December 31, 1999. The table shows the Fund's total returns averaged over a period of years relative to the Salomon Brothers Medium Term Broad Index (SBMTBI), a broad based market index. Total returns for the index shown do not reflect sales charges, expenses or other fees that the Securities and Exchange Commission requires to be reflected in the Fund's performance. Indexes are unmanaged, and it is not possible to invest directly in an index.
| Calendar Period | Fund | SBMTBI | ||
| 1 Year | (3.93%) | 1.00% | ||
| 5 Year | 6.07% | 7.42% | ||
| 10 Year | 6.26% | 7.51% |
</R>
Past performance does not necessarily predict future performance. This information provides you with historical performance information so that you can analyze whether the Fund's investment risks are balanced by its potential rewards.
The Fund is a money market fund which seeks to maintain a stable net asset value (NAV) of $1 per Share. The Fund's goal is current income consistent with stability of principal.
The Fund's portfolio consists of high quality money market instruments maturing in one year or less. As a matter of policy, which cannot be changed without shareholder approval, the average maturity of the securities in the Fund's portfolio, computed on a dollar-weighted basis, will be 120 days or less. As a matter of operating policy, which may be changed without shareholder approval, the Fund will limit the average maturity of its portfolio to 90 days or less, in order to meet regulatory requirements. The Fund invests in high quality money market instruments that are either rated in the highest short-term rating category by one or more nationally recognized statistical rating organizations (NRSROs) or of comparable quality to securities having such ratings. The Fund invests only in instruments denominated and payable in U.S. dollars.
Even though the Fund is a money market fund that seeks to maintain a stable NAV it is possible to lose money by investing in the Fund.
Generally, in excess of 50% of the total assets of the Fund will be invested in commercial paper and variable rate demand notes. Commercial paper issued by finance companies will comprise more than 25% of the Fund's total assets, unless the Fund is in a temporary defensive position as a result of economic conditions. These policies may not be changed without shareholder approval. Concentration of the Fund's portfolio in such obligations may entail additional risks which are not encountered by funds with more diversified portfolios including credit risk to such finance companies and temporary demand and supply imbalances.
[Graphic Representation Omitted--See Appendix]
Historically, the Fund has maintained a constant $1.00 net asset value per share. The bar chart shows the variability of the Fund's Class A Shares total returns on a calendar year-end basis.
<R>
The Fund's Class A Shares' are not sold subject to a sales charge (load). The total returns displayed above are based upon net asset value.
The Fund's Class A Shares' total return for the nine-month period from January 1, 2000 to September 30, 2000 was 3.97%.
Within the period shown in the Chart, the Fund's Class A Shares' highest quarterly return was 1.91% (quarter ended June 30, 1990). Its lowest quarterly return was 0.57% (quarter ended December 31, 1993).
</R>
<R>
The following table represents the Fund's Average Annual Total Returns for calendar periods ending December 31, 1999.
| Calendar Period | Class A | Class B | ||
| 1 Year | 4.27% | (2.00%) | ||
| 5 Year | 4.72% | N/A | ||
| 10 Year | 4.56% | N/A | ||
| Start of Performance 1 | N/A | 0.15% |
1 The Fund's Class A Shares' and Class B Shares' start of performance dates were October 14, 1988 and September 4, 1998, respectively.
The Fund's Class A Shares' and Class B Shares' 7-Day Net Yield as of December 31, 1999 were 4.68% and 3.93%, respectively. Investors may call the Fund at 1-800-263-1078 to acquire the current 7-Day Net Yield.
</R>
Past performance does not necessarily predict future performance. This information provides you with historical performance information so that you can analyze whether the Fund's investment risks are balanced by its potential rewards.
The Fund is a money market fund which seeks to maintain a stable NAV of $1 per Share. The Fund's goal is current income consistent with stability of principal and liquidity.
The Fund pursues its goal by investing in a portfolio of short-term U.S. Treasury obligations which are issued by the U.S. government and are fully guaranteed as to payment of principal and interest by the United States. The Fund invests only in short-term U.S. Treasury obligations maturing in 397 days or less. The average maturity of the U.S. Treasury obligations in the Fund's portfolio, computed on a dollar-weighted basis, will be 90 days or less.
Even though the Fund is a money market fund that seeks to maintain a stable NAV, it is possible to lose money by investing in the Fund.
Although the Fund invests in U.S. Treasury securities that are backed by the full faith and credit of the United States, Fund Shares, themselves, are not guaranteed or supported by the U.S. government.
While there is no assurance that the Cash Reserve Fund and U.S. Treasury Money Market Fund (together, the Money Market Funds) will achieve their respective investment goals, they endeavor to do so by following the strategies and policies described in this prospectus and by complying with the diversification and other requirements of Rule 2a-7 under the Investment Company Act of 1940, which regulates money market funds.
[Graphic Representation Omitted--See Appendix]
Historically, the Fund has maintained a constant $1.00 net asset value per share. The bar chart shows the variability of the Fund's total returns on a calendar year-end basis.
The Fund's shares are not sold subject to a sales charge (load). The total returns displayed above are based upon net asset value.
<R>
The Fund's total return for the nine-month period from January 1, 2000 to September 30, 2000 was 4.07%.
Within the period shown in the Chart, the Fund's highest quarterly return was 1.37% (quarter ended June 30, 1995). Its lowest quarterly return was 0.61% (quarter ended March 31, 1994).
The following table represents the Fund's Average Annual Total Returns for calendar periods ending December 31, 1999.
| Calendar Period | Fund | |
| 1 Year | 4.27% | |
| 5 Year | 4.86% | |
| Start of Performance1 | 4.48% |
1 The Fund's start of performance date was July 16, 1993.
The Fund's 7-Day Net Yield as of December 31, 1999 was 4.28%. Investors may call the Fund at 1-800-263-1078 to acquire the current 7-Day Net Yield.
</R>
Past performance does not necessarily predict future performance. This information provides you with historical performance information so that you can analyze whether the Fund's investment risks are balanced by its potential rewards.
In addition to the risks set forth below that are specific to an investment in a particular Fund, there are risks common to all mutual funds.
For example, a Fund's share price may decline and an investor could lose money. It is possible to lose money by investing in any of the Hibernia Funds. Also there is no assurance that a Fund will achieve its investment goal.
<R>
| Capital Appreciation Fund |
Louisiana Municipal Income Fund |
Mid Cap Equity Fund |
Total Return Bond Fund |
U.S. Government Income Fund |
Cash Reserve Fund |
U.S. Treasury Money Market Fund |
||||||||
| Stock Market Risk 1 | X | X | ||||||||||||
| Sector Risk 2 | X | X | X | X | ||||||||||
| Liquidity Risk 3 | X | X | X | X | ||||||||||
| Investing for Growth4 | X | X | ||||||||||||
| Company Size Risk 5 | X | |||||||||||||
| Foreign Investing Risk 6 | X | X | X | |||||||||||
| Credit Risks 7 | X | X | X | X | X | X | X | |||||||
| Interest Rate Risk 8 | X | X | X | |||||||||||
| Prepayment Risk 9 | X | X | X | |||||||||||
| Call Risk 10 | X | X | X | |||||||||||
| Tax Risks 11 | X | |||||||||||||
| Risks of Investing in Louisiana 12 | X |
</R>
1 The value of equity securities rise and fall.
2 Because companies providing credit enhancement with regard to a Fund's securities may be concentrated in certain industry sectors, the creditworthiness of the Fund's securities may be adversely affected by developments which adversely affect such sectors.
3 Limited trading opportunities for certain securities and the inability to sell a security at will could result in losses to a Fund.
4 Growth stocks in particular may experience a larger decline on a forecast of lower earnings, a negative fundamental development or an adverse market development.
5 The smaller the capitalization of a company, the less liquid its stock and the more volatile its price. Companies with smaller market capitalizations also tend to have unproven track records and are more likely to fail than companies with larger market capitalizations.
6 Foreign economic, political or regulatory conditions may be less favorable than those of the United States.
7 The possibility that an issuer will default on a security by failing to pay interest or principal when due.
8 Prices of fixed income securities rise and fall in response to interest rate changes.
9 When interest rates decline, unscheduled prepayments of principal could accelerate and require the Fund to reinvest the proceeds of the prepayments at lower interest rates.
10 A Fund's performance may be adversely affected by the possibility that an issuer of a security held by a Fund may redeem the security prior to maturity at a price below its current market value.
11 Any failure of municipal securities invested in by a Fund to meet certain applicable legal requirements, or any proposed or actual changes in the federal or a state's tax law, could adversely affect shareholders of a Fund.
12 Any economic, political, or regulatory developments affecting the value of the securities in the Fund's portfolio could have a greater impact on the total value of the portfolio than would be the case if the portfolio were diversified among more issuers. The Louisiana economy is heavily dependent upon energy prices, both oil and gas. Any adverse economic conditions or developments affecting the state of Louisiana or its municipalities could impact the Fund's portfolio. Investing in Louisiana municipal securities which meet the Fund's quality standards may not be possible if the state of Louisiana and its municipalities do not maintain their current credit ratings.
| Capital Appreciation Fund Class A Shares |
Capital Appreciation Fund Class B Shares |
Louisiana Municipal Income Fund |
Mid Cap Equity Fund Class A Shares |
Mid Cap Equity Fund Class B Shares |
Total Return Bond Fund |
U.S. Government Income Fund |
||||||||
| Shareholder Transaction Expenses | ||||||||||||||
| Maximum Sales Charge Imposed on Purchases (as a percentage of offering price) | 4.50% | None | 3.00% | 4.50% | None | 3.00% | 3.00% | |||||||
| Maximum Sales Charge (Load) Imposed on Reinvested Dividends (as a percentage of offering price) | None | None | None | None | None | None | None | |||||||
| Contingent Deferred Sales Charge (as a percentage of original purchase price or redemption proceeds, as applicable) | None | 5.50% 1 | None | None | 5.50% 1 | None | None | |||||||
| Redemption Fee (as a percentage of amount redeemed, if applicable) | None | None | None | None | None | None | None | |||||||
| Exchange Fee | None | None | None | None | None | None | None | |||||||
| Annual Fund Operating Expenses (Before Waivers)2 | ||||||||||||||
| (As a percentage of average net assets) | ||||||||||||||
| Management Fee 3 | 0.75% | 0.75% | 0.45% | 0.75% | 0.75% | 0.70% | 0.45% | |||||||
| Distribution (12b-1 Fee) 4 | 0.25% | 0.75% | 0.25% | 0.25% | 0.75% | 0.25% | 0.25% | |||||||
| Shareholder Service Fee | None | 0.25% | None | None | 0.25% | None | None | |||||||
| Other Expenses | 0.20% | 0.20% | 0.30% | 0.95% 5 | 0.95% 5 | 0.33% | 0.29% | |||||||
| Total Annual Fund Operating Expenses | 1.20% | 1.95% 6 | 1.00% | 1.95% | 2.70% 6 | 1.28% | 0.99% | |||||||
| 1 The contingent deferred sales charge is 5.50% in the first year, declining to 1.00% in the sixth year and then 0.00% thereafter. See "What do Shares Cost--Contingent Deferred Sales Charge." | ||||||||||||||
| 2 Although not contractually obligated to do so, the Adviser, administrator, distributor and shareholder services provider waived certain amounts. These are shown below along with the net expenses the Funds actually paid for the fiscal year ended August 31, 2000. | ||||||||||||||
| Total Waiver of Fund Expenses | 0.00% | 0.00% | 0.33% | 0.23% | 0.23% | 0.30% | 0.31% | |||||||
| Total Actual Annual Fund Operating Expenses (after waiver) | 1.20% | 1.95% | 0.67% | 1.72% | 2.47% | 0.98% | 0.68% | |||||||
| 3 The adviser voluntarily waived a portion of the management fee of Louisiana Municipal Income Fund, Mid Cap Equity Fund, Total Return Bond Fund, and U.S. Government Income Fund. The voluntary waiver can be terminated at any time. The management fee paid by Louisiana Municipal Income Fund, Mid Cap Equity Fund, Total Return Bond Fund, and U.S. Government Income Fund (after voluntary reduction) was 0.22%, 0.55%, 0.40%, and 0.24%, respectively, for the year ended August 31, 2000. | ||||||||||||||
| 4 The distribution (12b-1) fee for Louisiana Municipal Income Fund and U.S. Government Income Fund has been voluntarily reduced. This voluntary reduction can be terminated at any time. The distribution (12b-1) fee paid by the Louisiana Municipal Income Fund and U.S. Government Income Fund (after voluntary reduction) was 0.15% for both funds for the year ended August 31, 2000. | ||||||||||||||
| 5 The administrator voluntarily reduced a portion of its fee for the Mid Cap Equity Fund Class A and Class B Shares. The administrator can terminate this voluntary reduction at any time. Total other expenses paid by the Mid Cap Equity Fund Class A and Class B Shares (after voluntary reduction) was 0.92% and 0.92%, respectively. | ||||||||||||||
| 6 After Class B Shares have been held for eight years from the date of purchase, they will automatically convert to Class A Shares on the 15th of the following month. Class A Shares pay lower operating expenses than Class B Shares. | ||||||||||||||
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This Example is intended to help you compare the cost of investing in each of the Funds with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 in each of the Funds for the time periods indicated and then redeemed all of your Shares at the end of those periods. Expenses assuming no redemption are also shown. The Example also assumes that your investment has a 5% return each year and that the Funds' operating expenses are before waivers as shown in the table and remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
| 1 Year | 3 Years | 5 Years | 10 Years | |||||||
| Expenses assuming redemption | ||||||||||
| Capital Appreciation Fund--Class A Shares | $567 | $ | 814 | $ | 1,080 | $1,839 | ||||
| Capital Appreciation Fund--Class B Shares | $748 | $ | 1,012 | $ | 1,252 | $2,081 | ||||
| Louisiana Municipal Income Fund | $399 | $ | 609 | $ | 836 | $1,488 | ||||
| Mid Cap Equity Fund--Class A Shares | $639 | $ | 1,035 | $ | 1,455 | $2,622 | ||||
| Mid Cap Equity Fund--Class B Shares | $823 | $ | 1,238 | $ | 1,630 | $2,851 | ||||
| Total Return Bond Fund | $426 | $ | 694 | $ | 981 | $1,799 | ||||
| U.S. Government Income Fund | $398 | $ | 606 | $ | 831 | $1,477 | ||||
| Expenses assuming no redemption | ||||||||||
| Capital Appreciation Fund--Class B Shares | $198 | $ | 612 | $ | 1,052 | $2,081 | ||||
| Mid Cap Equity Fund--Class B Shares | $273 | $ | 838 | $ | 1,430 | $2,851 | ||||
</R>
| Cash Reserve Fund Class A Shares |
Cash Reserve Fund Class B Shares |
U.S. Treasury Money Market Fund |
||||
| Shareholder Transaction Expenses | ||||||
| Maximum Sales Charge Imposed on Purchases (as a percentage of offering price) | None | None | None | |||
| Maximum Sales Charge Imposed on Reinvested Dividends (as a percentage of offering price) | None | None | None | |||
| Contingent Deferred Sales Charge (as a percentage of original purchase price or redemption proceeds, as applicable) | None | 5.50% 1 | None | |||
| Redemption Fee (as a percentage of amount redeemed, if applicable) | None | None | None | |||
| Exchange Fee | None | None | None | |||
| Annual Fund Operating Expenses | ||||||
| (As a percentage of average net assets) | ||||||
| Management Fees | 0.40% | 0.40% | 0.40% | |||
| Distribution (12b-1 fee) 2 | 0.25% | 0.75% | 0.25% | |||
| Shareholder Services Fee | None | 0.25% | None | |||
| Other Expenses | 0.29% | 0.29% | 0.23% | |||
| Total Annual Fund Operating Expenses | 0.94% | 1.69% 3 | 0.88% | |||
| 1 The contingent deferred sales charge is 5.50% in the first year, declining to 1.00% in the sixth year and then 0.00% thereafter. See "What do Shares Cost--Contingent Deferred Sales Charge." | ||||||
| 2 Under Rule 12b-1 distribution plans, U.S. Treasury Money Market Fund can pay the distributor up to 0.25% as a 12b-1 fee. The U.S. Treasury Money Market Fund did not pay or accrue the distribution (12b-1) fee during the fiscal year ended August 31, 2000. The U.S. Treasury Money Market Fund has no present intention of paying or accruing the distribution (12b-1) fee for the fiscal year ending August 31, 2001. | ||||||
| 3 After Class B Shares have been held for eight years from the date of purchase, they will automatically convert to Class A Shares on the 15th of the following month. Class A Shares pay lower operating expenses than Class B Shares. | ||||||
This Example is intended to help you compare the cost of investing in each of the Funds with the cost of investing in other funds. The Example assumes that you invest $10,000 in each of the Funds for the time periods indicated and then redeem all of your Shares at the end of those periods. Expenses assuming no redemption are also shown. The Example also assumes that your investment has a 5% return each year and that each of the Funds' operating expenses are before waivers as shown in the table and remain the same. Wire-transferred redemption of less than $5,000 may be subject to additional fees. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
<R>
| 1 Year | 3 Years | 5 Years | 10 Years | |||||
| Cash Reserve Fund-- Class A Shares | $ 96 | $300 | $ 520 | $1,155 | ||||
| Cash Reserve Fund-- Class B Shares | $722 | $933 | $1,118 | $1,799 | ||||
| U.S. Treasury Money Market Fund | $ 90 | $281 | $ 488 | $1,084 | ||||
| Expenses assuming no redemption | ||||||||
| Cash Reserve Fund-- Class B Shares | $172 | $533 | $ 918 | $1,799 |
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</R>
Following are descriptions of each of these principal types of investments.
Equity securities represent a share of an issuer's earnings and assets, after the issuer pays its liabilities. A Fund cannot predict the income it will receive from equity securities because issuers generally have discretion as to the payment of any dividends or distributions. However, equity securities offer greater potential for appreciation than many other types of securities, because their value increases directly with the value of the issuer's business. The following describes the types of equity securities in which the Funds invest as noted in the chart.
Common stocks are the most prevalent type of equity security. Common stocks receive the issuer's earnings after the issuer pays its creditors and any preferred stockholders. As a result, changes in an issuer's earnings directly influence the value of its common stock.
Fixed income securities pay interest, dividends or distributions at a specified rate. The rate may be a fixed percentage of the principal or adjusted periodically. In addition, the issuer of a fixed income security must repay the principal amount of the security, normally within a specified time. Fixed income securities provide more regular income than equity securities. However, the returns on fixed income securities are limited and normally do not increase with the issuer's earnings. This limits the potential appreciation of fixed income securities as compared to equity securities. A security's yield measures the annual income earned on a security as a percentage of its price.
A security's yield will increase or decrease depending upon whether it costs less (a discount) or more (a premium) than the principal amount. If the issuer may redeem the security before its scheduled maturity, the price and yield on a discount or premium security may change based upon the probability of an early redemption. Securities with higher risks generally have higher yields.
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The following describes the types of fixed income securities in which the Funds invest.
</R>
Treasury securities are direct obligations of the federal government of the United States. Treasury securities are generally regarded as having the lowest credit risks.
Agency securities are issued or guaranteed by a federal agency or other government sponsored entity acting under federal authority (a GSE). The United States supports some GSEs with its full faith and credit. Other GSEs receive support through federal subsidies, loans or other benefits. A few GSEs have no explicit financial support, but are regarded as having implied support because the federal government sponsors their activities. Agency securities are generally regarded as having low credit risks, but not as low as treasury securities.
The Funds treat mortgage backed securities guaranteed by GSEs as agency securities. Although a GSE guarantee protects against credit risks, it does not reduce the market and prepayment risks of these mortgage backed securities.
Corporate debt securities are fixed income securities issued by businesses. Notes, bonds, debentures and commercial paper are the most prevalent types of corporate debt securities. A Fund may also purchase interests in bank loans to companies. The credit risks of corporate debt securities vary widely among issuers.
In addition, the credit risk of an issuer's debt security may vary based on its priority for repayment. For example, higher ranking (senior) debt securities have a higher priority than lower ranking (subordinated) securities. This means that the issuer might not make payments on subordinated securities while continuing to make payments on senior securities. In addition, in the event of bankruptcy, holders of senior securities may receive amounts otherwise payable to the holders of subordinated securities. Some subordinated securities, such as trust preferred and capital securities notes, also permit the issuer to defer payments under certain circumstances. For example, insurance companies issue securities known as surplus notes that permit the insurance company to defer any payment that would reduce its capital below regulatory requirements.
Commercial paper is an issuer's obligation with a maturity of less than nine months. Companies typically issue commercial paper to pay for current expenditures. Most issuers constantly reissue their commercial paper and use the proceeds (or bank loans) to repay maturing paper. If the issuer cannot continue to obtain liquidity in this fashion, its commercial paper may default. The short maturity of commercial paper reduces both the market and credit risks as compared to other debt securities of the same issuer.
Demand instruments are corporate debt securities that the issuer must repay upon demand. Other demand instruments require a third party, such as a dealer or bank, to repurchase the security for its face value upon demand. The Funds treat demand instruments as short-term securities, even though their stated maturity may extend beyond one year.
Mortgage backed securities represent interests in pools of mortgages. The mortgages that comprise a pool normally have similar interest rates, maturities and other terms. Mortgages may have fixed or adjustable interest rates. Interests in pools of adjustable rate mortgages are known as ARMs.
Mortgage backed securities come in a variety of forms. Many have extremely complicated terms. The simplest form of mortgage backed securities are pass-through certificates. An issuer of pass-through certificates gathers monthly payments from an underlying pool of mortgages. Then, the issuer deducts its fees and expenses and passes the balance of the payments onto the certificate holders once a month. Holders of pass-through certificates receive a pro rata share of all payments and pre-payments from the underlying mortgages. As a result, the holders assume all the prepayment risks of the underlying mortgages.
CMOs, including interests in real estate mortgage investment conduits (REMICs), allocate payments and prepayments from an underlying pass-through certificate among holders of different classes of mortgage backed securities. This creates different prepayment and interest rate risks for each CMO class.
Asset backed securities are payable from pools of obligations other than mortgages. Most asset backed securities involve consumer or commercial debts with maturities of less than ten years. However, almost any type of fixed income assets (including other fixed income securities) may be used to create an asset backed security. Asset backed securities have prepayment risks. Like CMOs, asset backed securities may be structured like Floaters, Inverse Floaters, IOs and POs.
Tax exempt securities are fixed income securities that pay interest that is not subject to regular federal income taxes. Typically, states, counties, cities and other political subdivisions and authorities issue tax exempt securities. The market categorizes tax exempt securities by their source of repayment. Louisiana Municipal Income Fund invests in debt obligations, including industrial development bonds, issued on behalf of the state of Louisiana, its political subdivisions or agencies and debt obligations issued by or on behalf of any state, territory or possession of the United States, including the district of Columbia, or any political subdivision or agency of any of these.
Louisiana municipal securities are generally issued to finance public works, such as airports, bridges, highways, housing, hospitals, mass transportation projects, schools, streets, and water and sewer works. They are also issued to repay outstanding obligations, to raise funds for general operating expenses, and to make loans to other public institutions and facilities.
Louisiana municipal securities include industrial development and pollution control bonds issued by or on behalf of public authorities to provide financing aid to acquire sites or construct and equip facilities for privately or publicly owned corporations. The availability of this financing encourages these corporations to locate within the sponsoring communities and thereby increases local employment.
The interest from the municipal securities in which the Louisiana Municipal Income Fund invests is, in the opinion of bond counsel for the issuers, or in the opinion of officers of Hibernia Mutual Funds and/or the investment adviser to the Fund, exempt from both federal regular income tax and the personal income tax imposed by the state of Louisiana. (Municipal securities not issued by the state of Louisiana, its political subdivisions or agencies, which may generate interest income subject to the Louisiana personal income tax, may also be purchased by the Fund.)
General obligation bonds are supported by the issuer's power to exact property or other taxes. The issuer must impose and collect taxes sufficient to pay principal and interest on the bonds. However, the issuer's authority to impose additional taxes may be limited by its charter or state law.
Special revenue bonds are payable solely from specific revenues received by the issuer such as specific taxes, assessments, tolls, or fees. Bondholders may not collect from the municipality's general taxes or revenues. For example, a municipality may issue bonds to build a toll road, and pledge the tolls to repay the bonds. Therefore, a shortfall in the tolls normally would result in a default on the bonds.
Repurchase agreements are transactions in which a Fund buys a security from a dealer or bank and agrees to sell the security back at a mutually agreed upon time and price. The repurchase price exceeds the sale price, reflecting the Fund's return on the transaction. This return is unrelated to the interest rate on the underlying security. The Funds will enter into repurchase agreements only with banks and other recognized financial institutions, such as securities dealers, deemed creditworthy by the Adviser.
A Fund's custodian or subcustodian will take possession of the securities subject to repurchase agreements. The Adviser or subcustodian will monitor the value of the underlying security each day to ensure that the value of the security always equals or exceeds the repurchase price.
Repurchase agreements are subject to credit risks.
During times of unusual market conditions, for defensive purposes and to maintain liquidity, Capital Appreciation Fund, Mid Cap Equity Fund, Total Return Bond Fund, and U.S. Government Income Fund may invest in cash and money market instruments, such as the following:
Louisiana Municipal Income Fund may, from time to time, on a temporary basis, or when the Adviser determines that market conditions call for a temporary defensive posture, invest in short-term tax-exempt or taxable temporary investments. These temporary investments include: notes issued by or on behalf of municipal or corporate issuers; obligations issued or guaranteed by the U.S. government, its agencies or instrumentalities; other debt securities; commercial paper; certificates of deposit of banks; and repurchase agreements. Louisiana Municipal Income Fund has no rating requirements applicable to temporary investments. However, the investment adviser will limit temporary investments to those it considers to be of high quality. Although the Fund is permitted to make taxable, temporary investments, there is no current intention of generating income subject to federal regular income tax.
For defensive purposes only, Total Return Bond Fund may also invest in acceptable investments of the Fund with short-term maturities.
Funds employing defensive tactics may not attain their stated goal relative to the period during which such tactics are employed.
The Adviser will determine whether a security is investment grade based upon the credit ratings given by one or more nationally recognized rating services. For example, S&P, a rating service, assigns ratings to investment grade securities (AAA, AA, A, and BBB) based on their assessment of the likelihood of the issuer's inability to pay interest or principal (default) when due on each security. Lower credit ratings correspond to higher credit risk. If a security has not received a rating, a Fund must rely entirely upon the Adviser's credit assessment that the security is comparable to investment grade. The U.S. Government Income Fund may invest in corporate bonds rated A or better by S&P, Moody's or Fitch. The Louisiana Municipal Income Fund, Mid Cap Equity Fund and Total Return Bond Fund each invest in securities rated Baa or better by Moody's or BBB or better by S&P or Fitch.
Money market instruments and commercial paper in which the Funds normally invest are rated A-1 or A-2 by S&P, Prime-1 or Prime-2 by Moody's or F-1 or F-2 by Fitch.
The notes, warrants, rights and convertible securities in which the Funds invest are rated at least BBB by S&P or Fitch, or at least Baa by Moody's, or if not rated, are determined by the Adviser to be of comparable quality.
