1933 Act File No. 33-40428
1940 Act File No. 811-6309
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
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Pre-Effective Amendment No. .......................... _
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Post-Effective Amendment No. 16 ............................. X
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 16 ............................................... X
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RIGGS FUNDS
(Exact Name of Registrant as Specified in Charter)
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7910
(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)
(Notices should be sent to the Agent for Service)
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b) _X on August 26, 1999,
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
COMBINED PROSPECTUS
August 31, 1999
Class BShares
Riggs Stock Fund
Riggs Small Company Stock Fund
Federated Securities Corp., Distributor
Prospectus
Riggs Funds
CLASS B SHARES
Riggs Stock Fund
Riggs Small Company Stock Fund
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
CONTENTS
Fund Goals, Strategies, Performance and Risk 1
What are the Funds' Fees and Expenses? 4
Principal Securities in Which the Funds Invest 5
Specific Risks of Investing in the Funds 5
What do Shares Cost? 5
How are the Funds Sold? 6
How to Purchase Shares 6
How to Redeem and Exchange Shares 7
Account and Share Information 8
Who Manages the Funds? 9
Financial Information 10
AUGUST 31, 1999
Fund Goals, Strategies, Performance and Risk
Riggs Funds offer five portfolios, including two equity funds, one income fund
and two money market funds. The following describes the investment goals,
strategies, and principal risks of the Riggs Stock Fund and the Riggs Small
Company Stock Fund (the "Funds"). There can be no assurance that a Fund will
achieve its goal.
The investment objective of each Fund described in this section may only be
changed upon the approval of a majority of the outstanding shares of the Fund
that would be affected by the change. The investment strategies are not
fundamental and may be changed without shareholder approval.
RIGGS STOCK FUND
Goal
Seeks to provide growth of capital and income.
Strategy
The Fund pursues its investment objective by investing at least 65% of its
assets in common stocks of improving quality, large capitalization U.S.
companies. These will generally be companies whose market capitalizations are $5
billion or more, and whose earnings and dividends are growing at above average
rates relative to the historic growth rates of such companies, and relative to
the current growth rates of other companies comprising the Standard & Poor's 500
Index. The investment adviser uses the "value" style of investing, selecting
stocks which it believes are undervalued based on such factors as low
price/earnings ratios relative to earnings growth and history; rising earnings
estimates; relative price strength; high or improved earnings, and credit
quality.
Risks
All mutual funds take investment risks. Therefore, it is possible to lose money
by investing in the Fund. The primary factors that may reduce the Fund's returns
include:
. Stock Market Risks. The value of equity securities in the Fund's portfolio
will fluctuate and, as a result, the Fund's share price may decline suddenly
or over a sustained period of time.
. Risks Relating to Investing for Value. Due to the Fund's "value" style of
investing, the Fund's share price may lag that of other funds using a
different investment style.
The shares offered by this prospectus are not deposits or obligations of any
bank, including Riggs Bank, are not endorsed or guaranteed by any bank and are
not insured or guaranteed by the U.S. government, the Federal Deposit Insurance
Corporation, the Federal Reserve Board, or any other government agency.
RISK/RETURN BAR CHART AND TABLE
The graphic presentation displayed here consists of a bar chart representing the
annual total returns of Class R Shares of Riggs Stock Fund as of the calendar
year-end for each of six years.
The `y' axis reflects the "% Total Return" beginning with "0" and increasing in
increments of 5% up to 45.00%. The `x' axis represents calculation periods from
the earliest first full calendar year end of the Fund's Class R Shares start of
business through the calendar year ended December 31, 1998. The light gray
shaded chart features six distinct vertical bars, each shaded in charcoal, and
each visually representing by height the total return percentages for the
calendar year stated directly at its base. The calculated total return
percentage for the Fund's Class R Shares for each calendar year is stated
directly at the top of each respective bar, for the calendar years 1993 through
1998. The percentages noted are: 18.51%, 3.44%, 37.59%, 19.90%, 27.75% and
16.50%.
The total returns shown here are for Class R Shares which is another class of
shares offered by the Stock Fund. Class R Shares are not offered in this
prospectus for the Fund's Class B Shares. The total returns for Class R Shares
are disclosed here because Class B Shares have only been offered since July 19,
1998. These total returns would be substantially similar to the annual returns
for Class B Shares over the same period and would differ only to the extent that
the two classes do not have the same expenses. It is anticipated that expenses
of Class B Shares will exceed those of the Class R Shares.
The bar chart shows the variability of the Fund's Class R Shares total returns
on a calendar year-end basis.
Total returns displayed for the Fund's Class R 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 R Shares total return from January 1, 1999 to June 30, 1999 was
7.00%.
Within the period shown in the Chart, the Fund's Class R Shares highest
quarterly return was 22.00% (quarter ended December 31, 1998). Its lowest
quarterly return was (14.71)% (quarter ended September 30, 1998).
Average Annual Total Return
The following table represents the Fund's Class R Shares Average Annual Total
Returns for the calendar periods ended December 31, 1998. The table shows the
Fund's Class R Shares total returns averaged over a period of years relative to
the Standard & Poor's 500 Index ("S&P 500"), a broad-based market index. Indexes
are unmanaged, and it is not possible to invest in an index.
Calendar Period Class R Shares S&P 500
1 Year 14.50% 28.58%
5 Years 20.32% 23.89%
Start of Performance/1/ 18.67% 20.41%
1 The Fund's Class R Shares start of performance date was May 11, 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
returns.
RIGGS SMALL COMPANY STOCK FUND
Goal
Seeks to provide long-term capital appreciation.
Strategy
The Fund pursues its investment objective by investing at least 65% of its
assets in a diversified portfolio of stocks of small-sized U.S. companies which
are either listed on the New York or American Stock Exchangeor Nasdaq, or trade
in the over-the-counter marketand which, in the opinion of the Fund's investment
adviser, have potential to become significant factors in their respective
industries in terms of market share. The Fund seeks to invest primarily in
companies whose market capitalizations are less than $1.2 billion. In selecting
securities, the investment adviser uses the "value" style of investing described
on the previous page with respect to Riggs Stock Fund.
Risks
All mutual funds take investment risks. Therefore, it is possible to lose money
by investing in the Fund. The primary factors that may reduce the Fund's returns
include:
. Stock Market Risks. The value of equity securities in the Fund's portfolio
will fluctuate and, as a result, the Fund's share price may decline suddenly
or over a sustained period of time.
. Risks Relating to Investing for Value. The Fund generally uses a "value"
style of investing, so that the Fund's share price may lag that of other
funds using a different investment style.
. Liquidity Risks. Smaller company securities in which the Fund invests may be
less readily marketable and may be subject to greater fluctuation in price
than other securities.
. Risks Related to Company Size. Because the smaller companies in which the
Fund may invest may have unproven track records, a limited product or
services base and limited access to capital, they may be more likely to fail
than larger companies.
The Shares offered by this prospectus are not deposits or obligations of any
bank, including Riggs Bank, are not endorsed or guaranteed by any bank and are
not insured or guaranteed by the U.S. government, the Federal Deposit Insurance
Corporation, the Federal Reserve Board, or any other government agency.
Risk/Return Bar Chart and Table
The graphic presentation displayed here consists of a bar chart representing the
annual total returns of Class R Shares of Riggs Small Company Stock Fund as of
the calendar year-end for each of three years.
The `y' axis reflects the "% Total Return" beginning with "-15.00%" and
increasing in increments of 5% up to 45.00%. The `x' axis represents calculation
periods from the earliest first full calendar year end of the Fund's Class R
Shares start of business through the calendar year ended December 31, 1998. The
light gray shaded chart features three distinct vertical bars, each shaded in
charcoal, and each visually representing by height the total return percentages
for the calendar year stated directly at its base. The calculated total return
percentage for the Fund's Class R Shares for each calendar year is stated
directly at the top of each respective bar, for the calendar years 1996 through
1998. The percentages noted are: 21.92%, 38.85% and -10.44%.
The total returns shown here are for Class R Shares which is another class of
shares offered by Small Company Stock Fund. Class R Shares are not offered in
this prospectus for the Fund's Class B Shares. The total returns for Class R
Shares are disclosed here because Class B Shares have only been offered since
July 17, 1998. These total returns would be substantially similar to the annual
returns for Class B Shares over the same period and would differ only to the
extent that the two classes do not have the same expenses. It is anticipated
that expenses of Class B Shares will exceed those of the Class R Shares.
The bar chart shows the variability of the Fund's Class R Shares total returns
on a calendar year-end basis.
Total returns displayed for the Fund's Class R 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 R Shares total return from January 1, 1999 to June 30, 1999 was
2.69%.
Within the period shown in the Chart, the Fund's Class R Shares highest
quarterly return was 23.16% (quarter ended September 30, 1997). Its lowest
quarterly return was (29.19)% (quarter ended September 30, 1998).
Average Annual Total Return
The following table represents the Fund's Class R Shares Average Annual Total
Returns for the calendar periods ended December 31, 1998. The table shows the
Fund's Class R Shares total returns averaged over a period of years relative to
the Russell 2000 Index ("Russell 2000"), a broad-based market index. Indexes are
unmanaged, and it is not possible to invest directly in an index.
Calendar Period Class R Shares Russell 2000
1 Year (11.98)% (2.55)%
Start of Performance/1/ 17.63% 15.78%
1 The Fund's Class R Shares start of performance date was February 27, 1995.
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
returns.
What are the Fund's Fees and Expenses?
RIGGS FUNDS, CLASS B SHARES
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
Class B Shares of the Funds.
<TABLE>
<CAPTION>
Shareholder Fees Stock Fund Small Company
Stock Fund
Fees Paid Directly From Your Investment
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) None None
<S> <C> <C>
Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or 5.00% 5.00%
redemption proceeds, as applicable)
Maximum Sales Charge (Load) Imposed on Reinvested Dividends (and other Distributions) (as a None None
percentage of offering price)
Redemption Fee (as a percentage of amount redeemed, if applicable) None None
Exchange Fee None None
Annual Fund Operating Expenses/1/
Expenses That are Deducted From Fund Assets (as percentage of average net assets)
Management Fee 0.75% 0.80%
Distribution (12b-1) Fee 0.75% 0.75%
Shareholder Services Fee/2/ 0.25% 0.25%
Other Expenses/3/ 0.29% 0.45%
Total Annual Fund Operating Expenses (Before Waivers)/1/ 2.04% 2.25%
1 Although not contractually obligated to do so, the shareholder services
provider waived certain amounts. These are shown along with the net expenses
the Funds actually paid for the fiscal year ended April 30, 1999.
Total Waivers of Fund Expenses 0.15% 0.15%
Total Annual Fund Operating Expenses (after waiver) 1.89% 2.10%
2 The shareholder services provider voluntarily waived a portion of the
shareholder services fee for the Stock Fund and the Small Company Stock Fund.
The shareholder service provider can terminate this voluntary reduction at any
time. The shareholder services fees paid by the Stock Fund and the Small
Company Stock Fund (after the voluntary reduction) were 0.06% and 0.05%,
respectively, for the fiscal year ended April 30, 1999. It is anticipated that
the shareholder services fee paid by the Stock Fund and the Small Company Fund
will be 0.10% for the fiscal year ending April 30, 2000.
3 Other Expenses are based on estimated amounts for the fiscal year ending April
30, 2000. The actual Fund operating expenses for the fiscal year ended April
30, 1999 were 1.97% and 2.13% for the Stock Fund and Small Company Stock Fund,
respectively.
</TABLE>
EXAMPLE
This Example is intended to help you compare the cost of investing in Class B
Shares of the Funds with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Funds' Class B Shares 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' Class B Shares 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
Stock Fund
Assuming redemption $407 $840 $1,298 $2,569
Assuming no redemption $207 $640 $1,098 $2,369
Small Company Stock Fund
Assuming redemption $428 $903 $1,405 $2,785
Assuming no redemption $228 $703 $1,205 $2,585
Principal Securities in Which the Funds Invest
EQUITY SECURITIES
Equity securities represent a share of an issuer's earnings and assets, after
the issuer pays its liabilities. The Funds cannot predict the income they 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 securitiesbecause
their value increases directly with the value of the issuer's business.
The following describes the principal types of equity securities in which the
Funds may invest.
Common Stocks
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.
PORTFOLIO TURNOVER
Each Fund actively trades its portfolio securities in an attempt to achieve its
investment objectives. 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 a Fund's performance.
TEMPORARY DEFENSIVE INVESTMENTS
Each Fund may temporarily depart from its principal investment strategies by
investing its assets in cashand shorter-term, higher- quality debt securities
and similar obligations. A Fund may do this to minimize potential losses and
maintain liquidity to meet shareholder redemptions during adverse market
conditions. This may cause the Funds to give up greater investment returns to
maintain the safety of principal, that is, the original amount invested by
shareholders.
Specific Risks of Investing in the Funds
STOCK MARKET RISKS
. The value of equity securities in each Fund's portfolio will rise and fall.
These fluctuations could be a sustained trend or a drastic movement. A Fund's
portfolio will reflect changes in prices of individual portfolio stocks or
general changes in stock valuations. Consequently, a Fund's share price may
decline.
. The Adviser attempts to manage market risk by limiting the amount a Fund
invests in each company's equity securities. However, diversification will
not protect a Fund against widespread or prolonged declines in the stock
market.
LIQUIDITY RISKS
. 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 a
Fund'sperformance. Infrequent trading of securities may also lead to an
increase in their price volatility.
. Liquidity risk also refers to the possibility that a Fund may not be able to
sell a security when it wants to. If this happens, a Fund will be required to
continue to hold the security and a Fund could incur losses.
RISKS RELATED TO INVESTING FOR VALUE
. Due to their relatively low valuations, value stocks are typically less
volatile than growth stocks. For instance, the price of a value stock may
experience a smaller increase on a forecast of higher earnings, a positive
fundamental development, or positive market development. Further, value
stocks tend to have higher dividends than growth stocks. This means they
depend less on price changes for returns and may lag behind growth stocks in
an up market.
RISKS RELATED TO COMPANY SIZE
. Generally, the smaller the market capitalization of a company, the fewer the
number of shares traded daily, the less liquid its stock and the more
volatile its price. Market capitalization is determined by multiplying the
number of its outstanding shares by the current market price per share.
. Companies with smaller market capitalizations also tend to have unproven
track records, a limited product or service base and limited access to
capital. These factors also increase risks and make these companies more
likely to fail than companies with larger market capitalizations.
What do Shares Cost?
You can purchase, redeem, or exchange Class B Shares any day the New York Stock
Exchange (NYSE) is open. When a Fund receives your transaction request in proper
form, it is processed at the next calculated net asset value (NAV). The Funds do
not charge a front-end sales charge. The NAV for the Funds is determined at the
end of regular trading (normally 4:00 p.m. Washington, D.C. time) each day the
NYSE is open.The Funds 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), if available.
The minimum initial investment in each Fund is $1000, except for an Individual
Retirement Account ("IRA") which requires a minimum initial investment of $500.
Subsequent investments must be in amounts of at least $100, except for an IRA,
which must be in amounts of at least $50. An investor's minimum investment will
be calculated by combining all mutual fund accounts it maintains in the Riggs
Funds.
The minimum investment required may be waived for purchases by employees or
retirees of the Riggs National Corporation and/or its subsidiaries, and their
spouses and children under the age of 21. The minimum investment may also be
waived for investors participating in a payroll deduction program.
SALES CHARGE WHEN YOU REDEEM
Shareholders redeeming Class B Shares (and any Class R Shares of Riggs Prime
Money Market Fund acquired in exchange for Class B Shares) from the Funds within
five years of the purchase date will be charged a contingent deferred sales
charge ("CDSC"). The CDSC will be deducted from the redemption proceeds
otherwise payable to the shareholder and will be retained by the distributor. In
determining the applicability of the CDSC, the required holding period for new
shares received through an exchange will include the period for which the
original shares were held. Any applicable CDSC will be imposed on the lesser of
the net asset value of the redeemed shares at the time of purchase or the net
asset value of the redeemed shares at the time of redemption in accordance with
the following schedule: Year of Redemption After Purchase CDSC First 5.00%
Second 4.00% Third 3.00% Fourth 2.00% Fifth 1.00% Sixth 0.00%
You will not be charged a CDSC when redeeming Shares:
. purchased with reinvested dividends or capital gains;
. following the death or disability, as defined in Section 72(m)(7) of the
Internal Revenue Code of 1986, of the last surviving shareholder;
. representing minimum required distributions from an Individual Retirement
Account or other retirement plan to a shareholder who has attained the age of
70.;
. if a Fund redeems your Shares and closes your account for not meeting the
minimum balance; and
. which are qualifying redemptions of shares under a Systematic Withdrawal
Program.
To keep the sales charge as low as possible, the Funds redeem your Shares in
this order:
. Shares that are not subject to a CDSC; and
. Shares held the longest.
The CDSC is then calculated using the share price at the time of purchase or
redemption, whichever is lower.
How are the Funds Sold?
The Funds' Distributor, Federated Securities Corp. (Distributor), markets the
Shares described in this prospectus. The Funds offer two share classes: Class B
Sharesand Class R Shares, each representing interests in a single portfolio of
securities. This prospectus relates only to Class B Shares. Class B Shares are
sold primarily to retail customers through broker/dealers which are not
affiliated with Riggs Bank. Each share class has different expenses which affect
their performance.Class R Shares are subject to a 0.25% Rule 12b-1 fee and
impose a (maximum) 2% CDSC.For more information concerning Class R Shares
contact Riggs Investment Corp. at (202) 835-5300 or outside the Washington, D.C.
metropolitan area toll-free at 1-800-934-3883.
When the Distributor receives marketing fees, 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).
RULE 12B-1 PLAN
The Funds have adopted a Rule 12b-1 Plan, which allows them to pay marketing
fees to the Distributor and investment professionals for the sale, distribution
and customer servicing of the Funds' Class B Shares at an annual rate of up to
0.75% of the average net assets. Because these Shares pay marketing fees on an
ongoing basis, your investment cost may be higher over time than other shares
with different sales charges and marketing fees.
How to Purchase Shares
You may purchase Shares through authorized broker/dealers or through an exchange
from another Riggs Fund. The Funds reserve the right to reject any request to
purchase or exchange Shares. Shares will be purchased at net asset value after
the Fund receives the purchase request from Riggs Investment Corp. Purchase
requests through authorized brokers and dealers must be received by Riggs
Investment Corp. and transmitted to the Funds before 3:00 p.m. (Washington, D.C.
time) in order for shares to be purchased at that day's public offering price.
THROUGH AN EXCHANGE
You may purchase Class B Shares of the Funds through an exchange from Class B
Shares of another Riggs Fund and for Class R Shares of Riggs Prime Money Market
Fund. You must meet the minimum initial investment requirement for purchasing
Shares and both accounts must have identical registrations.
BY SYSTEMATIC INVESTMENT PROGRAM
Once a Fund account has been opened, shareholders may add to their investment on
a regular basis in a minimum amount of $50. Under this program, funds may be
automatically withdrawn on a periodic schedule from the shareholder's checking
or savings account or an account in one of the Riggs Funds and invested in Fund
shares at the net asset value next determined after an order is received.
Shareholders may apply for participation in this program through Riggs
Investment Corp., Riggs Bank or an authorized broker or dealer.
BY AUTOMATED CLEARING HOUSE (ACH)
Once you have opened an account, you may purchase additional Shares through a
depository institution that is an ACH member. This purchase option can be
established by completing the appropriate sections of the New Account Form.
RETIREMENT INVESTMENTS
Shares of the Funds can be purchased as an investment for retirement plans or
for IRA accounts. For further details, contact Riggs Investment Corp. and
consult a tax adviser.
CONVERSION OF CLASS B SHARES
Class B Shares will automatically convert into Class R Shares after six full
years from the purchase date. Such conversion will be on the basis of the
relative net asset value per share, without the imposition of any charges. Class
B Shares acquired by exchange from Class B Shares of another fund will convert
into Class R Shares based on the time of the initial purchase. Class R Shares
are subject to a 2% CDSC (which will not apply to Class R Shares issued as a
result of automatic conversion of Class B Shares); a .25% Rule 12b-1 fee; and a
.25% shareholder services fee. How to Redeem and Exchange Shares
Each Fund redeems Class B Shares (and any Class R Shares of Riggs Prime Money
Market Fund acquired in exchange for Class B Shares) at their net asset value,
less any applicable CDSC, next determined after Riggs Investment Corp. receives
the redemption request.
Redemptions will be made on days on which both the New York Stock Exchange and
Federal Reserve Wire system are open for business. Telephone or written requests
for redemption must be received in proper form by Riggs Investment Corp.
DIRECTLY FROM THE FUND
By Telephone
You may redeem or exchange Shares by calling Riggs Investment Corp. once you
have completed the appropriate authorization form for telephone transactions.
Although Riggs Investment Corp. does not charge for telephone redemptions, it
reserves the right to charge a fee for the cost of wire-transferred redemptions
of less than $5,000, or in excess of one per month.
Redemption requests must be received before the end of regular trading on the
NYSE (normally 4:00 p.m. Washington, D.C. time) in order for shares to be
redeemed at that day's NAV.
By Mail
You may redeem or exchange Shares by mailing a written request to:
Riggs Investment Corp.
P.O. Box 96656
Washington, D.C. 20090-6656
Send requests by private courier or overnight delivery service to:
Riggs Investment Corp.
808 17th Street, N.W. - 11th Floor
Washington, D.C. 20006
All requests must include:
. Fund Name, Share Class and account number;
. amount to be redeemed or exchanged;
. signatures of all shareholders exactly as registered; and
. if exchanging, the Fund Name and Share Class, account number and account
registration into which you are exchanging.
Signature Guarantees
Signatures must be guaranteed if:
. your redemption will be sent to an address other than the address of record;
. your redemption will be sent to an address of record that was changed within
the last 30 days; or
. if exchanging (transferring) into another fund with a different shareholder
registration.
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.
PAYMENT METHODS FOR REDEMPTIONS
Your redemption proceeds will be mailed by check to your address of record. The
following payment options are available if you complete the appropriate section
of the New Account Form or an Account Service Options Form. These payment
options require a signature guarantee if they were not established when the
account was opened:
. an electronic transfer to your account at a financial institution that is an
ACH member; or
. wire payment to your account at a domestic commercial bank that is a Federal
Reserve System member.
Redemption in Kind
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 the
Funds' portfolio securities.
LIMITATIONS ON REDEMPTION PROCEEDS
Redemption proceeds normally are wired or mailed within one business day after
receiving a request in proper form. Payment may be delayed up to seven days:
. to allow your purchase to clear;
. during periods of market volatility; or
. when a shareholder's trade activity or amount adversely impacts a Fund's
ability to manage its assets.
You will not accrue interest or dividends on uncashed checks from a Fund if
those checks are undeliverable and returned to the Fund.
REDEMPTIONS FROM RETIREMENT ACCOUNTS
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.
SYSTEMATIC WITHDRAWAL PROGRAM
You may automatically redeem Shares in a minimum amount of $50 on a regular
basis. To be eligible to participate in this program, a shareholder must have an
account value of at least $10,000. A shareholder may apply for participation in
this program through Riggs Investment Corp., Riggs Bank or an authorized broker
or dealer. This program may reduce, and eventually deplete, your account.
Payments should not be considered yield or income.
EXCHANGE PRIVILEGES
A shareholder may generally exchange Class B Shares of one Fund for Class B
Shares of another Fund in the Trust, or exchange Class B Shares of one Fund for
Class R Shares of Riggs Prime Money Market Fund at net asset value. Exchanges
can be made by writing to or calling Riggs Investment Corp. at (202) 835-5300 or
outside the Washington, D.C. metropolitan area toll-free at 1-800-934-3883. A
contingent deferred sales charge ("CDSC") is not assessed in connection with
such exchanges, but if the shareholder redeems shares within five years of the
original purchase, a CDSC will be imposed. For purposes of computing the CDSC,
the length of time the shareholder has owned shares will be measured from the
date of original purchase and will not be affected by the exchange .
Orders for exchanges received by a Fund prior to 4:00 p.m. (Washington, D.C.
time) on any day that Fund is open for business will be executed as of the close
of business that day. Orders for exchanges received after 4:00 p.m. (Washington,
D.C. time) on any business day will be executed at the close of the next
business day.
To execute an order to exchange you must first:
. complete an authorization form permitting a Fund to accept telephone exchange
requests;
. ensure that the account registrations are identical;
. meet any minimum initial investment requirements;
. specify the dollar value or number of shares to be exchanged; and
. receive a prospectus for the Fund into which you wish to exchange.
An exchange is treated as a redemption and a subsequent purchase, and is a
taxable transaction.
The Funds may modify or terminate the exchange privilege at any time. The
Funds' management or investment adviser may determine from the amount, frequency
and pattern of exchanges that a shareholder is engaged in excessive trading that
is detrimental to a Fund and other shareholders. If this occurs, a Fund may
terminate the availability of exchanges to that shareholder.
Shareholders may obtain further information on the exchange privilege by
calling Riggs Funds Shareholder Services at (202) 835-5300 or outside the
Washington, D.C. metropolitan area toll-free at 1-800-934-3883.
SYSTEMATIC EXCHANGE PROGRAM
Shareholders who desire to automatically exchange shares of a predetermined
amount on a monthly, quarterly or annual basis may take advantage of a
systematic exchange privilege. The minimum amount that may be exchanged is $50.
Shareholders interested in participating in this program should contact Riggs
Funds Shareholder Services.
ADDITIONAL CONDITIONS
Telephone Transactions
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.
Share Certificates
The Funds no longer issues share certificates. If you are redeeming or
exchanging Shares represented by certificates previously issued by a Fund, 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.
Account and Share Information
CONFIRMATIONS AND ACCOUNT STATEMENTS
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.
DIVIDENDS AND CAPITAL GAINS
Dividends on the Funds are declared and paid quarterly. Unless cash payments are
requested by shareholders in writing to the appropriate Fund or by indication on
the account application, dividends are automatically reinvested in additional
shares of a Fund on payment dates at the ex-dividend date net asset value
without a sales charge.
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 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.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, 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 required minimum may be waived for employees or retirees of the Riggs
National Corporation and/or its subsidiaries, employees of any broker/dealer
operating on the premises of Riggs Bank, and their spouses and children under
21.
TAX INFORMATION
The Funds send an annual statement of your account activity to assist you in
completing your federal, state and local tax returns. Fund distributions of
dividends and capital gains are taxable to you whether paid in cash or
reinvested in a 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.
Fund distributions are expected to be both dividends and capital gains.
Redemptions and exchanges are taxable sales. Please consult your tax adviser
regarding your federal, state, and local tax liability.
Who Manages the Funds?
The Board of Trustees governs the Funds. The Board selects and oversees the
adviser, Riggs Bank N.A. ("Adviser"). The Adviser manages the Funds' assets,
including buying and selling portfolio securities. The Adviser's address is 800
17th Street N.W., Washington, D.C. 20006.
The Adviser has delegated daily management of all of the Funds' assets to the
Sub-Adviser, Riggs Investment Management Corp. ("RIMCO"), which is paid by the
Adviser and not by the Funds. The Sub-Adviser's address is 800 17th Street N.W.,
Washington, D.C. 20006.
The Adviser is a wholly owned subsidiary of Riggs National Corporation, a bank
holding company. The Adviser or its subsidiary, RIMCO, have advised the Riggs
Funds since September 1991 and, as of April 30, 1999, provides investment advice
for assets approximating $2.7 billion. The Adviser has a varied client base of
approximately 100 other relationships including corporate, union and public
pension plans, foundations, endowments and associations.
Each Fund's portfolio manager is Philip D. Tasho. Mr. Tasho is the Chief
Executive Officer and Chief Investment Officer of RIMCO and served as the
manager of the Stock Fund from its inception through June 1994. Most recently,
Mr. Tasho was a Vice President at Shawmut Investment Advisers in Boston, MA from
1994 to 1995. Prior to that, Mr. Tasho served as a Managing Director of RIMCO
and was a member of the senior management committee from 1990 to 1994. He also
served as a Senior Portfolio Manager for the Sovran Bank in Bethesda and as
Director of Research for the same bank at its Richmond head office. He started
his career as a Trust Investment Officer for the First American Bank in
Washington. Mr. Tasho earned a B.A. in Russian from Grinnel College and an
M.B.A. in Finance and Investments from George Washington University. He holds a
CFA from the Institute of Chartered Financial Analysts. Mr. Tasho assumed
portfolio management responsibility of the Stock Fund and Small Company Stock
Fund in November 1995.
ADVISORY FEES
The Adviser receives an annual investment advisory fee at an annual rate of up
to 0.75% of the Stock Fund's and 0.80% of the Small Company Stock Fund's average
net assets. The Adviser may voluntarily waive a portion of its fee or reimburse
the Funds for certain operating expenses.
YEAR 2000 READINESS
The "Year 2000" problem is the potential for computer errors or failures because
certain computer systems may be unable to interpret dates after December 31,
1999 or experience other date- related problems. The Year 2000 problem may cause
systems to process information incorrectly and could disrupt businesses, such as
the Funds', that rely on computers.
While it is impossible to determine in advance all of the risks to the Funds,
the Funds could experience interruptions in basic financial and operational
functions. Fund shareholders could experience errors or disruptions in Fund
share transactions or Fund communications.
The Funds' service providers are making changes to their computer systems to
fix any Year 2000 problems. In addition, they are working to gather information
from third-party providers to determine their Year 2000 readiness.
Year 2000 problems would also increase the risks of the Funds' investments. To
assess the potential effect of the Year 2000 problem, the Adviser is reviewing
information regarding the Year 2000 readiness of issuers of securities the Funds
may purchase. However, this may be difficult with certain issuers. For example,
funds dealing with foreign service providers or investing in foreign securities
will have difficulty determining the Year 2000 readiness of those entities.
The financial impact of these issues for the Funds is still being determined.
There can be no assurance that potential Year 2000 problems would not have a
material adverse effect on the Funds.
Financial Information
FINANCIAL HIGHLIGHTS
The Financial Highlights will help you understand the Funds' financial
performance for the 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 the Funds, assuming reinvestment of any dividends and capital
gains.
This information has been audited by Arthur Andersen LLP, whose report, along
with the Funds' audited financial statements, is included in the Annual Report.
Riggs Stock Fund Financial Highlights--Class B Shares
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
The following table has been audited by Arthur Andersen LLP, the Trust's
independent auditors. Arthur Andersen's report dated June 22, 1999, on the
Trust's financial statements for the year ended April 30, 1999, is included in
the Combined Annual Report, which is incorporated herein by reference. This
table should be read in conjunction with the Fund's financial statements and
notes thereto, which may be obtained free of charge from the Trust.
<TABLE>
<S> <C>
Period Ended April 30 1999/1/
Net Asset Value, Beginning of Period $16.65
Income from Investment Operations:
Net investment loss (0.03)
Net realized and unrealized gain oninvestments 0.83
TOTAL FROM INVESTMENT OPERATIONS 0.80
Less Distributions:
Distributions from net investment income (0.01)
Distributions from net realized gain on investments (1.71)
TOTAL DISTRIBUTIONS (1.72)
Net Asset Value, End of Period $15.73
Total Return/2/ 5.31%
Ratios to Average Net Assets:
Expenses/3/ 2.16%/4/
Net investment loss/3/ (0.67%)/4/
Expenses (after waivers) 1.97%/4/
Net investment loss (after waivers) (0.48%)/4/
Supplemental Data:
Net assets, end of period (000 omitted) $ 182
Portfolio turnover 52%
</TABLE>
1 Reflects operations for the period from July 19, 1998 (date of initial public
investment) to April 30, 1999.
2 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
3 During the period certain fees were voluntarily waived. If such voluntary
waivers had not been accrued, the ratios would have been as indicated.
4 Computed on an annualized basis.
Riggs Small Company Stock Fund Financial Highlights--Class B Shares
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
The following table has been audited by Arthur Andersen LLP, the Trust's
independent auditors. Arthur Andersen's report dated June 22, 1999, on the
Trust's financial statements for the year ended April 30, 1999, is included in
the Combined Annual Report, which is incorporated herein by reference. This
table should be read in conjunction with the Fund's financial statements and
notes thereto, which may be obtained free of charge from the Trust.
<TABLE>
<S> <C>
Period Ended April 30 1999/1/
Net Asset Value, Beginning of Period $ 17.25
Income from Investment Operations:
Net investment loss (0.07)
Net realized and unrealized loss oninvestments (4.12)
TOTAL FROM INVESTMENT OPERATIONS (4.19)
Less Distributions:
Distributions from net realized gain on investments (1.85)
Net Asset Value, End of Period $ 11.21
Total Return/2/ (24.43%)
Ratios to Average Net Assets:
Expenses/3/ 2.33%/4/
Net investment loss/3/ (0.97%)/4/
Expenses (after waivers) 2.13%/4/
Net investment loss (after waivers) (0.77%)/4/
Supplemental Data:
Net assets, end of period (000 omitted) $ 101
Portfolio turnover 100%
</TABLE>
1 Reflects operations for the period from July 17, 1998 (date of initial public
investment) to April 30, 1999.
2 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
3 During the period certain fees were voluntarily waived. If such waivers had
not been accrued, the ratios would have been as indicated.
4 Computed on an annualized basis.
Riggs Funds
CLASS B SHARES
Riggs Stock Fund
Riggs Small Company Stock Fund
AUGUST 31, 1999
A Statement of Additional Information (SAI) dated August 31, 1999, is
incorporated by reference into this prospectus. Additional information about the
Funds and their investments is contained in the Funds' SAI, and Annual and
SemiAnnual Reports to shareholders as they become available. The Annual Report
discusses market conditions and investment strategies that significantly
affected the Funds' performance during their last fiscal year. To obtain the
SAI, the Annual Report, Semi-Annual Report and other information without charge,
call your investment professional or contact Riggs Funds Shareholder Services at
(202) 835-5300 or outside the Washington, D.C. metropolitan area toll-free at 1-
800-934-3883. You can obtain information about the Funds (including the
SAI) by visiting or writing the Public Reference Room of the Securities and
Exchange Commission in Washington, DC 20549-6009 or from the Commission's
Internet site at http://www.sec.gov. You can call 1-800-SEC-0330 for information
on the Public Reference Room's operations and copying charges.
Investment Company Act File No. 811-6309
Cusip 76656A 708
Cusip 76656A 880
G00355-01 (8/99)
Cusip 76656A 708
Cusip 76656A 880
G00355-01 (8/99)
COMBINED PROSPECTUS
August 31, 1999
Class R Shares
Riggs U.S. Treasury Money Market Fund
Riggs Prime Money Market Fund
Riggs U.S. Government Securities Fund
Riggs Stock Fund
Riggs Small Company Stock Fund
Class Y Shares
Riggs U.S. Treasury Money Market Fund
Riggs Prime Money Market Fund
[logo of Riggs Funds]
Federated Securities Corp., Distributor
PROSPECTUS
Riggs Funds
CLASS R SHARES
Riggs U.S. Treasury Money Market Fund
Riggs Prime Money Market Fund
Riggs U.S. Government Securities Fund
Riggs Stock Fund
Riggs Small Company Stock Fund
CLASS Y SHARES
Riggs U.S. Treasury Money Market Fund
Riggs Prime Money Market Fund
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
<TABLE>
<CAPTION>
CONTENTS
<S> <C>
Fund Goals, Strategies, Performance and Risk 1
The Funds' Fees and Expenses 8
Principal Securities in Which the Funds Invest 9
Specific Risks of Investing in the Funds 11
What do Shares Cost? 12
How are the Funds Sold? 13
How to Purchase Shares 14
How to Redeem and Exchange Shares 15
Account and Share Information 17
Who Manages the Funds? 17
Financial Information 18
</TABLE>
AUGUST 31, 1999
Fund Goals, Strategies, Performance and Risk
Riggs Funds offer five portfolios, including two equity funds, one income fund
and two money market funds. The following describes the investment goals,
strategies, and principal risks of each Fund. There can be no assurance that a
Fund will achieve its goal.
The investment objective of each Fund described in this section may only be
changed upon the approval of a majority of the outstanding shares of the Fund
which would be affected by the change. The investment strategies are not
fundamental and may be changed without shareholder approval.
RIGGS U.S. TREASURY MONEY MARKET FUND
Goal
Seeks to provide current income consistent with stability of principal and
liquidity.
Strategy
The Fund pursues its investment objective by investing only in a portfolio of
short-term U.S. Treasury obligations maturing in 397 days or less and repurchase
agreements fully collateralized by U.S. Treasury obligations. The dollar-
weighted average maturity of the Fund's portfolio will be 90 days or less. U.S.
Treasury obligations are issued by the U.S. government, and are fully guaranteed
as to payment of principal and interest by the United States. The investment
adviser uses a broad, overall analysis of the U.S. credit markets as a basis for
its selection of portfolio securities. In doing so, it assesses a variety of
factors, including the current and expected U.S. economic growth interest rates
and inflation rates.
Risk/Return Bar Chart and Table
The graphic presentation displayed here consists of a bar chart representing the
annual total returns of Class Y Shares of Riggs Treasury Money Market Fund as of
the calendar year-end for each of seven years.