The securities in which the Cash Reserve Fund invests must be rated in the highest short-term rating categories by one or more NRSROs or be of comparable quality to securities having such ratings. The Fund has been rated AAAm by Moody's and in the highest class of acceptable investments by the National Association of Insurance Companies.
If a security loses its rating or has its rating reduced after a Fund purchases it, the Fund is not required to sell or otherwise dispose of the security, but may consider doing so.
As previously stated, the Cash Reserve Fund may invest 25% or more of its assets in commercial paper and variable rate demand notes. Generally, in excess of 50% of the total assets of the Fund will be invested in commercial paper and variable rate demand notes. Commercial paper issued by finance companies will comprise more than 25% of the Fund's total assets, unless the Fund is in a temporary defensive position as a result of economic conditions. These policies may not be changed without shareholder approval. Concentration of the Fund's portfolio in such obligations may entail additional risks which are not encountered by funds with more diversified portfolios including credit risk to such finance companies and temporary demand and supply imbalances.
The Capital Appreciation Fund, Mid Cap Equity Fund and Total Return Bond Fund actively trade portfolio securities in an attempt to achieve their respective goal. Active trading will cause a Fund to have an increased portfolio turnover rate, which is likely to generate shorter-term gains (losses) for its shareholders, which are taxed at a higher rate than longer-term gains (losses). Actively trading portfolio securities increases a Fund's trading costs and may have an adverse impact on the Fund's performance.
For example, when interest rates decline, the values of mortgage backed securities generally rise. However, when interest rates decline, unscheduled prepayments can be expected to accelerate, and a Fund would be required to reinvest the proceeds of the prepayments at the lower interest rates then available. Unscheduled prepayments would also limit the potential for capital appreciation on mortgage backed securities.
Conversely, when interest rates rise, the values of mortgage backed securities generally fall. Since rising interest rates typically result in decreased prepayments, this could lengthen the average lives of mortgage backed securities, and cause their value to decline more than traditional fixed income securities.
Yields on Louisiana municipal securities depend on a variety of factors, including: the general conditions of the money market and the taxable and municipal security markets; the size of the particular offering; the maturity of the obligations; and the credit quality of the issue. The ability of the Fund to achieve its goal also depends on the continuing ability of the issuers of Louisiana municipal securities to meet their obligations for the payment of interest and principal when due.
Further, the Louisiana economy is predominated by oil and gas; both the exploration and production. Any adverse economic conditions or developments affecting these industries, the state of Louisiana or its municipalities could impact the Fund's portfolio. Investing in Louisiana municipal securities which meet the Fund's quality standards may not be possible if the state of Louisiana and its municipalities do not maintain their current credit ratings.
The Fund may invest more than 25% of the value of its total assets in industrial development and pollution control bonds, which may result in more than 25% of the Fund's total assets being invested in one industry. The Fund may also invest more than 25% of its assets in housing bonds, which are revenue bonds. Legislative actions at the state or federal level, changes in national or regional economic conditions, or changes in the quality of mortgages securing some housing bonds are some of the factors that could affect housing bonds.
Other factors that may affect the Fund's returns include bond defaults or increase in the risk of defaults, or early redemptions of portfolio securities.
The Fund is a non-diversified investment company. An investment in the Fund, therefore, may entail greater risk than would exist in a diversified investment company because the higher percentage of investments across fewer issuers could result in greater fluctuation in the total market value of the Fund's portfolio. Any economic, political, or regulatory developments affecting the value of the securities in the Fund's portfolio could have a greater impact on the total value of the portfolio than would be the case if the portfolio were diversified among more issuers. The Fund will attempt to minimize the risks associated with a non-diversified portfolio by limiting, with respect to 75% of the Fund's total assets, investments in one issuer to not more than 10% of the value of its total assets. The total amount of the remaining 25% of the value of the Fund's total assets could be invested in a single issuer, but only if the investment adviser believes such a strategy to be prudent. In addition, the Fund intends to comply with Subchapter M of the Internal Revenue Code. This undertaking requires that at the end of each quarter of the taxable year, the aggregate value of all investments in any one issuer (except U.S. government obligations, cash, and money market instruments) which exceed 5% of the Fund's total assets not exceed 50% of the value of the Fund's total assets.
<R>
You can purchase, redeem, or exchange Shares any day the New York Stock Exchange (NYSE) is open. When the Capital Appreciation Fund, Louisiana Municipal Income Fund, Mid Cap Equity Fund, Total Return Bond Fund and U.S. Government Income Fund (collectively, the Equity and Income Funds) receive your transaction request in proper form (as described in this prospectus), it is processed at the next calculated NAV plus any applicable front-end sales charge (public offering price). From time to time a Fund may purchase foreign securities that trade on foreign markets on days the NYSE is closed. The value of a Fund's assets may change on days you cannot purchase or redeem Shares. NAV of the Equity and Income Funds is determined at the end of regular trading (normally 3:00 p.m. Central time) each day the NYSE is open.
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The Capital Appreciation Fund and Mid Cap Equity Fund generally value equity securities according to the last sale price in the market in which they are primarily traded (either a national securities exchange or the over-the-counter market).
The Louisiana Municipal Income Fund, Total Return Bond Fund and U.S. Government Income Fund generally value fixed income securities at the last sale price on a national securities exchange, if available, otherwise, as determined by an independent pricing service.
The Cash Reserve Fund and U.S. Treasury Money Market Fund (the Money Market Funds) attempt to stabilize the NAV of their Shares at $1.00 by valuing the portfolio securities using the amortized cost method. The Funds cannot guarantee that their NAV will always remain at $1.00 per Share. The Money Market Funds do not charge a front-end sales charge. NAV of the Money Market Funds is determined at 11:00 a.m. (Central time) and as of the end of regular trading (normally 3:00 p.m. Central time) each day the NYSE is open.
The minimum initial investment for each Fund is $1,000. With respect to the Money Market Funds, if the investment is in a retirement plan, the minimum initial investment is $250. Subsequent investments must be in amounts of at least $100. The Funds may choose to waive these minimum investment requirements for Hibernia National Bank or its affiliates and for directors and employees of Hibernia National Bank and the immediate family members of these individuals.
The following tables summarize the maximum sales charge that you will pay on an investment in a Fund. Keep in mind that investment professionals may charge you fees for their services in connection with your Share transactions.
Class A Shares of Capital Appreciation Fund and Mid Cap Equity Fund are sold with a sales charge as follows:
<R>
| Purchase Amount | Sales Charge as a Percentage of Public Offering Price |
Sales Charge as a Percentage of NAV |
||
| Less than $100,000 | 4.50% | 4.71% | ||
| $100,000 but less than $250,000 |
3.75% | 3.90% | ||
| $250,000 but less than $500,000 |
2.50% | 2.56% | ||
| $500,000 but less than $750,000 |
2.00% | 2.04% | ||
| $750,000 but less than $1 million |
1.00% | 1.01% | ||
| $1 million but less than $2 million |
0.50% | 0.50% | ||
| $2 million or greater | 0.25% | 0.25% |
</R>
Shares of Louisiana Municipal Income Fund, Total Return Bond Fund and U.S. Government Income Fund are sold with a sales charge as follows:
<R>
| Purchase Amount | Sales Charge as a Percentage of Public Offering Price |
Sales Charge as a Percentage of NAV |
||
| Less than $100,000 | 3.00% | 3.09% | ||
| $100,000 but less than $250,000 |
2.50% | 2.56% | ||
| $250,000 but less than $500,000 |
2.00% | 2.04% | ||
| $500,000 but less than $750,000 |
1.00% | 1.01% | ||
| $750,000 but less than $1 million |
0.75% | 0.76% | ||
| $1 million but less than $2 million |
0.50% | 0.50% | ||
| $2 million or greater | 0.25% | 0.25% |
</R>
If your investment qualifies for a reduction or elimination of the sales charge as described below, you or your investment professional should notify the Funds' Distributor at the time of purchase. If the Distributor is not notified, you will receive the reduced sales charge only on additional purchases, and not retroactively on previous purchases.
The sales charge at purchase may be reduced or eliminated by:
The sales charge will be eliminated when you purchase Shares:
Redemption proceeds of Class B Shares of Capital Appreciation Fund and Mid Cap Equity Fund may be reduced by a sales charge, commonly referred to as a contingent deferred sales charge (CDSC).
<R>
| Class B Shares of Capital
Appreciation Fund, Mid Cap Equity Fund and Cash Reserve Fund |
||
| Shares Held Up To |
CDSC |
|
| 1 year | 5.50% | |
| 2 years | 4.50% | |
| 3 years | 4.00% | |
| 4 years | 3.00% | |
| 5 years | 2.00% | |
| 6 years | 1.00% | |
| 7 years or more | 0.00% |
</R>
If your investment qualifies for elimination of the CDSC as described below, you or your investment professional should notify the Distributor at the time of redemption. If the Distributor is not notified, the CDSC will apply.
You will not be charged a CDSC when redeeming Class B Shares:
To keep the sales charge as low as possible, the Funds redeem your Shares in this order:
The CDSC is then calculated using the Share price at the time of purchase or redemption, whichever is lower.
Class B Shares include all Class B Shares which have been outstanding for less than the period ending eight years after the end of the month in which the shareholder's order to purchase Class B Shares was accepted. At the end of this eight-year period, Class B Shares will automatically convert to Class A Shares of, as applicable, Capital Appreciation Fund, Mid Cap Equity Fund or Cash Reserve Fund, in which case the Shares will be subject to a lower Rule 12b-1 distribution fee which is assessed on Class A Shares and will no longer be subject to a shareholder services fee. Such conversion will be on the basis of the relative NAV of the two classes, without the imposition of any sales charge, fee or other charge. The purpose of the conversion feature is to relieve the holders of the Class B Shares that have been outstanding for a period of time sufficient for the distributor to have been compensated for distribution expenses related to the Class B Shares from most of the burden of such distribution-related expe nses. This conversion is a non-taxable event.
For purposes of conversion to Class A Shares, Class B Shares purchased through the reinvestment of dividends and distributions paid on Class B Shares in a shareholder's Fund account will be considered to be held in a separate sub-account. Each time any Class B Shares in the shareholder's Fund account (other than those in the sub-account) convert to Class A Shares, an equal pro rata portion of the Class B Shares in the sub-account will also convert to Class A Shares. Orders for $250,000 or more will be invested in Class A Shares instead of Class B Shares to maximize your return and minimize the sales charges and marketing fees. Accounts held in the name of an investment professional may be treated differently. Class B Shares will automatically convert into Class A Shares after eight full years from the purchase date. This conversion is a non-taxable event.
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The Capital Appreciation Fund, Mid Cap Equity Fund and Cash Reserve Fund each offer two Share classes: Class A Shares and Class B Shares, each representing interests in a single portfolio of securities. The Louisiana Municipal Income Fund, Total Return Bond Fund, U.S. Government Income Fund, and U.S. Treasury Money Market Fund each offer a single class of Shares.
</R>
The Funds' Distributor, Federated Securities Corp., markets the Funds' Shares described in this prospectus to institutions or individuals, directly or through investment professionals. The Louisiana Municipal Income Fund may not be a suitable investment for retirement plans or for non-Louisiana taxpayers because it invests in Louisiana municipal securities.
When the Distributor receives marketing fees and sales charges, it may pay some or all of them to investment professionals. The Distributor and its affiliates may pay out of their assets other amounts (including items of material value) to investment professionals for marketing and servicing Shares. The Distributor is a subsidiary of Federated Investors, Inc. (Federated).
The Funds (except U.S. Treasury Money Market Fund) have adopted a Rule 12b-1 Plan, which allows each Fund to pay fees for marketing and administrative services to the Distributor and investment professionals for the sale, distribution and customer servicing of a Fund's Shares. Because these Shares pay marketing and administrative fees on an ongoing basis, your investment cost may be higher over time than other shares with different sales charges and marketing fees.
You may purchase Shares through Hibernia National Bank (HNB), Hibernia Investments, L.L.C. (HISI) or an investment professional (broker/dealer). Shares of the Money Market Funds may be purchased directly from the Distributor. The Funds reserve the right to reject any request to purchase or exchange Shares.
</R>
Purchase orders for the Funds (except the Money Market Funds) are considered received when the appropriate Fund is notified of the purchase order. Purchase orders must be received by HNB or HISI before 3:00 p.m. (Central time) and must be transmitted by HNB or HISI to the appropriate Fund or its agent before 3:00 p.m. (Central time) in order for Shares to be purchased at that day's public offering price.
Payment for Shares of the Money Market Funds may be made either by check or federal funds. Payment by check must be included with the order.
Purchase orders for the Money Market Funds are considered received after payment by check is converted into federal funds. When payment is made with federal funds, the order is considered received immediately. Payment by federal funds must be received before 11:00 a.m. (Central time) on the same day as the order to earn dividends for that day. Purchase orders for the Money Market Funds may still be placed after 11:00 a.m. (Central time) but payment for such orders by federal funds must be received before 2:00 p.m. (Central time) and you will not earn dividends for that day. If your check does not clear, your purchase order will be canceled and you could be liable for any losses or fees the Funds or their transfer agent incurs.
Federal funds should be wired as follows:
Hibernia National Bank,
New Orleans, Louisiana
All requests must include:
Shares cannot be purchased by wire on holidays when wire transfers are restricted.
Once a Fund account has been opened, shareholders may add to their investment on a regular basis in a minimum amount of $100. Under this program, funds may be automatically withdrawn periodically from the shareholder's checking account and invested in Fund shares at the NAV next determined after an order is received, plus the applicable sales charge, if any. A shareholder of a Fund may apply for participation in this program through HNB or HISI.
You should redeem or exchange Shares:
You may redeem or exchange Shares by calling HNB at 1-800-999-0124, HISI at 1-800-999-0426, or the Fund once you have completed the appropriate authorization form (you may exchange Shares by calling the Distributor directly).
If you call before the end of regular trading on the NYSE (normally 3:00 p.m. Central time) to redeem Shares of Capital Appreciation Fund, Louisiana Municipal Income Fund, Mid Cap Equity Fund, Total Return Bond Fund or U.S. Government Income Fund, you will receive a redemption amount based on that day's NAV.
If you call before 2:00 p.m. (Central time) to redeem from a Money Market Fund, your redemption will be wired to you the same day. If you call before 11:00 a.m. (Central time) you will not receive that day's dividend.
If you call after 2:00 p.m. (Central time) to redeem from a Money Market Fund, your redemption will be wired to you the following business day. You will receive that day's dividend.
You may redeem or exchange Shares by mailing a written request to HNB or HISI.
You will receive a redemption amount based on the next calculated NAV after the Capital Appreciation Fund, Louisiana Municipal Income Fund, Mid Cap Equity Fund, Total Return Bond Fund or U.S. Government Income Fund receives your written request in proper form.
Your redemption request for a Money Market Fund will be processed on the day the Fund receives your written request in proper form. Dividends are paid up to and including the day that a redemption request is processed.
Send requests by mail to:
HISI
313 Carondelet Street
New Orleans, Louisiana 70130
All requests must include:
Call your investment professional or HISI at 1-800-999-0426 if you need special instructions.
Submit your redemption or exchange request to your investment professional by the end of regular trading on the NYSE (normally 3:00 p.m. Central time). The redemption amount you will receive is based upon the next calculated NAV after the Fund receives the order from your investment professional.
Signatures must be guaranteed if:
A signature guarantee is designed to protect your account from fraud. Obtain a signature guarantee from a bank or trust company, savings association, credit union or broker, dealer, or securities exchange member.
A notary public cannot provide a signature guarantee.
Your redemption proceeds will be mailed by check to your address of record or wired to your account at a domestic commercial bank that is a Federal Reserve System member.
Although the Funds intend to pay Share redemptions in cash, they reserve the right to pay the redemption price in whole or in part by a distribution of a Fund's portfolio securities.
Redemption proceeds normally are wired or mailed within one business day after receiving a request in proper form. Payment may be delayed up to five days:
You will not accrue interest or dividends on uncashed checks from a Fund if those checks are undeliverable and returned to the Fund.
In the absence of your specific instructions, 10% of the value of your redemption from a retirement account in a Fund may be withheld for taxes. This withholding only applies to certain types of retirement accounts.
Shareholders of any of the Funds are shareholders of Hibernia Funds. You may exchange Class A Shares of Capital Appreciation Fund, Mid Cap Equity Fund, and Cash Reserve Fund or Shares of Louisiana Municipal Income Fund, Total Return Bond Fund, U.S. Government Income Fund, and U.S. Treasury Money Market Fund for Shares of each of the portfolios of Hibernia Mutual Funds through a telephone exchange program. Class B Shares of Capital Appreciation Fund, Mid Cap Equity Fund, and Cash Reserve Fund may exchange Class B Shares through a telephone exchange program.
To do this, you must:
When an exchange is made from a Fund with a front end sales charge to a Fund with no front end sales charge, the shares exchanged and acquired through reinvested dividends retain the character of the exchanged Shares for purposes of exercising further exchange privileges; thus, an exchange of such Shares for Shares of a Fund with a front end sales charge would be at NAV.
An exchange of Class B shares for Class B Shares of another Hibernia Fund will not be subject to a CDSC. However, if the shareholder redeems the exchanged-for Shares within six years of the original purchase of Class B Shares, a CDSC will be imposed. For purposes of computing the CDSC, the length of time the shareholder has owned Class B Shares will be measured from the date of original purchase and will not be affected by the exchange.
The Funds may modify or terminate the exchange privilege at any time. The Funds' management or Adviser may determine from the amount, frequency and pattern of exchanges that a shareholder is engaged in excessive trading that is detrimental to the Funds and other shareholders. If this occurs, the Funds may terminate the availability of exchanges to that shareholder and may bar that shareholder from purchasing other Hibernia Funds.
You may automatically redeem Shares in a minimum amount of $100 on a regular basis. Complete the appropriate section of the new account form or contact your investment professional, HNB or HISI. Your account value must have a value of at least $10,000, other than retirement accounts, at the time the program is established. This program may reduce, and eventually deplete, your account. Payments should not be considered yield or income.
Generally, it is not advisable to continue to purchase Class A Shares of Capital Appreciation Fund, Mid Cap Equity Fund or Shares of Louisiana Municipal Income Fund, Total Return Bond Fund, or U.S. Government Income Fund subject to a sales charge while redeeming Shares using this program.
<R>
You will not be charged a CDSC on systematic withdrawal program redemptions if:
</R>
You will be subject to a CDSC on redemption amounts that exceed the 12% annual limit. In measuring the redemption percentage, your account is valued when you establish the SWP and then annually at calendar year-end. You can redeem monthly, quarterly, or semi-annually.
The Funds will record your telephone instructions. If a Fund does not follow reasonable procedures, it may be liable for losses due to unauthorized or fraudulent telephone instructions.
The Funds no longer issue share certificates. If you are redeeming or exchanging Shares represented by certificates previously issued by the Funds, you must return the certificates with your written redemption or exchange request. For your protection, send your certificates by registered or certified mail, but do not endorse them.
You will receive confirmation of purchases, redemptions and exchanges except for systematic transactions. In addition, you will receive periodic statements reporting all account activity, including systematic transactions, dividends and capital gains paid.
The Capital Appreciation Fund and Mid Cap Equity Fund declare and pay any dividends quarterly to shareholders. The Louisiana Municipal Income Fund, Total Return Bond Fund and U.S. Government Income Fund declare and pay any dividends monthly to shareholders. Dividends are paid to all shareholders invested in a Fund on the record date. The record date is the date on which a shareholder must officially own Shares in order to earn a dividend. The Money Market Funds declare any dividends daily and pay them monthly to shareholders.
If you purchase Shares by wire, you begin earning dividends on the day your wire is received. If you purchase Shares by check, you begin earning dividends on the business day after the Fund receives your check. In either case, you earn dividends through the day your redemption request is received.
In addition, the Funds pay any capital gains at least annually. Your dividends and capital gains distributions will be automatically reinvested in additional Shares without a sales charge, unless you elect cash payments.
If you purchase Shares (other than Money Market Fund Shares) just before a Fund declares a dividend or capital gain distribution, you will pay the full price for the Shares and then receive a portion of the price back in the form of a taxable distribution, whether or not you reinvest the distribution in Shares. Therefore, you should consider the tax implications of purchasing Shares shortly before a Fund declares a dividend or capital gain. Contact your investment professional or HNB for information concerning when dividends and capital gains will be paid.
The Money Market Funds do not expect to realize any capital gains or losses. If capital gains or losses were to occur, they could result in an increase or decrease in dividends.
Due to the high cost of maintaining accounts with low balances, non-retirement accounts may be closed if redemptions or exchanges cause the account balance to fall below the minimum initial investment amount. Before an account is closed, you will be notified and allowed 30 days to purchase additional Shares to meet the minimum.
The Funds send an annual statement of your account activity to assist you in completing your federal, state and local tax returns. For all the Funds (except Louisiana Municipal Income Fund), Fund distributions of dividends and capital gains are taxable to you whether paid in cash or reinvested in the Fund. Dividends are taxable as ordinary income; capital gains are taxable at different rates depending upon the length of time a Fund holds its assets.
<R>
| Fund | Distributions are expected to be primarily |
|
| Capital Appreciation Fund | Capital Gains | |
| Mid Cap Equity Fund | Capital Gains | |
| Total Return Bond Fund | Dividends | |
| U.S. Government Income Fund | Dividends | |
| Cash Reserve Fund | Dividends | |
| U.S. Treasury Money Market Fund | Dividends |
</R>
With regard to the Louisiana Municipal Income Fund, it is anticipated that distributions will be primarily dividends that are exempt from federal income tax, although a portion of the Fund's dividends may not be exempt. Dividends may be subject to state and local taxes, although the Fund's dividends will be exempt from Louisiana state personal income tax to the extent they are derived from interest on obligations exempt from Louisiana personal income taxes. Capital gains and non-exempt dividends are taxable whether paid in cash or reinvested in the Fund. It is likely that you will be required to include interest from a portion of the municipal securities owned by the Fund in calculating the federal individual alternative minimum tax or the federal alternative minimum tax for corporations.
Redemptions and exchanges are taxable sales. Please consult your tax adviser regarding your federal, state, and local tax liability.
The Board of Trustees governs the Funds. The Board selects and oversees the Adviser, HNB. The Adviser manages the Funds' assets, including buying and selling portfolio securities. The Adviser's address is Hibernia Funds, P.O. Box 61540, New Orleans, Louisiana 70161.
HNB, a national bank organized in 1890, is a wholly owned subsidiary of Hibernia Corporation ("Hibernia"). HNB has acted as investment adviser to the Trust since its inception in 1988. Through its subsidiaries and affiliates, Hibernia offers a full range of financial services to the public, including commercial lending, depository services, cash management, retail banking, mortgage banking, discount brokerage, investment counseling, international banking, and trust services.
<R>
Hibernia is the largest publicly traded national banking company headquartered in Louisiana, Texas, Oklahoma, Arkansas or Mississippi. Hibernia is a $15.3-billion-asset organization with 250 banking locations in 33 Louisiana parishes and 13 Texas counties. It is either first, second or third in deposit market share in 31 Louisiana parishes and six Texas counties. Hibernia's Louisiana markets represent approximately 80% of the state's population and 84% of its deposits. Its statewide Louisiana deposit share is 22.3%.
As of December 31, 1999, the Trust Group had $9 billion under administration of which it had investment discretion over $3.7 billion.
</R>
As part of their regular banking operations, HNB may make loans to public companies. Thus, it may be possible, from time to time, for a Fund to hold or acquire the securities of issuers which are also lending clients of HNB. The lending relationship will not be a factor in the selection of securities.
John A. Cain became Capital Appreciation Fund's portfolio manager in March 1995 and Mid Cap Equity Fund's portfolio manager in June 1998. Mr. Cain is a Vice President and Trust Investment Officer, specializing in equity and balanced account management for Hibernia since May 1985. He has 40 years of investment management experience both in the brokerage and trust industries. He earned his B.B.A. from the University of Mississippi.
Jeffrey R. Tanguis has been Louisiana Municipal Income Fund's portfolio manager since 1988 and portfolio manager of Total Return Bond Fund since 1995. Mr. Tanguis joined Hibernia in 1984 and is currently a Vice President and Trust Investment Officer of Hibernia. Mr. Tanguis received a B.S. from Louisiana State University.
Martin C. Sirera has been the portfolio manager of the U.S. Government Income Fund, Cash Reserve Fund and U.S. Treasury Money Market Fund since 1999. Mr. Sirera joined Hibernia National Bank in 1996 and is currently a Vice President, Trust Investment Officer and a portfolio manager responsible for monitoring and managing personal trust, employee benefit, and investment management agency accounts. Prior to joining Hibernia, Mr. Sirera was a portfolio manager for Regions Bank in Mobile, Alabama from October 1995 through March 1996. Before that, he was a portfolio manager for First NBC in New Orleans, Louisiana from January 1993 through September 1995. Mr. Sirera is a Chartered Financial Analyst and received his B.S. degree in Finance from the University of New Orleans.
<R>
The Adviser receives a monthly investment advisory fee at annual rates equal to percentages of the relevant Fund's average net assets, as follows: Capital Appreciation Fund--0.75%; Louisiana Municipal Income Fund--0.45%; Mid Cap Equity Fund--0.75%, Total Return Bond Fund--0.70%; U.S. Government Income Fund--0.45%; Cash Reserve Fund and U.S. Treasury Money Market Fund--0.40%. The Adviser may voluntarily choose to waive a portion of its fee or reimburse a Fund for certain operating expenses.
The Financial Highlights will help you understand a Fund's financial performance for its past five fiscal years, or since inception, if the life of a Fund is shorter. Some of the information is presented on a per share basis. Total returns represent the rate an investor would have earned (or lost) on an investment in a Fund, assuming reinvestment of any dividends and capital gains.