The `y' axis reflects the "% Total Return" beginning with "0" and increasing in
increments of 3% up to 6%.
The `x' axis represents calculation periods from the earliest first full
calendar year end of the Fund's Class Y Shares start of business through the
calendar year ended December 31, 1998. The light gray shaded chart features
seven distinct vertical bars, each shaded in charcoal, and each visually
representing by height the total return percentages for the calendar year stated
directly at its base. The calculated total return percentage for the Fund's
Class Y Shares for each calendar year is stated directly at the top of each
respective bar, for the calendar years 1992 through 1998. The percentages noted
are: 3.32%, 2.60%, 3.55%, 5.40%, 4.85%, 5.00%, 4.75%.
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 Y Shares total
returns on a calendar year-end basis.
The Fund's Class Y 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 Y Shares total return for January 1, 1999 to June 30, 1999 was
2.01%.
Within the period shown in the Chart, the Fund's Class Y Shares highest
quarterly return was 1.38% (quarter ended June 30, 1995). Its lowest quarterly
return was 0.64% (quarter ended December 31, 1993).
Average Annual Total Return Table
The following table represents the Fund's Class Y Shares and Class R Shares
Average Annual Total Returns for the calendar periods ended December 31, 1998.
<TABLE>
<CAPTION>
Calendar Period Class Y Class R
<S> <C> <C>
1 Year 4.75% N/A
5 Years 4.71% N/A
Start of Performance/1/ 4.23% 2.09%
</TABLE>
1 The Fund's Class Y and Class R Shares start of performance dates were
October 8, 1991 and July 7, 1998, respectively.
The Fund's Class Y Shares and Class R Shares 7-Day Net Yields as of
December 31, 1998 were 4.20% and 3.95%, respectively.
Investors may call the Fund at 1-800-341-7400 to acquire the current 7-Day
Net Yields.
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
returns.
RIGGS PRIME MONEY MARKET FUND
Goal
Seeks to provide current income consistent with stability of principal and
liquidity.
Strategy
The Fund pursues its investment objective by investing exclusively in a
portfolio of corporate, municipal, U.S. government and other money market
instruments (high-quality, short-term debt securities) maturing in 397 days or
less. The dollar-weighted average maturity of the Fund's portfolio will be 90
days or less. The securities in which the Fund invests must be rated in the
highest short-term category by two recognized rating services or be of
comparable quality to securities having such ratings. The investment adviser
uses a broad, overall analysis of the U.S. credit markets as a basis for its
selection of portfolio securities. In so doing, it assesses a variety of factors
including the current and expected U.S. economic growth, interest rates and
inflation rates. Risk/Return Bar Chart and Table
The graphic presentation displayed here consists of a bar chart representing the
annual total returns of Class Y Shares of Riggs Prime Money Market Fund as of
the calendar year-end for each of seven years. The `y' axis reflects the "%
Total Return" beginning with "0" and increasing in increments of 3% up to 6%.
The `x' axis represents calculation periods from the earliest first full
calendar year end of the Fund's Class Y Shares start of business through the
calendar year ended December 31, 1998. The light gray shaded chart features
seven distinct vertical bars, each shaded in charcoal, and each visually
representing by height the total return percentages for the calendar year stated
directly at its base. The calculated total return percentage for the Fund's
Class Y Shares for each calendar year is stated directly at the top of each
respective bar, for the calendar years 1992 through 1998. The percentages noted
are: 3.86%, 3.12%, 4.01%, 5.68%, 5.10%, 5.22% and 4.99%.
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 Y Shares total
returns on a calendar year-end basis.
The Fund's Class Y 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 Y Shares total return from January 1, 1999 to June 30, 1999 was 2.18%.
Within the period shown in the Chart, the Fund's Class Y Shares highest
quarterly return was 1.43% (quarter ended June 30, 1995). Its lowest quarterly
return was 0.72% (quarter ended December 31, 1993). Average Annual Total
Return Table The following table represents the Fund's Class Y Shares and Class
R Shares Average Annual Total Returns for the calendar periods ended December
31, 1998. <TABLE> <CAPTION> Calendar Period Class Y Class R <S> <C> <C>
1 Year 4.99% 4.73% 5 Years 5.00% N/A Start of Performance/1/ 4.59% 4.63%
</TABLE>
1 The Fund's Class Y Shares and Class R Shares start of performance dates were
September 17, 1991 and December 12, 1995, respectively.
The Fund's Class Y Shares and Class R
Shares 7-Day Net Yields as of December
31, 1998 were 4.66% and 4.41%, respectively.
Investors may call the Fund at
1-800-341-7400 to acquire the current 7-Day
Net Yields.
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
returns.
RIGGS U.S. GOVERNMENT SECURITIES FUND
Goal
Seeks to achieve current income.
Strategy
The Fund pursues its investment objective by investing at least 65% of its
assets in U.S. Treasury and government agency securities. The Fund may also
invest in non-governmental debt securities, such as investment grade debt
securities issued by corporations or banks, and in privately issued
collateralized mortgage obligations. The adviser uses a broad, overall analysis
of the U.S. credit markets as a basis for its selection of portfolio securities.
In so doing, it assesses a variety of factors, including the current and
expected U.S. economic growth, interest rates and inflation rates. Under
ordinary market conditions, the Fund's duration, as determined by the adviser,
will be within 20% of the Merrill Lynch U.S.
Government Master Index.
Risk/Return Bar Chart and Table
The graphic presentation displayed here consists of a bar chart representing the
annual total returns of Class R Shares of Riggs U.S. Government Securities Fund
as of the calendar year-end for each of six years.
The `y' axis reflects the "% Total Return" beginning with "-6.00%" and
increasing in increments of 5% up to 34.00%. The `x' axis represents calculation
periods from the earliest first full calendar year end of the Fund's Class R
Shares start of business through the calendar year ended December 31, 1998. The
light gray shaded chart features six distinct vertical bars, each shaded in
charcoal, and each visually representing by height the total return percentages
for the calendar year stated directly at its base. The calculated total return
percentage for the Fund's Class R Shares for each calendar year is stated
directly at the top of each respective bar, for the calendar years 1993 through
1998. The percentages noted are: 11.06%, -4.39%, 17.28%, 1.81%, 8.63% and 8.88%.
The bar chart shows the variability of the
Fund's Class R Shares total returns
on a calendar year-end basis.
Total returns displayed for the Fund's Class R 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 R Shares total return from January 1, 1999 to June 30, 1999 was
(2.04)%. Within the period shown in the Chart, the Fund's Class R Shares
highest quarterly return was 6.49% (quarter ended June 30, 1995). Its lowest
quarterly return was (3.03)% (quarter ended March 31, 1994).
Average Annual Total Return Table The following table represents the Fund's
Class R Shares Average Annual Total Returns for the calendar periods ended
December 31, 1998. The table shows the
Fund's Class R Shares total returns averaged over a period of years relative to
the Lehman Brothers Government/Corporate (Total) Index ("LBGCTI"), a broad based
market index. Indexes are unmanaged, and it is not possible to invest directly
in an index.
<TABLE>
<CAPTION>
Calendar Period
Class R LBGCTI
<S>
<C> <C>
1 Year
6.88% 9.47%
5 Years
5.89% 7.30%
Start of Performance/1/
7.43% 8.42%
</TABLE>
1 The Fund's start of performance date was May 11, 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
returns.
RIGGS STOCK FUND
Goal
Seeks to provide growth of capital and income.
Strategy
The Fund pursues its investment objective by investing at least 65% of its
assets in common stocks of improving quality, large capitalization U.S.
companies. These will generally be companies whose market capitalizations are $5
billion or more, and whose earnings and dividends are growing at above average
rates relative to the historic growth rates of such companies, and relative to
the current growth rates of other companies comprising the Standard & Poor's 500
Index. The investment adviser uses the "value" style of investing, selecting
stocks which it believes are under valued based on such factors as low
price/earnings ratios relative to earnings growth and history; rising earnings
estimates; relative price strength; high or improved earnings, and credit
quality. Risk/Return Bar Chart and Table
The graphic presentation displayed here consists of a bar chart representing the
annual total returns of Class R Shares of Riggs Stock Fund as of the calendar
year-end for each of six years. The `y' axis reflects the "% Total Return"
beginning with "0" and increasing in increments of 5% up to 45.00%.
The `x' axis represents calculation periods from the earliest first full
calendar year end of the Fund's Class R Shares start of business through the
calendar year ended December 31, 1998. The light gray shaded chart features six
distinct vertical bars, each shaded in charcoal, and each visually representing
by height the total return percentages for the calendar year stated directly at
its base. The calculated total return percentage for the Fund's Class R Shares
for each calendar year is stated directly at the top of each respective bar, for
the calendar years 1993 through 1998. The percentages noted are: 18.51%, 3.44%,
37.59%, 19.90%, 27.75% and 16.50%.
The bar chart shows the variability of the Fund's Class R Shares total returns
on a calendar year-end basis.
Total returns displayed for the Fund's Class R 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 R Shares total return from January 1, 1999 to June 30, 1999 was
7.00%.
Within the period shown in the Chart, the Fund's Class R Shares highest
quarterly return was 22.00% (quarter ended December 31, 1998). Its lowest
quarterly return was (14.71)% (quarter ended September 30, 1998).
Average Annual Total Return Table
The following table represents the Fund's Class R Shares Average Annual Total
Returns for the calendar periods ended December 31, 1998. The table shows the
Fund's Class R Shares total returns averaged over a period of years relative to
the Standard & Poor's 500 Index ("S&P 500"), a broad-based market index. Indexes
are unmanaged, and it is not possible to invest directly in an index.
<TABLE>
<CAPTION>
Calendar Period Class R S&P 500
<S> <C> <C>
1 Year 14.50% 28.58%
5 Years 20.32% 23.89%
Start of Performance/1/ 18.67% 20.41%
</TABLE>
1 The Fund's Class R Shares start of performance date was May 11, 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
returns.
RIGGS SMALL COMPANY STOCK FUND
Goal
Seeks to provide long-term capital appreciation.
Strategy
The Fund pursues its investment objective by investing at least 65% of its
assets in a diversified portfolio of stocks of small-sized U.S. companies which
are either listed on the New York or American Stock Exchange or Nasdaq, or trade
in the over-the-counter market and which, in the opinion of the Fund's
investment adviser, have potential to become significant factors in their
respective industries in terms of market share. The Fund seeks to invest
primarily in companies whose market capitalizations are less than $1.2 billion.
In selecting securities, the investment adviser uses the "value" style of
investing described on the previous page with respect to Riggs Stock Fund.
Risk/Return Bar Chart and Table
The graphic presentation displayed here consists of a bar chart representing the
annual total returns of Class R Shares of Riggs Small Company Stock Fund as of
the calendar year-end for each of three years. The `y' axis reflects the "%
Total Return" beginning with "-15.00%" and increasing in increments of 5% up to
45.00%.
The `x' axis represents calculation periods from the earliest first full
calendar year end of the Fund's Class R Shares start of business through the
calendar year ended December 31, 1998. The light gray shaded chart features
three distinct vertical bars, each shaded in charcoal, and each visually
representing by height the total return percentages for the calendar year stated
directly at its base. The calculated total return percentage for the Fund's
Class R Shares for each calendar year is stated directly at the top of each
respective bar, for the calendar years 1996 through 1998. The percentages noted
are: 21.92%, 38.85% and -10.44%.
The bar chart shows the variability of the Fund's Class R Shares total returns
on a calendar year-end basis.
Total returns displayed for the Fund's Class R 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 R Shares total return from January 1, 1999 to June 30, 1999 was
2.69%.
Within the period shown in the Chart, the Fund's Class R Shares highest
quarterly return was 23.16% (quarter ended September 30, 1997). Its lowest
quarterly return was (29.19)% (quarter ended September 30, 1998).
Average Annual Total Return Table
The following table represents the Fund's Class R Shares Average Annual Total
Returns for the calendar periods ended December 31, 1998. The table shows the
Fund's Class R Shares total returns averaged over a period of years relative to
the Russell 2000 Index ("Russell 2000"), a broad-based market index. Indexes are
unmanaged, and it is not possible to invest directly in an index.
<TABLE>
<CAPTION>
Calendar Period Class R Russell 2000
<S> <C> <C>
1 Year (11.98)% (2.55)%
Start of Performance/1/ 17.63% 15.78%
</TABLE>
1 The Fund's Class R Shares start of performance date was February 27, 1995.
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
returns.
PRINCIPAL RISKS OF THE FUNDS
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. Thus, although the Prime Money Market Fund and the Treasury Money Market
Fund seek to preserve the value of your investment at $1.00 per share, it is
possible to lose money by investing in any of the Riggs Funds. Also, there is no
assurance that a Fund will achieve its investment objective. The Shares offered
by this prospectus are not deposits or obligations of any bank including Riggs
Bank N.A., and are not endorsed or guaranteed by the U.S. government, the
Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency.
<TABLE>
<CAPTION>
Risks U.S. Treasury Prime Money U.S. Government Stock Fund Small Company
Money Market Market Fund Securities Fund Stock Fund
Fund
<S> <C> <C> <C> <C> <C>
Stock Market Risks/1/ x x
Liquidity Risks/2/ x
Risks Related to Investing for Value/3/ x x
Risks Related to Company Size/4/ x
x x
Credit Risks/5/
Interest Rate Risks/6/ x x x
Prepayment Risks/7/ x
Sector Risks/8/ x
</TABLE>
1 The value of equity securities rise and fall.
2 Limited trading opportunities for certain securities and the inability to
sell a security at will could result in losses to a Fund.
3 Value stocks depend less on price changes for returns and may lag behind
growth stock in an up market.
4 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.
5 The possibility that an issuer will default on a security by failing to pay
interest or principal when due.
6 Prices of fixed income securities rise and fall in response to interest rate
changes.
7 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.
8 Because companies providing credit enhancement with regard to the 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.
What are The Funds' Fees and Expenses?
RIGGS FUNDS, CLASS Y SHARES AND CLASS R SHARES
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
Class Y or Class R Shares of the Funds.
<TABLE>
<CAPTION>
Shareholder Fees
Fees Paid Directly From Your Investment U.S. Small
U.S. Treasury Prime Government Company
Money Market Money Market Securities Stock Stock
Fund Fund Fund Fund Fund
Class Y Class R Class Y Class R Class R Class R Class R
<S> <C> <C> <C> <C> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) None None None None None None None
Maximum Deferred Sales Charge (Load) (as a percentage
of original purchase price or redemption proceeds,
as applicable) None None None None 2.00% 2.00% 2.00%
Maximum Sales Charge (Load) Imposed on Reinvested
Dividends (and other Distributions) (as a
percentage of offering price) None None None None None 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/1/ Expenses That are Deducted From Fund Assets
(as a percentage of average net assets)
Management Fee 0.50% 0.50% 0.50% 0.50% 0.75%/2/ 0.75% 0.80%
Distribution (12b-1) Fee None 0.50%/3/ None 0.50%/3/ 0.25%/3/ 0.25%/3/ 0.25%/3/
Shareholder Services Fee 0.25%/4/ 0.25%/4/ 0.25%/4/ 0.25%/4/ 0.25%/4/ 0.25%/4/ 0.25%/4/
Other Expenses 0.22% 0.30% 0.19% 0.24% 0.36%/5/ 0.29%/5/ 0.45%/5/
Total Annual Fund Operating Expenses 0.97% 1.55% 0.94% 1.49% 1.61% 1.54% 1.75%
(Before Waivers)/1/
1 Although not contractually obligated to do so, the Adviser, distributor and shareholder services provider waived certain
amounts. These are shown along with the net expenses the Funds actually paid for the fiscal year ended April 30, 1999.
Total Waiver of Fund Expenses 0.25% 0.47% 0.25% 0.46% 0.55% 0.15% 0.15%
Total Annual Operating Expenses (after waivers) 0.72% 1.08% 0.69% 1.03% 1.06% 1.39% 1.60%
2 The Adviser voluntarily waived a portion of the management fee. The Adviser
can terminate this voluntary waiver at any time. The management fee paid by
U. S. Government Securities Fund (after the voluntary waiver) was 0.35% for
the fiscal year ended April 30, 1999.
3 The distributor waived a portion of the Class R Shares distribution (12b-1)
fee. The distributor can terminate this voluntary waiver at any time. The
distribution fee (12b-1) paid by U.S. Treasury Money Market Fund, Prime
Money Market Fund, U.S. Government Securities Fund, Stock Fund and Small
Company Stock Fund (after voluntary waiver) was 0.25%, 0.25%, 0.15%, 0.15%
and 0.15%, respectively, for the fiscal year ended April 30, 1999. It is
anticipated that the distribution fees paid for the U.S. Government
Securities Fund, Stock Fund and Small Company Stock Fund will be 0.25% by
the fiscal year ending April 30, 2000.
4 The shareholder services provider waived a portion of the Class Y Shares
shareholder services fee. The shareholder services provider can terminate
this voluntary waiver at any time. The shareholder services fee paid by U.S.
Treasury Money Market Fund and Prime Money Market Fund, was 0.00% and 0.00%,
respectively for the fiscal year ended April 30, 1999. The shareholder
services provider also waived a portion of the Class R Shares shareholder
services fee. The shareholder services provider can terminate this voluntary
waiver at any time. The shareholder services fee paid by U.S. Treasury Money
Market Fund, Prime Money Market Fund, U.S. Government Securities Fund, Stock
Fund and Small Company Stock Fund (after voluntary waiver) was 0.03%, 0.04%,
0.08%, 0.09% and 0.09%, respectively, for the fiscal year ended April 30,
1999. It is anticipated that the shareholder services fee paid for the U.S.
Government Securities Fund, Stock Fund and Small Company Stock Fund will be
0.10% by the fiscal year ending April 30, 2000.
5 Other expenses for the U.S. Government Securities Fund, Stock Fund and Small
Company Stock Fund are based on estimated amounts for the fiscal year ending
April 30, 2000. The actual Fund operating expenses for the fiscal year ended
April 30, 1999 were 0.91%, 1.22% and 1.37% for the U.S. Government
Securities Fund, Stock Fund and Small Company Stock Fund, respectively.