This information has been audited by Ernst & Young, LLP whose report, along with the Funds' audited financial statements, is included in the Annual Report.
| Year Ended August 31, |
Net Asset Value, Beginning of Period |
Net Investment Income (Loss) |
Net Realized and Unrealized Gain/(Loss) on Investment Transactions |
Total from Investment Operations |
Distributions from Net Investment Income |
Distributions from Net Realized Gain on Investments |
Distributions in Excess of Net Investment Income |
|||||||
|
Capital Appreciation Fund--Class A Shares |
||||||||||||||
|
1996 |
|
$16.09 |
|
0.19 |
|
2.62 |
|
2.81 |
|
(0.19) |
|
(0.84) |
|
-- |
|
1997 |
|
$17.87 |
|
0.15 |
|
6.51 |
|
6.66 |
|
(0.16) |
|
(1.99) |
|
-- |
|
1998 |
|
$22.38 |
|
0.08 |
|
1.09 |
|
1.17 |
|
(0.07) |
|
(2.34) |
|
-- |
|
1999 |
|
$21.14 |
|
0.01 |
|
7.73 |
|
7.74 |
|
(0.00) 8 |
|
(2.79) |
|
(0.02) 3 |
| 2000 | $26.07 | (0.01) | 4.50 | 4.49 | -- | (3.15) | -- | |||||||
|
Capital Appreciation Fund--Class B Shares |
||||||||||||||
|
1997 1 |
|
$18.90 |
|
(0.01) 2 |
|
3.48 |
|
3.47 |
|
-- |
|
-- |
|
(0.05) 3 |
|
1998 |
|
$22.32 |
|
(0.06) |
|
1.07 |
|
1.01 |
|
-- |
|
(2.34) |
|
-- |
|
1999 |
|
$20.99 |
|
(0.16) |
|
7.66 |
|
7.50 |
|
-- |
|
(2.79) |
|
-- |
| 2000 | $25.70 | (0.18) | 4.39 | 4.21 | -- | (3.15) | -- | |||||||
|
Louisiana Municipal Income Fund |
||||||||||||||
|
1996 |
|
$10.99 |
|
0.60 |
|
(0.05) |
|
0.55 |
|
(0.60) |
|
-- |
|
-- |
|
1997 |
|
$10.94 |
|
0.57 |
|
0.28 |
|
0.85 |
|
(0.58) |
|
-- |
|
-- |
|
1998 |
|
$11.21 |
|
0.56 |
|
0.32 |
|
0.88 |
|
(0.57) |
|
(0.05) |
|
(0.00) 3,8 |
|
1999 |
|
$11.47 |
|
0.54 |
|
(0.54) |
|
0.00 |
|
(0.54) |
|
(0.08) |
|
-- |
| 2000 | $10.85 | 0.56 | 0.09 | 0.65 | (0.55) | (0.10) | -- | |||||||
|
Mid Cap Equity Fund--Class A Shares |
||||||||||||||
|
1998 7 |
|
$10.00 |
|
(0.01) |
|
(1.85) |
|
(1.86) |
|
-- |
|
-- |
|
-- |
|
1999 |
|
$8.14 |
|
(0.05) 2 |
|
3.26 |
|
3.21 |
|
-- |
|
-- |
|
-- |
| 2000 | $11.35 | (0.05) | 4.71 | 4.66 | -- | -- | -- | |||||||
|
Mid Cap Equity Fund - Class B Shares |
||||||||||||||
|
1998 7 |
|
$10.00 |
|
(0.01) |
|
(1.86) |
|
(1.87) |
|
-- |
|
-- |
|
-- |
|
1999 |
|
$8.13 |
|
(0.13) 2 |
|
3.29 |
|
3.16 |
|
-- |
|
-- |
|
-- |
| 2000 | $11.29 | (0.11) | 4.63 | 4.52 | -- | -- | -- | |||||||
|
Total Return Bond Fund |
||||||||||||||
|
1996 |
|
$10.05 |
|
0.56 |
|
(0.27) |
|
0.29 |
|
(0.57) |
|
-- |
|
-- |
|
1997 |
|
$9.77 |
|
0.60 |
|
0.23 |
|
0.83 |
|
(0.61) |
|
-- |
|
-- |
|
1998 |
|
$9.99 |
|
0.58 |
|
0.35 |
|
0.93 |
|
(0.58) |
|
(0.07) |
|
(0.00) 3,8 |
|
1999 |
|
$10.27 |
|
0.58 |
|
(0.57) |
|
0.01 |
|
(0.57) |
|
(0.03) |
|
-- |
| 2000 | $9.68 | 0.59 | (0.07) | 0.52 | (0.58) | -- | -- | |||||||
1 Reflects operations for the period from December 2, 1996 (date of initial public offering) to August 31, 1997.
2 Per share information presented is based on the monthly average number of shares outstanding divided by the net operating loss due to large fluctuations in the number of shares outstanding during the period.
3 These distributions in excess of net investment income were a result of certain book and tax timing differences. These distributions do not represent a return of capital for federal tax purposes.
4 Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable.
|
|
|
|
|
|
|
Ratio to Average Net Assets |
|
|
|
|
||||
| Total Distributions |
Net Asset Value, End of Period |
Total Return 4 |
Expenses | Net Investment Income (Loss) |
Expense Waiver/ Reimbursement 6 |
Net Assets, End of Period (000 omitted) |
Portfolio Turnover Rate |
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1.03) |
|
$17.87 |
|
18.03% |
|
1.24% |
|
1.08% |
|
-- |
|
$169,648 |
|
69% |
|
(2.15) |
|
$22.38 |
|
39.56% |
|
1.24% |
|
0.72% |
|
-- |
|
$283,040 |
|
62% |
|
(2.41) |
|
$21.14 |
|
5.12% |
|
1.21% |
|
0.32% |
|
-- |
|
$279,778 |
|
62% |
|
(2.81) |
|
$26.07 |
|
38.35% |
|
1.22% |
|
0.03% |
|
-- |
|
$352,876 |
|
44% |
| (3.15) | $27.41 | 18.55% | 1.20% | (0.04%) | -- | $380,073 | 8% | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.05) |
|
$22.32 |
|
18.40% |
|
1.99% 5 |
|
(0.09%) 5 |
|
-- |
|
$4,635 |
|
62% |
|
(2.34) |
|
$20.99 |
|
4.36% |
|
1.96% |
|
(0.44%) |
|
-- |
|
$10,840 |
|
62% |
|
(2.79) |
|
$25.70 |
|
37.35% |
|
1.98% |
|
(0.73%) |
|
-- |
|
$18,435 |
|
44% |
| (3.15) | $26.76 | 17.65% | 1.95% | (0.79%) | -- | $21,159 | 8% | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.60) |
|
$10.94 |
|
5.04% |
|
0.74% |
|
5.37% |
|
0.08% |
|
$65,717 |
|
17% |
|
(0.58) |
|
$11.21 |
|
8.31% |
|
0.69% |
|
5.19% |
|
0.08% |
|
$101,441 |
|
17% |
|
(0.62) |
|
$11.47 |
|
8.04% |
|
0.66% |
|
4.94% |
|
0.08% |
|
$98,711 |
|
24% |
|
(0.62) |
|
$10.85 |
|
(0.08%) |
|
0.66% |
|
4.77% |
|
0.29% |
|
$92,702 |
|
17% |
| (0.65) | $10.85 | 6.23% | 0.67% | 5.20% | 0.33% | $93,684 | 12% | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-- |
|
$8.14 |
|
(18.60%) |
|
1.89% 5 |
|
(0.48%) 5 |
|
0.20% 5 |
|
$13,422 |
|
1% |
|
-- |
|
$11.35 |
|
39.43% |
|
1.76% |
|
(0.44%) |
|
0.70% |
|
$18,283 |
|
55% |
| -- | $16.01 | 41.06% | 1.72% | (0.35%) | 0.23% | $26,171 | 32% | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-- |
|
$8.13 |
|
(18.70%) |
|
2.76% 5 |
|
(1.22%) 5 |
|
0.17% 5 |
|
$567 |
|
1% |
|
-- |
|
$11.29 |
|
38.87% |
|
2.51% |
|
(1.21%) |
|
0.63% |
|
$1,990 |
|
55% |
| -- | $15.81 | 40.04% | 2.47% | (1.10%) | 0.23% | $4,090 | 32% | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.57) |
|
$9.77 |
|
2.90% |
|
1.29% |
|
5.57% |
|
-- |
|
$71,188 |
|
38% |
|
(0.61) |
|
$9.99 |
|
8.71% |
|
1.29% |
|
6.00% |
|
-- |
|
$71,867 |
|
65% |
|
(0.65) |
|
$10.27 |
|
9.51% |
|
1.08% |
|
5.66% |
|
0.17% |
|
$79,957 |
|
31% |
|
(0.60) |
|
$9.68 |
|
(0.03%) |
|
0.99% |
|
5.69% |
|
0.30% |
|
$79,913 |
|
20% |
| (0.58) | $9.62 | 5.53% | 0.98% | 6.04% | 0.30% | $77,909 | 11% | |||||||
5 Computed on an annualized basis.
6 This voluntary expense decrease is reflected in both the expense and net investment income ratios.
7 Reflects operations for the period from July 13, 1998 (date of initial public offering) to August 31, 1998.
8 Amount is less than $0.01 per share.
</R>
| Year Ended August 31, |
Net Asset Value, Beginning of Period |
Net Investment Income (Loss) |
Net Realized and Unrealized Gain/(Loss) on Investment Transactions |
Total from Investment Operations |
Distributions from Net Investment Income |
Distributions from Net Realized Gain on Investments |
Distributions in Excess of Net Investment Income |
|||||||
|
U.S. Government Income Fund |
||||||||||||||
|
1996 |
|
$10.14 |
|
0.67 |
|
(0.30) |
|
0.37 |
|
(0.69) |
|
-- |
|
-- |
|
1997 |
|
$9.82 |
|
0.62 |
|
0.18 |
|
0.80 |
|
(0.64) |
|
-- |
|
-- |
|
1998 |
|
$9.98 |
|
0.61 |
|
0.34 |
|
0.95 |
|
(0.60) |
|
-- |
|
-- |
|
1999 |
|
$10.33 |
|
0.57 |
|
(0.52) |
|
0.05 |
|
(0.57) |
|
-- |
|
-- |
| 2000 | $9.81 | 0.58 | 0.03 | 0.61 | (0.57) | -- | -- | |||||||
|
Cash Reserve Fund--Class A Shares |
||||||||||||||
|
1996 |
|
$1.00 |
|
0.05 |
|
-- |
|
0.05 |
|
(0.05) |
|
-- |
|
-- |
|
1997 |
|
$1.00 |
|
0.05 |
|
-- |
|
0.05 |
|
(0.05) |
|
-- |
|
-- |
|
1998 |
|
$1.00 |
|
0.05 |
|
-- |
|
0.05 |
|
(0.05) |
|
-- |
|
-- |
|
1999 |
|
$1.00 |
|
0.04 |
|
-- |
|
0.04 |
|
(0.04) |
|
-- |
|
-- |
| 2000 | $1.00 | 0.05 | -- | 0.05 | (0.05) | -- | -- | |||||||
|
Cash Reserve Fund--Class B Shares |
||||||||||||||
|
1999 1 |
|
$1.00 |
|
0.03 |
|
-- |
|
0.03 |
|
(0.03) |
|
-- |
|
-- |
| 2000 | $1.00 | 0.04 | -- | 0.04 | (0.04) | -- | -- | |||||||
|
U.S. Treasury Money Market Fund |
||||||||||||||
|
1996 |
|
$1.00 |
|
0.05 |
|
-- |
|
0.05 |
|
(0.05) |
|
-- |
|
-- |
|
1997 |
|
$1.00 |
|
0.05 |
|
-- |
|
0.05 |
|
(0.05) |
|
-- |
|
-- |
|
1998 |
|
$1.00 |
|
0.05 |
|
-- |
|
0.05 |
|
(0.05) |
|
-- |
|
-- |
|
1999 |
|
$1.00 |
|
0.04 |
|
-- |
|
0.04 |
|
(0.04) |
|
-- |
|
-- |
| 2000 | $1.00 | 0.05 | -- | 0.05 | (0.05) | -- | -- | |||||||
1 Reflects operations for the period from September 4, 1998 (date of initial public offering) to August 31, 1999.
2 Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable.
3 Computed on an annualized basis.
4 This voluntary expense decrease is reflected in both the expense and net investment income ratios.
|
|
|
|
|
|
|
Ratio to Average Net Assets |
|
|
|
|
||||
| Total Distributions |
Net Asset Value, End of Period |
Total Return 2 |
Expenses | Net Investment Income (Loss) |
Expense Waiver/ Reimbursement 4 |
Net Assets, End of Period (000 omitted) |
Portfolio Turnover Rate |
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.69) |
|
$9.82 |
|
3.72% |
|
0.87% |
|
6.64% |
|
0.06% |
|
$37,544 |
|
27% |
|
(0.64) |
|
$9.98 |
|
8.39% |
|
0.88% |
|
6.31% |
|
0.06% |
|
$59,438 |
|
72% |
|
(0.60) |
|
$10.33 |
|
9.74% |
|
0.73% |
|
5.98% |
|
0.06% |
|
$83,535 |
|
44% |
|
(0.57) |
|
$9.81 |
|
0.41% |
|
0.70% |
|
5.55% |
|
0.27% |
|
$84,242 |
|
24% |
| (0.57) | $9.85 | 6.47% | 0.68% | 5.96% | 0.31% | $85,724 | 15% | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.05) |
|
$1.00 |
|
4.79% |
|
0.87% |
|
4.69% |
|
-- |
|
$168,344 |
|
-- |
|
(0.05) |
|
$1.00 |
|
4.70% |
|
0.89% |
|
4.59% |
|
-- |
|
$150,377 |
|
-- |
|
(0.05) |
|
$1.00 |
|
4.82% |
|
0.89% |
|
4.72% |
|
-- |
|
$149,219 |
|
-- |
|
(0.04) |
|
$1.00 |
|
4.23% |
|
0.92% |
|
4.16% |
|
-- |
|
$157,099 |
|
-- |
| (0.05) | $1.00 | 5.10% | 0.94% | 5.03% | -- | $232,410 | -- | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.03) |
|
$1.00 |
|
3.37% |
|
1.67% 3 |
|
3.35% 3 |
|
-- |
|
$77 |
|
-- |
| (0.04) | $1.00 | 4.31% | 1.69% | 4.27% | -- | $189 | -- | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.05) |
|
$1.00 |
|
5.08% |
|
0.44% |
|
4.95% |
|
0.22% |
|
$136,068 |
|
-- |
|
(0.05) |
|
$1.00 |
|
4.92% |
|
0.50% |
|
4.81% |
|
0.14% |
|
$154,624 |
|
-- |
|
(0.05) |
|
$1.00 |
|
4.89% |
|
0.63% |
|
4.78% |
|
-- |
|
$175,133 |
|
-- |
|
(0.04) |
|
$1.00 |
|
4.23% |
|
0.63% |
|
4.14% |
|
-- |
|
$213,793 |
|
-- |
| (0.05) | $1.00 | 5.15% | 0.63% | 4.99% | -- | $198,457 | -- | |||||||
Hibernia Capital Appreciation Fund
Class A Shares and Class B Shares
Hibernia Louisiana Municipal Income Fund
Hibernia Mid Cap Equity Fund
Class A Shares and Class B Shares
Hibernia Total Return Bond Fund
Hibernia U.S. Government Income Fund
Hibernia Cash Reserve Fund
Class A Shares and Class B Shares
Hibernia U.S. Treasury Money Market Fund
<R>
A Statement of Additional Information (SAI) dated August 31, 2000, is incorporated by reference into this prospectus. Additional information about the Funds' investments is contained in the Funds' Annual and Semi-Annual Reports to shareholders as they become available. The Annual Report's Management Discussion and Analysis discusses market conditions and investment strategies that significantly affected the Funds' performance during their last fiscal year. To obtain the SAI, Annual Report, Semi-Annual Report and other information without charge, and make inquiries, call your investment professional or the Trust at 1-800-999-0124.
</R>
You can obtain information about the Funds (including the SAI) by writing to or visiting the Public Reference Room in Washington, DC. You may also access fund information from the EDGAR Database on the SEC's Internet site at http://www.sec.gov. You can purchase copies of this information by contacting the SEC by email at [email protected] or by writing to the SEC's Public Reference Section, Washington, DC 20549-0102. Call 1-202-942-8090 for information on the Public Reference Room's operations and copying fees.
<R>
Hibernia Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
1-800-341-7400
www.Hiberniafunds.com
</R>
Federated Securities Corp., Distributo
<R>
Investment Company Act File No. 811-5536
Cusip 428661102
Cusip 428661201
Cusip 428661508
Cusip 428661607
Cusip 428661706
Cusip 428661805
Cusip 428661888
Cusip 428661300
Cusip 428661409
Cusip 428661870
006584 (10/00)
</R>
Federated Securities Corp., Distributor of the funds
006584 (10/00)
STATEMENT OF ADDITIONAL INFORMATION
HIBERNIA CAPITAL APPRECIATION FUND - CLASS A SHARES AND CLASS B SHARES
HIBERNIA LOUISIANA MUNICIPAL INCOME FUND
HIBERNIA MID CAP EQUITY FUND - CLASS A SHARES AND CLASS B SHARES
HIBERNIA TOTAL RETURN BOND FUND
HIBERNIA U.S. GOVERNMENT INCOME FUND
HIBERNIA CASH RESERVE FUND - CLASS A SHARES AND CLASS B SHARES
HIBERNIA U.S. TREASURY MONEY MARKET FUND
(PORTFOLIOS OF HIBERNIA FUNDS)
<R>
This Statement of Additional Information (SAI) is not a prospectus. Read
this SAI in conjunction with the prospectus for Hibernia Capital Appreciation
Fund, Class A Shares and Class B Shares, Hibernia Louisiana Municipal Income
Fund, Hibernia Mid Cap Equity Fund, Class A Shares and Class B Shares, Hibernia
Total Return Bond Fund, Hibernia U.S. Government Income Fund, Hibernia Cash
Reserve Fund, Class A Shares and Class B Shares, and Hibernia U.S. Treasury
Money Market Fund dated October 31, 2000.
</R>
This SAI incorporates by reference the Funds' Annual Report. Obtain the
prospectus or the Annual Report without charge by calling 1-800-999-0124.
<R>
October 31, 2000
</R>
CONTENTS
How are the Funds Organized? 2
Securities in Which the Funds Invest 2
Securities Descriptions, Techniques and Risks 5
What do Shares Cost? 24
How are the Funds Sold? 26
Exchanging Securities for Shares 27
Redemption in Kind 27
Massachusetts Partnership Law 27
Account and Share Information 27
Tax Information 29
Who Manages and Provides Services to the Funds? 30
How Do the Funds Measure Performance? 35
Financial Information 40
Investment Ratings 41
Addresses Inside Back Cover
CUSIP 428661102 CUSIP 428661201 CUSIP 428661508 CUSIP 428661607 CUSIP 428661706
CUSIP 428661805 CUSIP 428661888 CUSIP 428661300 CUSIP 428661409 CUSIP 428661870
006897 (10/00)
HOW ARE THE FUNDS ORGANIZED?
Hibernia Capital Appreciation Fund (Capital Appreciation Fund), Hibernia
Mid Cap Equity Fund (Mid Cap Equity Fund), Hibernia Total Return Bond Fund
(Total Return Bond Fund), Hibernia U.S. Government Income Fund (U.S. Government
Income Fund) (together, the Equity and Income Funds) are diversified portfolios
of Hibernia Funds (Trust). Hibernia Cash Reserve Fund (Cash Reserve Fund) and
Hibernia U.S. Treasury Money Market Fund (U.S. Treasury Money Market Fund, and
together with Cash Reserve Fund, the Money Market Funds) are also diversified
portfolios of the Trust. Louisiana Municipal Income Fund is a non-diversified
portfolio of the Trust. The Trust is an open-end, management investment company
that was established as a Massachusetts business trust under the laws of the
Commonwealth of Massachusetts on April 8, 1988. The Trust changed its name from
Tower Mutual Funds to Hibernia Funds on November 1, 1998.
The Board of Trustees (the Board) has established two classes of shares of
the Capital Appreciation Fund, Mid Cap Equity Fund and Cash Reserve Fund, known
as Class A Shares and Class B Shares. This SAI relates to all of the Funds and
their respective classes of Shares (Shares). The Funds' investment adviser is
Hibernia National Bank (Adviser).
SECURITIES IN WHICH THE FUNDS INVEST
------------------------------------------------------------------------------
Following is a table that indicates which types of securities are a: P =
PRINCIPAL investment of a Fund; (shaded in chart) A = ACCEPTABLE (but not
principal) investment of a Fund; or N = NOT AN ACCEPTABLE investment of a Fund.
-----------------------------------------------------------------------------------------
SECURITIES IN CAPITAL LOUISIANA MID CAP TOTAL U.S. CASH U.S.
WHICH THE FUNDS APPRECIATION MUNICIPAL EQUITY RETURN GOVERNMENT RESERVE TREASURY
INVEST: FUND INCOME FUND BOND INCOME FUND FUND MONEY
FUND FUND MARKET FUND
EQUITY SECURITIES P N P N N N N
COMMON STOCKS P N P N N N N
PREFERRED A N A N N N N
STOCKS
WARRANTS A N A N N N N
FIXED INCOME A A A P P P P
SECURITIES
TREASURY A A A P P A P
SECURITIES
AGENCY A A A A P A N
SECURITIES
CORPORATE DEBT A A A P A P N
SECURITIES
COMMERCIAL A A A A A P N
PAPER1
SECURITIES IN CAPITAL LOUISIANA MID CAP TOTAL U.S. CASH U.S.
WHICH THE FUNDS APPRECIATION MUNICIPAL EQUITY RETURN GOVERNMENT RESERVE TREASURY
INVEST: FUND INCOME FUND BOND INCOME FUND FUND MONEY
FUND FUND MARKET FUND
DEMAND A A A A N P N
INSTRUMENTS
TAXABLE N A N A A N N
MUNICIPAL
SECURITIES
MORTGAGE N N N P A N N
BACKED
SECURITIES
COLLATERALIZED N N N P P N N
MORTGAGE
OBLIGATIONS
(CMOS)
SEQUENTIAL CMOS N N N A A N N
Z CLASSES AND N N N N A N N
RESIDUAL
CLASSES
ASSET BACKED N N N P A A N
SECURITIES
ZERO COUPON A A A A A A A
SECURITIES
BANK A A A A A A N
INSTRUMENTS
CREDIT N A N N N A N
ENHANCEMENT
CONVERTIBLE A N A A A N N
SECURITIES
TAX EXEMPT N P N A N N N
SECURITIES
GENERAL N P N N N N N
OBLIGATION
BONDS
SPECIAL N P N N N N N
REVENUE BONDS
PRIVATE N A N N N N N
ACTIVITY BONDS
<R>
SECURITIES IN CAPITAL LOUISIANA MID CAP TOTAL U.S. CASH U.S.
WHICH THE FUNDS APPRECIATION MUNICIPAL EQUITY RETURN GOVERNMENT RESERVE TREASURY
INVEST: FUND INCOME FUND BOND INCOME FUND FUND MONEY
FUND FUND MARKET FUND
TAX INCREMENT N A N N N N N
FINANCING BONDS
MUNICIPAL NOTES N A N N N N N
MUNICIPAL N A N N N N N
LEASES
PARTICIPATION N A N N N N N
INTERESTS
VARIABLE RATE N A N A N A N
DEMAND
INSTRUMENTS
FOREIGN A N A A N N N
SECURITIES 2
DEPOSITARY A N A A N N N
RECEIPTS
FOREIGN A N A A N N N
EXCHANGE
CONTRACTS
FOREIGN A N A A N N N
GOVERNMENT
SECURITIES
BRADY BONDS A N A A N N N
DERIVATIVE A A A A A N N
CONTRACTS
FUTURES A A A A A N N
CONTRACTS3/4
OPTIONS3 A A A A A N N
SPECIAL A A A A A A N
TRANSACTIONS
REPURCHASE A A A A A P P
AGREEMENTS
REVERSE A A A A A A N
REPURCHASE
AGREEMENTS
DELAYED A A A A A A A
DELIVERY
TRANSACTIONS
TO BE A A N N A A N
ANNOUNCED
SECURITIES
(TBAS)
DOLLAR ROLLS A A N A A A N
SECURITIES A A A A A N N
LENDING
ASSET COVERAGE A A A A A A N
SHARES OF A A A A A A A
OTHER
INVESTMENT
COMPANIES
RESTRICTED AND A A A A A A A
ILLIQUID
SECURITIES5
</R>
1 Cash Reserve Fund will not invest more than 25% of the value of its total
assets in any one industry except commercial paper of finance companies.
2 The Capital Appreciation Fund, Mid Cap Equity Fund and Total Return Fund
will only purchase securities issued in U.S. dollar denominations and will not
invest more than 15% of total assets in foreign securities.
3 The Capital Appreciation Fund and Mid Cap Equity Fund may utilize stock
index futures contracts, options and options on stock index futures contracts,
subject to the limitation that the value of these futures contracts and options
will not exceed 20% of the Fund's total assets. Each Fund will limit its
purchase of options so that not more than 20% of its net assets will be invested
in option premiums. Each Fund will limit its option writing so that the assets
underlying such options will not exceed 25% of its total net assets.
4 A Fund will not participate in futures transactions if the sum of its
initial margin deposits will exceed 5% of the value of the market value of the
Fund's total assets, after taking into account the unrealized profits and losses
on those contracts into which it has entered.
5 The Funds may invest up to 10% of their respective total assets in
restricted securities. Capital Appreciation Fund, Louisiana Municipal Income
Fund, Mid Cap Equity Fund, Total Return Bond Fund, and U.S. Government Income
Fund will limit investments in illiquid securities (including, as applicable,
certain restricted securities not determined by the Trustees to be liquid,
non-negotiable time deposits, repurchase agreements providing for settlement in
more than seven days after notice, and over-the-counter options) to 15% of their
respective net assets. The Money Market Funds will limit investments in illiquid
securities to 10% of their respective net assets.
SECURITIES IN WHICH THE FUNDS INVEST
<R>
-------------------------------------------------------------------------------
Permitted securities and investment techniques are set forth in the
securities chart. Securities and techniques principally used by the Funds to
meet their respective goals are above described in the prospectus. Other
securities and techniques used by the Funds to meet their respective goals are
described below.
</R>
SECURITIES DESCRIPTIONS AND TECHNIQUES
EQUITY SECURITIES
Equity securities represent a share of an issuer's earnings and assets,
after the issuer pays its liabilities. A Fund cannot predict the income it will
receive from equity securities because issuers generally have discretion as to
the payment of any dividends or distributions. However, equity securities offer
greater potential for appreciation than many other types of securities, because
their value increases directly with the value of the issuer's business. The
following describes the types of equity securities in which the Funds may
invest.
PREFERRED STOCKS
Preferred stocks have the right to receive specified dividends or
distributions before the issuer makes payments on its common stock. Some
preferred stocks also participate in dividends and distributions paid on common
stock. Preferred stocks may also permit the issuer to redeem the stock. A Fund
may also treat such redeemable preferred stock as a fixed income security.
WARRANTS
Warrants give a Fund the option to buy the issuer's equity securities at a
specified price (the exercise price) at a specified future date (the expiration
date). The Fund may buy the designated securities by paying the exercise price
before the expiration date. Warrants may become worthless if the price of the
stock does not rise above the exercise price by the expiration date. This
increases the market risks of warrants as compared to the underlying security.
Rights are the same as warrants, except companies typically issue rights to
existing stockholders.
FIXED INCOME SECURITIES
Fixed income securities pay interest, dividends or distributions at a
specified rate. The rate may be a fixed percentage of the principal or adjusted
periodically. In addition, the issuer of a fixed income security must repay the
principal amount of the security, normally within a specified time. Fixed income
securities provide more regular income than equity securities. However, the
returns on fixed income securities are limited and normally do not increase with
the issuer's earnings. This limits the potential appreciation of fixed income
securities as compared to equity securities.
A security's yield measures the annual income earned on a security as a
percentage of its price. A security's yield will increase or decrease depending
upon whether it costs less (a discount) or more (a premium) than the principal
amount. If the issuer may redeem the security before its scheduled maturity, the
price and yield on a discount or premium security may change based upon the
probability of an early redemption. Securities with higher risks generally have
higher yields. The following describes the types of fixed income securities in
which the Funds invest.
TAXABLE MUNICIPAL SECURITIES
Municipal securities are issued by states, counties, cities and other
political subdivisions and authorities. Although many municipal securities are
exempt from federal income tax, the Funds may invest in taxable municipal
securities.
MORTGAGE BACKED SECURITIES
Mortgage backed securities represent interests in pools of mortgages. The
mortgages that comprise a pool normally have similar interest rates, maturities
and other terms. Mortgages may have fixed or adjustable interest rates.
Interests in pools of adjustable rate mortgages are known as ARMs.
Mortgage backed securities come in a variety of forms. Many have extremely
complicated terms. The simplest form of mortgage backed securities are
pass-through certificates. An issuer of pass-through certificates gathers
monthly payments from an underlying pool of mortgages. Then, the issuer deducts
its fees and expenses and passes the balance of the payments onto the
certificate holders once a month. Holders of pass-through certificates receive a
pro rata share of all payments and pre-payments from the underlying mortgages.
As a result, the holders assume all the prepayment risks of the underlying
mortgages.
COLLATERALIZED MORTGAGE OBLIGATIONS (CMOS)
CMOs, including interests in real estate mortgage investment conduits
(REMICs), allocate payments and prepayments from an underlying pass-through
certificate among holders of different classes of mortgage backed securities.
This creates different prepayment and interest rate risks for each CMO class.
SEQUENTIAL CMOS
In a sequential pay CMO, one class of CMOs receives all principal payments
and prepayments. The next class of CMOs receives all principal payments after
the first class is paid off. This process repeats for each sequential class of
CMO. As a result, each class of sequential pay CMOs reduces the prepayment risks
of subsequent classes.
The Funds will invest only in CMOs which are rated AAA by an NRSRO and
which may be: (a) collateralized by pools of mortgages in which each mortgage is
guaranteed as to payment of principal and interest by an agency or
instrumentality of the U.S. government; (b) collateralized by pools of mortgages
in which payment of principal and interest is guaranteed by the issuer and such
guarantee is collateralized by U.S. government securities; or (c) securities in
which the proceeds of the issuance are invested in mortgage securities and
payment of the principal and interest are supported by the credit of an agency
or instrumentality of the U.S. government.
Z CLASSES AND RESIDUAL CLASSES
CMOs must allocate all payments received from the underlying mortgages to
some class. To capture any unallocated payments, CMOs generally have an accrual
(Z) class. Z classes do not receive any payments from the underlying mortgages
until all other CMO classes have been paid off. Once this happens, holders of Z
class CMOs receive all payments and prepayments. Similarly, REMICs have residual
interests that receive any mortgage payments not allocated to another REMIC
class. The degree of increased or decreased prepayment risks depends upon the
structure of the CMOs. However, the actual returns on any type of mortgage
backed security depend upon the performance of the underlying pool of mortgages,
which no one can predict and will vary among pools.
ZERO COUPON SECURITIES
Zero coupon securities do not pay interest or principal until final
maturity unlike debt securities that provide periodic payments of interest
(referred to as a coupon payment). Investors buy zero coupon securities at a
price below the amount payable at maturity. The difference between the purchase
price and the amount paid at maturity represents interest on the zero coupon
security. Investors must wait until maturity to receive interest and principal,
which increases the interest rate and credit risks of a zero coupon security.
There are many forms of zero coupon securities. Some are issued at a
discount and are referred to as zero coupon or capital appreciation bonds.
Others are created from interest bearing bonds by separating the right to
receive the bond's coupon payments from the right to receive the bond's
principal due at maturity, a process known as coupon stripping. Treasury STRIPs,
Treasury Income Growth Receipts (TIGRs) and Certificates of Accrual on
Treasuries (CATs) are the most common forms of stripped zero coupon securities.
In addition, some securities give the issuer the option to deliver additional
securities in place of cash interest payments, thereby increasing the amount
payable at maturity. These are referred to as pay-in-kind or PIK securities.
BANK INSTRUMENTS
Bank instruments are unsecured interest bearing deposits with banks. Bank
instruments include bank accounts, time deposits, certificates of deposit and
banker's acceptances. Yankee instruments are denominated in U.S. dollars and
issued by U.S. branches of foreign banks. Eurodollar instruments are denominated
in U.S. dollars and issued by non-U.S. branches of U.S. or foreign banks.
CREDIT ENHANCEMENT
Credit enhancement consists of an arrangement in which a company agrees to
pay amounts due on a fixed income security if the issuer defaults. In some cases
the company providing credit enhancement makes all payments directly to the
security holders and receives reimbursement from the issuer. Normally, the
credit enhancer has greater financial resources and liquidity than the issuer.
For this reason, the Adviser usually evaluates the credit risk of a fixed income
security based solely upon its credit enhancement.
Common types of credit enhancement include guarantees, letters of credit,
bond insurance and surety bonds. Credit enhancement also includes arrangements
where securities or other liquid assets secure payment of a fixed income
security. If a default occurs, these assets may be sold and the proceeds paid to
the defaulted security's holders. Either form of credit enhancement reduces
credit risks by providing another source of payment for a fixed income security.
CONVERTIBLE SECURITIES
Convertible securities are fixed income securities that a Fund has the
option to exchange for equity securities at a specified conversion price. The
option allows the Fund to realize additional returns if the market price of the
equity securities exceeds the conversion price. For example, the Fund may hold
fixed income securities that are convertible into shares of common stock at a
conversion price of $10 per share. If the market value of the shares of common
stock reached $12, the Fund could realize an additional $2 per share by
converting its fixed income securities. Convertible securities have lower yields
than comparable fixed income securities. In addition, at the time a convertible
security is issued the conversion price exceeds the market value of the
underlying equity securities. Thus, convertible securities may provide lower
returns than non-convertible fixed income securities or equity securities
depending upon changes in the price of the underlying equity securities.
However, convertible securities permit a Fund to realize some of the potential
appreciation of the underlying equity securities with less risk of losing its
initial investment.
The Funds treat convertible securities as both fixed income and equity
securities for purposes of their investment policies and limitations, because of
their unique characteristics.
TAX EXEMPT SECURITIES
Tax exempt securities are fixed income securities that pay interest that is
not subject to regular federal income taxes. Typically, states, counties, cities
and other political subdivisions and authorities issue tax exempt securities.
The market categorizes tax exempt securities by their source of repayment.
PRIVATE ACTIVITY BONDS
Private activity bonds are special revenue bonds used to finance private
entities. For example, a municipality may issue bonds to finance a new factory
to improve its local economy. The municipality would lend the proceeds from its
bonds to the company using the factory, and the company would agree to make loan
payments sufficient to repay the bonds. The bonds would be payable solely from
the company's loan payments, not from any other revenues of the municipality.
Therefore, any default on the loan normally would result in a default on the
bonds. The interest on many types of private activity bonds is subject to the
federal alternative minimum tax (AMT). The Louisiana Municipal Income Fund may
invest in bonds subject to AMT.
TAX INCREMENT FINANCING BONDS
Tax increment financing (TIF) bonds are payable from increases in taxes or
other revenues attributable to projects financed by the bonds. For example, a
municipality may issue TIF bonds to redevelop a commercial area. The TIF bonds
would be payable solely from any increase in sales taxes collected from
merchants in the area. The bonds could default if merchants' sales, and related
tax collections, failed to increase as anticipated.
MUNICIPAL NOTES
Municipal notes are short-term tax exempt securities. Many municipalities
issue such notes to fund their current operations before collecting taxes or
other municipal revenues. Municipalities may also issue notes to fund capital
projects prior to issuing long-term bonds. The issuers typically repay the notes
at the end of their fiscal year, either with taxes, other revenues or proceeds
from newly issued notes or bonds.
MUNICIPAL LEASES
Municipalities may enter into leases for equipment or facilities. In order
to comply with state public financing laws, these leases are typically subject
to annual appropriation. In other words, a municipality may end a lease, without
penalty, by not providing for the lease payments in its annual budget. After the
lease ends, the lessor can resell the equipment or facility but may lose money
on the sale. The Louisiana Municipal Income Fund may invest in securities
supported by pools of municipal leases. The most common type of lease backed
securities are certificates of participation (COPs). However, the Fund may also
invest directly in individual leases.
PARTICIPATION INTERESTS
The Louisiana Municipal Income Fund may purchase participation interests
from financial institutions such as commercial banks, savings associations, and
insurance companies. These participation interests give the Fund an undivided
interest in Louisiana municipal securities.
The municipal securities subject to the participation interests are not
limited to maturities of one year or less, so long as the participation
interests include the right to demand payment, typically within seven days, from
the issuers of those interests. The Fund will purchase only participation
interests which have such a demand feature or which mature in less than one
year. The financial institutions from which the Fund purchases participation
interests frequently provide or secure irrevocable letters of credit or
guarantees to assure that the participation interests are of high quality. The
Trustees will determine that participation interests meet the prescribed quality
standards for the Fund.
LIQUIDITY PUTS
The Louisiana Municipal Income Fund may purchase a right to sell a security
held by it back to the issuer or to another party at an agreed upon price at any
time during a stated period or on a certain date. These rights are also referred
to as standby commitments.
MUNICIPAL BOND INSURANCE
The Louisiana Municipal Income Fund may purchase municipal securities
covered by insurance which guarantee the timely payment of principal at maturity
and interest on such securities. These insured municipal securities are either
(1) covered by an insurance policy applicable to a particular security, whether
obtained by the issuer of the security or by a third party (Issuer-Obtained
Insurance) or (2) insured under master insurance policies issued by municipal
bond insurers, which may be purchased by the Fund (Policies).
The Fund will require or obtain municipal bond insurance when purchasing
municipal securities which would not otherwise meet the Fund's quality
standards. The Fund may also require or obtain municipal bond insurance when
purchasing or holding specific municipal securities when, in the opinion of the
Fund's Adviser, such insurance would benefit the Fund, for example, through
improvement of portfolio quality or increased liquidity of certain securities.
The Fund's Adviser anticipates that more than 50% of the Fund's net assets will
be invested in municipal securities which are insured.
Issuer-Obtained Insurance policies are noncancellable and continue in force
as long as the municipal securities are outstanding and their respective
insurers remain in business. If a municipal security is covered by
Issuer-Obtained Insurance, then such security need not be insured by the
Policies purchased by the Fund.
The Fund may purchase two types of Policies issued by municipal bond
insurers. One type of Policy covers certain municipal securities only during the
period in which they are in the Fund's portfolio. In the event that a municipal
security covered by such a Policy is sold from the Fund, the insurer of the
relevant Policy will be liable only for those payments of interest and principal
which are then due and owing.
The other type of Policy covers municipal securities not only while they
remain in the Fund's portfolio but also until their final maturity even if they
are sold out of the Fund's portfolio, so that the coverage may benefit all
subsequent holders of those municipal securities. The Fund will obtain insurance
which covers municipal securities until final maturity even after they are sold
out of the Fund's portfolio only if, in the judgment of the Adviser, the Fund
would receive net proceeds from the sale of those securities, after deducting
the cost of such permanent insurance and related fees, significantly in excess
of the proceeds it would receive if such municipal securities were sold without
insurance.
The premiums for the Policies are paid by the Fund and the yield on the
Fund's portfolio is reduced thereby. Premiums for the Policies are paid by the
Fund monthly, and are adjusted for purchases and sales of municipal securities
during the month. Depending upon the characteristics of the municipal security
held by the Fund, the annual premium for the Policies are estimated to range
from 0.1% to 0.25% of the value of the municipal securities covered under the
Policies, with an average annual premium rate of approximately 0.175%.
The Fund may purchase Policies from MBIA Corp. (MBIA), AMBAC Indemnity
Corporation (AMBAC), Financial Guaranty Insurance Company (FGIC), Bond Investors
Guaranty Insurance Company (BIG), or any other municipal bond insurer which is
rated AAA by S&P or Aaa by Moody's. Each Policy guarantees the payment of
principal and interest on the municipal securities it insures. The Policies will
have the same general characteristics and features. A municipal security will be
eligible for coverage if it meets certain requirements set forth in a Policy. In
the event interest or principal on an insured municipal security is not paid
when due, the insurer covering the security will be obligated under its Policy
to make such payment not later than 30 days after it has been notified by the
Fund that such non-payment has occurred. The insurance feature reduces financial
risk, but the cost thereof and the restrictions on investments imposed by the
guidelines in the insurance policies reduce the yield to shareholders.
MBIA, AMBAC, FGIC, and BIG will not have the right to withdraw coverage on
securities insured by their Policies so long as such securities remain in the
Fund's portfolio, nor may MBIA, AMBAC, FGIC, and BIG cancel their Policies for
any reason except failure to pay premiums when due. MBIA, AMBAC, FGIC, and BIG
will reserve the right at any time upon 90 days' written notice to the Fund to
refuse to insure any additional municipal securities purchased by the Fund after
the effective date of such notice. The Trustees will reserve the right to
terminate any policy if it determines that the benefits to the Fund of having
its portfolio insured under such policy are not justified by the expense
involved.
Under the Policies, municipal bond insurers unconditionally guarantee to
the Fund the timely payment of principal and interest on the insured municipal
securities when and as such payments shall become due but shall not be paid by
the issuer, except that in the event of any acceleration of the due date of the
principal by reason of mandatory or optional redemption (other than acceleration
by reason of mandatory sinking fund payment), default or otherwise, the payments
guaranteed will be made in such amounts and at such times as payments of
principal would have been due had there not been such acceleration. The
municipal bond insurers will be responsible for such payments less any amounts
received by the Fund from any trustee for the municipal bond issuers or from any
other source. The Policies do not guarantee payment on an accelerated basis, the
payment of any redemption premium, the value of the Shares of the Fund, or
payments of any tender purchase price upon the tender of the municipal
securities. The Policies also do not insure against nonpayment of principal of
or interest on the securities resulting from the insolvency, negligence or any
other act or omission of the trustee or other paying agent for the securities.
However, with respect to small issue industrial development municipal bonds and
pollution control revenue municipal bonds covered by the Policies, the municipal
bond insurers guarantee the full and complete payments required to be made by or
on behalf of an issuer of such municipal securities, if there occurs any change
in the tax-exempt status of interest on such municipal securities, including
principal, interest or premium payments, if any, as and when required to be made
by or on behalf of the issuer pursuant to the terms of such municipal
securities. A "when-issued" municipal security will be covered under the
Policies upon the settlement date of the issuer of such "when-issued" municipal
security. In determining to insure municipal securities held by the Fund, each
municipal bond insurer has applied its own standards, which correspond generally
to the standards established for determining the insurability of new issues of
municipal securities. This insurance is intended to reduce financial risk, but
the cost thereof and compliance with investment restrictions imposed under the
Policies will reduce the yield to shareholders of the Fund.
If a Policy terminates as to municipal securities sold by the Fund on the
date of sale, in which event municipal bond insurers will be liable only for
those payments of principal and interest that are then due and owing, the
provision for insurance will not enhance the marketability of securities held by
the Fund, whether or not the securities are in default or subject to significant
risk of default, unless the option to obtain permanent insurance is exercised.
On the other hand, since Issuer-Obtained Insurance will remain in effect as long
as the insured municipal securities are outstanding, such insurance may enhance
the marketability of municipal securities covered thereby, but the exact effect,
if any, on marketability cannot be estimated. The Fund generally intends to
retain any securities that are in default or subject to significant risk of
default and to place a value on the insurance, which ordinarily will be the
difference between the market value of the defaulted security and the market
value of similar securities of minimum investment grade (i.e., rated "BBB") that
are not in default. To the extent that the Fund holds defaulted securities, it
may be limited in its ability to manage its investments and to purchase other
municipal securities. Except as described above with respect to securities that
are in default or subject to significant risk of default, the Fund will not
place any value on the insurance in valuing the municipal securities that it
holds.
VARIABLE RATE DEMAND INSTRUMENTS
Variable rate demand instruments are securities that require the issuer or
a third party, such as a dealer or bank, to repurchase the security for its face
value upon demand. The securities also pay interest at a variable rate intended
to cause the securities to trade at their face value. The Funds treat demand
instruments as short-term securities, because their variable interest rate
adjusts in response to changes in market rates, even though their stated
maturity may extend beyond thirteen months.
FOREIGN SECURITIES
Foreign securities are securities of issuers based outside the United
States. The Funds consider an issuer to be based outside the United States if:
o it is organized under the laws of, or has a principal office located in,
another country;
o the principal trading market for its securities is in another country; or
o it (or its subsidiaries) derived in its most current fiscal year at least
50% of its total assets, capitalization, gross revenue or profit from goods
produced, services performed, or sales made in another country.
Foreign securities are primarily denominated in foreign currencies. Along
with the risks normally associated with domestic securities of the same type,
foreign securities are subject to currency risks and risks of foreign investing.
Trading in certain foreign markets is also subject to liquidity risks.
DEPOSITARY RECEIPTS
Depositary receipts represent interests in underlying securities issued by
a foreign company. Depositary receipts are not traded in the same market as the
underlying security. The foreign securities underlying American Depositary
Receipts (ADRs) are traded in the United States. ADRs provide a way to buy
shares of foreign-based companies in the United States rather than in overseas
markets. ADRs are also traded in U.S. dollars, eliminating the need for foreign
exchange transactions. The foreign securities underlying European Depositary
Receipts (EDRs), Global Depositary Receipts (GDRs), and International Depositary
Receipts (IDRs), are traded globally or outside the United States. Depositary
receipts involve many of the same risks of investing directly in foreign
securities, including currency risks and risks of foreign investing.
FOREIGN EXCHANGE CONTRACTS
In order to convert U.S. dollars into the currency needed to buy a foreign
security, or to convert foreign currency received from the sale of a foreign
security into U.S. dollars, a Fund may enter into spot currency trades. In a
spot trade, the Fund agrees to exchange one currency for another at the current
exchange rate. The Fund may also enter into derivative contracts in which a
foreign currency is an underlying asset. The exchange rate for currency
derivative contracts may be higher or lower than the spot exchange rate. Use of
these derivative contracts may increase or decrease the Fund's exposure to
currency risks.
FOREIGN GOVERNMENT SECURITIES
Foreign government securities generally consist of fixed income securities
supported by national, state or provincial governments or similar political
subdivisions. Foreign government securities also include debt obligations of
supranational entities, such as international organizations designed or
supported by governmental entities to promote economic reconstruction or
development, international banking institutions and related government agencies.
Examples of these include, but are not limited to, the International Bank for
Reconstruction and Development (the World Bank), the Asian Development Bank, the
European Investment Bank and the Inter-American Development Bank.
Foreign government securities also include fixed income securities of
quasi-governmental agencies that are either issued by entities owned by a
national, state or equivalent government or are obligations of a political unit
that are not backed by the national government's full faith and credit. Further,
foreign government securities include mortgage-related securities issued or
guaranteed by national, state or provincial governmental instrumentalities,
including quasi-governmental agencies.
BRADY BONDS
Brady Bonds are U.S. dollar denominated debt obligations that foreign
governments issue in exchange for commercial bank loans. The International
Monetary Fund (IMF) typically negotiates the exchange to cure or avoid a default
by restructuring the terms of the bank loans. The principal amount of some Brady
Bonds is collateralized by zero coupon U.S. Treasury securities which have the
same maturity as the Brady Bonds. However, neither the U.S. government nor the
IMF has guaranteed the repayment of any Brady Bond.
DERIVATIVE CONTRACTS
Derivative contracts are financial instruments that require payments based
upon changes in the values of designated (or underlying) securities, currencies,
commodities, financial indices or other assets. Some derivative contracts (such
as futures, forwards and options) require payments relating to a future trade
involving the underlying asset. Other derivative contracts (such as swaps)
require payments relating to the income or returns from the underlying asset.
The other party to a derivative contract is referred to as a counterparty.
Many derivative contracts are traded on securities or commodities
exchanges. In this case, the exchange sets all the terms of the contract except
for the price. Investors make payments due under their contracts through the
exchange. Most exchanges require investors to maintain margin accounts through
their brokers to cover their potential obligations to the exchange. Parties to
the contract make (or collect) daily payments to the margin accounts to reflect
losses (or gains) in the value of their contracts. This protects investors
against potential defaults by the counterparty. Trading contracts on an exchange
also allows investors to close out their contracts by entering into offsetting
contracts.
For example, a Fund could close out an open contract to buy an asset at a
future date by entering into an offsetting contract to sell the same asset on
the same date. If the offsetting sale price is more than the original purchase
price, the Fund realizes a gain; if it is less, the Fund realizes a loss.
Exchanges may limit the amount of open contracts permitted at any one time. Such
limits may prevent the Fund from closing out a position. If this happens, the
Fund will be required to keep the contract open (even if it is losing money on
the contract), and to make any payments required under the contract (even if it
has to sell portfolio securities at unfavorable prices to do so). Inability to
close out a contract could also harm the Fund by preventing it from disposing of
or trading any assets it has been using to secure its obligations under the
contract.
The Funds may also trade derivative contracts over-the-counter (OTC) in
transactions negotiated directly between the Fund and the counterparty. OTC
contracts do not necessarily have standard terms, so they cannot be directly
offset with other OTC contracts. In addition, OTC contracts with more
specialized terms may be more difficult to price than exchange traded contracts.
Depending upon how a Fund uses derivative contracts and the relationships
between the market value of a derivative contract and the underlying asset,
derivative contracts may increase or decrease the Fund's exposure to interest
rate and currency risks, and may also expose the Fund to liquidity and leverage
risks. OTC contracts also expose the Fund to credit risks in the event that a
counterparty defaults on the contract. The Funds may trade in the following
types of derivative contracts. FUTURES CONTRACTS Futures contracts provide for
the future sale by one party and purchase by another party of a specified amount
of an underlying asset at a specified price, date, and time. Entering into a
contract to buy an underlying asset is commonly referred to as buying a contract
or holding a long position in the asset. Entering into a contract to sell an
underlying asset is commonly referred to as selling a contract or holding a
short position in the asset. Futures contracts are considered to be commodity
contracts. Futures contracts traded OTC are frequently referred to as forward
contracts.
The Funds (except the Money Market Funds) may buy and sell the following
types of futures contracts: financial futures contracts, and, in the case of
Capital Appreciation Fund and Mid Cap Equity Fund, stock index futures. For the
immediate future, Capital Appreciation Fund and Mid Cap Equity Fund will enter
into futures contracts directly only when they desire to exercise a financial
futures put option in their respective portfolio rather than either closing out
the option or allowing it to expire.
OPTIONS
Options are rights to buy or sell an underlying asset for a specified price
(the exercise price) during, or at the end of, a specified period. A call option
gives the holder (buyer) the right to buy the underlying asset from the seller
(writer) of the option. A put option gives the holder the right to sell the
underlying asset to the writer of the option. The writer of the option receives
a payment, or premium, from the buyer, which the writer keeps regardless of
whether the buyer uses (or exercises) the option.
The Funds may:
o Buy call options on financial futures contracts in anticipation of an
increase in the value of the underlying asset.;
o Buy put options on financial futures contracts in anticipation of a
decrease in the value of the underlying asset (Except Capital Appreciation
Fund); and
o Buy or write options to close out existing options positions. The Funds may
also write call options on portfolio securities to generate income from
premiums, and in anticipation of a decrease or only limited increase in the
value of the underlying asset. If a call written by the Fund is exercised,
the Fund foregoes any possible profit from an increase in the market price
of the underlying asset over the exercise price plus the premium received.
The Funds may also write put options on portfolio securities to generate
income from premiums, and in anticipation of an increase or only limited
decrease in the value of the underlying asset. In writing puts, there is a risk
that a Fund may be required to take delivery of the underlying asset when its
current market price is lower than the exercise price.
When a Fund writes options on futures contracts, it will be subject to
margin requirements similar to those applied to futures contracts. Mid Cap
Equity Fund may utilize stock index futures contracts, options and options on
stock index futures contracts, subject to the limitation that the value of these
futures contracts and options will not exceed 20% of the Fund's total assets.
Each Fund will limit its purchase of options so that not more than 20% of
its net assets will be invested in option premiums. Each Fund will limit its
option writing so that the assets underlying such options will not exceed 25% of
its total net assets.
HEDGING
Hedging transactions are intended to reduce specific risks. For example, to
protect a Fund against circumstances that would normally cause a Fund's
portfolio securities to decline in value, the Fund may buy or sell a derivative
contract that would normally increase in value under the same circumstances. A
Fund may also attempt to hedge by using combinations of different derivatives
contracts, or derivatives contracts and securities. A Fund's ability to hedge
may be limited by the costs of the derivatives contracts. A Fund may attempt to
lower the cost of hedging by entering into transactions that provide only
limited protection, including transactions that (1) hedge only a portion of its
portfolio, (2) use derivatives contracts that cover a narrow range of
circumstances or (3) involve the sale of derivatives contracts with different
terms. Consequently, hedging transactions may not eliminate risk even if they
work as intended. In addition, hedging strategies are not always successful, and
could result in increased expenses and losses to the Fund.
DERIVATIVE CONTRACTS
Derivative contracts are financial instruments that require payments based
upon changes in the values of designated (or underlying) securities, currencies,
commodities, financial indices or other assets. Some derivative contracts (such
as futures, forwards and options) require payments relating to a future trade
involving the underlying asset. Other derivative contracts (such as swaps)
require payments relating to the income or returns from the underlying asset.
The other party to a derivative contract is referred to as a counterparty.
Many derivative contracts are traded on securities or commodities
exchanges. In this case, the exchange sets all the terms of the contract except
for the price. Investors make payments due under their contracts through the
exchange. Most exchanges require investors to maintain margin accounts through
their brokers to cover their potential obligations to the exchange. Parties to
the contract make (or collect) daily payments to the margin accounts to reflect
losses (or gains) in the value of their contracts. This protects investors
against potential defaults by the counterparty. Trading contracts on an exchange
also allows investors to close out their contracts by entering into offsetting
contracts.
For example, a Fund could close out an open contract to buy an asset at a
future date by entering into an offsetting contract to sell the same asset on
the same date. If the offsetting sale price is more than the original purchase
price, the Fund realizes a gain; if it is less, the Fund realizes a loss.
Exchanges may limit the amount of open contracts permitted at any one time. Such
limits may prevent the Fund from closing out a position. If this happens, the
Fund will be required to keep the contract open (even if it is losing money on
the contract), and to make any payments required under the contract (even if it
has to sell portfolio securities at unfavorable prices to do so). Inability to
close out a contract could also harm the Fund by preventing it from disposing of
or trading any assets it has been using to secure its obligations under the
contract.
The Funds may also trade derivative contracts over-the-counter (OTC) in
transactions negotiated directly between the Fund and the counterparty. OTC
contracts do not necessarily have standard terms, so they cannot be directly
offset with other OTC contracts. In addition, OTC contracts with more
specialized terms may be more difficult to price than exchange traded contracts.
Depending upon how a Fund uses derivative contracts and the relationships
between the market value of a derivative contract and the underlying asset,
derivative contracts may increase or decrease the Fund's exposure to market and
currency risks, and may also expose the Fund to liquidity and leverage risks.
OTC contracts also expose the Fund to credit risks in the event that a
counterparty defaults on the contract. The Funds may trade in the following
types of derivative contracts.