</TABLE>
EXAMPLE
The following Example is intended to help you compare the cost of investing in
the Funds with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Funds' Class Y Shares and
Class R Shares 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 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:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
Assuming Redemption:
U.S. Treasury Money Market Fund
Class Y $ 99 $309 $ 536 $1,190
Class R $158 $490 $ 845 $1,845
Prime Money Market Fund
Class Y $ 96 $300 $ 520 $1,155
Class R $152 $471 $ 813 $1,779
U.S. Government Securities Fund
Class R $364 $708 $1,076 $2,111
Stock Fund
Class R $357 $686 $1,039 $2,034
Small Company Stock Fund
Class R $378 $751 $1,149 $2,262
Assuming no Redemption:
U.S. Treasury Money Market Fund
Class Y $ 99 $309 $ 536 $1,190
Class R $158 $490 $ 845 $1,845
Prime Money Market Fund
Class Y $ 96 $300 $ 520 $1,155
Class R $152 $471 $ 813 $1,779
U.S. Government Securities Fund
Class R $164 $508 $ 876 $1,911
Stock Fund
Class R $157 $486 $ 839 $1,834
Small Company Stock Fund
Class R $178 $551 $ 949 $2,062
</TABLE>
Principal Securities In Which the Funds Invest
EQUITY SECURITIES
Equity securities represent a share of an issuer's earnings and assets, after
the issuer pays its liabilities. The Funds cannot predict the income they 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 principal types of equity securities in which a
Fund may invest where that security has been referred to in the Fund's strategy
section above.
Common Stocks
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
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 principal types of fixed income securities in
which a Fund may invest, where that security has been referred to in the Fund's
strategy section above.
Treasury Securities
Treasury securities are direct obligations of the federal government of the
United States. Treasury securities held by the Funds are generally regarded as
having the lowest credit risks.
Agency Securities
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
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
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.
Demand Instruments
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. 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, a Fund may invest in taxable municipal securities.
Mortgage Backed Securities
The 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. 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.
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 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.
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 security's
holders. Either form of credit enhancement reduces credit risks by providing
another source of payment for a fixed income security.
PORTFOLIO TURNOVER
The U.S. Government Securities Fund, Stock Fund and Small Company Stock Fund
actively trade their portfolio securities in an attempt to achieve their
investment objectives. 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 a Fund's performance.
TEMPORARY DEFENSIVE INVESTMENTS
The Stock Fund, Small Company Stock Fund and U.S. Government Securities Fund may
temporarily depart from their principal investment strategies by investing their
assets in cash and shorter- term, higher-quality debt securities and similar
obligations. They may do this to minimize potential losses and maintain
liquidity to meet shareholder redemptions during adverse market conditions. This
may cause the Funds to give up greater investment returns to maintain the safety
of principal, that is, the original amount invested by shareholders.
SPECIAL TRANSACTIONS
Repurchase Agreements
The Funds may enter into repurchase agreements. Repurchase agreements are
transactions in which a Fund buys a security from a dealer or bank and agree to
sell the security back at a mutually agreed upon time and price. The repurchase
price exceeds the sale price, reflecting a Fund's return on the transaction.
This return is unrelated to the interest rate on the underlying security. A Fund
will enter into repurchase agreements only with banks and other recognized
financial institutions, such as securities dealers, deemed creditworthy by the
Adviser.
The Funds' 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 counterparty risks.
INVESTMENT RATINGS
The securities in which the Prime Money Market Fund invests must be rated in the
highest short-term category by two recognized rating services or be of
comparable equality to securities having such ratings.
INVESTMENT RATINGS FOR INVESTMENT GRADE SECURITIES
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 and 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.
Specific Risks of Investing in the Funds
STOCK MARKET RISKS
. The value of equity securities in a Fund's portfolio will rise and fall. These
fluctuations could be a sustained trend or a drastic movement. A 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 a Fund
invest in each company's equity securities. However, diversification will not
protect a Fund against widespread or prolonged declines in the stock market.
LIQUIDITY RISKS
. 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 a Fund's performance.
Infrequent trading of securities may also lead to an increase in their price
volatility. . Liquidity risk also refers to the possibility that a Fund may
not be able to sell a security when it wants to. If this happens, the Fund will
be required to continue to hold the security and the Fund could incur losses.
RISKS RELATED TO INVESTING FOR VALUE
. Due to their relatively low valuations, value stocks are typically less
volatile than growth stocks. For instance, the price of a value stock may
experience a smaller increase on a forecast of higher earnings, a positive
fundamental development, or positive market development. Further, value stocks
tend to have higher dividends than growth stocks. This means they depend less on
price changes for returns and may lag behind growth stocks in an up market.
RISKS RELATED TO COMPANY SIZE
. Generally, the smaller the market capitalization of a company, the fewer the
number of shares traded daily, the less liquid its stock and the more volatile
its price. Market capitalization is determined by multiplying the number of its
outstanding shares by the current market price per share.
. Companies with smaller market capitalizations also tend to have unproven track
records, a limited product or service base and limited access to capital. These
factors also increase risks and make these companies more likely to fail than
companies with larger market capitalizations.
CREDIT RISKS
. Credit risk is the possibility that an issuer will default on a security by
failing to pay interest or principal when due. If an issuer defaults, a Fund
will lose money.
. Many fixed income securities receive credit ratings from services such as
Standard & Poor's and Moody's Investor Services, Inc. These services assign
ratings to securities by assessing the likelihood of issuer default. 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.
. Fixed income securities generally compensate for greater credit risk by paying
interest at a higher rate. The difference between the yield of a security and
the yield of a U.S. Treasury security with a comparable maturity (the spread)
measures the additional interest paid for risk. Spreads may increase generally
in response to adverse economic or market conditions. A security's spread may
also increase if the security's rating is lowered, or the security is perceived
to have an increased credit risk. An increase in the spread will cause the price
of the security to decline.
. Credit risk includes the possibility that a party to a transaction involving a
Fund will fail to meet its obligations. This could cause a Fund to lose the
benefit of the transaction or prevent a Fund from selling or buying other
securities to implement its investment strategy.
INTEREST RATE RISKS
. 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.
PREPAYMENT RISKS
. Generally, homeowners have the option to prepay their mortgages at any time
without penalty. Homeowners frequently refinance high interest rate mortgages
when mortgage rates fall. This results in the prepayment of mortgage backed
securities with higher interest rates. Conversely, prepayments due to
refinancings decrease when mortgage rates increase. This extends the life of
mortgage backed securities with lower interest rates. Other economic factors can
also lead to increases or decreases in prepayments. Increases in prepayments of
high interest rate mortgage backed securities, or decreases in prepayments of
lower interest rate mortgage backed securities, may reduce their yield and
price. These factors, particularly the relationship between interest rates and
mortgage prepayments makes the price of mortgage backed securities held by a
Fund more volatile than many other types of fixed income securities with
comparable credit risks.
. Mortgage backed securities generally compensate for greater prepayment risk by
paying a higher yield. The difference between the yield of a mortgage backed
security and the yield of a U.S. Treasury security with a comparable maturity
(the spread) measures the additional interest paid for risk. Spreads may
increase generally in response to adverse economic or market conditions. A
security's spread may also increase if the security is perceived to have an
increased prepayment risk or perceived to have less market demand. An increase
in the spread will cause the price of the security to decline.
. The Fund may have to reinvest the proceeds of mortgage prepayments in other
fixed income securities with lower interest rates, higher prepayment risks, or
other less favorable characteristics.
SECTOR RISKS
. A substantial part of a Fund's portfolio may be comprised of securities issued
or credit enhanced by companies in similar businesses, or with other similar
characteristics. As a result, the Fund will be more susceptible to any economic,
business, political, or other developments which generally affect these issuers.
What Do Shares Cost? You can purchase, redeem, or exchange Shares any
day the New York Stock Exchange (NYSE) is open. When a Fund receives your
transaction request in proper form, it is processed at the next calculated net
asset value (NAV). The Funds do not charge a front-end sales charge. The NAV for
the Stock Fund, Small Company Stock Fund and U.S. Government Securities Fund is
determined at the end of regular trading (normally 4:00 p.m. Washington, D.C.
time) each day the NYSE is open. The NAV for the U.S. Treasury Money Market Fund
and Prime Money Market Fund (together, the "Money Market Funds") is determined
at 12:00 noon and 4:00 p.m. (Washington, D.C. time).
A Fund's NAV is determined as follows: The Money Market Funds attempt to
stabilize the NAV of their Shares at $1.00 by valuing the portfolio securities
at amortized cost. Equity securities are generally valued at 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.Fixed income securities
are valued at the last sale price on a national securities exchange, if
available, otherwise, as determined by an independent pricing service.Short-term
fixed income 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.
Outside of Automatic Investment Programs, the minimum initial investment in
each Fund is $1000 [$500 for an Individual Retirement Account ("IRA")].
Subsequent investments must be in amounts of at least $100 ($50 for an IRA). An
investor's minimum investment will be calculated by combining all mutual fund
accounts it maintains in the Riggs Funds. Within Automatic Investment Programs,
the minimum investment requirements would be specified in the Riggs Bank or
Riggs Investment Corp. Service Agreement.
The minimum investment required may be waived for purchases by employees or
retirees of the Riggs National Corporation and/or its subsidiaries, and their
spouses and children under the age of 21. The minimum investment may also be
waived for investors participating in a payroll deduction program.
SALES CHARGE WHEN YOU REDEEM
Your redemption proceeds may be reduced by a sales charge, commonly referred to
as a contingent deferred sales charge (CDSC). Shareholders redeeming Class R
Shares from the Funds (with the exception of the Money Market Funds, unless the
Money Market Fund Shares were acquired in exchange for Class R Shares or Class B
Shares of a Fund which is not a Money Market Fund) within five years of the
purchase date will be charged a CDSC equal to 2.00% or the lesser of the net
asset value of the redeemed shares at the time of purchase or the net asset
value of the redeemed shares at the time of redemption. The CDSC will be
deducted from the redemption proceeds otherwise payable to the shareholder and
will be retained by the distributor. In determining the applicability of the
CDSC, the required holding period for new shares received through an exchange
will include the period for which the original shares were held.
You will not be charged a CDSC when redeeming Shares:
. as a shareholder who acquired Shares prior to July 1, 1998 (including shares
acquired in exchange for shares acquired prior to July 1, 1998); . which
were automatically converted from Class B Shares after six full years from the
purchase date of the Class B Shares; . purchased with reinvested dividends
or capital gains; . following the death or disability, as defined in Section
72(m)(7) of the Internal Revenue Code of 1986, of the last surviving
shareholder; . 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; . if a Fund redeems your Shares and closes your account for
not meeting the minimum balance; and . which are qualifying redemptions of
shares under a Systematic Withdrawal Program. In addition, you will not be
charged a CDSC: . on shares held by Trustees, employees and retired
employees of the Funds, Riggs National Corporation and/or its subsidiaries, or
Federated Securities Corp. and/or its affiliates, and their spouses and children
under the age of 21; . on shares originally purchased (i) through the Trust
Division or the Private Banking Division of Riggs Bank; (ii) through an
investment adviser registered under the Investment Advisers Act of 1940; (iii)
through retirement plans or Systematic Investment Plan where the third party
administrator has entered into certain arrangements with Riggs Bank or its
affiliates; or (iv) by any bank or dealer (in each case for its own account)
having a sales agreement with Federated Securities Corp.; and
. on shares purchased through entities having no transaction fee agreements or
wrap accounts with Riggs Bank or its affiliates. To keep the sales charge as low
as possible, the Funds redeem your Shares in this order :
. Shares that are not subject to a CDSC; and
. Shares held the longest.
The CDSC is then calculated using the share price at the time of purchase or
redemption, whichever is lower.
How are the Funds Sold?
The Funds offer the following share classes: The Money Market Funds offer Class
R Shares and Class Y Shares; Stock Fund and Small Company Stock Fund offer Class
R Shares and Class B Shares; and U.S. Government Securities Fund offers Class R
Shares. Each class represents interests in a single portfolio of securities.
This prospectus relates only to Class R Shares and Class Y Shares. Each share
class has different expenses which affect their performance. Class B Shares are
subject to a 0.75% Rule 12b-1 fee and impose a (maximum) 5% CDSC. For more
information concerning Class B Shares, contact Riggs Investment Corp. at (202)
835-5300 or outside the Washington, D.C. metropolitan area toll-free at 1-800-
934-3883.
The Funds' Distributor, Federated Securities Corp. (Distributor), markets the
Shares described in this prospectus. With respect to the Money Market Funds,
Class R Shares (which are subject to the distribution fee) are sold primarily to
retail customers of Riggs Bank through Riggs Investment Corp., Riggs Bank and
its affiliates, and to other retail customers through non-affiliated, authorized
broker/dealers. Class R Shares of the Money Market Funds are also available to
retail and institutional investors in connection with an Asset Management
Program for automatic investment. Class Y Shares of the Money Market Funds
(which are not subject to the distribution fee) are sold primarily to trusts,
fiduciaries and institutions; and to persons and entities ("Class A
Shareholders") who held Class Y Shares (formerly known as "Class A Shares") on
June 30, 1998.
Class R Shares of U.S. Government Securities Fund, Stock Fund, and Small
Company Stock Fund are sold primarily to retail and trust customers of Riggs
Bank through Riggs Bank and its affiliates.
When the Distributor receives marketing fees, 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).
RULE 12B-1 PLAN
The Funds have adopted a Rule 12b-1 Plan, which allows them to pay marketing
fees to the Distributor and investment professionals for the sale, distribution
and customer servicing of the Funds' Class R Shares at an annual rate of up to
0.25% of the average daily assets of the U.S. Government Securities Fund, Stock
Fund and Small Company Stock Fund, and up to 0.50% of the average daily assets
of the Money Market Funds. Because these Shares pay marketing fees on an ongoing
basis, your investment cost may be higher over time than other shares with
different sales charges and marketing fees.
How to Purchase Shares
You may purchase Shares through Riggs Investment Corp., Riggs Bank, a Riggs-
affiliated broker/dealer or through an exchange from another Riggs Fund. The
Funds reserve the right to reject any request to purchase or exchange Shares.
THROUGH RIGGS INVESTMENT CORP.
To place an order to purchase shares of a Fund, an investor may write to or call
Riggs Investment Corp. at (202) 835-5300 or outside the Washington, D.C.
metropolitan area toll-free at 1-800-934-3883. Representatives are available
from 8:30 a.m. to 5:00 p.m. (Washington, D.C. time). Payment may be made either
by mail or federal funds or by debiting a customer's account at Riggs Bank. With
respect to U.S. Treasury Money Market Fund and Prime Money Market Fund, purchase
orders must be received by Riggs Investment Corp. before 11:00 a.m. (Washington,
D.C. time). Payment is normally required on the same business day. With respect
to Stock Fund, Small Company Stock Fund, and U.S. Government Securities Fund,
purchase orders must be received by Riggs Investment Corp. before 4:00 p.m.
(Washington, D.C. time). Payment is normally required on the next business day.
By Wire
To purchase shares of a Fund by wire, call the number on the front page of this
prospectus.
With respect to U.S. Treasury Money Market Fund and Prime Money Market Fund,
payment by wire must be received by Riggs Investment Corp. before 12:30 p.m.
(Washington, D.C. time) on the same day as the order is placed to earn dividends
for that day. With respect to Stock Fund, Small Company Stock Fund, and U.S.
Government Securities Fund, payment by wire must be received by Riggs Investment
Corp. before 3:00 p.m. (Washington, D.C. time) on the next business day after
placing the order. You cannot purchase Shares by wire on holidays when wire
transfers are restricted.
By Check
Make your check payable to Riggs Funds, note the name of the Fund and the share
class on the check, and mail it to:
Riggs Investment Corp.
P.O. Box 96656
Washington, D.C. 20090-6656
If you send your check by a private courier or overnight delivery service that
requires a street address, mail it to:
Riggs Investment Corp.
808 17th Street, N.W. - 11th Floor
Washington, D.C. 20006
Orders received by mail are considered received after payment by check is
converted by Riggs Bank into federal funds. This is normally the next business
day.
THROUGH RIGGS-AFFILIATED BROKER/DEALERS
An investor may place an order through Riggs-affiliated broker/dealers to
purchase shares of a Fund. Shares will be purchased at the public offering price
next determined after the Fund receives the purchase request from the
broker/dealer. Purchase requests through Riggs-affiliated broker/dealers must be
received by the broker/dealer before 3:00 p.m. (Washington, D.C. time) in order
for shares to be purchased at that day's public offering price.
THROUGH AUTOMATIC INVESTING PROGRAMS OFFERED THROUGH RIGGS BANK
You may establish an account with Riggs Investment Corp., or Riggs Bank to
automatically purchase Class R Shares of Prime Money Market Fund or U.S.
Treasury Money Market Fund when your bank account reaches a certain level.
Prospective investors in an Automatic Investing Program should refer to the
Riggs Investment Corp. or Riggs Bank Service Agreement for details regarding the
services, fees, restrictions, and limitations related to the Automatic
Investment Program. You should read this prospectus along with the Service
Agreement.
THROUGH AN EXCHANGE
You may purchase Class R Shares of the Funds (with the exception of Prime Money
Market Fund) through an exchange from Class R Shares of another Riggs Fund. You
must meet the minimum initial investment requirement for purchasing Shares and
both accounts must have identical registrations.
BY SYSTEMATIC INVESTMENT PROGRAM
Once a Fund account has been opened, shareholders may add to their investment on
a regular basis in a minimum amount of $50. Under this program, funds may be
automatically withdrawn on a periodic schedule from the shareholder's checking
or savings account or an account in one of the Riggs Funds and invested in Fund
shares at the net asset value next determined after an order is received.
Shareholders may apply for participation in this program through Riggs
Investment Corp., Riggs Bank or an authorized broker or dealer.
Due to the nature of the Automatic Investing Programs, systematic investment
privileges are unavailable to participants in these programs.
BY AUTOMATED CLEARING HOUSE (ACH)
Once you have opened an account, you may purchase additional Shares through a
depository institution that is an ACH member. This purchase option can be
established by completing the appropriate sections of the New Account Form.
RETIREMENT INVESTMENTS
Shares of the Funds can be purchased as an investment for retirement plans or
for IRA accounts. For further details, contact Riggs Investment Corp. and
consult a tax adviser.
How to Redeem and Exchange Shares
Each Fund redeems Class R Shares and Class Y Shares at their net asset value,
less, in the case of Class R Shares (with the exception of the Money Market
Funds, unless the Money Market Fund shares were acquired in exchange for Class R
Shares or Class B Shares of a Fund which is not a Money Market Fund), any
applicable CDSC, next determined after Riggs Investment Corp. receives the
redemption request.
Redemptions will be made on days on which both the New York Stock Exchange and
Federal Reserve Wire system are open for business. Telephone or written requests
for redemption must be received in proper form by Riggs Bank.
AUTOMATIC INVESTING PROGRAMS
Clients who have executed a Riggs Bank or Riggs Investment Corp. Service
Agreement should refer to the Agreement for information about redeeming Class R
Shares of Prime Money Market Fund and U.S. Treasury Money Market Fund purchased
through that program.