FUTURES AND OPTIONS TRANSACTIONS
The Funds (except the Money Market Funds) may engage in or reserve the
right to engage in put and call options, financial futures, and options on
futures as discussed for those Funds in the prospectus. For purposes of Capital
Appreciation Fund and Mid Cap Equity Fund, financial futures may include stock
index futures.
The Funds will maintain positions in securities, option rights, and
segregated cash subject to puts and calls until the options are exercised,
closed, or have expired. An option position may be closed out only on an
exchange which provides a secondary market for an option of the same series.
FINANCIAL FUTURES CONTRACTS
A futures contract is a firm commitment by two parties: the seller who
agrees to make delivery of the specific type of security called for in the
contract ("going short") and the buyer who agrees to take delivery of the
security ("going long") at a certain time in the future. Financial futures
contracts call for the delivery of particular debt securities issued or
guaranteed by the U.S. Treasury or by specified agencies or instrumentalities of
the U.S. government.
In the fixed income securities market, price moves inversely to interest
rates. A rise in rates means a drop in price. Conversely, a drop in rates means
a rise in price. In order to hedge their holdings of securities, the Funds could
enter into contracts to deliver securities at a predetermined price (i.e., "go
short") to protect themselves against the possibility that the prices of their
securities may decline during the Funds' anticipated holding period. The Funds
would "go long" (agree to purchase securities in the future at a predetermined
price) to hedge against a decline in market interest rates.
PURCHASING PUT OPTIONS ON FINANCIAL FUTURES CONTRACTS
Unlike entering directly into a futures contract, which requires the
purchaser to buy a financial instrument on a set date at a specified price, the
purchase of a put option on a futures contract entitles (but does not obligate)
its purchaser to decide on or before a future date whether to assume a short
position at the specified price.
A Fund could purchase put options on futures to protect portfolio
securities against decreases in value resulting from an anticipated increase in
market interest rates or as a means of reducing fluctuations in the net asset
value of shares of the Fund. Generally, if the hedged portfolio securities
decrease in value during the term of an option, the related futures contracts
will also decrease in value and the option will increase in value. In such an
event, a Fund will normally close out its option by selling an identical option.
If the hedge is successful, the proceeds received by a Fund upon the sale of the
second option will be large enough to offset both the premium paid by such Fund
for the original option plus the realized decrease in value of the hedged
securities.
Alternately, a Fund may exercise its put to close out the position. To do
so, it would simultaneously enter into a futures contract of the type underlying
the option (for a price less than the strike price of the option) and exercise
the option. The Fund would then deliver the futures contract in return for
payment of the strike price. If a Fund neither closes out nor exercises an
option, the option will expire on the date provided in the option contract, and
only the premium paid for the contract will be lost.
WRITING CALL OPTIONS ON FINANCIAL FUTURES CONTRACTS
In addition to purchasing put options on futures, a Fund may write listed
call options on futures contracts for U.S. government securities to hedge its
portfolio against an increase in market interest rates. When a Fund writes a
call option on a futures contract, it is undertaking the obligation of assuming
a short futures position (selling a futures contract) at the fixed strike price
at any time during the life of the option if the option is exercised. As market
interest rates rise, causing the prices of futures to go down, a Fund's
obligation under a call option on a future (to sell a futures contact) costs
less to fulfill, causing the value of such Fund's call option position to
increase.
In other words, as the underlying futures price goes down below the strike
price, the buyer of the option has no reason to exercise the call, so that Fund
keeps the premium received for the option. This premium can offset the drop in
value of such Fund's fixed income securities which is occurring as interest
rates rise.
Prior to the expiration of a call written by a Fund, or exercise of it by
the buyer, such Fund may close out the option by buying an identical option. If
the hedge is successful, the cost of the second option will be less than the
premium received by the Fund for the initial option. The new premium income of
the Fund will then offset the decrease in value of the hedged securities.
WRITING PUT OPTIONS ON FINANCIAL FUTURES CONTRACTS
The Funds may write listed put options on financial futures contracts for
U.S. government securities to hedge their portfolios against a decrease in
market interest rates. When a Fund writes a put option on a futures contract, it
receives a premium for undertaking the obligation to assume a long futures
position (buying a futures contract) at a fixed price at any time during the
life of the option. As market interest rates decrease, the market price of the
underlying futures contract increases.
As the market value of the underlying futures contract increases, the buyer
of the put option has less reason to exercise the put because the buyer can sell
the same futures contract at a higher price in the market. The premium received
by the Fund can then be used to offset the higher prices of portfolio securities
to be purchased in the future due to the decrease in market interest rates.
Prior to the expiration of the put option, or its exercise by the buyer, a
Fund may close out the option by buying an identical option. If the hedge is
successful, the cost of buying the second option will be less than the premium
received by such Fund for the initial option.
PURCHASING CALL OPTIONS ON FINANCIAL FUTURES CONTRACTS
When a Fund purchases a call option on a futures contract, it is purchasing
the right (not the obligation) to assume a long futures position (buy a futures
contract) at a fixed price at any time during the life of the option. As market
interest rates fall, the value of the underlying futures contract will normally
increase, resulting in an increase in value of such Fund's option position. When
the market price of the underlying futures contract increases above the strike
price plus premium paid, a Fund could exercise its option and buy the futures
contract below market price.
LIMITATION ON OPEN FUTURES POSITION
A Fund will not maintain open positions in futures contracts it has sold or
call options it has written on futures contracts if, in the aggregate, the value
of the open positions (marked to market) exceeds the current market value of its
portfolio plus or minus the unrealized gain or loss on those open positions,
adjusted for the correlation of volatility between the hedged securities and the
futures contracts. If this limitation is exceeded at any time, a Fund will take
prompt action to close out a sufficient number of open contracts to bring its
open futures and options positions within this limitation.
MARGIN IN FUTURES TRANSACTIONS
Unlike the purchase or sale of a security, a Fund does not pay or receive
money upon the purchase or sale of a futures contract. Rather, the Fund is
required to deposit an amount of "initial margin" in cash or U.S. Treasury bills
with its custodian (or the broker, if legally permitted). The nature of initial
margin in futures transactions is different from that of margin in securities
transactions in that futures contract initial margin does not involve the
borrowing of funds by the Fund to finance the transactions. Initial margin is in
the nature of a performance bond or good-faith deposit on the contract which is
returned to the Fund upon termination of the futures contract, assuming all
contractual obligations have been satisfied.
A futures contract held by a Fund is valued daily at the official
settlement price of the exchange on which it is traded. Each day the Fund pays
or receives cash, called "variation margin," equal to the daily change in value
of the futures contract. This process is know as "marking to market." Variation
margin does not represent a borrowing or loan by the Fund but is instead
settlement between the Fund and the broker of the amount one would owe the other
if the futures contract expires. In computing its daily net asset value, a Fund
will mark-to-market its open futures positions.
The Funds are also required to deposit and maintain margin when they write
call options on futures contracts.
PURCHASING PUT AND CALL OPTIONS ON PORTFOLIO SECURITIES
The Funds may purchase put and call options on portfolio securities to
protect against price movements in particular securities. A put option gives a
Fund, in return for a premium, the right to sell the underlying security to the
writer (seller) at a specified price during the term of the option. A call
option gives a Fund, in return for a premium, the right to buy the underlying
security from the seller.
Capital Appreciation Fund may only buy put options which are listed on a
recognized options exchange.
WRITING COVERED PUT AND CALL OPTIONS ON PORTFOLIO SECURITIES
As writer of a call option, a Fund has the obligation, upon exercise of the
option during the option period, to deliver the underlying security upon payment
of the exercise price. As a writer of a put option, a Fund has the obligation to
purchase a security from the purchaser of the option upon the exercise of the
option.
A Fund may only write call options either on securities held in its
portfolio or on securities which it has the right to obtain without payment of
further consideration (or has segregated cash in the amount of any additional
consideration). In the case of put options, a Fund will segregate cash or U.S.
Treasury obligations with a value equal to or greater than the exercise price of
the underlying securities.
STOCK INDEX FUTURES AND OPTIONS
The Mid Cap Equity Fund may utilize stock index futures contracts, options
and options on stock index futures contracts, subject to the limitation that the
value of these futures contracts and options will not exceed 20% of the Fund's
total assets. These futures contracts and options will be used to handle cash
flows into and out of the Fund and to potentially reduce transactional costs,
since transactional costs associated with futures and options contracts can be
lower than costs stemming from direct investments in stocks.
SPECIAL TRANSACTIONS
REVERSE REPURCHASE AGREEMENTS
Reverse repurchase agreements are repurchase agreements in which a Fund is
the seller (rather than the buyer) of the securities, and agrees to repurchase
them at an agreed upon time and price. A reverse repurchase agreement may be
viewed as a type of borrowing by the Fund. Reverse repurchase agreements are
subject to credit risks. In addition, reverse repurchase agreements create
leverage risks because the Fund must repurchase the underlying security at a
higher price, regardless of the market value of the security at the time of
repurchase.
DELAYED DELIVERY TRANSACTIONS
Delayed delivery transactions, including when issued transactions, are
arrangements in which a Fund buys securities for a set price, with payment and
delivery of the securities scheduled for a future time. During the period
between purchase and settlement, no payment is made by the Fund to the issuer
and no interest accrues to the Fund. The Fund records the transaction when it
agrees to buy the securities and reflects their value in determining the price
of its shares. Settlement dates may be a month or more after entering into these
transactions so that the market values of the securities bought may vary from
the purchase prices. Therefore, delayed delivery transactions create interest
rate risks for a Fund. Delayed delivery transactions also involve credit risks
in the event of a counterparty default.
TO BE ANNOUNCED SECURITIES (TBAS)
As with other delayed delivery transactions, a seller agrees to issue a TBA
security at a future date. However, the seller does not specify the particular
securities to be delivered. Instead, the Fund agrees to accept any security that
meets specified terms. For example, in a TBA mortgage backed transaction, the
Fund and the seller would agree upon the issuer, interest rate and terms of the
underlying mortgages. The seller would not identify the specific underlying
mortgages until it issues the security. TBA mortgage backed securities increase
interest rate risks because the underlying mortgages may be less favorable than
anticipated by the Fund.
DOLLAR ROLLS
Dollar rolls are transactions where a Fund sells mortgage backed securities
with a commitment to buy similar, but not identical, mortgage backed securities
on a future date at a lower price. Normally, one or both securities involved are
TBA mortgage backed securities. Dollar rolls are subject to interest rate risks
and credit risks.
SECURITIES LENDING
A Fund may lend portfolio securities to borrowers that the Adviser deems
creditworthy. In return, the Fund receives cash or liquid securities from the
borrower as collateral. The borrower must furnish additional collateral if the
market value of the loaned securities increases. Also, the borrower must pay the
Fund the equivalent of any dividends or interest received on the loaned
securities. The Fund will reinvest cash collateral in securities that qualify as
an acceptable investment for the Fund. However, the Fund must pay interest to
the borrower for the use of cash collateral.
Loans are subject to termination at the option of the Fund or the borrower.
The Fund will not have the right to vote on securities while they are on loan,
but it will terminate a loan in anticipation of any important vote. The Fund may
pay administrative and custodial fees in connection with a loan and may pay a
negotiated portion of the interest earned on the cash collateral to a securities
lending agent or broker.
Securities lending activities are subject to interest rate risks and credit
risks.
ASSET COVERAGE
In order to secure its obligations in connection with derivatives contracts
or special transactions, a Fund will either own the underlying assets, enter
into an offsetting transaction or set aside readily marketable securities with a
value that equals or exceeds the Fund's obligations. Unless the Fund has other
readily marketable assets to set aside, it cannot trade assets used to secure
such obligations without entering into an offsetting derivative contract or
terminating a special transaction. This may cause the Fund to miss favorable
trading opportunities or to realize losses on derivative contracts or special
transactions.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
The Funds may invest assets in securities of other investment companies,
including the securities of affiliated money market funds, as an efficient means
of carrying out their investment policies and managing their uninvested cash.
Any such investment by a Fund may be subject to duplicate expenses. However, the
Adviser will waive its investment advisory fee on assets invested in securities
of other investment companies. The Adviser believes that the benefits and
efficiencies of this approach should outweigh the potential additional expenses.
The Funds may also invest in such securities directly.
INVESTMENT RATINGS
A nationally recognized rating service's two highest rating categories are
determined without regard for sub-categories and gradations. For example,
securities rated SP-1+, SP-1, or SP-2 by Standard & Poor's ("S&P"), MIG-1 or
MIG-2 by Moody's Investors Service, Inc. ("Moody's"), or F-1+, F-1, or F-2 by
Fitch IBCA, Inc. ("Fitch") are all considered to be rated in one of the two
highest short-term rating categories. The Cash Reserve Fund will follow
applicable regulations in determining whether a security rated by more than one
rating service can be treated as being in one of the two highest short-term
rating categories; currently, such securities must be rated by two rating
services in one of their two highest rating categories. See "Regulatory
Compliance."
The Adviser will determine whether a security is investment grade based upon the
credit ratings given by one or more nationally recognized rating services. For
example, Standard &Poor's, a rating service, assigns ratings to investment grade
securities (AAA, AA, A, and BBB) based on their assessment of the likelihood of
the issuer's inability to pay interest or principal (default) when due on each
security. Lower credit ratings correspond to higher credit risk. If a security
has not received a rating, a Fund must rely entirely upon the Adviser's credit
assessment that the security is comparable to investment grade.
INVESTMENT RISKS
There are many factors which may affect an investment in the Fund. A Fund's
principal risks are described in the prospectus. Additional risk factors are
outlined below.
LIQUIDITY RISKS
o Trading opportunities are more limited for equity securities that are not
widely held. This may make it more difficult to sell or buy a security at a
favorable price or time. Consequently, a Fund may have to accept a lower
price to sell a security, sell other securities to raise cash or give up an
investment opportunity, any of which could have a negative effect on the
Fund's performance. Infrequent trading of securities may also lead to an
increase in their price volatility.
o Liquidity risk also refers to the possibility that a Fund may not be able to
sell a security or close out a derivative contract when it wants to. If this
happens, the Fund will be required to continue to hold the security or keep
the position open, and the Fund could incur losses.
o OTC derivative contracts generally carry greater liquidity risk than
exchange-traded contracts.
CURRENCY RISKS
o Exchange rates for currencies fluctuate daily. The combination of currency
risk and market risk tends to make securities traded in foreign markets more
volatile than securities traded exclusively in the U.S.
o The Adviser attempts to manage currency risk by limiting the amount a Fund
invests in securities denominated in a particular currency. However,
diversification will not protect a Fund against a general increase in the
value of the U.S. dollar relative to other currencies.
RISKS OF FOREIGN INVESTING
o Foreign securities pose additional risks because foreign economic or
political conditions may be less favorable than those of the United States.
Securities in foreign markets may also be subject to taxation policies that
reduce returns for U.S. investors.
o Foreign companies may not provide information (including financial
statements) as frequently or to as great an extent as companies in the United
States. Foreign companies may also receive less coverage than United States
companies by market analysts and the financial press. In addition, foreign
countries may lack uniform accounting, auditing and financial reporting
standards or regulatory requirements comparable to those applicable to U.S.
companies. These factors may prevent a Fund and its Adviser from obtaining
information concerning foreign companies that is as frequent, extensive and
reliable as the information available concerning companies in the United
States.
o Foreign countries may have restrictions on foreign ownership of securities or
may impose exchange controls, capital flow restrictions or repatriation
restrictions which could adversely affect the liquidity of the Fund's
investments.
o Trading opportunities are more limited for fixed income securities that have
not received any credit ratings, have received ratings below investment grade
or are not widely held.
RISKS RELATED TO HEDGING
When a Fund uses financial futures and options on futures as hedging devices,
there is a risk that the prices of the securities subject to the futures
contracts may not correlate perfectly with the prices of the securities in the
Fund's portfolio. This may cause the futures contracts and any related options
to react differently than the portfolio securities to market changes. In
addition, the Fund's Adviser could be incorrect in its expectations about the
direction or extent of market factors, such as interest rate movements. In these
events, the Fund may lose money on the futures contracts or options. When a Fund
writes a call option, it retains the risk of a market decline in the price of
the underlying security, but gives up the right to capital appreciation of that
security above the "strike price" of the option.
It is not certain that a secondary market for positions in futures contracts or
for options will exist at all times. Although a Fund's Adviser will consider
liquidity before entering into options transactions, there is no assurance that
a liquid secondary market on an exchange will exist for any particular futures
contract or option at any particular time. The Funds' ability to establish and
close out futures and options positions depends on this secondary market.
o A Fund will not participate in futures transactions if the sum of its initial
margin deposits on open contracts will exceed 5% of the market value of the
Fund's total assets, after taking into account the unrealized profits and
losses on those contracts into which it has entered;
o The Funds will not enter into these contracts for speculative purposes; and
o Since the Funds do not constitute a commodity pool, they will not market as
such, nor serve as vehicles for trading in the commodities futures or
commodity options markets.
In this regard, the Funds will disclose to all prospective investors the
limitations on its futures and options transactions, and will make clear that
these transactions are entered into only for bona fide hedging purposes or such
other purposes permitted under regulations promulgated by the Commodity Futures
Trading Commission (CFTC). The Funds intend to claim an exclusion from
registration as a commodity pool operator under the regulations promulgated by
the CFTC. When a Fund purchases futures contracts or writes put options on
futures contracts , an amount of cash and cash equivalents equal to the
underlying commodity value of the futures contracts (less any related margin
deposits) or equal to the exercise price of the put options will be deposited in
a segregated account with the Fund's custodian (or broker, if legally permitted)
to collateralize the position and thereby insure that the use of such futures
contracts is unleveraged.
FUNDAMENTAL INVESTMENT OBJECTIVES AND POLICIES
The investment objective and fundamental policies of a Fund may not be changed
by the Fund's Trustees without shareholder approval. o Capital Appreciation Fund
seeks to provide growth of capital and income;
o Louisiana Municipal Income Fund seeks to provide current income which is
generally exempt from federal regular income tax and the personal income
taxes imposed by the state of Louisiana;
o Mid Equity Cap Fund seeks total return;
o Total Return Bond Fund seeks to maximize total return;
o U.S. Government Income Fund seeks to provide current income;
o Cash Reserve Fund seeks to provide current income consistent with stability of
principal; and
o U.S. Treasury Money Market Fund seeks to provide current income consistent
with stability of principal and liquidity.
As a matter of fundamental policy, the Louisiana Municipal Income Fund will
invest its assets so that, under normal circumstances, at least 80% of its
annual interest income is exempt from federal regular and Louisiana state income
taxes or at least 80% of its net assets are invested in obligations, the
interest income from which is exempt from federal regular and Louisiana state
income taxes.
As a matter of fundamental policy, the average maturity of the securities in
Cash Reserve Fund's portfolio, computed on a dollar-weighted basis, will be 120
days or less.
INVESTMENT LIMITATIONS
DIVERSIFICATION OF INVESTMENTS
With respect to securities comprising 75% of the value of its total assets, a
Fund (except Louisiana Municipal Income Fund) will not purchase securities of
any one issuer (other than cash; cash items, securities issued or guaranteed by
the government of the United States or its agencies or instrumentalities and
repurchase agreements collateralized by such U.S. government securities; and
securities of other investment companies) if, as a result, more than 5% of the
value of its total assets would be invested in securities of that issuer, or the
Fund would own more than 10% of the outstanding voting securities of that
issuer.
ISSUING SENIOR SECURITIES AND BORROWING MONEY
A Fund may borrow money, directly or indirectly, and issue senior securities to
the maximum extent permitted under the Investment Company Act of 1940.
CONCENTRATION OF INVESTMENTS
Capital Appreciation Fund and Mid Cap Equity Fund will not invest 25% or more of
their respective total assets in securities of issuers having their principal
business activities in the same industry. Total Return Bond Fund will not invest
25% or more of the value of its total assets in any one industry. However,
investing in U.S. government obligations shall not be considered investments in
any one industry. Cash Reserve Fund will not invest more than 25% of the value
of its total assets in any one industry except commercial paper of finance
companies. However, investing in bank instruments (such as time and demand
deposits and certificates of deposit), U.S. government obligations or
instruments secured by these money market instruments, such as repurchase
agreements, shall not be considered investments in any one industry. With
respect to securities comprising 75% of the value of its total assets, U.S.
Treasury Money Market Fund will not purchase securities of any one issuer (other
than cash, cash items or securities issued or guaranteed by the government of
the United States or its agencies or instrumentalities and repurchase agreements
collateralized by U.S. Treasury securities) if as a result more than 5% of the
value of its total assets would be invested in the securities of that issuer.
(For purposes of this limitation, U.S. Treasury Money Market Fund considers
instruments issued by a U.S. branch of a domestic bank having capital, surplus,
and undivided profits in excess of $100,000,000 at the time of investment, to be
"cash items.")
INVESTING IN REAL ESTATE
A Fund may not purchase or sell real estate, provided that this restriction does
not prevent the Fund from investing in issuers which invest, deal, or otherwise
engage in transactions in real estate or interests therein, or investing in
securities that are secured by real estate or interests therein. A Fund may
exercise its rights under agreements relating to such securities, including the
right to enforce security interests and to hold real estate acquired by reason
of such enforcement until that real estate can be liquidated in an orderly
manner.
INVESTING IN COMMODITIES
A Fund may not purchase or sell physical commodities, provided that the Fund may
purchase securities of companies that deal in commodities.
UNDERWRITING
A Fund may not underwrite the securities of other issuers, except that the Fund
may engage in transactions involving the acquisition, disposition or resale of
its portfolio securities, under circumstances where it may be considered to be
an underwriter under the Securities Act of 1933.
LENDING CASH OR SECURITIES
A Fund may not make loans, provided that this restriction does not prevent the
Fund from purchasing debt obligations, entering into repurchase agreements,
lending its assets to broker/dealers or institutional investors and investing in
loans, including assignments and participation interests.
THE ABOVE LIMITATIONS CANNOT BE CHANGED UNLESS AUTHORIZED BY THE BOARD OF
TRUSTEES (BOARD) AND BY THE "VOTE OF A MAJORITY OF ITS OUTSTANDING VOTING
SECURITIES," AS DEFINED BY THE INVESTMENT COMPANY ACT. THE FOLLOWING
LIMITATIONS, HOWEVER, MAY BE CHANGED BY THE BOARD WITHOUT SHAREHOLDER APPROVAL.
SHAREHOLDERS WILL BE NOTIFIED BEFORE ANY MATERIAL CHANGE IN THESE LIMITATIONS
BECOMES EFFECTIVE.
BUYING ON MARGIN
A Fund will not purchase securities on margin provided that the Fund may obtain
short-term credits necessary for the clearance of purchases and sales of
securities.
PLEDGING ASSETS
A Fund will not mortgage, pledge or hypothecate any of its assets, provided that
this shall not apply to the transfer of securities in connection with any
permissible borrowing or to collateral arrangements in connection with
permissible activities.
RESTRICTED AND ILLIQUID SECURITIES
A Fund may invest in restricted securities. Restricted securities are any
securities in which a Fund may invest pursuant to its investment objective and
policies but which are subject to restrictions on resale under federal
securities law. Under criteria established by the Trustees certain restricted
securities are determined to be liquid. To the extent that restricted securities
are not determined to be liquid, the Funds will limit their purchase, together
with other illiquid securities to 15% (for the Money Market Funds, 10%)of their
net assets.
ACQUIRING SECURITIES
Cash Reserve Fund will not acquire the voting securities of any issuer. It will
not invest in securities of a company for the purpose of exercising control or
management.
INVESTING IN OTHER INVESTMENT COMPANIES
A Fund may invest its assets in securities of other investment companies as an
efficient means of carrying out its investment policies. It should be noted that
investment companies incur certain expenses, such as management fees, and,
therefore, any investment by the Fund in shares of other investment companies
may be subject to such duplicate expenses. At the present time, the Fund expects
that its investments in other investment companies may include shares of money
market funds, including funds affiliated with the Fund's investment adviser.
WRITING COVERED CALL OPTIONS AND PURCHASING PUT OPTIONS
Capital Appreciation Fund and Mid Cap Equity Fund will not write call options on
securities unless the securities are held in the Fund's portfolio or unless the
Fund is entitled to them in deliverable form without further payment or after
segregating cash in the amount of any further payment. A Fund will not purchase
put options on securities, other than put options on stock indices, unless the
securities are held in the Fund's portfolio and not more than 5% of the value of
the Fund's net assets would be invested in premiums on open put option
positions.
Total Return Bond Fund will not purchase put options on securities unless the
securities are held in the Fund's portfolio. The Fund will not write put or call
options or purchase put or call options in excess of 5% of the value of its
total assets.
U.S. Government Income Fund will not write covered put and call options on
securities unless the securities are held in the Fund's portfolio or unless the
Fund is entitled to them in deliverable form without further payment or after
segregating cash or U.S. Treasury obligations with a value equal to or greater
than the exercise price of the underlying securities. The Fund will not purchase
put options on securities unless the securities are held in the Fund's
portfolio.
REGULATORY COMPLIANCE
The Money Market Funds may follow non-fundamental operational policies that are
more restrictive than the fundamental investment limitations, as set forth in
the prospectus and this Statement of Additional Information, in order to comply
with applicable laws and regulations, including the provisions of and
regulations under the Investment Company Act of 1940. In particular, the Funds
will comply with the various requirements of Rule 2a-7 (the Rule), which
regulates money market mutual funds. The Funds will determine the effective
maturity of investments according to the Rule. The Funds may change these
operational policies to reflect changes in the laws and regulations without the
approval of its shareholders.
DETERMINING MARKET VALUE OF SECURITIES
Market values of the Fund's (except the Money Market Funds) portfolio securities
are determined as follows:
o for equity securities, according to the last sale price in the market in which
they are primarily traded (either a national securities exchange or the
over-the-counter market), if available;
o in the absence of recorded sales for equity securities, according to the mean
between the last closing bid and asked prices;
o for fixed income securities, at the last sale price on a national securities
exchange, if available, otherwise, as determined by an independent pricing service;
o futures contracts and options are generally valued at market values
established by the exchanges on which they are traded at the close of trading
on such exchanges. Options traded in the over-the-counter market are
generally valued according to the mean between the last bid and the last
asked price for the option as provided by an investment dealer or other
financial institution that deals in the option. The Board may determine in
good faith that another method of valuing such investments is necessary to
appraise their fair market value;
o for short-term obligations, according to the mean between bid and asked prices
as furnished by an independent pricing service, except that short-term
obligations with remaining maturities of less than 60 days at the time of
purchase may be valued at amortized cost or at fair market value as determined
in good faith by the Board; and
o for all other securities at fair value as determined in good faith by the Board.
Prices provided by independent pricing services may be determined without
relying exclusively on quoted prices and may consider institutional trading in
similar groups of securities, yield, quality, stability, risk, coupon rate,
maturity, type of issue, trading characteristics, and other market data or
factors. From time to time, when prices cannot be obtained from an independent
pricing service, securities may be valued based on quotes from broker-dealers or
other financial institutions that trade the securities.
The Board has decided that the best method for determining the value of the
Money Market Funds' portfolio instruments is amortized cost. Under this method,
portfolio instruments are valued at the acquisition cost as adjusted for
amortization of premium or accumulation of discount rather than at current
market value. Accordingly, neither the amount of daily income nor the net asset
value is affected by any unrealized appreciation or depreciation of the
portfolio. In periods of declining interest rates, the indicated daily yield on
Shares of the Fund computed by dividing the annualized daily income on the
Fund's portfolio by the net asset value computed as above may tend to be higher
than a similar computation made by using a method of valuation based upon market
prices and estimates. In periods of rising interest rates, the opposite may be
true.
The Money Market Funds' use of the amortized cost method of valuing portfolio
instruments depends on their compliance with certain conditions in the Rule
promulgated by the SEC under the Investment Company Act of 1940. Under the Rule,
the Trustees must establish procedures reasonably designed to stabilize the net
asset value per Share, as computed for purposes of distribution and redemption,
at $1.00 per Share, taking into account current market conditions and the Funds'
investment objective. The procedures include monitoring the relationship between
the amortized cost value per Share and the net asset value per Share based upon
available indications of market value. The Board will decide what, if any, steps
should be taken if there is a difference of more than 0.5 of 1% between the two
values. The Board will take any steps they consider appropriate (such as
redemption in kind or shortening the average portfolio maturity) to minimize any
material dilution or other unfair results arising from differences between the
two methods of determining net asset value.
TRADING IN FOREIGN SECURITIES
Trading in foreign securities may be completed at times which vary from the
closing of the New York Stock Exchange (NYSE). In computing its NAV, a Fund
values foreign securities at the latest closing price on the exchange on which
they are traded immediately prior to the closing of the NYSE. Certain foreign
currency exchange rates may also be determined at the latest rate prior to the
closing of the NYSE. Foreign securities quoted in foreign currencies are
translated into U.S. dollars at current rates. Occasionally, events that affect
these values and exchange rates may occur between the times at which they are
determined and the closing of the NYSE. If such events materially affect the
value of portfolio securities, these securities may be valued at their fair
value as determined in good faith by the Funds' Board, although the actual
calculation may be done by others.
WHAT DO SHARES COST?
The Funds' (except the Money Market Funds) net asset value (NAV) per Share
fluctuates and is based on the market value of all securities and other assets
of the Fund.
The NAV for Class A Shares and Class B Shares of Capital Appreciation Fund and
Mid Cap Equity Fund may differ due to the variance in daily net income realized
by each class. Such variance will reflect only accrued net income to which the
shareholders of a particular class are entitled.
REDUCING OR ELIMINATING THE FRONT-END SALES CHARGE
You can reduce or eliminate the applicable front-end sales charge for the Equity
and Income Funds, as follows. HNB or the Distributor must be notified by you in
writing or by your financial institution in order to reduce or eliminate the
sales charge.
QUANTITY DISCOUNTS
Larger purchases of Class A Shares of Capital Appreciation Fund and Mid Cap
Equity Fund and Shares of Louisiana Municipal Income Fund, Total Return Bond
Fund, or U.S. Government Income Fund reduce the sales charge you pay. You can
combine purchases of Shares made on the same day by you, your spouse and your
children under age 21. In addition, purchases made at one time by a trustee or
fiduciary for a single trust estate or a single fiduciary account can be
combined.
ACCUMULATED PURCHASES
If you make an additional purchase of Shares, you can count previous Share
purchases still invested in a Fund in calculating the applicable sales charge on
the additional purchase.
CONCURRENT PURCHASES
You can combine concurrent purchases of Class A Shares of Capital Appreciation
Fund and Mid Cap Equity Fund and Shares of Louisiana Municipal Income Fund,
Total Return Bond Fund, or U.S. Government Income Fund in calculating the
applicable sales charge. The sales charge will be reduced after the purchase is
confirmed.
LETTER OF INTENT
You can sign a Letter of Intent committing to purchase a certain amount of the
Class A Shares of Capital Appreciation Fund and Mid Cap Equity Fund and Shares
of Louisiana Municipal Fund, Total Return Bond Fund, and U.S. Government Income
Fund within a 13-month period to combine such purchases in calculating the sales
charge. The Fund's custodian will hold Shares in escrow equal to the maximum
applicable sales charge. If you complete the Letter of Intent, the Custodian
will release the Shares in escrow to your account. If you do not fulfill the
Letter of Intent, the Custodian will redeem the appropriate amount from the
Shares held in escrow to pay the sales charges that were not applied to your
purchases.
REINVESTMENT PRIVILEGE
You may reinvest, within 30 days (within 120 days for an IRA account), your
Share redemption proceeds at the next determined NAV without any sales charge.
Hibernia National Bank or the Distributor must be notified by you or your
financial institutional in writing of the reinvestment in order to eliminate a
sales charge. If you redeem your Shares in a Fund, there may be tax
consequences.
PURCHASES BY AFFILIATES OF THE FUND
The following individuals may buy Shares at NAV without any sales charge because
there are nominal sales efforts associated with their purchases.
o the Trust Division of Hibernia National Bank or other affiliates of Hibernia
National Bank for funds which are held in a fiduciary, agency, custodial, or
similar capacity;
o Trustees/Directors and employees of the Trust, Hibernia National Bank, or
their affiliates and the spouses, children, parents, and the parents of the
spouse of any such person;
o retired Trustees/Directors and retired employees of Hibernia National Bank, and
the spouse, children, parents and the parents of the spouse of any such person;
o any accounts for which such an employee serves in a fiduciary, agency,
custodial, or similar capacity;
o Trustees/Directors and employees of Federated Securities Corp. or its
affiliates;
o retired Trustees/Directors and retired employees of any bank or investment
dealer who has a sales agreement with Federated Securities Corp. with regard to
the Funds, and their spouses and children; and
o investors who purchase shares through The Personal Portfolio Manager(R), an
investment program sponsored by Hibernia Investments, L.L.C. or other similar
asset allocation programs made available through financial institutions who
have established dealer agreements with Federated Securities Corp.
REDUCING OR ELIMINATING THE CONTINGENT DEFERRED SALES CHARGE - CLASS B SHARES
These reductions or eliminations are offered because: no sales commissions have
been advanced to the investment professional selling Shares; the shareholder has
already paid a Contingent Deferred Sales Charge (CDSC); or nominal sales efforts
are associated with the original purchase of Shares.
Upon notification to the Distributor or the Funds' transfer agent, no CDSC will
be imposed on redemptions:
o the portion of which is attributable to increases in the value of the account
due to increases in the net asset value per Share;
o of shares acquired through reinvestment of dividends and capital gains;
o of Shares held for more than six years after the end of the calendar month of
acquisition;
o following the death or post-purchase disability, as defined in Section 72(m)(7)
of the Internal Revenue Code of 1986, of the last surviving shareholder;
o representing minimum required distributions from an Individual Retirement
Account or other retirement plan to a shareholder who has attained the age of 70
1/2; and
o which are involuntary redemptions processed by the Fund because the accounts do
not meet the minimum balance requirements.
HOW ARE THE FUNDS SOLD?
---------------------------------------------------------------------------------------
Under the Distributor's Contract with the Fund, the Distributor (Federated Securities
Corp.) offers Shares on a continuous, best-efforts basis.
FRONT-END SALES CHARGE REALLOWANCES
For sales of Class A Shares of Capital Appreciation Fund and Mid Cap Equity Fund
and Shares of Louisiana Municipal Income Fund, Total Return Bond Fund, and U.S.
Government Income Fund, Hibernia National Bank and any authorized dealer will
normally receive up to 100% of the applicable sales charge. Any portion of the
sales charge which is not paid to HNB, HISI or a dealer will be retained by the
Distributor. For sales of Class B Shares of Capital Appreciation Fund, Mid Cap
Equity Fund, and Cash Reserve Fund, HISI and any authorized dealer will normally
receive up to 100% of the contingent deferred sales charge. Any portion of the
sales charge or contingent deferred sales charge which is not paid to HNB, HISI,
or a dealer will be retained by the Distributor. However, the Distributor, in
its sole discretion, may uniformly offer to pay to HNB, HISI or a dealer selling
shares of the Funds, all or a portion of the sales charge or contingent deferred
sales charge it normally retains. Such payments may, to the extent permitted by
applicable laws, rules and regulations, take the form of cash or promotional
incentives, such as payment of certain expenses of qualified employees and their
spouses to attend informational meetings about the Funds or other special events
at recreational facilities, or items of material value.
RULE 12B-1 PLAN
As a reimbursement-type plan, the Rule 12b-1 Plan is designed to pay the
Distributor (who may then pay investment professionals such as banks,
broker/dealers, trust departments of banks, and registered investment advisers)
for the provision of administrative services (such as the provision of office
space, equipment, telephone facilities and various personnel, including
clerical, supervisory, and computer, as necessary or beneficial to establish and
maintain shareholder accounts and records, processing purchase and redemption
transactions, and performing other services) marketing activities (such as
advertising, printing and distributing prospectuses, and providing incentives to
investment professionals) to promote sales of Shares so that a Fund's overall
assets are maintained or increased. This helps the Fund achieve economies of
scale, reduce per Share expenses, and provide cash for orderly portfolio
management and Share redemptions. In addition, the Funds' service providers that
receive asset-based fees also benefit from stable or increasing a Fund's assets.
The Fund reimburses the Distributor only for those payments made to investment
professionals up to the maximum Rule 12b-1 Plan fee. The Distributor may seek
reimbursement in following years for any unreimbursed expenses permitted under
the Plan. In no event will the Fund pay for any expenses of the Distributor that
exceed the maximum Rule 12b-1 Plan fee.
For some classes of Shares, the maximum Rule 12b-1 Plan fee that can be paid in
any one year may not be sufficient to cover the marketing-related expenses the
Distributor has incurred. Therefore, it may take the Distributor a number of
years to recoup these expenses.
SHAREHOLDER SERVICES - CLASS B SHARES
The Capital Appreciation Fund, Mid Cap Equity Fund and Cash Reserve Fund may pay
Federated Shareholder Services Company, a subsidiary of Federated Investors,
Inc. (Federated), for providing shareholder services and maintaining shareholder
accounts. Federated Shareholder Services Company may select others to perform
these services for their customers and may pay them fees.
SUPPLEMENTAL PAYMENTS
Investment professionals and financial institutions may be paid fees out of the
assets of the Distributor, HISI, Hibernia National Bank, or their affiliates
(but not out of a Fund's assets). The Distributor may be reimbursed by the
Adviser or its affiliates.
Investment professionals and financial institutions receive such fees for
providing distribution-related or shareholder services such as sponsoring sales,
providing sales literature, conducting training seminars for employees, and
engineering sales-related computer software programs and systems. Also,
investment professionals may, to the extent permitted by applicable laws, rules
and regulations, be paid cash or promotional incentives, such as reimbursement
of certain expenses relating to attendance at informational meetings about the
Funds or other special events at recreational-type facilities, or items of
material value.
When an investment professional's customer purchases shares, the investment
professional may receive an amount up to 5.50% of the NAV of Class B Shares.
In addition, the Distributor may pay investment professionals 0.25% of the
purchase price of $1 million or more of Class A Shares that its customer has not
redeemed over the first year.
EXCHANGING SECURITIES FOR SHARES
You may contact the Distributor to request a purchase of Shares in exchange for
securities you own with a value of at least $25,000. The Funds reserve the right
to determine whether to accept your securities. A Fund will value your
securities in the same manner as it values its assets. This exchange is treated
as a sale of your securities for federal tax purposes.
REDEMPTION IN KIND
Although the Funds intend to pay Share redemptions in cash, they reserve the
right, as described below, to pay the redemption price in whole or in part by a
distribution of the Funds' portfolio securities.
Because the Funds have elected to be governed by Rule 18f-1 under the Investment
Company Act of 1940, the Funds are obligated to pay Share redemptions to any one
shareholder in cash only up to the lesser of $250,000 or 1% of the net assets
represented by such Share class during any 90-day period.
Any Share redemption payment greater than this amount will also be in cash
unless the Funds' Board determines that payment should be in kind. In such a
case, the Fund will pay all or a portion of the remainder of the redemption in
portfolio securities, valued in the same way as the Fund determines its NAV. The
portfolio securities will be selected in a manner that the Funds' Board deems
fair and equitable and, to the extent available, such securities will be readily
marketable.
Redemption in kind is not as liquid as a cash redemption. If redemption is made
in kind, shareholders receiving the portfolio securities and selling them before
their maturity could receive less than the redemption value of the securities
and could incur certain transaction costs.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Trust. To protect its
shareholders, the Trust has filed legal documents with Massachusetts that
expressly disclaim the liability of its shareholders for acts or obligations of
the Funds.
In the unlikely event a shareholder is held personally liable for a Fund's
obligations, the Trust is required by the Declaration of Trust to use its
property to protect or compensate the shareholder. On request, the Trust will
defend any claim made and pay any judgment against a shareholder for any act or
obligation of a Fund. Therefore, financial loss resulting from liability as a
shareholder will occur only if the Trust itself cannot meet its obligations to
indemnify shareholders and pay judgments against them.
ACCOUNT AND SHARE INFORMATION
VOTING RIGHTS
Each share of a Fund gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote.
All Shares of a Fund have equal voting rights, except that in matters affecting
only a particular Fund or class, only Shares of that Fund or class are entitled
to vote.
Trustees may be removed by the Board or by shareholders at a special meeting. A
special meeting of shareholders will be called by the Board upon the written
request of shareholders who own at least 10% of the Trust's outstanding shares
of all series entitled to vote.
As of October 3, 2000, the following shareholders of each Fund owned of record,
beneficially, or both, 5% or more of a Fund's outstanding Shares:
HIBERNIA CAPITAL APPRECIATION FUND (CLASS A SHARES)
HIBILA, Marshall & Ilsley Trust Co., Milwaukee, Wisconsin, owned approximately
6,985,801 Shares (51.29%); HIBFUND, Marshall & Ilsley Trust Co., Milwaukee,
Wisconsin, owned approximately 2,054,848 Shares (15.09); Hibernia National Bank, RPO
Retirement Sec. Pl. of Hibernia, New Orleans, Louisiana, owned approximately
1,509,062 Shares (11.08%); HIBSPEC, Marshall & Ilsley Trust Co., Milwaukee,
Wisconsin, owned approximately 1,492,389 Shares (10.96%).
HIBERNIA CAPITAL APPRECIATION FUND (CLASS B SHARES)
There were no shareholders of record who owned 5% or more of the Fund's Class B
Shares.
HIBERNIA LOUISIANA MUNICIPAL INCOME FUND
HIBILA, Marshall & Ilsley Trust Co., Milwaukee, Wisconsin, owned approximately
2,692,958 Shares (32.16%); HIBSPEC, Marshall & Ilsley Trust Co., Milwaukee,
Wisconsin, owned approximately 1,094,068 Shares (13.07%); Donaldson Lufkin
Jenrette, Securities Corporation Inc., Jersey City, New Jersey, owned
approximately 847,453 Shares (10.12%); HIBFUND, Marshall & Ilsley Trust Co.,
Milwaukee, Wisconsin, owned approximately 651,833 Shares (7.79%).
HIBERNIA MID CAP EQUITY FUND (CLASS A SHARES)
HIBFUND, Marshall & Ilsley Trust Co., Milwaukee, Wisconsin, owned approximately
1,233,272 Shares (75.60%); Hibernia National Bank, RPO Retirement Security Plan
of Hibernia Corp., New Orleans, Louisiana, owned approximately 189,263 Shares
(11.60%); HIBSPEC, Marshall & Ilsley Trust Co., Milwaukee, Wisconsin, owned
approximately 86,908 Shares (5.33%).
HIBERNIA MID CAP EQUITY FUND (CLASS B SHARES)
Donaldson Lufkin Jenrette, Securities Corporation Inc., Jersey City, New Jersey,
owned approximately 22,184 Shares (8.59%); Donaldson Lufkin Jenrette, Securities
Corporation Inc., Jersey City, New Jersey, owned approximately 12,960 Shares (5.02%).
HIBERNIA TOTAL RETURN BOND FUND
HIBFUND, Marshall & Ilsley Trust Co., Milwaukee, Wisconsin, owned approximately
4,652,440 Shares (57.74%); HIBILA, Marshall & Ilsley Trust Co., Milwaukee,
Wisconsin, owned approximately 1,862,678 Shares (23.12%); HIBSPEC, Marshall
Ilsley Trust Co., Milwaukee, Wisconsin, owned approximately 817,994 Shares
(10.15%); Hibernia National Bank, RPO Retirement Security Plan of Hibernia., New
Orleans, Louisiana, owned approximately 557,539 Shares (6.92%).
HIBERNIA U.S. GOVERNMENT INCOME FUND
HIBILA, Marshall & Ilsley Trust Co., Milwaukee, Wisconsin, owned approximately
3,090,804 Shares (36.61%); HIBSPEC, Marshall & Ilsley Trust Co., Milwaukee,
Wisconsin, owned approximately 2,292,608 Shares (27.16%); HIBFUND, Marshall &
Ilsley Trust Co., Milwaukee, Wisconsin, owned approximately 2,215,804 Shares
(26.25%).
HIBERNIA CASH RESERVE FUND (CLASS A SHARES)
HIBSPEC, Marshall & Ilsley Trust Co., Milwaukee, Wisconsin, owned approximately
159,653,315 Shares (74.48%); Hibernia National Bank RPO Retirement Security Plan
of Hibernia, New Orleans, Louisiana, owned approximately 18,881,638 Shares
(8.81%).
HIBERNIA CASH RESERVE FUND (CLASS B SHARES)
Donaldson Lufkin Jenrette, Securities Corporation Inc., Jersey City, New
Jersey, owned approximately 76,732 Shares (39.00%), Donaldson Lufkin Jenrette,
Securities Corporation Inc., Jersey City, New Jersey, owned approximately 30,497
Shares (15.50%); Hibernia National Bank Custodian For The Simple IRA Plan For
Premier., Baton Rouge, Louisiana, owned approximately 13,106 Shares (6.66%).
HIBERNIA U.S. TREASURY MONEY MARKET FUND
HIBSPEC, Marshall & Ilsley Trust Co., Milwaukee Wisconsin, owned approximately
168,914,903 Shares (73.93%).
Shareholders owning 25% or more of outstanding Shares maybe in control and be
able to affect the outcome of certain matters presented for a vote of
shareholders.
TAX INFORMATION
FEDERAL INCOME TAX
The Funds intend to meet requirements of Subchapter M of the Internal Revenue
Code applicable to regulated investment companies. If these requirements are not
met, it will not receive special tax treatment and will pay federal income tax.
Each Fund will be treated as a single, separate entity for federal income tax
purposes so that income earned and capital gains and losses realized by the
Trust's other portfolios will be separate from those realized by a Fund.
The Total Return Bond Fund and U.S. Government Income Fund are entitled to a
loss carry-forward, which may reduce the taxable income or gain that the Fund
would realize, and to which the shareholder would be subject, in the future.
FOREIGN INVESTMENTS
If the Capital Appreciation Fund, Mid Cap Equity Fund, Total Return Bond Fund,
or Cash Reserve Fund purchase foreign securities, their investment income may be
subject to foreign withholding or other taxes that could reduce the return on
these securities. Tax treaties between the United States and foreign countries,
however, may reduce or eliminate the amount of foreign taxes to which the Fund
would be subject. The effective rate of foreign tax cannot be predicted since
the amount of Fund assets to be invested within various countries is uncertain.
However, the Fund intends to operate so as to qualify for treaty-reduced tax
rates when applicable.
Distributions from a Fund may be based on estimates of book income for the year.
Book income generally consists solely of the coupon income generated by the
portfolio, whereas tax-basis income includes gains or losses attributable to
currency fluctuation. Due to differences in the book and tax treatment of
fixed-income securities denominated in foreign currencies, it is difficult to
project currency effects on an interim basis. Therefore, to the extent that
currency fluctuations cannot be anticipated, a portion of distributions to
shareholders could later be designated as a return of capital, rather than
income, for income tax purposes, which may be of particular concern to simple
trusts.
If a Fund invests in the stock of certain foreign corporations, they may
constitute Passive Foreign Investment Companies (PFIC), and the Fund may be
subject to federal income taxes upon disposition of PFIC investments.
If more than 50% of the value of a Fund's assets at the end of the tax year is
represented by stock or securities of foreign corporations, the Fund intends to
qualify for certain Code stipulations that would allow shareholders to claim a
foreign tax credit or deduction on their U.S. income tax returns. The Code may
limit a shareholder's ability to claim a foreign tax credit. Shareholders who
elect to deduct their portion of the Fund's foreign taxes rather than take the
foreign tax credit must itemize deductions on their income tax returns.
LOUISIANA MUNICIPAL INCOME FUND--ADDITIONAL TAX INFORMATION
Shareholders are not required to pay federal regular income tax on any dividends
received from Louisiana Municipal Income Fund that represent net interest on
tax-exempt municipal securities. However, under the Tax Reform Act of 1986,
dividends representing net interest earned on some municipal securities may be
included in calculating the federal individual alternative minimum tax or the
federal alternative minimum tax for corporations.
The alternative minimum tax, equal to up to 28% of alternative minimum taxable
income for individuals and 20% for corporations, applies when it exceeds the
regular tax for the taxable year. Alternative minimum taxable income is equal to
the regular taxable income of the taxpayer increased by certain "tax-preference"
items not included in regular taxable income and reduced by only a portion of
the deductions allowed in the calculation of the regular tax.
The Tax Reform Act of 1986 treats interest on certain "private activity" bonds
issued after August 7, 1986, as a tax-preference item for both individuals and
corporations. Unlike traditional governmental purpose municipal bonds, which
finance roads, schools, libraries, prisons, and other public facilities, private
activity bonds provide benefits to private parties. Louisiana Municipal Income
Fund may purchase all types of municipal securities, including private activity
bonds. Thus, in any tax year, a portion of the Fund's dividends may be treated
as a tax-preference item.
In addition, in the case of a corporate shareholder, dividends of the Fund which
represent interest on municipal bonds may be subject to the 20% corporate
alternative minimum tax because the dividends are included in a corporation's
"adjusted current earnings." The corporate alternative minimum tax treats 75% of
the excess of a taxpayer's pre-tax "adjusted current earnings" over the
taxpayer's alternative minimum taxable income as a tax-preference item.
"Adjusted current earnings" is based upon the concept of a corporation's
"earnings and profits." Since "earnings and profits" generally includes the full
amount of any Fund dividend, and alternative minimum taxable income does not
include the portion of the Fund's dividend attributable to municipal bonds which
are not private activity bonds, the difference will be included in the
calculation of the corporation's alternative minimum tax.
Dividends of Louisiana Municipal Income Fund representing net interest income
earned on some temporary investments and any realized net short-term gains are
taxed as ordinary income.
These tax consequences apply whether dividends are received in cash or as
additional shares. Information on the tax status of dividends and distributions
is provided annually.
LOUISIANA TAXES. Under existing Louisiana laws, distributions made by the Fund
are not subject to Louisiana income taxes provided that such distributions
qualify as exempt-interest dividends, and represent interest from obligations
which are issued by the State of Louisiana or any of its political subdivisions,
which interest is exempt from federal income tax. Conversely, to the extent that
distributions made by the Fund are attributable to other types of obligations,
such distributions will be subject to Louisiana income taxes.
OTHER STATE AND LOCAL TAXES
Income from Louisiana Municipal Income Fund is not necessarily free from state
income taxes in states other than Louisiana or from personal property taxes.
With respect to all the Funds, shareholders are urged to consult their own tax
advisers regarding the status of their accounts under state and local tax laws.
WHO MANAGES AND PROVIDES SERVICES TO THE FUNDS?
BOARD OF TRUSTEES
The Board is responsible for managing the Trust's business affairs and for
exercising all the Trust's powers except those reserved for the shareholders.
Information about each Board member is provided below and includes each
person's: name, address, birth date, present position(s) held with the Trust,
principal occupations for the past five years and positions held prior to the
past five years, total compensation received as a Trustee from the Trust for its
most recent fiscal year, and the total compensation received from the Fund
Complex for the most recent calendar year. The Trust is comprised of seven
funds. The Trust is the only investment company in the Complex.
<R>
As of October 3, 2000, the Funds' Board and Officers as a group owned less than
1% of the outstanding Class A Shares and Class B Shares of Capital Appreciation
Fund, Mid Cap Equity Fund and Cash Reserve Fund and less than 1% of the
outstanding Shares of Louisiana Municipal Income Fund, Total Return Bond Fund,
U.S. Government Income Fund and U.S. Treasury Money Market Fund.
</R>
An asterisk (*) denotes a Trustee who is deemed to be an interested person as
defined in the Investment Company Act of 1940. A pound sign (#) denotes a Member
of the Board's Executive Committee, which handles the Board's responsibilities
between its meetings. A plus sign (+) denotes a Member of the Board's Audit
Committee, which operates pursuant to a Charter approved by the Board.
<R>
----------------------------------------------------------------------------------------------
NAME
BIRTH DATE ----------
ADDRESS PRINCIPAL OCCUPATIONS AGGREGATE
POSITION WITH TRUST FOR PAST FIVE YEARS COMPENSATION
FROM TRUST
----------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
EDWARD C. GONZALES*# President, Executive Vice President $0
Birth Date: October 22, and Treasurer of some of the Funds
1930 in the Federated Fund Complex; Vice
Federated Investors Chairman, Federated Investors, Inc.;
Tower Trustee, Federated Administrative
1001 Liberty Avenue Services; formerly: Trustee or
Pittsburgh, PA Director of some of the Funds in the
PRESIDENT; TREASURER; Federated Fund Complex; CEO and
Chairman, Federated Administrative
------------------------ Services; Vice President, Federated
TRUSTEE Investment Management Company,
Federated Investment Counseling,
Federated Global Investment
Management Corp. and Passport
Research, Ltd.; Director and
Executive Vice President, Federated
Securities Corp.; Director,
Federated Services Company; Trustee,
Federated Shareholder Services
Company.
---------------------------------------------------------------------------------------------
ROBERT L. DIBENEDETTO, Gynecologist; Vice President, $12,000
M.D.+ Birth Woman's Hospital Endowment Board;
Date: April 14, 1928 Board of Directors, Louisiana Heath
781 Colonial Drive Insurance Association Board. (High
------------------------ Risk Heath Pool), Retired
Baton Rouge, LA President/CEO, Louisiana Medical
TRUSTEE Mutual Insurance Company; Current
Audit and Investment Committee
Member.
----------------------------------------------------------------------------------------------
------------------------ Registered Professional Engineer;
ARTHUR RHEW DOOLEY, JR.+ Chairman and CEO, Dooley Tackaberry, $10,800
Birth Date: December Inc. (distributors and fabricators
17, 1942 of fire protection and safety
4849 Cardinal Drive equipment), 1967 to Present;
Beaumont, TX 77536 Chairman and CEO, Spindeltop
TRUSTEE Computer Systems, Inc. dba Entire
Business Technology Center, 1983 to
Present; Director, Loop Cold Storage
Company; Director, UTM.D. Anderson
Cancer Center Board of Visitors;
Director, Texas Energy Museum;
Member, World Presidents
Organization (former YPO Members);
Member, Society of Fire Protection
Engineers.
----------------------------------------------------------------------------------------------
J. GORDAN REISCHE#+
Birth Date: September Retired Managing Partner, New $13,800
11, 1931 Orleans office, KPMG - LLP.