DIRECTLY FROM THE FUND
By Telephone
You may redeem or exchange Shares by calling Riggs Investment Corp. An
authorization form permitting a Fund to accept telephone redemption requests
must first be completed. Although Riggs Investment Corp. does not charge for
telephone redemptions, it reserves the right to charge a fee for the cost of
wire-transferred redemptions of less than $5,000, or in excess of one per month.
With respect to the Stock Fund, Small Company Stock Fund and U.S. Government
Securities Fund, if you call before the end of regular trading on the NYSE
(normally 4:00 p.m. Washington, D.C. time) you will receive a redemption amount
based on that day's NAV.
With respect to the Money Market Funds, if you call before 11:00 a.m.
(Washington, D.C. time) your redemption will be wired to you the same day. You
will not receive that day's dividend. If you call after 11:00 a.m. (Washington,
D.C. time) your redemption will be wired to you the following business day. You
will receive that day's dividend.
By Mail
You may redeem or exchange Shares by mailing a written request to:
Riggs Investment Corp.
P.O. Box 96656
Washington, D.C. 20090-6656
Send requests by private courier or overnight delivery service to:
Riggs Investment Corp.
808 17th Street, N.W. - 11th Floor
Washington, D.C. 20006
All requests must include:
. Fund Name, Share Class and account number;
. amount to be redeemed or exchanged;
. signatures of all shareholders exactly as registered; and
. if exchanging, the Fund Name and Share Class, account number and account
registration into which you are exchanging.
Signature Guarantees Signatures must be guaranteed if:
. your redemption will be sent to an address other than the address of record;
. your redemption will be sent to an address of record that was changed within
the last 30 days; or
. if exchanging (transferring) into another fund with a different shareholder
registration.
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.
PAYMENT METHODS FOR REDEMPTIONS
Your redemption proceeds will be mailed by check to your address of record. The
following payment options are available if you complete the appropriate section
of the New Account Form or an Account Service Options Form. These payment
options require a signature guarantee if they were not established when the
account was opened:
. an electronic transfer to your account at a financial institution that is an
ACH member; or
. wire payment to your account at a domestic commercial bank that is a Federal
Reserve System member.
Redemption in Kind
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 the
Funds' portfolio securities.
LIMITATIONS ON REDEMPTION PROCEEDS
Redemption proceeds normally are wired or mailed within one business day after
receiving a request in proper form. Payment may be delayed up to seven days:
. to allow your purchase to clear;
. during periods of market volatility; or
. when a shareholder's trade activity or amount adversely impacts a
Fund's ability to manage its assets.
You will not accrue interest or dividends on uncashed checks from a Fund if
those checks are undeliverable and returned to a Fund.
REDEMPTIONS FROM RETIREMENT ACCOUNTS
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.
CHECKWRITING
Class R shareholders, and Class Y shareholders who at June 30, 1998 were Class A
shareholders, of U.S. Treasury Money Market Fund and Prime Money Market Fund
with a minimum balance of $5,000 can redeem shares by writing a check in the
amount of at least $100. Shareholders must complete the checkwriting section of
the account application or complete a subsequent checkwriting application form
which can be obtained from Riggs Investment Corp. The Fund will then provide
checks. Checks cannot be used to close a shareholder's account. Checkwriting is
not permitted with respect to shares held in IRA accounts, corporate accounts,
or an Automatic Investing Program. For further information, contact Riggs Funds
Shareholder Services at (202) 835-5300 or outside the Washington, D.C.
metropolitan area toll-free at 1-800-934-3883.
SYSTEMATIC WITHDRAWAL PROGRAM
You may automatically redeem Shares in a minimum amount of $50 on a regular
basis. To be eligible to participate in this program, a shareholder must have an
account value of at least $10,000. Shareholders may make arrangements to have
amounts systematically withdrawn from their accounts in the Money Market Funds
and automatically invested in Class R Shares of one of the other Funds in the
Riggs Funds. A shareholder may apply for participation in this program through
Riggs Investment Corp., Riggs Bank or an authorized broker or dealer. This
program may reduce, and eventually deplete, your account. Payments should not be
considered yield or income.
Due to the nature of the Automatic Investment Programs, systematic withdrawal
privileges are not available to participants in those programs.
EXCHANGE PRIVILEGES
A shareholder may generally exchange Class R Shares of one Fund for Class R
Shares of any of the other Funds in the Trust (with the exception of Prime Money
Market Fund) at net asset value by writing to or calling Riggs Funds Shareholder
Services. A CDSC is not assessed in connection with such exchanges, but if the
shareholder redeems shares (other than shares of a Money Market Fund, unless the
Money Market Fund Shares were acquired in exchange for Class R Shares or Class B
Shares of a Fund which is not a Money Market Fund) within five years of the
original purchase, a CDSC will be imposed. For purposes of computing the CDSC,
the length of time the shareholder has owned shares will be measured from the
date of original purchase and will not be affected by the exchange.
Orders for exchanges received by a Fund prior to 4:00 p.m. (Washington, D.C.
time) on any day that Fund is open for business will be executed as of the close
of business that day. Orders for exchanges received after 4:00 p.m. (Washington,
D.C. time) on any business day will be executed at the close of the next
business day.
To execute an order to exchange you must first:
. complete an authorization form permitting the Fund to accept telephone
exchange requests;
. ensure that the account registrations are identical;
. meet any minimum initial investment requirements;
. specify the dollar value or number of shares to be exchanged; and
. receive a prospectus for the Fund into which you wish to exchange.
An exchange is treated as a redemption and a subsequent purchase, and is a
taxable transaction.
The Funds may modify or terminate the exchange privilege at any time. The
Funds' management or investment adviser may determine from the amount, frequency
and pattern of exchanges that a shareholder is engaged in excessive trading that
is detrimental to a Fund and other shareholders. If this occurs, a Fund may
terminate the availability of exchanges to that shareholder.
Shareholders may obtain further information on the exchange privilege by
calling Riggs Funds Shareholder Services at (202) 835-5300 or outside the
Washington, D.C. metropolitan area toll-free at 1-800-934-3883.
SYSTEMATIC EXCHANGE PROGRAM
Shareholders who desire to automatically exchange shares of a predetermined
amount on a monthly, quarterly or annual basis may take advantage of a
systematic exchange privilege. The minimum amount that may be exchanged is $50.
This privilege is not available to shareholders of Class R Shares of the Money
Market Funds. Shareholders interested in participating in this program should
contact Riggs Funds Shareholder Services.
ADDITIONAL CONDITIONS
Telephone Transactions
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.
Share Certificates
The Funds no longer issues share certificates. If you are redeeming or
exchanging Shares represented by certificates previously issued by a Fund, 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.
Account and Share Information
CONFIRMATIONS AND ACCOUNT STATEMENTS
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.
DIVIDENDS AND CAPITAL GAINS
With respect to the Money Market Funds and U.S. Government Securities Fund,
dividends are declared daily and paid monthly. With respect to the Stock Fund
and Small Company Stock Fund, dividends are declared and paid quarterly. Unless
shareholders request cash payments by so indicating on the account application
or by writing to one of these Funds, dividends are automatically reinvested in
additional shares of the respective Fund on payment dates at net asset value on
the ex-dividend date without a sales charge.
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 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.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, 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 required minimum may be waived for employees or retirees of the Riggs
National Corporation and/or its subsidiaries, employees of any broker/dealer
operating on the premises of Riggs Bank, and their spouses and children under
21.
TAX INFORMATION
The Funds send an annual statement of your account activity to assist you in
completing your federal, state and local tax returns. Fund distributions of
dividends and capital gains are taxable to you whether paid in cash or
reinvested in a 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.
Fund distributions are expected to be both dividends and capital gains.
Redemptions and exchanges are taxable sales. Please consult your tax adviser
regarding your federal, state, and local tax liability.
Who Manages the Funds?
The Board of Trustees governs the Funds. The Board selects and oversees the
adviser, Riggs Bank N.A. ("Adviser"). The Adviser manages the Funds' assets,
including buying and selling portfolio securities. The Adviser's address is 800
17th Street N.W., Washington, D.C. 20006.
The Adviser has delegated daily management of all of the Funds' assets to the
Sub-Adviser, Riggs Investment Management Corp. ("RIMCO"), which is paid by the
Adviser and not by the Funds. The Sub-Adviser's address is 800 17th Street N.W.,
Washington, D.C. 20006.
The Adviser is a wholly owned subsidiary of Riggs National Corporation, a bank
holding company. The Adviser or its subsidiary, RIMCO, have advised the Riggs
Funds since September 1991 and, as of April 30, 1999, provide investment advice
for assets approximating $2.7 billion. The Adviser has a varied client base of
approximately 100 other relationships including corporate, union and public
pension plans, foundations, endowments and associations.
The Funds' portfolio managers are:
Philip D. Tasho is the Chief Executive Officer and Chief Investment Officer of
RIMCO and served as the manager of the Stock Fund from its inception through
June 1994. Most recently, Mr. Tasho was a Vice President at Shawmut Investment
Advisers in Boston, MA from 1994 to 1995. Prior to that, Mr. Tasho served as a
Managing Director of RIMCO and was a member of the senior management committee
from 1990 to 1994. He also served as a Senior Portfolio Manager for the Sovran
Bank in Bethesda and as Director of Research for the same bank at its Richmond
head office. He started his career as a Trust Investment Officer for the First
American Bank in Washington. Mr. Tasho earned a B.A. in Russian from Grinnel
College and an M.B.A. in Finance and Investments from George Washington
University. He holds a CFA from the Institute of Chartered Financial Analysts.
Mr. Tasho assumed portfolio management responsibility of the Stock Fund and
Small Company Stock Fund in November 1995.
Nathan Reischer is Director and Chief Fixed Income Strategist of RIMCO. He is
responsible for formulating the firm's fixed income investment strategy and
directing management of its fixed income portfolios. Mr. Reischer has more than
20 years of fixed income management experience. He was Director and Senior
Domestic Strategist for Barclays Capital, Inc. in New York from 1995 until
joining RIMCO in 1998. From 1983 to 1994, he served as Fixed Income Portfolio
Manager and Director of Cash Management at GM Investment Management Company in
New York. He brings additional asset/liability management experience having been
a consultant to financial institutions at IMA, Inc. in Seattle, and Vice
President and Manager of the Investment Portfolio Department at Seattle First
National Bank. Mr. Reischer earned his B.B.A. in Economics from the University
of Houston and his M.B.A. from Bernard M. Baruch College. He assumed portfolio
management responsibilities for the U.S. Government Securities Fund in September
1998.
ADVISORY FEES
The Adviser receives an annual investment advisory fee at annual rates equal to
percentages of the relevant Fund's average net assets as follows: Prime Money
Market Fund and U.S. Treasury Money Market Fund--0.50%; U.S. Government
Securities Fund and Stock Fund--0.75%; and Small Company Stock Fund--0.80%. The
Adviser may voluntarily waive a portion of its fee or reimburse the Funds for
certain operating expenses.
YEAR 2000 READINESS
The "Year 2000" problem is the potential for computer errors or failures because
certain computer systems may be unable to interpret dates after December 31,
1999 or experience other date- related problems. The Year 2000 problem may cause
systems to process information incorrectly and could disrupt businesses, such as
the Funds', that rely on computers.
While it is impossible to determine in advance all of the risks to the Funds,
the Funds could experience interruptions in basic financial and operational
functions. Fund shareholders could experience errors or disruptions in Fund
share transactions or Fund communications.
The Funds' service providers are making changes to their computer systems to
fix any Year 2000 problems. In addition, they are working to gather information
from third-party providers to determine their Year 2000 readiness.
Year 2000 problems would also increase the risks of the Funds' investments. To
assess the potential effect of the Year 2000 problem, the Adviser is reviewing
information regarding the Year 2000 readiness of issuers of securities the Funds
may purchase. However, this may be difficult with certain issuers. For example,
funds dealing with foreign service providers or investing in foreign securities
will have difficulty determining the Year 2000 readiness of these entities.
The financial impact of these issues for the Funds is still being determined.
There can be no assurance that potential Year 2000 problems would not have a
material adverse effect on the Funds.
Financial Information
FINANCIAL HIGHLIGHTS
The Financial Highlights will help you understand the Funds' financial
performance for the 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 the Funds, assuming reinvestment of any dividends and capital
gains.
This information has been audited by Arthur Andersen LLP whose report, along
with the Funds' audited financial statements, is included in the Annual Report.
Riggs Funds
Financial Highlights
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
The following table for the fiscal years ended April 30, 1995, 1996, 1997 and
1998 has been audited by Ernst & Young LLP, the Trust's former independent
auditors. The financial highlights for the fiscal year ended April 30, 1999 have
been audited by Arthur Andersen LLP. Arthur Andersen's report dated June 22,
1999, on the Trust 's financial statements for the year ended April 30, 1999, is
included in the Combined Annual Report, which is incorporated herein by
reference. This table should be read in conjunction with the Fund's financial
statements and notes thereto, which may be obtained free of charge from the
Trust. <TABLE> <CAPTION>
Net Realized Distributions
Net Asset Net and Unrealized Total From from Net Distributions
Year Ended Value, beginning Investment Gain (Loss) on Investment Investment from Net Capital
April 30, of period Income (Loss) Investments Operations Income Realized Gains Contribution
<S> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury Money Market Fund Y Shares
1995 $ 1.00 0.04 -- 0.04 (0.04) -- --
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) -- --
U.S. Treasury Money Market Fund R Shares
1999/3/ $ 1.00 0.03 -- 0.03 (0.03) -- --
Prime Money Market Fund Y Shares
1995 $ 1.00 0.047 (0.003) 0.044 (0.047) -- 0.003
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 0.05 -- 0.05 (0.05) -- --
Prime Money Market Fund R Shares
1996/6/ $ 1.00 0.02 -- 0.02 (0.02) -- --
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) -- --
U.S. Government Securities Fund R Shares
1995 $ 9.46 0.56 (0.11) 0.45 (0.56) -- --
1996 $ 9.35 0.59 0.12 0.71 (0.59) -- --
1997 $ 9.47 0.60 (0.07) 0.53 (0.59) -- --
1998 $ 9.41 0.56 0.37 0.93 (0.57) -- --
1999 $ 9.77 0.52 0.06 0.58 (0.50) -- --
Stock Fund R Shares
1995 $11.89 0.20 1.39 1.59 (0.19) (0.60) --
1996 $12.69 0.18 4.00 4.18 (0.18) (0.85) --
1997 $15.84 0.20 2.28 2.48 (0.20) (2.71) --
1998 $15.41 0.11 5.20 5.31 (0.11) (4.04) --
1999 $16.57 0.04 0.94 0.98 (0.04) (1.71) --
Small Company Stock Fund R Shares
1995/7/ $10.00 0.02 0.41 0.43 -- -- --
1996 $10.43 (0.02) 4.05 4.03 (0.01) (0.35) --
1997 $14.10 (0.01) (0.47) (0.48) -- (0.82) --
1998 $12.80 (0.04) 9.23 9.19 -- (3.19) --
1999 $18.80 (0.02) (5.66) (5.68) -- (1.85) --
</TABLE>
1 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
2 During the period certain fees were voluntarily waived. If such waivers had
not occurred, the ratios would have been as indicated.
3 Reflects operations for the period from July 7, 1998 (date of initial public
investment) to April 30, 1999.
4 Computed on an annualized basis.
5 Total return would have remained at 4.84% absent the capital contribution by
Riggs National Corp.
6 Reflects operations for the period from December 12, 1995 (date of initial
public investment) to April 30, 1996.
7Reflects operations for the period from February 27, 1995 (date of initial
public investment) to April 30, 1995.
<TABLE>
<CAPTION>
Ratios to Average Net Assets
Net
Net Asset Investment Net Investment Net Assets,
Total Value, end Total Income Expenses Income (Loss) end of period Portfolio
Distributions of period Return/1/ Expenses/2/ (Loss)/2/ (after waivers) (after waivers) (000 omitted) Turnover
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(0.04) $ 1.00 4.39% 0.80% 4.13% 0.60% 4.33% $ 81,089 --
(0.05) $ 1.00 5.28% 0.78% 4.99% 0.60% 5.17% $107,104 --
(0.05) $ 1.00 4.83% 0.70% 4.61% 0.57% 4.74% $141,011 --
(0.05) $ 1.00 5.00% 0.71% 4.80% 0.63% 4.88% $117,424 --
(0.04) $ 1.00 4.49% 0.97% 4.14% 0.72% 4.39% $138,097 --
(0.03) $ 1.00 3.35% 1.55%/4/ 3.39%/4/ 1.08%/4/ 3.86%/4/ $ 3,309 --
(0.044) $ 1.00 4.84%/5/ 0.68% 4.48% 0.44% 4.72% $284,059 --
(0.05) $ 1.00 5.50% 0.70% 5.07% 0.51% 5.26% $367,742 --
(0.05) $ 1.00 5.09% 0.68% 4.83% 0.51% 5.00% $372,037 --
(0.05) $ 1.00 5.22% 0.69% 5.00% 0.58% 5.11% $318,122 --
(0.05) $ 1.00 4.76% 0.94% 4.40% 0.69% 4.65% $425,054 --
(0.02) $ 1.00 0.74% 1.26%/4/ 4.39%/4/ 1.07%/4/ 4.58%/4/ $ 10 --
(0.05) $ 1.00 4.57% 1.18% 4.41% 1.01% 4.58% $ 26,263 --
(0.05) $ 1.00 4.92% 1.18% 4.33% 1.00% 4.51% $ 508 --
(0.04) $ 1.00 4.49% 1.49% 3.79% 1.03% 4.25% $ 8,422 --
(0.56) $ 9.35 5.01% 1.20% 5.66% 0.80% 6.06% $ 46,820 262%
(0.59) $ 9.47 7.60% 1.20% 5.64% 0.80% 6.04% $ 50,919 128%
(0.59) $ 9.41 5.79% 1.27% 5.96% 0.87% 6.36% $ 31,829 171%
(0.57) $ 9.77 10.14% 1.22% 5.47% 0.82% 5.87% $ 34,521 175%
(0.50) $ 9.85 6.03% 1.58% 4.45% 0.91% 5.12% $ 38,928 55%
(0.79) $12.69 14.16% 1.12% 1.52% 0.98% 1.66% $ 66,019 46%
(1.03) $15.84 33.73% 1.08% 1.14% 0.96% 1.26% $ 84,797 81%
(2.91) $15.41 16.34% 1.03% 1.14% 0.91% 1.26% $ 89,142 75%
(4.15) $16.57 39.68% 1.00% 0.56% 0.93% 0.63% $117,115 94%
(1.75) $15.80 6.50% 1.48% 0.00% 1.22% 0.26% $101,474 52%
-- $10.43 4.30% 3.20%/4/ (0.56%)/4/ 1.66%/4/ 0.98%/4/ $ 7,609 8%
(0.36) $14.10 39.43% 1.94% (0.93%) 1.14% (0.13%) $ 19,289 70%
(0.82) $12.80 (3.76%) 1.46% (0.53%) 1.00% (0.07%) $ 27,777 93%
(3.19) $18.80 77.85% 1.18% (0.35%) 1.09% (0.26%) $ 58,223 108%
(1.85) $11.27 (30.33%) 1.63% (0.40%) 1.37% (0.14%) $ 38,728 100%
</TABLE>
Riggs Funds
CLASS R SHARES
Riggs U.S. Treasury Money Market Fund
Riggs Prime Money Market Fund
Riggs U.S. Government Securities Fund
Riggs Stock Fund
Riggs Small Company Stock Fund
CLASS Y SHARES
Riggs U.S. Treasury Money Market Fund
Riggs Prime Money Market Fund
AUGUST 31, 1999
A Statement of Additional Information (SAI) dated August 31, 1999, is
incorporated by reference into this prospectus. Additional information about the
Funds' and their investments is contained in the Funds' SAI, and Annual and
Semi-Annual Reports to shareholders as they become available. The Annual Report
discusses market conditions and investment strategies that significantly
affected the Funds' performance during their last fiscal year. To obtain the
SAI, the Annual Report, Semi-Annual Report and other information without charge,
call your investment professional or Riggs Funds Shareholder Services at (202)
835-5300 or outside the Washington, D.C. metropolitan area toll-free at 1-800-
934-3883. You can obtain information about the Funds (including the SAI) by
visiting or writing the Public Reference Room of the Securities and Exchange
Commission in Washington, D.C. 20549-6009 or from the Commission's Internet site
at http://www.sec.gov. You can call 1-800-SEC-0330 for information on the Public
Reference Room's operations and copying charges.