20 Dogwood Drive
Covington, LA
TRUSTEE; CHAIRMAN,
AUDIT COMMITTEE
---------------------------------------------------------------------------
--------------------
JEFFREY W. STERLING Vice President, Mutual Fund
Birth Date: February Services. $0
5, 1947
Federated Investors
Tower
Pittsburgh, PA
VICEPRESIDENT;ASSISTANT
TREASURER
----------------------------------------------------------------------------------------------
PETER J. GERMAIN Senior Vice President and Director,
Birth Date: September Mutual Fund Services Division, $0
3, 1959 Federated Services Company; Formerly
Federated Investors Senior Corporate Counsel, Federated
Tower Investors (1992-1997).
Pittsburgh, PA
SECRETARY
----------------------------------------------------------------------------------------------
</R>
INVESTMENT ADVISER
The Adviser conducts investment research and makes investment decisions for the
Funds.
The Adviser shall not be liable to the Trust or any Fund shareholder for any
losses that may be sustained in the purchase, holding, or sale of any security
or for anything done or omitted by it, except acts or omissions involving
willful misfeasance, bad faith, gross negligence, or reckless disregard of the
duties imposed upon it by its contract with the Trust.
Because of the internal controls maintained by HNB to restrict the flow of
non-public information, Fund investments are typically made without any
knowledge of HNB's or it's affiliates' lending relationships with an issuer.
CODE OF ETHICS RESTRICTIONS ON PERSONAL TRADING
As required by SEC rules, the Fund, its Adviser, and its Distributor have
adopted codes of ethics. These codes govern securities trading activities of
investment personnel, Fund Trustees, and certain other employees. Although they
do permit these people to trade in securities, including those that the Fund
could buy, they also contain significant safeguards designed to protect the Fund
and its shareholders from abuses in this area, such as requirements to obtain
prior approval for, and to report, particular transactions.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the Adviser looks for prompt execution of the order at a favorable
price. The Adviser will generally use those who are recognized dealers in
specific portfolio instruments, except when a better price and execution of the
order can be obtained elsewhere. The Adviser may select brokers and dealers
based on whether they also offer research services (as described below). In
selecting among firms believed to meet these criteria, the Adviser may give
consideration to those firms which have sold or are selling Shares of the Funds
and other funds distributed by the Distributor and its affiliates. The Adviser
makes decisions on portfolio transactions and selects brokers and dealers
subject to review by the Funds' Board.
RESEARCH SERVICES
<R>
Research services may include advice as to the advisability of investing in
securities; security analysis and reports; economic studies; industry studies;
receipt of quotations for portfolio evaluations; and similar services. Research
services may be used by the Adviser or by affiliates in advising other accounts.
To the extent that receipt of these services may replace services for which the
Adviser or its affiliates might otherwise have paid, it would tend to reduce
their expenses. The Adviser and its affiliates exercise reasonable business
judgment in selecting those brokers who offer brokerage and research services to
execute securities transactions. They determine in good faith that commissions
charged by such persons are reasonable in relationship to the value of the
brokerage and research services provided. For the fiscal year ended August 31,
2000, the Fund's Adviser directed brokerage transactions to certain brokers due
to research services they provided.
For the fiscal year ended August 31, 2000, the Fund's Adviser directed brokerage
transactions to certain brokers due to research services they provided. The
total amount of these transactions for Capital Appreciation Fund was $85,447,774
for which the Fund paid $118,903 in brokerage commissions and the total amount
of these transactions for Mid Cap Equity Fund was $7,537,533 for which the fund
paid $12,953 in brokerage commissions.
Investment decisions for the Funds are made independently from those of other
accounts managed by the Adviser. When a Fund and one or more of those accounts
invests in, or disposes of, the same security, available investments or
opportunities for sales will be allocated among the Funds and the accounts in a
manner believed by the Adviser to be equitable. While the coordination and
ability to participate in volume transactions may benefit a Fund, it is possible
that this procedure could adversely impact the price paid or received and/or the
position obtained or disposed of by a Fund.
</R>
ADMINISTRATOR
Federated Administrative Services, a subsidiary of Federated, provides
administrative personnel and services (including certain legal and financial
reporting services) necessary to operate the Funds. Federated Administrative
Services provides these at the following annual rate of the average aggregate
daily net assets of the Funds as specified below:
MAXIMUM AVERAGE AGGREGATE DAILY NET ASSETS OF THE ADMINISTRATIVE FEE FEDERATED
FUNDS 0.150 of 1% on the first $250 million 0.125 of 1% on the next $250 million
0.100 of 1% on the next $250 million 0.075 of 1% on assets in excess of $750
million The administrative fee received during any fiscal year shall be at least
$50,000 per portfolio. Federated Administrative Services may voluntarily waive a
portion of its fee and may reimburse the Funds for expenses.
---------------------------------------------------------------------------------------
Federated Administrative Services also provides, or causes the provision of,
certain accounting and recordkeeping services with respect to the Funds'
portfolio investments for a fee based on each Fund's assets, plus out-of-pocket
expenses.
CUSTODIAN
Hibernia National Bank, New Orleans, Louisiana, is custodian for the securities
and cash of the Funds.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Federated Services Company, through its registered transfer agent subsidiary,
Federated Shareholder Services Company, maintains all necessary shareholder
records. The Funds pay the transfer agent a fee based on the size, type, and
number of accounts and transactions made by shareholders. The fee is based on
the level of a Fund's average net assets for the period, plus out-of- pocket
expenses.
INDEPENDENT AUDITORS
The independent auditor for the Funds, Ernst & Young LLP, plans and performs its
audit so that it may provide an opinion as to whether the Funds' financial
statements and financial highlights are free of material misstatement.
FEES PAID BY THE FUNDS FOR SERVICES
CAPITAL APPRECIATION FUND
<R>
FOR THE YEAR ENDED AUGUST 2000 1999 1998
31
Advisory Fee Earned $2,838,677 $2,663,596 $2,417,253
Advisory Fee Reduction $0 $0 $0
Brokerage Commissions $117,909 $488,045
$323,228
Administrative Fee $417,052 $395,787 $374,710
12b-1 Fee
Class A Shares $897,153 N/A N/A
Class B Shares $147,220 N/A N/A
Shareholder Services Fee
Class B Shares $49,074 N/A N/A
</R>
---------------------------------------------------------------------------------------
LOUISIANA MUNICIPAL INCOME FUND
<R>
FOR THE YEAR ENDED AUGUST 2000 1999 1998
31
Advisory Fee Earned $394,892 $440,117 $450,310
Advisory Fee Reduction $201,833 $200,207 $80,055
Administrative Fee $96,704 $109,123 $116,480
12b-1 Fee $219,384 N/A N/A
</R>
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MID CAP EQUITY FUND
<R>
FOR THE YEAR ENDED AUGUST 2000 1999 7/13*-
31 8/31/98
Advisory Fee Earned $182,506 $138,101 $15,872
Advisory Fee Reduction $48,668 $98,423 $0
Brokerage Commissions $13,416 $24,490 $0
Administrative Fee $50,000 $50,001 $2,420
12b-1 Fee
Class A Shares $53,452 N/A N/A
Class B Shares $22,152 N/A N/A
Shareholder Services Fee
Class B Shares $7,384 N/A N/A
* Date of initial public offering
---------------------------------------------------------------------------------------
</R>
TOTAL RETURN BOND FUND
<R>
FOR THE YEAR ENDED AUGUST 2000 1999 1998
31
Advisory Fee Earned $548,348 $552,433 $532,051
Advisory Fee Reduction $235,006 $236,757 $131,063
Administrative Fee $86,332 $88,052 $88,402
12b-1 Fee $195,839 N/A N/A
</R>
---------------------------------------------------------------------------------------
U.S. GOVERNMENT INCOME FUND
<R>
FOR THE YEAR ENDED AUGUST 2000 1999 1998
31
Advisory Fee Earned $380,907 $377,953 $289,526
Advisory Fee Reduction $177,757 $155,377 $38,603
Administrative Fee $93,275 $93,703 $74,793
12b-1 Fee $211,615 N/A N/A
</R>
---------------------------------------------------------------------------------------
CASH RESERVE FUND
<R>
FOR THE YEAR ENDED AUGUST 2000 1999 1998
31
Advisory Fee Earned $814,922 $639,664 $658,507
Administrative Fee $224,005 $178,384 $191,658
12b-1 Fee
Class A Shares $508,724 N/A N/A
Class B Shares $1,805 N/A N/A
Shareholder Services Fee
Class B Shares $601 N/A N/A
</R>
---------------------------------------------------------------------------------------
U.S. TREASURY MONEY MARKET FUND
<R>
FOR THE YEAR ENDED AUGUST 2000 1999 1998 31 Advisory Fee Earned $839,826
$934,658 $718,045 Administrative Fee $231,333 $260,324 $208,245 With respect to
Capital Appreciation Fund, Mid Cap Equity Fund, and Cash Reserve Fund, fees are
allocated among classes based on their pro rata share of Fund assets, except for
marketing (Rule 12b-1) fees and shareholder services fees, which are borne only
by the applicable class of Shares.
---------------------------------------------------------------------------------------
</R>
HOW DO THE FUNDS MEASURE PERFORMANCE?
The Funds may advertise Share performance by using the SEC's standard method for
calculating performance applicable to all mutual funds. The SEC also permits
this standard performance information to be accompanied by non-standard
performance information.
Share performance reflects the effect of non-recurring charges, such as maximum
sales charges, which, if excluded, would increase the total return and yield.
The performance of Shares depends upon such variables as: portfolio quality;
average portfolio maturity; type and value of portfolio securities; changes in
interest rates; changes or differences in a Fund's or any class of Shares'
expenses; and various other factors.
Share performance (except the Money Market Funds) fluctuates on a daily basis
largely because net earnings fluctuate daily. Both net earnings and offering
price per Share are factors in the computation of yield and total return.
AVERAGE ANNUAL TOTAL RETURNS AND YIELD
CAPITAL APPRECIATION FUND
<R>
Total returns for Class A Shares are given for the one-year, five-year and
ten-year periods ended August 31, 2000. Total returns for Class B Shares are
given for the one-year and Start of Performance periods ended August 31, 2000.
</R>
------------------------------------------------------------------------------
1 YEAR 5 YEARS10 YEARS
----------------
<R>
CLASS A SHARES
Total Return 13.21% 22.08% 17.76%
1 YEAR 5 YEARSSTART OF PERFORMANCE ON
DECEMBER 2, 1996
CLASS B SHARES
Total Return 12.15% N/A 19.78%
-------------------------------------------------------------------------------
</R>
---------------------------------------------------------------------------------------
LOUISIANA MUNICIPAL INCOME FUND
<R>
Total returns are given for the one-year, five-year and ten-year periods ended
August 31,2000.
Yield and Tax Equivalent Yield are given for the 30-day period ended August 31,
2000.
</R>
30-DAY PERIOD 1 YEAR 5 YEARS10 YEARS
Total Return N/A 3.00% 4.82% 6.62%
Yield 4.65% N/A N/A N/A
Tax Equivalent 8.55% N/A N/A N/A
Yield
------------------------------------------------------------------------------
MID CAP EQUITY FUND
---------------------------------------------------------------------------------------
<R>
Total returns for Class A Shares are given for the one-year, five-year and
ten-year periods ended August 31, 2000. Total returns for Class B Shares is
given for the one-year and Start of Performance periods ended August 31, 2000.
</R>
--------------------------------------------------------------------------------------------------------------
1 YEAR 5 YEARS10 YEARS
CLASS A SHARES*
Total Return 34.76% 22.84% 17.76%
1 YEAR START OF PERFORMANCE ON JULY
13, 1998
CLASS B SHARES
Total Return 34.54% 22.43%
* Hibernia Mid Cap Equity Fund, Class A Shares is the successor to a collective
trust fund. The quoted performance data includes performance of the collective
trust fund for the period from 8/31/90 to 7/12/98 when the Fund commenced
operation, as adjusted to reflect the Fund's anticipated expenses. The
collective trust fund was not registered under the Investment Company Act of
1940 ("1940 Act") and therefore was not subject to certain investment
restrictions imposed by the 1940 Act. If the collective trust fund had been
registered under the 1940 Act, the performance may have been adversely affected.
---------------------------------------------------------------------------------------
TOTAL RETURN BOND FUND
<R>
Total returns are given for the one-year, five-year and Start of Performance
periods ended August 31,2000.
Yield is given for the 30-day period ended August 31, 2000.
</R>
30-DAY PERIOD 1 YEAR 5 YEARSSTART OF PERFORMANCE ON
NOVEMBER 2, 1992
Total Return N/A 2.36% 4.63% 5.23%
Yield 6.07% N/A N/A N/A
--------------------------------------------------------------------------------
U.S. GOVERNMENT INCOME FUND
---------------------------------------------------------------------------------------
Total returns are given for the one-year, five-year and ten-year periods ended
August 31, 2000.
Yield is given for the 30-day period ended August 31, 2000.
30-DAY PERIOD 1 YEAR 5 YEARS10 YEARS
Total Return N/A 3.31% 5.06% 6.46%
Yield 6.14% N/A N/A N/A
--------------------------------------------------------------------------
CASH RESERVE FUND
---------------------------------------------------------------------------------------
<R>
Total returns for Class A Shares are given for the one-year, five-year and ten
year periods ended August 31, 2000. Total return for Class B Shares is given for
the Start of Performance period ended August 31, 2000.
</R>
Yield and Effective Yield are given for the 7-day period ended August 31, 2000.
7-DAY 1 Year 5 10 Years
PERIOD Years
CLASS A SHARES
Total Return N/A 5.10% 4.72% 4.39%
Yield 5.43% N/A N/A N/A
Effective Yield 5.58% N/A N/A N/A
START OF PERFORMANCE ON
7-DAY 1 YEAR 5 SEPTEMBER 4, 1998
PERIOD YEARS
CLASS B SHARES
Total Return N/A -1.19% N/A 1.66%
Yield 4.68% N/A N/A N/A
Effective Yield 4.79% N/A N/A N/A
------------------------------------------------------------------------
U.S. TREASURY MONEY MARKET FUND
---------------------------------------------------------------------------------------
<R>
Total returns are given for the one-year, five-year and Start of Performance
periods ended August 31, 2000.
Yield and Effective Yield are given for the 7-day period ended August 31, 2000.
</R>
7-DAY 1 YEAR 5 YEARS START OF PERFORMANCE ON
PERIOD JULY 16, 1993
Total Return N/A 5.15% 4.85% 4.57%
Yield 5.70% N/A N/A N/A
Effective Yield 5.87% N/A N/A N/A
--------------------------------------------------------------------------
---------------------------------------------------------------------------------------
TOTAL RETURN
Total return represents the change (expressed as a percentage) in the value of
Shares over a specific period of time, and includes the investment of income and
capital gains distributions.
The average annual total return for Shares is the average compounded rate of
return for a given period that would equate a $1,000 initial investment to the
ending redeemable value of that investment. The ending redeemable value is
computed by multiplying the number of Shares owned at the end of the period by
the NAV per Share at the end of the period. The number of Shares owned at the
end of the period is based on the number of Shares purchased at the beginning of
the period with $1,000, less any applicable sales charge, adjusted over the
period by any additional Shares, assuming the annual reinvestment of all
dividends and distributions.
When Shares of a Fund are in existence for less than a year, the Fund may
advertise cumulative total return for that specific period of time, rather than
annualizing the total return.
YIELD, EFFECTIVE YIELD AND TAX-EQUIVALENT YIELD
The yield of Equity and Income Fund Shares is calculated by dividing: (i) the
net investment income per Share earned by the Shares over a 30-day period; by
(ii) the maximum offering price per Share on the last day of the period. This
number is then annualized using semi-annual compounding. This means that the
amount of income generated during the 30-day period is assumed to be generated
each month over a 12-month period and is reinvested every six months.
The tax-equivalent yield of Louisiana Municipal Income Fund Shares is calculated
similarly to the yield, but is adjusted to reflect the taxable yield that Shares
would have had to earn to equal the actual yield, assuming the maximum combined
federal and state tax rate. The yield, effective yield and tax-equivalent yield
do not necessarily reflect income actually earned by Shares because of certain
adjustments required by the SEC and, therefore, may not correlate to the
dividends or other distributions paid to shareholders.
The yield of Money Market Fund Shares is based upon the seven days ending on the
day of the calculation, called the "base period." This yield is calculated by:
determining the net change in the value of a hypothetical account with a balance
of one Share at the beginning of the base period, with the net change excluding
capital changes but including the value of any additional Shares purchased with
dividends earned from the original one Share and all dividends declared on the
original and any purchased Shares; dividing the net change in the account's
value by the value of the account at the beginning of the base period to
determine the base period return; and multiplying the base period return by
365/7.
The effective yield of Money Market Fund Shares is calculated by compounding the
unannualized base-period return by: adding one to the base-period return,
raising the sum to the 365/7th power; and subtracting one from the result.
To the extent investment professionals and broker/dealers charge fees in
connection with services provided in conjunction with an investment in Shares,
the Share performance is lower for shareholders paying those fees.
TAX EQUIVALENCY TABLE
<R>
Set forth below is a sample of a tax-equivalency table that may be used in
advertising and sales literature. This table is for illustrative purposes only
and is not representative of past or future performance of the Louisiana
Municipal Income Fund. The interest earned by the municipal securities owned by
the Fund generally remains free from federal regular income tax and is often
free from state and local taxes as well. However, some of the Louisiana
Municipal Income Fund's income may be subject to the federal alternative minimum
tax and state and/or local taxes.
TAX EQUIVALENCY TABLE
-----------------------------------------------------------------------------------------
TAXABLE YIELD EQUIVALENT FOR 2000 - STATE OF LOUISIANA
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
COMBINED FEDERAL AND STATE INCOME TAX BRACKET:
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
19.00% 34.00% 37.00% 42.00% 45.60%
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
Joint Return $1-43,850 $43,851-105,95$105,951-161,45$161,451-288,35Over 288,350
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
Single Return $1-26,250 $26,251-63,550$63,551-132,600$132,601-288,35Over 288,350
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
TAX EXEMPT YIELD:
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
TAXABLE YIELD EQUIVALENT:
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
1.00% 1.23% 1.52% 1.59% 1.72% 1.84%
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
1.50% 1.85% 2.27% 2.38% 2.59% 2.76%
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
2.00% 2.47% 3.03% 3.17% 3.45% 3.68%
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
2.50% 3.09% 3.79% 3.97% 4.31% 4.60%
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
3.00% 3.70% 4.55% 4.76% 5.17% 5.51%
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
3.50% 4.32% 5.30% 5.56% 6.03% 6.43%
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
4.00% 4.94% 6.06% 6.35% 6.90% 7.35%
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
4.50% 5.56% 6.82% 7.14% 7.76% 8.27%
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
5.00% 6.17% 7.58% 7.94% 8.62% 9.19%
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
5.50% 6.79% 8.33% 8.73% 9.48% 10.11%
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
6.00% 7.41% 9.09% 9.52% 10.34% 11.03%
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
6.50% 8.02% 9.85% 10.32% 11.21% 11.95%
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
7.00% 8.64% 10.61% 11.11% 12.07% 12.87%
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
7.50% 9.26% 11.36% 11.90% 12.93% 13.79%
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
8.00% 9.88% 12.12% 12.70% 13.79% 14.71%
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
8.50% 10.49% 12.88% 13.49% 14.66% 15.63%
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
9.00% 11.11% 13.64% 14.29% 15.52% 16.54%
-----------------------------------------------------------------------------------------
</R>
NOTE: THE MAXIMUM MARGINAL TAX RATE FOR EACH BRACKET WAS USED IN CALCULATING THE
TAXABLE YIELD EQUIVALENT. FURTHERMORE, ADDITIONAL STATE AND LOCAL TAXES PAID ON
COMPARABLE TAXABLE INVESTMENTS WERE NOT USED TO INCREASE FEDERAL DEDUCTIONS.
PERFORMANCE COMPARISONS
Advertising and sales literature may include:
o references to ratings, rankings, and financial publications and/or performance
comparisons of Shares to certain indices;
o charts, graphs and illustrations using the Fund's returns, or returns in
general, that demonstrate investment concepts such as tax-deferred
compounding, dollar-cost averaging and systematic investment;
o discussions of economic, financial and political developments and their impact
on the securities market, including the portfolio manager's views on how such
developments could impact the Funds; and
o information about the mutual fund industry from sources such as the Investment
Company Institute.
A Fund may compare its performance, or performance for the types of securities
in which it invests, to a variety of other investments, including federally
insured bank products such as bank savings accounts, certificates of deposit,
and Treasury bills.
A Fund may quote information from reliable sources regarding individual
countries and regions, world stock exchanges, and economic and demographic
statistics.
You may use financial publications and/or indices to obtain a more complete view
of Share performance. When comparing performance, you should consider all
relevant factors such as the composition of the index used, prevailing market
conditions, portfolio compositions of other funds, and methods used to value
portfolio securities and compute offering price. The financial publications
and/or indices which a Fund uses in advertising may include:
OLIPPER ANALYTICAL SERVICES, INC., ranks funds in various fund categories by
making comparative calculations using total return. Total return assumes the
reinvestment of all income dividends and capital gains distributions, if any.
From time to time, the Money Market Funds will quote the Lipper ranking in the
"money market instruments funds" category in advertising and sales literature.
OBANK RATE MONITOR NATIONAL INDEX, Miami Beach, Florida, is a financial
reporting service which publishes weekly average rates of 50 leading bank and
thrift institution money market deposit accounts. The rates published in the
index are averages of the personal account rates offered on the Wednesday prior
to the date of publication by ten of the largest banks and thrifts in each of
the five largest Standard Metropolitan Statistical Areas. Account minimums range
upward from $2,500 in each institution, and compounding methods vary. If more
than one rate is offered, the lowest rate is used. Rates are subject to change
at any time specified by the institution.
ODOW JONES INDUSTRIAL AVERAGE ("DJIA") represents share prices of selected
blue-chip industrial corporations as well as public utility and transportation
companies. The DJIA indicates daily changes in the average price of stocks in
any of its categories. It also reports total sales for each group of industries.
Because it represents the top corporations of America, the DJIA index is a
leading economic indicator for the stock market as a whole.
OSTANDARDS & POOR'S DAILY STOCK PRICE INDEX OF 500 COMMON STOCKS, a composite
index of common stocks in industry, transportation, and financial and public
utility companies, compares total returns of funds whose portfolios are invested
primarily in common stocks. In addition, the Standard & Poor's index assumes
reinvestment of all dividends paid by stock listed on the index. Taxes due on
any of these distributions are not included, nor are brokerage or other fees
calculated in the Standard & Poor's figures.
oLEHMAN BROTHERS GOVERNMENT/CORPORATE TOTAL INDEX is compromised of
approximately 5,000 issues which include: non-convertible bonds publicly issued
by the U.S. government or its agencies; corporate bonds guaranteed by the U.S.
government and quasi-federal corporations; and publicly issued, fixed rate,
non-convertible domestic bonds of companies in industry, public utilities, and
finance. The average maturity of these bonds approximates nine years. Tracked by
Lehman Brothers, Inc., the index calculates total returns for one-month,
three-months, twelve months, and ten-year periods and year-to-date.
OSALOMON BROTHERS AAA-AA CORPORATE INDEX calculates total returns of
approximately 775 issues which include long-term, high grade domestic corporate
taxable bonds, rated AAA-AA with maturities of twelve years or more and
companies in industry, public utilities, and finance.
OMERRILL LYNCH CORPORATE & GOVERNMENT MASTER INDEX is an unmanaged index
comprised of approximately 4,821 issues which include corporate debt obligations
rated BBB or better and publicly issued, non-convertible domestic debt of the
U.S. government or any agency thereof. These quality parameters are based on
composite of rating assigned by Standard and Poor's and Moody's Investors
Service, Inc. Only notes and bonds with a minimum maturity of one year are
included.
OMERRILL LYNCH CORPORATE MASTER INDEX is an unmanaged index comprised of
approximately 4,356 corporate debt obligations rated BBB or better. These
quality parameters are based on composites of ratings assigned by Standard and
Poor's and Moody's Investors Service, Inc. Only bonds with a minimum maturity of
one year are included.
OSALOMON BROTHERS BROAD INVESTMENT-GRADE ("BIG") BOND INDEX is designed to
provide the investment-grade bond manager with an all-inclusive universe of
institutionally traded U.S. Treasury, agency, mortgage and corporate securities
which can be used as a benchmark. The BIG Index is market
capitalization-weighted and includes all fixed rate bonds with a maturity of one
year or longer and a minimum of $50-million amount outstanding at entry ($200
million for mortgage coupons) and remain in the index until their amount falls
below $25 million.
OMORNINGSTAR, INC., an independent rating service , is the publisher of the
bi-weekly MUTUAL FUNDS VALUES. MUTUAL FUNDS VALUES rates more than 1,000
NASDAQ-listed mutual funds of all types, according to their risk-adjusted
returns. The maximum rating is five stars, and ratings are effective for two
weeks.
FINANCIAL INFORMATION
The Financial Statements for the Funds for the fiscal year ended August 31,
2000, are incorporated herein by reference to the Annual Report to Shareholders
of Capital Appreciation Fund, Louisiana Municipal Income Fund, Mid Cap Equity
Fund, Total Return Bond Fund, U.S. Government Income Fund, Cash Reserve Fund and
U.S. Treasury Money Market Fund dated October 31, 2000.
INVESTMENT RATINGS
STANDARD AND POOR'S MUNICIPAL BOND RATING DEFINITIONS
AAA - Debt rated AAA has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
A - Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effect of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB - Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB, B, CCC, CC - Debt rated BB, B, CCC and CC is regarded, on balance, as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and CC the highest degree of speculation. While
such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties of major risk exposures to adverse
conditions.
C - The rating C is reserved for income bonds on which no interest is being
paid.
D - Debt rated D is in default, and payments of interest and/or repayment of
principal is in arrears.
STANDARD & POOR'S SHORT-TERM MUNICIPAL OBLIGATION RATINGS
A Standard & Poor's (S&P) note rating reflects the liquidity concerns and market
access risks unique to notes.
SP-1--Very strong or strong capacity to pay principal and interest. Those issues
determined to possess overwhelming safety characteristics will be given a plus
sign (+) designation.
SP-2--Satisfactory capacity to pay principal and interest.
VARIABLE RATE DEMAND NOTES (VRDNS) AND TENDER OPTION BONDS (TOBS) RATINGS
S&P assigns dual ratings to all long-term debt issues that have as part of their
provisions a variable rate demand feature. The first rating (long-term rating)
addresses the likelihood of repayment of principal and interest when due, and
the second rating (short-term rating) describes the demand characteristics.
Several examples are AAA/A-1+, AA/A-1+, A/A-1. (The definitions for the
long-term and the short-term ratings are provided below.)
COMMERCIAL PAPER (CP) RATINGS
An S&P commercial paper rating is a current assessment of the likelihood of
timely payment of debt having an original maturity of no more than 365 days.
A-1--This highest category indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong safety
characteristics are denoted with a plus sign (+) designation.
A-2--Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated A-1.