Investment Company Act File No. 811-6309
Cusip 76656A 104
Cusip 76656A 203
Cusip 76656A 302
Cusip 76656A 609 Cusip 76656A 807 Cusip 76656A 401 Cusip 76656A 500
Cusip 76656A 104 Cusip 76656A 203 Cusip 76656A 302 Cusip 76656A 500 Cusip 76656A
609 Cusip 76656A 807 Cusip 76656A 401 1061803A (8/99)
Riggs Funds
Riggs U.S. Treasury Money Market Fund
Class R Shares
Class Y Shares
Riggs Prime Money Market Fund
Class R Shares
Class Y Shares
Riggs U.S. Government Securities Fund
Class R Shares
Riggs Stock Fund
Class R Shares
Class B Shares
Riggs Small Company Stock Fund
Class R Shares
Class B Shares
Statement of Additional Information
August 31, 1999
This Statement of Additional Information (SAI) is not a prospectus. Read this
SAI in conjunction with the prospectuses of the Riggs Funds dated August 31,
1999.
This SAI incorporates by reference the Funds' Annual Report. Obtain the
prospectuses or the Annual Report without charge by calling Riggs Funds
Shareholder Services at (202) 835-5300 or outside the Washington, D.C.
metropolitan area toll-free at 1-800-934-3883.
CONTENTS
How Are the Funds Organized?.................................2
Securities in Which the Funds Invest.........................2
What do Shares Cost?........................................16
How Are the Funds Sold?.....................................17
Subaccounting Services......................................17
Redemption in Kind..........................................18
Massachusetts Partnership Law...............................18
Account and Share Information...............................18
Tax Information.............................................19
Who Manages and Provides Services to the Funds..............20
Fees Paid by the Funds for Services.........................25
How do the Funds Measure Performance?.......................26
Financial Information.......................................30
Appendix....................................................31
Addresses...........................................Back Cover
Federated Securities Corp., Distributor,
subsidiary of Federated Investors, Inc.
1061803B (8/99)
<PAGE>
HOW ARE THE FUNDS ORGANIZED
Riggs Funds (Trust) is a diversified open-end, management investment company
that was established under the laws of the Commonwealth of Massachusetts on
April 1, 1991. The Trust may offer separate series of shares representing
interests in separate portfolios of securities. The Board of Trustees (the
Board) has established three classes of shares known as Class R Shares, Class Y
Shares and Class B Shares. This SAI relates to all three classes of Shares. The
Funds' investment adviser is Riggs Bank N.A.
(Adviser).
SECURITIES IN WHICH THE FUNDS INVEST
In pursuing their investment strategy, the Funds may invest in the following
securities for any purpose that is consistent with their investment objective.
Following tables indicate which types of securities are a: o P = Principal
investment of a Fund; o A = Acceptable (but not principal) investment of a Fund;
or o N = Not an acceptable investment of a Fund.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
- -------------------------------------------- --------------------- -------------- ----------------- ------------ ------------------
Securities U.S. Treasury Money Prime Money U.S. Government Stock Fund Small Company
Market Fund Market Fund Securities Fund Stock Fund
- -------------------------------------------- --------------------- -------------- ----------------- ------------ ------------------
American Depository Receipts2 N N N A A
------------------------------------------- --------------------- -------------- ----------------- ------------ ------------------
- -------------------------------------------- --------------------- -------------- ----------------- ------------ ------------------
Agency Securities N P P A A
- -------------------------------------------- --------------------- -------------- ----------------- ------------ ------------------
- -------------------------------------------- --------------------- -------------- ----------------- ------------ ------------------
Banking Instruments N P A A A
- -------------------------------------------- --------------------- -------------- ----------------- ------------ ------------------
- -------------------------------------------- --------------------- -------------- ----------------- ------------ ------------------
Collateralized Mortgage Obligations N N P N N
- -------------------------------------------- --------------------- -------------- ----------------- ------------ ------------------
- -------------------------------------------- --------------------- -------------- ----------------- ------------ ------------------
Commercial Paper 4 5 N P A A A
- -------------------------------------------- --------------------- -------------- ----------------- ------------ ------------------
- -------------------------------------------- --------------------- -------------- ----------------- ------------ ------------------
Common Stocks N N N P P
- -------------------------------------------- --------------------- -------------- ----------------- ------------ ------------------
- -------------------------------------------- --------------------- -------------- ----------------- ------------ ------------------
Convertible Securities N N N A A
- -------------------------------------------- --------------------- -------------- ----------------- ------------ ------------------
- -------------------------------------------- --------------------- -------------- ----------------- ------------ ------------------
Corporate Debt Obligations 3 N P A A A
- -------------------------------------------- --------------------- -------------- ----------------- ------------ ------------------
- -------------------------------------------- --------------------- -------------- ----------------- ------------ ------------------
Credit Enhancement 1 N P N N N
- -------------------------------------------- --------------------- -------------- ----------------- ------------ ------------------
- -------------------------------------------- --------------------- -------------- ----------------- ------------ ------------------
Demand Instruments N A A A A
- -------------------------------------------- --------------------- -------------- ----------------- ------------ ------------------
- -------------------------------------------- --------------------- -------------- ----------------- ------------ ------------------
Foreign Securities N N N A A
- -------------------------------------------- --------------------- -------------- ----------------- ------------ ------------------
- -------------------------------------------- --------------------- -------------- ----------------- ------------ ------------------
Futures and Options Transactions N N A A A
- -------------------------------------------- --------------------- -------------- ----------------- ------------ ------------------
- -------------------------------------------- --------------------- -------------- ----------------- ------------ ------------------
General Obligation Bonds N A N N N
- -------------------------------------------- --------------------- -------------- ----------------- ------------ ------------------
- -------------------------------------------- --------------------- -------------- ----------------- ------------ ------------------
Insurance Contracts N A N N N
- -------------------------------------------- --------------------- -------------- ----------------- ------------ ------------------
- -------------------------------------------- --------------------- -------------- ----------------- ------------ ------------------
Mortgage-Backed Securities N N P N N
- -------------------------------------------- --------------------- -------------- ----------------- ------------ ------------------
- -------------------------------------------- --------------------- -------------- ----------------- ------------ ------------------
Preferred Stocks N N N A A
- -------------------------------------------- --------------------- -------------- ----------------- ------------ ------------------
- -------------------------------------------- --------------------- -------------- ----------------- ------------ ------------------
Private Activity Bonds N A N N N
- -------------------------------------------- --------------------- -------------- ----------------- ------------ ------------------
- -------------------------------------------- --------------------- -------------- ----------------- ------------ ------------------
Real Estate Investment Trusts N N N N A
- -------------------------------------------- --------------------- -------------- ----------------- ------------ ------------------
- -------------------------------------------- --------------------- -------------- ----------------- ------------ ------------------
Repurchase Agreements P A A A A
- -------------------------------------------- --------------------- -------------- ----------------- ------------ ------------------
- -------------------------------------------- --------------------- -------------- ----------------- ------------ ------------------
Reverse Repurchase Agreements A A A A A
- -------------------------------------------- --------------------- -------------- ----------------- ------------ ------------------
<PAGE>
- -------------------------------------------- --------------------- -------------- ----------------- ------------ ------------------
Securities of Other Investment Companies A A A A A
- -------------------------------------------- --------------------- -------------- ----------------- ------------ ------------------
- -------------------------------------------- --------------------- -------------- ----------------- ------------ ------------------
Special Revenue Bonds N A N N N
- -------------------------------------------- --------------------- -------------- ----------------- ------------ ------------------
- -------------------------------------------- --------------------- -------------- ----------------- ------------ ------------------
Treasury Securities P P P A A
- -------------------------------------------- --------------------- -------------- ----------------- ------------ ------------------
- -------------------------------------------- --------------------- -------------- ----------------- ------------ ------------------
Variable Rate Demand Notes N P A A A
- -------------------------------------------- --------------------- -------------- ----------------- ------------ ------------------
- -------------------------------------------- --------------------- -------------- ----------------- ------------ ------------------
Warrants N N N A A
- -------------------------------------------- --------------------- -------------- ----------------- ------------ ------------------
- -------------------------------------------- --------------------- -------------- ----------------- ------------ ------------------
When-Issued Transactions A A A A A
- -------------------------------------------- --------------------- -------------- ----------------- ------------ ------------------
</TABLE>
1. The Prime Money Market Fund may have more than 25% of its total assets
invested in securities credit-enhanced by banks. 2. The Stock Fund and Small
Company Stock Fund may invest up to 20% of their total assets in ADRs. 3. The
U.S. Government Securities Fund may invest in corporate debt obligations and
U.S. dollar denominated debt obligations of foreign corporations and governments
rated Baa or better, Aaa, Aa or A by Moody's Investor Services, Inc. (Moody's);
BBB or better, AAA, AA or A by Standard & Poor's (S&P); or BBB or better, AAA,
AA, or A by Fitch IBCA, Inc. (Fitch). The Fund will limit its investment in
bonds rated in the lowest investment grade category to 10% of its total assets.
In the event that any such security is downgraded below the fourth highest
rating category, the Fund will dispose of the security. 4. The U.S. Government
Securities Fund may invest in commercial paper that has at least two high
quality ratings by a nationally recognized statistical rating organization
(NRSRO). 5. The Stock Fund and Small Company Stock Fund may invest in commercial
paper rated A-1 by S&P, Prime-1 by Moody's or F-1+ or F-1 by Fitch.
<PAGE>
123
SECURITIES DESCRIPTIONS AND TECHNIQUES
Equity Securities
Equity securities represent a share of an issuer's earnings and assets, after
the issuer pays its liabilities. The Funds 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.
Common Stocks
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. 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 treat such redeemable preferred stock as a fixed income
security. Real Estate Investment Trusts (REITs) REITs are real estate
investment trusts that lease, operate and finance commercial real estate.
REITs are exempt from federal corporate income tax if they limit their
operations and distribute most of their income. Such tax requirements limit
a REIT's ability to respond to changes in the commercial real estate
market. 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). A 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.
<PAGE>
The following describes the types of fixed income securities in which a Fund may
invest.
Treasury Securities
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 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
Corporate Debt 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
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. Demand Instruments 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
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. 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.
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. PACs, TACs and Companion Classes More sophisticated CMOs
include planned amortization classes (PACs) and targeted
amortization classes (TACs). PACs and TACs are issued with
companion classes. PACs and TACs receive principal payments and
prepayments at a specified rate. The companion classes receive
principal payments and prepayments in excess of the specified
rate. In addition, PACs will receive the companion classes' share
of principal payments, if necessary, to cover a shortfall in the
prepayment rate. This helps PACs and TACs to control prepayment
risks by increasing the risks to their companion classes. IOs and
POs CMOs may allocate interest payments to one class (Interest
Only or IOs) and principal payments to another class (Principal
Only or POs). POs increase in value when prepayment rates
increase. In contrast, IOs decrease in value when prepayments
increase, because the underlying mortgages generate less interest
payments. However, IOs tend to increase in value when interest
rates rise (and prepayments decrease), making IOs a useful hedge
against interest rate risks. Floaters and Inverse Floaters Another
variant allocates interest payments between two classes of CMOs.
One class (Floaters) receives a share of interest payments based
upon a market index such as LIBOR. The other class (Inverse
Floaters) receives any remaining interest payments from the
underlying mortgages. Floater classes receive more interest (and
Inverse Floater classes receive correspondingly less interest) as
interest rates rise. This shifts prepayment and interest rate
risks from the Floater to the Inverse Floater class, reducing the
price volatility of the Floater class and increasing the price
volatility of the Inverse Floater class. 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.
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 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 the 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 the Fund to realize some of the potential
appreciation of the underlying equity securities with less risk of losing its
initial investment (but the value of the convertible security may also be
adversely affected by the source of the potential appreciation of the equity
security). The Fund treats convertible securities as both fixed income and
equity securities for purposes of its investment policies and limitations,
because of their unique characteristics.
Insurance Contracts
Insurance contracts include guaranteed investment contracts, funding agreements
and annuities. A Fund treats these contracts as fixed income securities.
<PAGE>
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.
General Obligation Bonds
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 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.
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).
A Fund may invest in bonds subject to AMT.
Variable Rate Demand Instruments
Variable rate demand instruments are tax exempt 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 Fund considers 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.
The foreign securities in which the Funds invest are primarily denominated in
U.S. dollars. Along with the risks normally associated with domestic securities
of the same type, foreign securities are subject to risks of foreign investing.
<PAGE>
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 not 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.
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 a Fund from closing out a position. If this happens, a 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 a Fund by preventing it from disposing of or trading
any assets it has been using to secure its obligations under the contract. A
Fund 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 a Fund's exposure to market and currency risks, and may
also expose a Fund to liquidity and leverage risks. OTC contracts also expose a
Fund to credit risks in the event that a counterparty defaults on the contract.
A Fund 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. U.S.
Government Securities Fund, Stock Fund and Small Company Stock Fund may
buy/sell the following types of futures contracts: Financial Futures and
Stock Index Futures. 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 U.S. Government Securities Fund,
Stock Fund and Small Company Stock Fund may: Buy call options on portfolio
securities and on futures contracts in anticipation of an increase in the
value of the underlying asset.; Buy put options on portfolio securities and
on futures contracts in anticipation of a decrease in the value of the
underlying asset.; and Buy or write options to close out existing options
positions. U.S. Government Securities Fund, Stock Fund and Small Company
Stock Fund may also write call options 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 a 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. When a
Fund writes options on futures contracts, it will be subject to margin
requirements similar to those applied to futures contracts.
Special Transactions
Repurchase Agreements
Repurchase agreements are transactions in which a Fund buys a security from
a dealer or bank and agree to sell the security back at a mutually agreed
upon time and price. The repurchase price exceeds the sale price,
reflecting a 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. The Funds' 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 counterparty risks. 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 a Fund. Reverse
repurchase agreements are subject to credit risks. In addition, reverse
repurchase agreements create leverage risks because a 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 a Fund. A 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 market risks for the Fund. Delayed delivery
transactions also involve credit risks in the event of a counterparty
default. These transactions create leverage 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
they 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 market risks and credit risks. These transactions create
leverage risks. Asset Coverage In order to secure their 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.
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, a Fund may buy or sell a
derivative contract that would normally increase in value under the same
circumstances. The 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 will 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 a Fund.
<PAGE>
Investing in Securities of Other Investment Companies
A Fund may invest its assets in securities of other investment companies,
including the securities of affiliated money market funds, as an efficient means
of carrying out its investment policies and managing its uninvested cash.
Investment Ratings
An NRSRO's highest rating category is determined without regard for
sub-categories and gradations. For example, securities rated A-1 or A-1+ by
Standard & Poor's ("S&P"), Prime-1 by Moody's Investors Service, Inc.
("Moody's"), or F-1+ or F-1 by Fitch IBCA, Inc.
("Fitch"), are all considered rated in the highest short-term rating category.
INVESTMENT RISKS
There are many factors which may affect an investment in the Funds. The Funds'
risks are described below.
Stock Market Risks
The value of equity securities in a Fund's portfolio will rise and fall. These
fluctuations could be a sustained trend or a drastic movement. A 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 a Fund invests
in each company's equity securities. However, diversification will not protect a
Fund against widespread or prolonged declines in the stock market.
Interest Rate Risks
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.
Prepayment Risks
Generally, homeowners have the option to prepay their mortgages at any time
without penalty. Homeowners frequently refinance high interest rate mortgages
when mortgage rates fall. This results in the prepayment of mortgage backed
securities with higher interest rates. Conversely, prepayments due to
refinancings decrease when mortgage rates increase. This extends the life of
mortgage backed securities with lower interest rates. Other economic factors can
also lead to increases or decreases in prepayments. Increases in prepayments of
high interest rate mortgage backed securities, or decreases in prepayments of
lower interest rate mortgage backed securities, may reduce their yield and
price. These factors, particularly the relationship between interest rates and
mortgage prepayments makes the price of mortgage backed securities more volatile
than many other types of fixed income securities with comparable credit risks.
Mortgage backed securities generally compensate for greater prepayment risk by
paying a higher yield. The difference between the yield of a mortgage backed
security and the yield of a U.S. Treasury security with a comparable maturity
(the spread) measures the additional interest paid for risk. Spreads may
increase generally in response to adverse economic or market conditions. A
security's spread may also increase if the security is perceived to have an
increased prepayment risk or perceived to have less market demand. An increase
in the spread will cause the price of the security to decline. A Fund may have
to reinvest the proceeds of mortgage prepayments in other fixed income
securities with lower interest rates, higher prepayment risks, or other less
favorable characteristics.
Risks Related to Investing for Value
Due to their relatively low valuations, value stocks are typically less volatile
than growth stocks. For instance, the price of a value stock may experience a
smaller increase on a forecast of higher earnings, a positive fundamental
development, or positive market development. Further, value stocks tend to have
higher dividends than growth stocks. This means they depend less on price
changes for returns and may lag behind growth stocks in an up market.
Risks Related to Company Size
Generally, the smaller the market capitalization of a company, the fewer the
number of shares traded daily, the less liquid its stock and the more volatile
its price. Market capitalization is determined by multiplying the number of its
outstanding shares by the current market price per share.
Companies with smaller market capitalizations also tend to have unproven track
records, a limited product or service base and limited access to capital. These
factors also increase risks and make these companies more likely to fail than
companies with larger market capitalizations.
Liquidity Risks
Trading opportunities are more limited for equity securities that are not widely
held and for fixed income securities that have not received any credit ratings,
have received ratings below investment grade or are not widely held. This may
make it more difficult to sell or buy a security at a favorable price or time.
Consequently, the 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. 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, a
Fund will be required to continue to hold the security or keep the position
open, and the Fund could incur losses. OTC derivative contracts generally carry
greater liquidity risk than exchange-traded contracts.
Leverage Risks
Leverage risk is created when an investment exposes the Funds to a level of risk
that exceeds the amount invested. Changes in the value of such an investment
magnify the Funds' risk of loss and potential for gain. Investments can have
these same results if their returns are based on a multiple of a specified
index, security, or other benchmark.
Credit Risks
Credit risk is the possibility that an issuer will default on a security by
failing to pay interest or principal when due. If an issuer defaults, a Fund
will lose money. Many fixed income securities receive credit ratings from
services such as Standard & Poor's and Moody's Investor Services, Inc. These
services assign ratings to securities by assessing the likelihood of issuer
default. 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. Fixed income securities generally compensate for greater credit risk
by paying interest at a higher rate. The difference between the yield of a
security and the yield of a U.S. Treasury security with a comparable maturity
(the spread) measures the additional interest paid for risk. Spreads may
increase generally in response to adverse economic or market conditions. A
security's spread may also increase if the security's rating is lowered, or the
security is perceived to have an increased credit risk. An increase in the
spread will cause the price of the security to decline. Credit risk includes the
possibility that a party to a transaction involving a Fund will fail to meet its
obligations. This could cause a Fund to lose the benefit of the transaction or
prevent a Fund from selling or buying other securities to implement its
investment strategy. Risks of Foreign Investing 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.
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. 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 a Fund's investments.
INVESTMENT LIMITATIONS
Issuing Senior Securities and Borrowing Money
The Funds may borrow money, directly or indirectly, and issue senior
securities to the maximum extent permitted under the 1940 Act.
Lending Cash or Securities
The Funds may not make loans, provided that this restriction does not
prevent the Funds 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.
Investing in Commodities
The Funds may not purchase or sell physical commodities, provided that
the Funds may purchase securities of companies that deal in
commodities.
Investing in Real Estate
The Funds may not purchase or sell real estate, provided that this
restriction does not prevent the Funds 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. The Funds may exercise their 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.
Diversification of Investments
With respect to securities comprising 75% of the value of its total
assets, the Funds 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 their total assets would be
invested in securities of that issuer, or the Funds would own more than
10% of the outstanding voting securities of that issuer.
Concentration of Investments
The Funds will not make investments that will result in the
concentration of their investments in the securities of issuers
primarily engaged in the same industry. Government securities,
municipal securities and bank instruments will not be deemed to
constitute an industry.
Underwriting
The Funds may not underwrite the securities of other issuers, except
that the Funds may engage in transactions involving the acquisition,
disposition or resale of their portfolio securities, under
circumstances where they may be considered to be an underwriter under
the Securities Act of 1933.
The above limitations cannot be changed unless authorized 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.
Pledging Assets
The Funds will not mortgage, pledge, or hypothecate any of their
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.
Buying on Margin
The Government Fund, Small Company Fund and Stock Fund will not
purchase securities on margin, provided that the Funds may obtain
short-term credits necessary for the clearance of purchases and sales
of securities, and further provided that the Funds may make margin
deposits in connection with their use of financial options and futures,
forward and spot currency contracts, swap transactions and other
financial contracts or derivative instruments.
The Prime Fund and Treasury Fund will not purchase securities on
margin, provided that the Funds may obtain short-term credits necessary
for the clearance of purchases and sales of securities.
Investing in Illiquid Securities
The U.S. Government Securities Fund, Stock Fund, Small Company Stock
Fund and Prime Money Market Fund will not purchase securities for which
there is no readily available market, or enter into repurchase
agreements or purchase time deposits maturing in more than seven days
if immediately after and as a result, the value of such securities
would exceed, in the aggregate, 15% of the net assets of the U.S.
Government Securities Fund, Stock Fund, and Small Company Stock Fund,
and 10% of the net assets of the Prime Money Market Fund.
Investing in Securities of Other Investment Companies
The Funds may invest their assets in the securities of other investment
companies.
Except with respect to the Funds' policy of borrowing money, if a percentage
limitation is adhered to at the time of investment, a later increase or decrease
in percentage resulting from any change in value or net assets will not result
in a violation of such restriction.
For purposes of their policies and limitations, the Funds consider certificates
of deposit and demand and time deposits issued by a U.S. branch of a domestic
bank or savings association having capital, surplus, and undivided profits in
excess of $100,000,000 at the time of investment to be "cash items."
DETERMINING MARKET VALUE OF SECURITIES
With respect to the Treasury Money Market Fund and the Prime Money Market Fund,
the Trustees have decided that the best method for determining the value of
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 a
Fund computed by dividing the annualized daily income on a 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 Funds' use of the amortized cost method of valuing portfolio instruments
depends on its compliance with certain conditions in Rule 2a-7 (the "Rule")
promulgated by the Securities and Exchange Commission 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 a Fund's 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 Trustees 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 Trustees 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.
With respect to the U.S. Government Securities Fund, Stock Fund and Small
Company Stock Fund, the market values of the Funds' portfolio securities are
determined as follows:
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;
in the absence of recorded sales for equity securities, according to the mean
between the last closing bid and asked prices;
for bonds and other 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 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 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;
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
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.
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, the Funds
value 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 NAV for each class of Shares 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 CONTINGENT DEFERRED SALES CHARGE
You will not be charged a CDSC when redeeming Shares:
o as a shareholder who acquired Shares prior to July 1, 1998 (including
shares acquired in exchange for shares acquired prior to July 1, 1998);
o purchased with reinvested dividends or capital gains;
o following the death or 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;
o if a Fund redeems your Shares and closes your account for not meeting the
minimum balance; and
o which are qualifying redemptions of shares under a Systematic Withdrawal
Program.
In addition, (with the exception of the Class B Shares of the Stock Fund and the
Small Company Stock Fund), you will not be charged a CDSC:
o on shares held by Trustees, employees and retired employees of the Funds,
Riggs National Corporation and/or its subsidiaries, or Federated Securities
Corp. and/or its affiliates, and their spouses and children under the age of
21;
o on shares originally purchased (i) through the Trust Division or the
Private Banking Division of Riggs Bank; (ii) through an investment adviser
registered under the Investment Advisers Act of 1940; (iii) through
retirement plans or Systematic Investment Plan where the third party
administrator has entered into certain arrangements with Riggs Bank or its
affiliates; or (iv) by any bank or dealer (in each case for its own account)
having a sales agreement with Federated Securities Corp.; and
o on shares purchased through entities having no transaction fee agreements or
wrap accounts with Riggs Bank or its affiliates.
<PAGE>
HOW ARE THE FUNDS SOLD?
Under the Distributor's Contract with the Funds, the Distributor (Federated
Securities Corp.) offers Shares on a continuous, best-efforts basis.
RULE 12B-1 PLAN (Class R Shares and Class B Shares)
As a compensation-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 marketing activities (such as advertising, printing and distributing
prospectuses, and providing incentives to investment professionals) to promote
sales of Shares so that overall Fund assets are maintained or increased. This
helps the Funds 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 Fund assets.
The Funds may compensate the Distributor more or less than its actual marketing
expenses. In no event will the Funds 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
The Funds 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 may be paid fees out of the assets of the Distributor
and/or Federated Shareholder Services Company (but not out of Fund assets). The
Distributor and/or Federated Shareholder Services Company may be reimbursed by
the Adviser or its affiliates.
Investment professionals 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 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.
These payments will be based upon the amount of Shares the investment
professional sells or may sell and/or upon the type and nature of sales or
marketing support furnished by the investment professional.
SUBACCOUNTING SERVICES
Certain investment professionals may wish to use the transfer agent's
subaccounting system to minimize their internal recordkeeping requirements. The
transfer agent may charge a fee based on the level of subaccounting services
rendered. Investment professionals holding Shares in a fiduciary, agency,
custodial, or similar capacity may charge or pass through subaccounting fees as
part of or in addition to normal trust or agency account fees. They may also
charge fees for other services that may be related to the ownership of Shares.
This information should, therefore, be read together with any agreement between
the customer and the investment professional about the services provided, the
fees charged for those services, and any restrictions and limitations imposed.
<PAGE>
REDEMPTION IN KIND
Although the Funds intend to pay Share redemptions in cash, they reserves 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 Funds will pay all or a portion of the remainder of the redemption in
portfolio securities, valued in the same way as the Funds determine their 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 Trust.
In the unlikely event a shareholder is held personally liable for the Trust'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 the Trust. 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 each Fund gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All Shares of the Trust have
equal voting rights, except that in matters affecting only a particular Fund
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 August 2, 1999, the following shareholders owned of record,
beneficially, or both, 5% or more of outstanding Shares of the following Funds:
U.S. Treasury Money Market Fund - Class R Shares
Devotional Claimants 1996 Escrow, Washington, D.C., owned approximately
1,630,025 shares (44.58%); St. Alban's Episcopal Church, Washington, D.C., owned
approximately 910,335 shares (24.90%); BHC Securities Inc., Philadelphia, PA,
owned approximately 618,067 shares (16.90%); and Janet B. Nunnelley Trustee,
Washington, D.C., owned approximately 207,230 shares (5.67%).
U.S. Treasury Money Market Fund - Class Y Shares
EAMCO - Riggs Funds, Washington, D.C., owned approximately 103,548,443 shares
(69.31%); Riggs Bank N.A., Washington, D.C., owned approximately 22,581,000
shares (15.11%); and Hare & Co., New York, NY, owned approximately 11,212,716
shares (7.51%).
Prime Money Market Fund - Class R Shares
BHC Securities Inc., Philadelphia, PA, owned approximately 12,281,421 shares
(76.73%).
Prime Money Market Fund - Class Y Shares
EAMCO - Riggs Funds, Washington, D.C., owned approximately 173,793,451 shares
(57.72%), and Riggs Bank N.A., Washington, D.C., owned approximately 56,300,000
shares (18.70%).
U.S. Government Securities Fund - Class R Shares
EAMCO - Riggs Funds, Washington, D.C., owned approximately 2,998,741 shares
(77.01%).
Stock Fund - Class R Shares
EAMCO - Riggs Funds, Washington, D.C., owned approximately 3,360,480 shares
(55.62%); EAMCO Trustee #01769201, FBO Collier Shannon Profit Sharing,
Washington, D.C., owned approximately 449,239 shares (7.44%); EAMCO for Nuclear
Energy Institute Employees Saving Plan #02121601, owned approximately 385,822
shares (6.39%); and EAMCO Trustee #01769101, FBO Collier Shannon 401k,
Washington, D.C., owned approximately 345,355 shares (5.72%).
Stock Fund - Class B Shares
Mutual Funds Dept., BHC Securities Inc., FAO 58531989, Philadelphia, PA, owned
approximately 3,724 shares (22.45%); Riggs Bank N.A., custodian for the IRA of
Roger Winston, Rockville, MD, owned approximately 3,475 shares (20.95%); Mutual
Funds Dept., BHC Securities Inc., FAO 58513612, Philadelphia, PA, owned
approximately 1,321 shares (7.96%); and Mutual Funds Dept., BHC Securities Inc.,
FAO 58515772, Philadelphia, PA, owned approximately 1,312 shares (7.91%)
Small Company Stock Fund - Class R Shares
EAMCO - Riggs Funds, Washington, D.C., owned approximately 2,593,423 shares
(81.21%).
Small Company Stock Fund - Class B Shares
Riggs Bank N.A., custodian for the IRA of Roger D. Winston, Rockville, MD, owned
approximately 1,982 shares (20.44%); Donaldson Lufkin Jenrette Securities
Corporation Inc., Jersey City, NJ, owned approximately 1,523 shares (15.71%);
BHC Securities, Inc. for benefit of Marie-Laurence Wax Cooperman 1133,
Washington, DC, owned approximately 943 shares (9.72%); Riggs Bank N.A.,
custodian for the IRA of Jeanne C. Nash, Oakton, VA, owned approximately 908
shares (9.37%); Mutual Funds Dept., BHC Securities Inc., FAO 58575209,
Philadelphia, PA, owned approximately 743 shares (7.67%); and Issa J. Boullata
and Marita S. Boullata, Montreal, Quebec, Canada, owned approximately 641 shares
(6.61%).
Shareholders owning 25% or more of outstanding Shares may be 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.
FOREIGN INVESTMENTS
If the Funds 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 a 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 Funds intend 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 a Fund's foreign taxes rather than take the
foreign tax credit must itemize deductions on their income tax returns.
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. The Trust is comprised of five funds.
As of August 2, 1999, the Funds' Board and Officers as a group owned less than
1% of the Funds' outstanding Class Y, R and B Shares.
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.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Name Aggregate
Birth Date Compensation
Address From Trust
Position With Trust Principal Occupations
for Past Five Years
John F. Donahue*+ $0
Birth Date: July 28, 1924 Chief Executive Officer and Director or Trustee of the
Federated Investors Tower Federated Fund Complex; Chairman and Director,
1001 Liberty Avenue Federated Investors, Inc.; Chairman and Trustee,
Pittsburgh, PA Federated Investment Management Company; Chairman and
CHAIRMAN and TRUSTEE Director, Federated Investment Counseling, and
Federated Global Investment Management Corp.; Chairman,
Passport Research, Ltd.
Thomas G. Bigley Director or Trustee of the Federated Fund Complex; $1412.26
Birth Date: February 3, 1934 Director, Member of Executive Committee, Children's
15 Old Timber Trail Hospital of Pittsburgh; Director, Robroy Industries,
Pittsburgh, PA Inc. (coated steel conduits/computer storage
TRUSTEE equipment); formerly: Senior Partner, Ernst & Young
LLP; Director, MED 3000 Group, Inc. (physician practice
management); Director, Member of Executive Committee,
University of Pittsburgh.
John T. Conroy, Jr. Director or Trustee of the Federated Fund Complex; $1553.73
Birth Date: June 23, 1937 President, Investment Properties Corporation; Senior
Wood/Commercial Dept. Vice President, John R. Wood and Associates, Inc.,
John R. Wood Associates, Inc. Realtors; Partner or Trustee in private real estate
Realtors ventures in Southwest Florida; formerly: President,
3255 Tamiami Trail North Naples Property Management, Inc. and Northgate Village
Naples, FL Development Corporation.
TRUSTEE
Nicholas Constantakis Director or Trustee of the Federated Fund Complex; $1412.26
Birth Date: September 3, 1939 formerly: Partner, Andersen Worldwide SC.
175 Woodshire Drive
Pittsburgh, PA
TRUSTEE
John F. Cunningham Director or Trustee of some of the Federated Fund $0
Birth Date: March 5, 1943 Complex; Chairman, President and Chief Executive
353 El Brillo Way Officer, Cunningham & Co., Inc. (strategic business
Palm Beach, FL consulting) ; Trustee Associate, Boston College;
TRUSTEE Director, EMC Corporation (computer storage systems);
formerly: Director, Redgate Communications.
Previous Positions: Chairman of the Board and Chief
Executive Officer, Computer Consoles, Inc.; President
and Chief Operating Officer, Wang Laboratories;
Director, First National Bank of Boston; Director,
Apollo Computer, Inc.
Lawrence D. Ellis, M.D.* Director or Trustee of the Federated Fund Complex; $1412.26
Birth Date: October 11, 1932 Professor of Medicine, University of Pittsburgh;
3471 Fifth Avenue Medical Director, University of Pittsburgh Medical
Suite 1111 Center - Downtown; Hematologist, Oncologist, and
Pittsburgh, PA Internist, University of Pittsburgh Medical Center;
TRUSTEE Member, National Board of Trustees, Leukemia Society of
America.
Peter E. Madden Director or Trustee of the Federated Fund Complex; $1446.23
Birth Date: March 16, 1942 formerly: Representative, Commonwealth of Massachusetts
One Royal Palm Way General Court; President, State Street Bank and Trust
100 Royal Palm Way Company and State Street Corporation.
Palm Beach, FL
TRUSTEE Previous Positions: Director, VISA USA and VISA
International; Chairman and Director, Massachusetts
Bankers Association; Director, Depository Trust
Corporation; Director
Charles F. Mansfield, Jr. Director or Trustee of some of the Federated Fund $0
Birth Date: April 10, 1945 Complex; Management Consultant.
80 South Road
Westhampton Beach, NY Previous Positions: Chief Executive Officer, PBTC
TRUSTEE International Bank; Partner, Arthur Young & Company
(now Ernst & Young LLP); Chief Financial
Officer of Retail Banking Sector, Chase
Manhattan Bank; Senior Vice President, Marine
Midland Bank; Vice President, Citibank;
Assistant Professor of Banking and Finance,
Frank G. Zarb School of Business, Hofstra
University.
John E. Murray, Jr., J.D., Director or Trustee of the Federated Fund Complex; $1446.23
S.J.D. President, Law Professor, Duquesne University;
Birth Date: December 20, 1932 Consulting Partner, Mollica & Murray; Director, Michael
President, Duquesne University Baker Corp. (engineering, construction, operations, and
Pittsburgh, PA technical services).
TRUSTEE
Previous Positions: Dean and Professor of Law,
University of Pittsburgh School of Law; Dean and
Professor of Law, Villanova University School of Law.
Marjorie P. Smuts Director or Trustee of the Federated Fund Complex; $1412.26
Birth Date: June 21, 1935 Public Relations/Marketing/Conference Planning.
4905 Bayard Street
Pittsburgh, PA Previous Positions: National Spokesperson, Aluminum
TRUSTEE Company of America; television producer; business owner.
John S. Walsh Director or Trustee of some of the Federated Fund $339.20
Birth Date: November 28, 1957 Complex; President and Director, Heat Wagon, Inc.
2007 Sherwood Drive (manufacturer of construction temporary heaters);
Valparaiso, IN President and Director, Manufacturers Products, Inc.
TRUSTEE (distributor of portable construction heaters);
President, Portable Heater Parts, a division of
Manufacturers Products, Inc.; Director, Walsh & Kelly,
Inc. (heavy highway contractor); formerly: Vice
President, Walsh & Kelly, Inc.