LONG-TERM DEBT RATINGS
AAA--Debt rated AAA has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA--Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the highest-rated issues only in small degree.
A--Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher-rated categories.
MOODY'S INVESTORS SERVICE, INC., MUNICIPAL BOND RATING DEFINITIONS
AAA - Bonds which are 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.
AA - Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they compromise what are generally known as high
grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long term risks appear somewhat larger than in Aaa securities.
A - Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment some time in the future.
BAA - Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
BA - Bonds which are Ba are judged to have speculative elements; their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class.
B - Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
CAA - Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
CA - Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default of have other marked shortcomings.
C - Bonds which are rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
MOODY'S INVESTORS SERVICE, INC., SHORT-TERM MUNICIPAL OBLIGATION RATINGS
Moody's Investor Service, Inc. (Moody's) short-term ratings are designated
Moody's Investment Grade (MIG or VMIG). (See below.) The purpose of the MIG or
VMIG ratings is to provide investors with a simple system by which the relative
investment qualities of short-term obligations may be evaluated.
MIG1--This designation denotes best quality. There is present strong protection
by established cash flows, superior liquidity support or demonstrated broad
based access to the market for refinancing.
MIG2--This designation denotes high quality. Margins of protection are ample
although not so large as in the preceding group.
MOODY'S INVESTORS SERVICE, INC. SHORT-TERM DEBT RATING DEFINITIONS
PRIME-1 - Issuers rated PRIME-1 (or related supporting institutions) have a
superior capacity for repayment of short-term promissory obligations. PRIME-1
repayment capacity will normally be evidenced by the following characteristics:
- Leading market positions in well established industries.
- High rates of return on funds employed.
- Conservative capitalization structure with moderate reliance on debt and ample
asset protection.
- Broad margins in earning coverage of fixed financial charges and high internal
cash generation.
- Well-established access to a range of financial markets and assured sources of
alternate liquidity
PRIME-2 - Issuers rated PRIME-2 (or related supporting institutions) have a
strong capacity for repayment of short-term promissory obligations. This will
normally be evidenced by many of the characteristics cited above, but to a
lesser degree. Earnings trends and coverage ratios, while sound, will be more
subject to variation. Capitalization characteristics, while still appropriate,
may be more affected by external conditions. Ample alternate liquidity is
maintained.
PRIME-3 - Issuers rated PRIME-3 (or related supporting institutions) have an
acceptable ability for repayment of senior short-term obligations. The effect of
industry characteristics and market compositions may be more pronounced.
Variability in earnings and profitability may result in changes in the level of
debt protection measurements and may require relatively high financial leverage.
Adequate alternate liquidity is maintained.
NOT PRIME- Issuers rated NOT PRIME do not fall within any of the Prime rating
categories.
VARIABLE RATE DEMAND NOTES (VRDNS) AND TENDER OPTION BONDS (TOBS) RATINGS
Short-term ratings on issues with demand features are differentiated by the use
of the VMIG symbol to reflect such characteristics as payment upon periodic
demand rather than fixed maturity dates and payment relying on external
liquidity. In this case, two ratings are usually assigned, (for example,
Aaa/VMIG-1); the first representing an evaluation of the degree of risk
associated with scheduled principal and interest payments, and the second
representing an evaluation of the degree of risk associated with the demand
feature. The VMIG rating can be assigned a 1 or 2 designation using the same
definitions described above for the MIG rating.
COMMERCIAL PAPER (CP) RATINGS
P-1--Issuers rated Prime-1 (or related supporting institutions) have a superior
capacity for repayment of short-term promissory obligations. Prime-1 repayment
capacity will normally be evidenced by the following characteristics: leading
market positions in well established industries, high rates of return on funds
employed, conservative capitalization structure with moderate reliance on debt
and ample asset protection, broad margins in earning coverage of fixed financial
charges and high internal cash generation, well-established access to a range of
financial markets and assured sources of alternate liquidity.
P-2--Issuers rated Prime-2 (or related supporting institutions) have a strong
capacity for repayment of short-term promissory obligations. This will normally
be evidenced by many of the characteristics cited above, but to a lesser degree.
Earnings trends and coverage ratios, while sound, will be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
LONG-TERM DEBT RATINGS
AAA--Bonds which are 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
edged." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
AA--Bonds which are 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
which make the long-term risks appear somewhat larger than in Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
NR--Indicates that both the bonds and the obligor or credit enhancer are not
currently rated by S&P or Moody's with respect to short-term indebtedness.
However, management considers them to be of comparable quality to securities
rated A-1 or P-1.
NR(1)--The underlying issuer/obligor/guarantor has other outstanding debt rated
AAA by S&P or Aaa by Moody's.
NR(2)--The underlying issuer/obligor/guarantor has other outstanding debt rated
AA by S&P or Aa by Moody's.
NR(3)--The underlying issuer/obligor/guarantor has other outstanding debt rated
A by S&P or Moody's.
FITCH IBCA, INC.. SHORT-TERM DEBT RATING DEFINITIONS
F-1+--Exceptionally Strong Credit Quality. Issues assigned this rating are regarded
as having the strongest degree of assurance for timely payment.
F-1--Very Strong Credit Quality. Issues assigned this rating reflect an
assurance for timely payment, only slightly less in degree than issues rated
F-1+.
F-2--Good Credit Quality. Issues carrying this rating have a satisfactory degree
of assurance for timely payment, but the margin of safety is not as great as for
issues assigned F-1+ and F-1 ratings.
FITCH IBCA, INC. LONG-TERM DEBT RATING DEFINITIONS
AAA--Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.
AA--Bonds considered to be investment grade and of very high credit quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated AAA. Because bonds rated in the AAA and AA
categories are not significantly vulnerable to foreseeable future developments,
short-term debt of these issuers is generally rated F-1+.
A--Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
BBB--Bonds considered to be investment grade and of satisfactory credit quality.
The obligor's ability to pay interest and repay principal is considered to be
adequate. Adverse changes in economic conditions and circumstances, however, are
more likely to have adverse impact on these bonds, and therefore impair timely
payment. The likelihood that the ratings of these bonds will fall below
investment grade is higher than for bonds with higher ratings.
BB--Bonds are considered speculative. The obligor's ability to pay interest and
repay principal may be affected over time by adverse economic changes. However,
business and financial alternatives can be identified which could assist the
obligor in satisfying its debt service requirements.
B--Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issue.
CCC--Bonds have certain identifiable characteristics which, if not remedied, may
lead to default. The ability to meet obligations requires an advantageous
business and economic environment.
CC--Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.
C--Bonds are imminent default in payment of interest or principal.
MOODY'S INVESTORS SERVICE, INC. COMMERCIAL PAPER RATINGS
PRIME-1--Issuers rated Prime-1 (or related supporting institutions) have a
superior capacity for repayment of short-term promissory obligations. Prime-1
repayment capacity will normally be evidenced by the following characteristics:
o Leading market positions in well-established industries;
o High rates of return on funds employed;
o Conservative capitalization structure with moderate reliance on debt and ample
asset protection;
o Broad margins in earning coverage of fixed financial charges and high internal
cash generation; and
o Well-established access to a range of financial markets and assured sources of
alternate liquidity.
PRIME-2--Issuers rated Prime-1 (or related supporting institutions) have a
strong capacity for repayment of short-term promissory obligations. This will
normally be evidenced by many of the characteristics cited above but to a lesser
degree. Earnings trends and coverage ratios, while sound, will be more subject
to variation. Capitalization characteristics, while still appropriate, may be
more affected by external conditions. Ample alternate liquidity is maintained.
STANDARD AND POOR'S COMMERCIAL PAPER RATINGS
A-1--This designation indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong safety
characteristics are denoted with a plus sign (+) designation.
A-2--Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated A-1.
FITCH IBCA, INC. COMMERCIAL PAPER RATING DEFINITIONS
FITCH-1--(Highest Grade) Commercial paper assigned this rating is regarded as
having the strongest degree of assurance for timely payment.
FITCH-2--(Very Good Grade) Issues assigned this rating reflect an assurance of
timely payment only slightly less in degree than the strongest issues.
ADDRESSES
HIBERNIA CAPITAL APPRECIATION FUND - CLASS A SHARES AND CLASS B SHARES
HIBERNIA LOUISIANA MUNICIPAL INCOME FUND
HIBERNIA MID CAP EQUITY FUND - CLASS A SHARES AND CLASS B SHARES
HIBERNIA TOTAL RETURN BOND FUND
HIBERNIA U.S. GOVERNMENT INCOME FUND
HIBERNIA CASH RESERVE FUND - CLASS A SHARES AND CLASS B SHARES
HIBERNIA U.S. TREASURY MONEY MARKET FUND
(PORTFOLIOS OF HIBERNIA FUNDS)
5800 Corporate Drive
Pittsburgh, PA 15237-7010
DISTRIBUTOR
Federated Securities Corp.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
INVESTMENT ADVISER
Hibernia National Bank
Attention: Hibernia Funds
P.O. Box 61540
New Orleans, Louisiana 70161
CUSTODIAN
Hibernia National Bank
Attention: Hibernia Funds
P.O. Box 61540
New Orleans, Louisiana 70161
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Federated Shareholder Services Company
P.O. Box 8600
Boston, MA 02266-8600
INDEPENDENT AUDITORS
Ernst & Young LLP
200 Clarendon Street
Boston, MA 02116-5072
PART C. OTHER INFORMATION.
Item 23. Exhibits:
(a) (i) Conformed copy of Declaration of Trust of the Registrant;
(5.)
(ii) Conformed copy of Amendment No. 7 of Articles
Supplementary; (11.)
(b) (i) Copy of By-Laws of the Registrant; (1.)
(ii) Copy of Amendment #1 to the By-Laws of the Registrant;(12.)
(c) (i) Copy of Specimen Certificate for Shares of Beneficial
Interest of the Registrant; (3.)
(ii) Copy of Specimen Certificates for Shares of Beneficial
Interest of the Registrant;(5.)
(d) (i) Conformed copy of Investment Advisory Contract of the
Registrant; (5.)
(ii) Conformed copy of Exhibit G to Investment Advisory
Contract; (11.)
(e) (i) Conformed copy of Administrative Support and Distributor's
Contract of the Registrant;(5.)
(ii) Amendments No. 1,2,3 and 4 to Exhibit A to Administrative
Support and Distributor's Contract of the Registrant; (10.)
(iii) Exhibit B to Administrative Support and Distributor's
Contract of the Registrant; (10.)
(iv) Conformed copy of Mutual Funds Sales and Service Agreement
among Federated Securities Corp., Federated Shareholder Services
and Hibernia Investment Securities, Inc.; (11.)
(v) Conformed copy of Mutual Funds Sales and Service Agreement
among Federated Securities Corp., Federated Shareholder Services
and Hibernia National Bank; (11.)
(vi) Amendment No. 1 to Exhibit B to the Administrative Support
and Distributor's Contract of the Registrant; (11.)
(f) Not applicable;
+ All exhibits have been filed electronically.
1. Response is incorporated by reference to Registrant's Registration Statement on Form
N-1A filed April 15, 1988. (File Nos. 33-21321 and 811-5536)
3. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 1
on Form N-1A filed April 27, 1989. (File Nos. 33-21321 and 811-5536)
5. Response is incorporated by reference to Registrant's Post-Effective Amendment No.
11 filed October 28, 1993. (File Nos. 33-21321 and 811-5536)
10. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 20 filed March 25, 1998. (File Nos. 33-21321 and 811- 5536)
11. Response is incorporated by reference to Registrant's Post-Effective Amendment No.
22 filed October 27, 1998. (File Nos. 33-21321 and 811-5536)
12. Response is incorporated by reference to Registrant's Post-Effective Amendment No.
23 filed October 29, 1999. (File Nos. 33-21321 and 811-5536)
(g) (i) Conformed copy of Custodian Agreement of the
Registrant; (6.)
(ii) Conformed copy of Transfer Agency and Service Agreement of
the Registrant; (5.)
(iii) Conformed copy of Administrative Services Agreement of the
Registrant; (5.)
(iv) Conformed copy of Assignment of Administrative Services
Agreement of the Registrant to Federated Administrative
Services; (5.)
(v) Copy of Schedule A to Custodian Contract;(8.)
I. Conformed copy of Sub-Transfer Agency Agreement;(9.)
II. Conformed copy of Agreement for Fund Accounting Services, Administrative
Services and Transfer Agency Services; (12.)
(h) (i) Conformed copy of Agreement for Fund Accounting,
Shareholder Recordkeeping, and Custody Services Procurement; (6.)
(ii) Exhibit 1 to the Agreement for Fund Accounting, Shareholder
Recordkeeping, and Custody Services Procurement; (10.)
(i) Conformed copy of Opinion and Consent of Counsel as to
legality of shares being registered;(7.)
(j) (i) Conformed copy of Opinion and Consent of Special
Counsel;(7.)
(ii) Conformed copy of Consent of Independent Auditors; +
(k) Not applicable;
(l) Conformed copy of Initial Capital Understanding;(7.);
(m) (i) Conformed copy of Present Distribution Plan; (5.)
(ii) Form of Rule 12b-1 Agreement;(10.)
(iii) Amendments No. 1,2,3 and 4 to Exhibit A to the
Distribution Plan;(10.)
+ All exhibits have been filed electronically.
5. Response is incorporated by reference to Registrant's Post-Effective Amendment No.
11 filed October 28, 1994. (File Nos. 33-21321 and 811-5536)
6. Response is incorporated by reference to Registrant's Post-Effective Amendment No.
12 filed December 28, 1994. (File Nos. 33-21321 and 811-5536)
7. Response is incorporated by reference to Registrant's Post-Effective Amendment No.
15 filed October 28, 1996. (File Nos. 33-21321 and 811-5536)
8. Response is incorporated by reference to Registrant's Post-Effective Amendment No.
17 filed October 22, 1997. (File Nos. 33-21321 and 811-5536)
9. Response is incorporated by reference to Registrant's Post-Effective Amendment No.
19 filed February 25, 1998. (File Nos. 33-21321 and 811-5536)
10. Response is incorporated by reference to Registrant's Post-Effective Amendment No.
20 filed March 25, 1998. (File Nos. 33-21321 and 811-5536)
12. Response is incorporated by reference to Registrant's Post-Effective Amendment No.
23 filed October 29, 1999. (File Nos. 33-21321 and 811-5536)
(iv) Copy of Sales Agreement with Federated Securities Corp.;
(3.)
(v) Conformed copy of Shareholder Services Agreement;(7.)
(vi) Conformed copy of Shareholder Services Agreement through
and Exhibit A which relates to Class B Shares of
Capital Appreciation Fund; (8.)
(vii) Exhibit B Shareholder Services Agreement which
relates to Class B Shares for Cash Reserve Fund
and Mid-Cap Equity Fund;(10.)....
(n) (i) Conformed copy of Multiple Class
Plan;(7.)
(ii) Conformed copy of Exhibit B to the
Multiple Class Plan; (11.)
(o) Conformed copy of Power of Attorney;+
(p) (i) Copy of Code Of Ethics of Hibernia
National Bank.+
I. Copy of Code Of Ethics Hibernia Funds+
(iii) The Registrant hereby incorporates, on behalf
of the Distributor and a Sub-Adviser, the conformed copy of
the Code Of Ethics for Access Persons from Item 23(p) of
the Money Market Obligations Trust Registration Statement
of Form N-1A filed with the Commission on February 25,
2000. (File Nos. 33-31602 and 811-5950).
------------------
+ All exhibits have been filed electronically.
3. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 1
on Form N-1A filed April 27, 1989. (File Nos. 33-21321 and 811-5536)
7. Response is incorporated by reference to Registrant's Post-Effective Amendment No.
15 filed October 28, 1996. (File Nos. 33-21321 and 811-5536)
8. Response is incorporated by reference to Registrant's Post-Effective Amendment No.
17 filed October 22, 1997. (File Nos. 33-21321 and 811-5536)
10. Response is incorporated by reference to Registrant's Post-Effective Amendment No.
20 filed March 25, 1998. (File Nos. 33-21321 and 811-5536)
11. Response is incorporated by reference to Registrant's Post-Effective Amendment No.
22 filed October 27, 1998. (File Nos. 33-21321 and 811-5536)
12. Response is incorporated by reference to Registrant's Post-Effective Amendment No.
23 filed October 29, 1999. (File Nos. 33-21321 and 811-5536)
Item 25. Indemnification: (1)
Item 26. Business and Other Connections of Investment Adviser:
A. Investment Adviser
Hibernia National Bank is a national bank with its principal place
of business at 313 Carondelet Street, New Orleans, Louisiana 70130.
Hibernia National Bank, a national bank organized in 1933, is a
wholly-owned subsidiary of Hibernia Corporation ("Hibernia"), a
Louisiana Corporation. Through its subsidiaries and affiliates,
Hibernia offers a full range of financial services to the public
including commercial and consumer lending and depository services,
cash management, retail banking, mortgage banking, brokerage,
investment counseling, international banking, trust services, life
and health insurance and property and casualty insurance. Hibernia
is the largest publicly traded national banking company
head-quartered in Louisiana, Texas, Oklahoma, Arkansas or
Mississippi. Hibernia is a $15.3-billion-asset organization with 250
banking locations in 33 Louisiana parishes and 13 Texas counties. It
is either first, second or third in deposit market share in 31
Louisiana parishes and six Texas counties. Hibernia's Louisiana
markets represent approximately 80% of the state's population and
84% of its deposits. Its statewide Louisiana deposit share would be
21%. As of December 31, 1998, the Trust Group had $9 billion under
administration of which it had investment discretion over $3.7
billion. The executive officers and directors of the Adviser and any
other business, profession, vocation or employment of a substantial
nature in which each such officer and director is or has been
engaged during the past two years is set forth below. Unless
otherwise noted, the position listed under Other Business,
Profession, Vocation or Employment is with Hibernia National Bank.
Other Substantial
Position with Business, Profession,
NAME THE ADVISER VOCATION, EMPLOYMENT
Robert H. Boh Chairman and Director Chairman, Boh
Brothers Construction Co. L.L.C.
Paul J. Bonitatibus Executive Vice President
J. Herbert Boydstun Chairman-Southwest Louisiana Region and Director
E.R. Campbell Vice Chairman and Director -
Hibernia Corporation and Hibernia
National Bank; Chairman and Director
Hibernia National Bank of
Texas
Cindy S. Collins Executive Vice President
K. Kirk Domingos III Senior Executive Vice President
B. D. Flurry Chairman-Northern Louisiana
Region and Director, Hibernia
National Bank of Texas
Marsha M. Gassan Senior Executive Vice President and Chief Financial
Officer
Michael G. Gretchen Executive Vice President
Stephen A. Hansel President, Chief
Executive Officer,
and Director
Russell S. Hoadley Executive Vice President
Linda A. Hoffman Executive Vice President
Randall E. Howard Chairman, Southeast
Louisiana Region
Scott P. Howard Senior Executive Vice President
Patricia C. Meringer Senior Vice President, Corporate Counsel and Secretary
Susan Johnson Executive Vice President
Suzette J. Prechter Executive Vice President
Kenneth A. Rains Executive Vice President
Ron E. Samford, Jr. Executive Vice President
and Controller
John E. Smith Executive Vice President
Willie L. Spears Executive Vice President
Walter P. Walker Executive Vice President
Richard G. Wright Senior Executive Vice President and Chief Credit Officer
Mike Zainey Executive Vice President
Directors
Robert H. Boh Robert T. Holleman William C. O'Malley
J. Herbert Boydstun Elton R. King Robert T. Ratcliff
J. Terrell Brown Sidney W. Lassen Janee M. Tucker
E. R. Campbell Donald J. Nalty Virginia E. Weinmann
Richard W. Freeman, Jr. Robert E. Zetzmann
Stephen A. Harsel
Dick H. Hearin
Item 27. PRINCIPAL UNDERWRITERS:
-----------------------
(A) FEDERATED SECURITIES CORP. THE DISTRIBUTOR FOR SHARES OF THE REGISTRANT, ACTS
AS PRINCIPAL UNDERWRITER FOR THE FOLLOWING OPEN-END INVESTMENT COMPANIES, INCLUDING
THE REGISTRANT:
Cash Trust Series II; Cash Trust Series, Inc.; CCB Funds; Edward D. Jones & Co. Daily
Passport Cash Trust; Federated Limited Duration Government Fund, Inc.; Federated
American Leaders Fund, Inc.; Federated ARMs Fund; Federated Core Trust; Federated
Equity Funds; Federated Equity Income Fund, Inc.; Federated Fixed Income Securities,
Inc.;
Federated Fund for U.S. Government Securities, Inc.; Federated GNMA Trust; Federated
Government Income Securities, Inc.; Federated High Income Bond Fund, Inc.; Federated
High Yield Trust; Federated Income Securities Trust; Federated Income Trust;
Federated Index Trust; Federated Institutional Trust; Federated Insurance Series;
Federated International Series, Inc.; Federated Investment Series Funds, Inc.;
Federated Managed Allocation Portfolios; Federated Municipal Opportunities Fund,
Inc.; Federated Municipal Securities Fund, Inc.; Federated Municipal Securities
Income Trust; Federated Short-Term Municipal Trust; Federated Stock and Bond Fund,
Inc.; Federated Stock Trust; Federated Total Return Series, Inc.; Federated U.S.
Government Bond Fund; Federated U.S. Government Securities Fund: 1-3 Years; Federated
U.S. Government Securities Fund: 2-5 Years; Federated U.S. Government Securities
Fund: 5-10 Years; Federated Utility Fund, Inc.; Federated World Investment Series,
Inc.; FirstMerit Funds; Hibernia Funds; Independence One Mutual Funds; Intermediate
Municipal Trust; Marshall Funds, Inc.; Money Market Obligations Trust; Regions Funds;
RIGGS Funds; SouthTrust Funds; Wachovia Variable Insurance Funds; The Wachovia Funds;
The Wachovia Municipal Funds; and Vision Group of Funds, Inc.
(b)
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT
------------------ ------------------------ -----------------
Richard B. Fisher Chairman, [Insert Title(s)]
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Arthur L. Cherry Director, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
John B. Fisher President-Institutional Sales --
Federated Investors Tower and Director,
1001 Liberty Avenue Federated Securities Corp.
Pittsburgh, PA 15222-3779
Thomas R. Donahue Director, Executive Vice --
Federated Investors Tower Vice President and Assistant
1001 Liberty Avenue Secretary,
Pittsburgh, PA 15222-3779 Federated Securities Corp.
James F. Getz President-Broker/Dealer and --
Federated Investors Tower Director,
1001 Liberty Avenue Federated Securities Corp.
Pittsburgh, PA 15222-3779
David M. Taylor Executive Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Mark W. Bloss Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Richard W. Boyd Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Laura M. Deger Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Theodore Fadool, Jr. Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Bryant R. Fisher Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Christopher T. Fives Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
James S. Hamilton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
James M. Heaton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Keith Nixon Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Solon A. Person, IV Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Ronald M. Petnuch Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Timothy C. Pillion Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Thomas E. Territ Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Ernest G. Anderson Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Teresa M. Antoszyk Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
John B. Bohnet Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Jane E. Broeren-Lambesis Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Matthew W. Brown Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
David J. Callahan Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Mark Carroll Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Steven R. Cohen Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Mary J. Combs Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
R. Edmond Connell, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Kevin J. Crenny Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Daniel T. Culbertson Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
G. Michael Cullen Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Marc C. Danile Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Robert J. Deuberry Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
William C. Doyle Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Timothy Franklin Vice President, --
Federated Investors Tower Federated Securities Corp
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Mark A. Gessner Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Joseph D. Gibbons Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
John K. Goettlicher Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
G. Tad Gullickson Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Scott Gundersen Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Dayna C. Haferkamp Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Anthony J. Harper Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Bruce E. Hastings Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Charlene H. Jennings Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
H. Joseph Kennedy Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Michael W. Koenig Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Ed Koontz Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Dennis M. Laffey Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Christopher A. Layton Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Michael H. Liss Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Michael R. Manning Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Amy Michalisyn Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Mark J. Miehl Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Richard C. Mihm Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Alec H. Neilly Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Thomas A. Peter III Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Raleigh Peters Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Robert F. Phillips Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Richard A. Recker Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Eugene B. Reed Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Paul V. Riordan Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
John Rogers Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Brian S. Ronayne Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Thomas S. Schinabeck Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Edward J. Segura Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Edward L. Smith Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
David W. Spears Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
John A. Staley Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Colin B. Starks Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Jeffrey A. Stewart Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
William C. Tustin Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Paul A. Uhlman Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Richard B. Watts Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Terence Wiles Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Edward J. Wojnarowski Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Michael P. Wolff Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Robert W. Bauman Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Edward R. Bozek Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Charles L. Davis, Jr. Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Beth C. Dell Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Donald C. Edwards Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
John T. Glickson Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Ernest L. Linane Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Renee L. Martin Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Lynn Sherwood-Long Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Kirk A. Montgomery Secretary, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Denis McAuley, III Treasurer, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Timothy S. Johnson Assistant Secretary, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Victor R. Siclari Assistant Secretary, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
(c) Not applicable.
Item 28. Location of Accounts and Records:
All accounts and records required to be maintained by Section 31(a)
of the Investment Company Act of 1940 and Rules 31a-1 through 31a-3
promulgated thereunder are maintained at one of the following
locations:
Registrant 5800 Corporate Drive
Pittsburgh, PA 15237-7010
Federated Shareholder Services Company P.O. Box 8600
("Transfer Agent, Dividend Boston, MA 02266-8600
Disbursing Agent and Portfolio
Recordkeeper")
Federated Administrative Federated Investors Tower
Services 1001 Liberty Avenue
("Administrator") Pittsburgh, PA 15222-3779
Hibernia National Bank 313 Carondelet Street
("Adviser") New Orleans, LA 70130
Hibernia National Bank 313 Carondelet Street
("Custodian") New Orleans, LA 70130
Item 29. Management Services: Not applicable.
Item 30. Undertakings:
Registrant hereby undertakes to comply with the provisions of
Section 16(c) of the 1940 Act with respect to the removal of
Trustees and the calling of special shareholder meetings by
shareholders.
Registrant hereby undertakes to furnish each person to whom a
prospectus for Tower Mutual Funds is delivered a copy of the
Registrant's latest annual report to shareholders, upon request and
without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, HIBERNIA FUNDS, certifies that
it meets all of the requirements for effectiveness of this Amendment to its
Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933
and has duly caused this Amendment to its Registration Statement to be signed on
its behalf by the undersigned, thereto duly authorized, in the City of
Pittsburgh and Commonwealth of Pennsylvania, on the 31st day of October, 2000.
HIBERNIA FUNDS
BY: /s/ Timothy S. Johnson
Timothy S. Johnson, Assistant Secretary
Attorney in Fact for Edward C. Gonzales
October 31, 2000
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to its Registration Statement has been signed below by the following person in
the capacity and on the date indicated:
NAME TITLE DATE
---- ----- ----
By: /s/Timothy S. Johnson
ASSISTANT SECRETARY Attorney In Fact October 31, 2000
For the Persons
Listed Below
NAME TITLE
Edward C. Gonzales* President, Treasurer
and Trustee
(Chief Executive Officer,
Principal Financial and
Accounting Officer)
Robert L. diBenedetto, M.D.* Trustee
Arthur Rhew Dooley, Jr.* Trustee
J. Gordon Reische* Trustee
* By Power of Attorney
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