J. Christopher Donahue+ President or Executive Vice President of the Federated $0
Birth Date: April 11, 1949 Fund Complex; Director or Trustee of some of the Funds
Federated Investors Tower in the Federated Fund Complex; President and Director,
1001 Liberty Avenue Federated Investors, Inc.; President and Trustee,
Pittsburgh, PA Federated Investment Management Company; President and
EXECUTIVE VICE PRESIDENT AND Director, Federated Investment Counseling and Federated
TRUSTEE Global Investment Management Corp.; President, Passport
Research, Ltd.; Trustee, Federated Shareholder Services
Company; Director, Federated Services Company.
</TABLE>
<PAGE>
Edward C. Gonzales* Trustee or Director of some of the Funds in the Birth Date:
October 22, 1930 Federated Fund Complex; President, Executive Vice $0 Federated
Investors Tower President and Treasurer of some of the Funds in the 1001 Liberty
Avenue Federated Fund Complex; Vice Chairman, Federated Pittsburgh, PA
Investors, Inc.; Vice President, Federated Investment PRESIDENT AND TREASURER
Management Company and Federated Investment Counseling, Federated Global
Investment Management Corp. and Passport Research, Ltd.; Executive Vice
President and Director, Federated Securities Corp.; Trustee, Federated
Shareholder Services Company. John W. McGonigle Executive Vice President and
Secretary of the Federated Birth Date: October 26, 1938 Fund Complex; Executive
Vice President, Secretary, and $0 Federated Investors Tower Director, Federated
Investors, Inc.; Trustee, Federated 1001 Liberty Avenue Investment Management
Company; Director, Federated Pittsburgh, PA Investment Counseling and Federated
Global Investment EXECUTIVE VICE PRESIDENT and Management Corp.; Director,
Federated Services Company; SECRETARY Director, Federated Securities Corp.
Joseph S. Machi Vice President and Assistant Treasurer of some of the $0 Birth
Date: May 22, 1962 Funds. Federated Investors Tower 1001 Liberty Avenue
Pittsburgh, PA VICE PRESIDENT AND ASSISTANT TREASURER Richard B. Fisher
President or Vice President of some of the Funds in the Birth Date: May 17, 1923
Federated Fund Complex; Director or Trustee of some of $0 Federated Investors
Tower the Funds in the Federated Fund Complex; Executive Vice 1001 Liberty
Avenue President, Federated Investors, Inc.; Chairman and Pittsburgh, PA
Director, Federated Securities Corp. VICE PRESIDENT
- ------------------------------------------------------------------------------
+ Mr. Donahue is the father of J. Christopher Donahue, Executive Vice President
of the Trust. ++ Mr. Walsh became a member of the Board of Trustees on January
1, 1999. Messrs. Cunningham and Mansfield became members of the Board on June
15, 1999. Messrs. Cunningham and Mansfield did not receive any fees as of the
fiscal year end of the Trust.
INVESTMENT ADVISER
The Adviser conducts investment research and makes investment decisions for
the Funds. The Adviser and Riggs Investment Management Corp. are subsidiaries of
Riggs National Corporation, a bank holding company.
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.
Other Related Services
Affiliates of the Adviser may, from time to time, provide certain electronic
equipment and software to institutional customers in order to facilitate the
purchase of Fund Shares offered by the Distributor.
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
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 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 years ended April 30, 1999, 1998 and 1997, the Stock Fund paid
total brokerage commissions of $187,811, $245,522 and $175,381, respectively,
and the Small Company Stock Fund paid total brokerage commissions of $125,313,
$107,288, and $72,366, respectively.
Investment decisions for the Funds are made independently from those of other
accounts managed by the Adviser. When the Funds 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 account(s) in
a manner believed by the Adviser to be equitable. While the coordination and
ability to participate in volume transactions may benefit the Funds, it is
possible that this procedure could adversely impact the price paid or received
and/or the position obtained or disposed of by the Funds.
ADMINISTRATOR
Federated Services Company, a subsidiary of Federated, provides administrative
personnel and services (including certain legal and financial reporting
services) necessary to operate the Funds. Federated Services Company provides
these at an annual rate of 0.16% of the average aggregate daily net assets of
the Trust.
Federated Services Company also provides certain accounting and recordkeeping
services with respect to the Funds' portfolio investments for a fee based on
Fund assets plus out-of-pocket expenses.
CUSTODIAN
Riggs Bank, Washington, D.C., is custodian for the securities and cash of the
Funds. Under the Custodian Agreement, Riggs Bank holds the Funds' portfolio
securities in safekeeping and keeps all necessary records and documents relating
to its duties.
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.
INDEPENDENT auditors
The independent auditor for the Fund, Arthur Andersen LLP, plans and performs
its audit so that it may provide an opinion as to whether the Fund's financial
statements and financial highlights are free of material misstatements.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FEES PAID BY THE FUNDs FOR SERVICES
- ------------------ ------------------------------------------ ------------------------------------- --------------------------------
Fund Advisory Fee Paid/ Shareholder Services Fee Paid Administrative Fee Paid
Advisory Fee Waived
------------------------------------- --------------------------------
------------------------------------------ ------------------------------------- --------------------------------
For the fiscal year ended For the fiscal year ended For the fiscal year ended
April 30, April 30, April 30,
------------------------------------------ ------------------------------------- --------------------------------
------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1999 1998 1997 1999 1998 1997
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury $635,522/ $704,027/ $672,065/ $312,575 $56,082 $68,994 $177,826 $186,366 $171,345
Money Market Fund
$0 $119,268 $173,436
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Prime Money $1,652,495/ $1,803,267/ $1,954,745/ $824,862 $130,369 $148,946 $462,021 $478,888 $497,453
Market Fund
$0 $409,724 $676,608
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Government $277,475/ $246,668/ $255,588/ $82,762 $59,058 $88,771 $51,778 $48,888 $51,473
Securities Fund
$147,987 $131,556 $136,314
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Stock Fund $756,558/ $790,694/ $622,704/ $216,250(R) $71,317 $92,259 $141,350 $139,892 $106,088
$0 $78,554 $99,633 $211(B)
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Small Company $333,762/ $338,723/ $184,690/ $85,927(R) $53,392 $71,963 $58,587 $58,191 $49,978
Stock Fund
$0 $36,697 $105,949 $228(B)
- ------------------------------------------------------------------------------------------------------------------------------------
(R) Class R Shares (B) Class B Shares
</TABLE>
<PAGE>
- --------------------------------------- ----------------------------------------
Funds For the fiscal year ended
April 30, 1999
----------------------------------------
----------------------------------------
12b-1 Fee
----------------------------------------
-------------------- -------------------
Class R Shares Class B Shares
- --------------------------------------- -------------------- -------------------
- --------------------------------------- -------------------- -------------------
U.S. Treasury Money Market Fund $14,901 ---
- --------------------------------------- -------------------- -------------------
- --------------------------------------- -------------------- -------------------
Prime Money Market Fund $17,064 ---
- --------------------------------------- -------------------- -------------------
- --------------------------------------- -------------------- -------------------
U.S. Government Securities Fund $92,719 ---
- --------------------------------------- -------------------- -------------------
- --------------------------------------- -------------------- -------------------
Stock Fund $241,118 $653
- --------------------------------------- -------------------- -------------------
- --------------------------------------- -------------------- -------------------
Small Company Stock Fund $95,808 $709
- --------------------------------------- -------------------- -------------------
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.
<PAGE>
HOW DO THE FUNDS MEASURE PERFORMANCE?
The Funds may advertise Share performance by using the Securities and Exchange
Commission's (SEC) 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 the Funds' or any class of Shares'
expenses; and various other factors.
Share performance 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 and effective yield
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------- --------------------------------------- ------------------------------ ------------------------------
Fund Average Annual Total Return Yield Effective Yield
for the following periods ended April for the 7-day period ended for the 7-day period ended
30, 1999 April 30, 1999/ April 30, 1999
for the 30-day period ended
April 30, 1999
--------------------------------------- ------------------------------ ------------------------------
-------------- ----------- ------------ ---------- --------- --------- -------- ----------- ---------
Class R Class Y Class B Class R Class Y Class B Class Class Y Class B
Shares Shares Shares Shares Shares Shares R Shares Shares
One Year One Year One Year Shares
Five Year Five Year Five Years
Since Since Since
Inception Inception Inception
- ------------------- -------------- ----------- ------------ ---------- --------- --------- -------- ----------- ---------
- ------------------- -------------- ----------- ------------ ---------- --------- --------- -------- ----------- ---------
U.S. Treasury N/A N/A N/A 3.69%/ 4.04%/ N/A 3.76% 4.12% N/A
Money Market Fund 3.68% 4.03%
- ------------------- -------------- ----------- ------------ ---------- --------- --------- -------- ----------- ---------
- ------------------- -------------- ----------- ------------ ---------- --------- --------- -------- ----------- ---------
Prime Money N/A N/A N/A 3.97%/ 4.32%/ N/A 4.05% 4.41% N/A
Market Fund 3.96% 4.31%
- ------------------- -------------- ----------- ------------ ---------- --------- --------- -------- ----------- ---------
- ------------------- -------------- ----------- ------------ ---------- --------- --------- -------- ----------- ---------
U.S. Government 4.03% N/A N/A N/A N/A N/A N/A N/A N/A
Securities Fund 6.59% 4.88%
6.93%
- ------------------- -------------- ----------- ------------ ---------- --------- --------- -------- ----------- ---------
- ------------------- -------------- ----------- ------------ ---------- --------- --------- -------- ----------- ---------
Stock Fund 4.60% N/A 0.59% 0.08% N/A N/A N/A N/A N/A
21.26%
18.43%
- ------------------- -------------- ----------- ------------ ---------- --------- --------- -------- ----------- ---------
- ------------------- -------------- ----------- ------------ ---------- --------- --------- -------- ----------- ---------
Small Company -31.53% N/A -27.68% N/A N/A N/A N/A N/A N/A
Stock Fund N/A
13.80%
- ------------------- -------------- ----------- ------------ ---------- --------- --------- -------- ----------- ---------
</TABLE>
<PAGE>
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.
yield
With respect to the Stock Fund, Small Company Stock Fund and the U.S. Government
Securities Fund, the yield of 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 effective yield
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. The yield and effective 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.
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.
With respect to the U.S. Treasury Money Market Fund and the Prime Money Market
Fund, the yield of 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 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.
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 Funds' 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.
Advertising and sales literature for the Funds may also include statements
describing the history of Riggs Bank. For example, reference may be made to
Riggs Bank's heritage of serving historical and political figures and financing
projects that have been important to the growth of the United States.
The Funds may compare their performance, or performance for the types of
securities in which they invest, to a variety of other investments, including
federally insured bank products such as bank savings accounts, certificates of
deposit, and Treasury bills.
The Funds 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 the Funds use in advertising may include:
Consumer Price Index (CPI) is the measure of change in consumer prices, as
determined by a monthly survey of the U.S. Bureau of Labor Statistics. Many
pension and employment contracts are tied to changes in consumer prices, as
protection against inflation and reduced purchasing power. Among the CPI
components are housing costs, food, transportation, and electricity. The CPI is
also known as the cost-of-living index.
U.S. TREASURY MONEY MARKET FUND:
o Lipper 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 Fund
will quote its Lipper ranking in advertising and sales literature.
o Salomon 30-Day Treasury Bill Index is a weekly quote of the most
representative yields for selected securities, issued by the U.S.
Treasury, maturing in 30 days.
o Money, a monthly magazine, regularly ranks money market funds in
various categories based on the latest available seven-day compound
(effective) yield. From time to time, the Fund will quote its Money
ranking in advertising and sales literature.
PRIME MONEY MARKET FUND:
o Lipper Analytical Services, Inc. ranks funds in various fund
categories by making comparative calculations using total return.
Total return assumes the reinvestment of all capital gains
distributions and income dividends, if any. From time to time, the
Fund will quote its Lipper ranking in advertising and sales
literature.
o Bank 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 an average 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.
o Salomon 30-Day Treasury Bill Index is a weekly quote of the most
representative yields for selected securities, issued by the U.S.
Treasury, maturing in 30 days.
U.S. GOVERNMENT SECURITIES FUND:
o Lehman Brothers Government Index is an unmanaged index comprised of
all publicly issued, non-convertible domestic debt of the U.S.
government, or any agency thereof, or any quasi-federal corporation
and of corporate debt guaranteed by the U.S. government. Only notes
and bonds with a minimum outstanding principal of $1 million and a
minimum maturity of one year are included.
o Lehman Brothers Government/Corporate (Total) Index is comprised 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 Shearson Lehman Brothers, Inc., the index
calculates total returns for one month, three month, twelve month
and ten year periods and year-to-date.
o Lipper Analytical Services, Inc. ranks funds in various fund
categories using total return. Total return assumes the reinvestment
of all capital gains distributions and income dividends and takes
into account any change in net asset value over a specific period of
time. From time to time, the Fund will quote its Lipper ranking in
advertising and sales literature.
o Lehman Brothers Aggregate Bond Index is a total return index
measuring both the capital price changes and income provided by the
underlying universe of securities, weighted by market value
outstanding. The Aggregate Bond Index is comprised of the Shearson
Lehman Government Bond Index, Corporate Bond Index, Mortgage- Backed
Securities Index and the Yankee Bond Index. These indices include:
U.S. Treasury obligations, including bonds and notes; U.S. agency
obligations, including those of the Federal Farm Credit Bank,
Federal Land Bank and the Bank for Co-Operatives; foreign
obligations, U.S. investment grade corporate debt and
mortgage-backed obligations. All corporate debt included in the
Aggregate Bond Index has a minimum S&P rating of BBB, a minimum
Moody's rating of Baa, or a minimum Fitch rating of BBB.
o Merrill Lynch Corporate and Government Index includes issues which
must be in the form of publicly placed, nonconvertible, coupon-
bearing domestic debt and must carry a term of maturity of at least
one year. Par amounts outstanding must be no less than $10 million
at the start and at the close of the performance measurement period.
Corporate instruments must be rated by S&P or by Moody's as
investment grade issues (i.e., BBB/Baa or better).
o Merrill 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 composites of ratings
assigned by Standard and Poor's Ratings Group and Moody's Investors
Service, Inc. Only notes and bonds with a minimum maturity of one
year are included.
o Merrill Lynch Domestic Master Index includes issues which must be in
the form of publicly placed, nonconvertible, coupon-bearing domestic
debt and must carry a term to maturity of at least one year. Par
amounts outstanding must be no less than $10 million at the start and
at the close of the performance measurement period. The Domestic
Master Index is a broader index than the Merrill Lynch Corporate and
Government Index and includes, for example, mortgage related
securities. The mortgage market is divided by agency, type of mortgage
and coupon and the amount outstanding in each agency/type/coupon
subdivision must be no less than $200 million at the start and at the
close of the performance measurement period. Corporate instruments
must be rated by S&P or by Moody's as investment grade issues (i.e.,
BBB/Baa or better).
STOCK FUND:
o Lipper Analytical Services, Inc. ranks funds in various fund
categories by making comparative calculations using total return.
Total return assumes the reinvestment of all capital gains
distributions and income dividends and takes into account any change
in net asset value over a specific period of time. From time to
time, the Fund will quote its Lipper ranking in advertising and
sales literature.
o Dow Jones Industrial Average ("DJIA") represents share prices of
selected blue-chip industrial corporations. The DJIA indicates daily
changes in the average price of stock in these corporations. It also
reports total sales for this group. Because it represents the top
corporations of America, the DJIA index is a leading economic
indicator for the stock market as a whole.
o Standard & 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. The Standard & Poor's index
assumes reinvestment of all dividends paid by stocks 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.
SMALL COMPANY STOCK FUND:
o Lipper Analytical Services, Inc. ranks funds in various fund
categories by making comparative calculations using total return.
Total return assumes the reinvestment of all capital gains
distributions and income dividends and takes into account any change
in offering price over a specific period of time. From time to time,
the Fund will quote its Lipper ranking in the "index funds" category
in advertising and sales literature.
o Morningstar, Inc., an independent rating service, is the publisher of
the bi-weekly Mutual Fund Values. Mutual Fund 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.
o Russell 2000 Index is a broadly diversified index consisting of
approximately 2,000 small capitalization common stocks that can be
used to compare to the total returns of funds whose portfolios are
invested primarily in small capitalization stocks.
o Standard & Poor's Small Stock Index is a broadly diversified,
unmanaged, index consisting of approximately 600 small
capitalization common stocks that can be used to compare to the
total returns of funds whose portfolios are invested primarily in
small capitalization common stocks.
FINANCIAL INFORMATION
The Financial Statements for the Funds for the fiscal year ended April 30, 1999,
are incorporated herein by reference to the Annual Report to Shareholders of the
Riggs Funds dated April 30, 1999.
<PAGE>
APPENDIX
Standard and Poor's Long-Term Debt 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 effects 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
CC--The rating CC typically is applied to debt subordinated to senior debt that
is assigned an actual or implied CCC debt rating.
C--The rating C typically is applied to debt subordinated to senior debt which
is assigned an actual or implied CCC debt rating. The C rating may be used to
cover a situation where a bankruptcy petition has been filed, but debt service
payments are continued.
Moody's Investors Service, Inc. Long-Term 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
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.
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 or 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.
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:
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; and
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. 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--Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB rating.
B--Debt rated B has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The B rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied BB or BB-
rating.
CCC--Debt rated CCC has a currently identifiable vulnerability to default, and
is dependent upon favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The CCC rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
B or B rating.
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.
<PAGE>
ADDRESSES
riggs funds
Class R Shares, Class Y Shares, Class B Shares
5800 Corporate Drive
Pittsburgh, PA 15237-7010
Distributor
Federated Securities Corp.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Investment Adviser
Riggs Investment Management Corp.
800 17th Street N.W.
Washington, D.C. 20006-3950
Custodian
Riggs Bank N.A.
Riggs Funds
5700 RiverTech Court
Riverdale, MD 20737-1250
Transfer Agent and Dividend Disbursing Agent
Federated Shareholder Services Company
P.O. Box 8600
Boston, MA 02266-8600
Independent Public Accountants
Arthur Andersen LLP
225 Franklin Street
Boston, MA 02110-2812
Cusip 76656A 104 Cusip 76656A 203 Cusip 76656A 302 Cusip 76656A 500 Cusip 76656A
609 Cusip 76656A 807 Cusip 76656A 401
PART C. OTHER INFORMATION.
Item 23. Exhibits:
(a) Conformed Copy of Declaration of Trust of the Registrant; (1)
(i)Conformed copy of Amendment No. 3 (dated
December 15, 1993) to Registrant's Declaration of Trust; (8)
(ii) Conformed copy of Amendment No. 4 (dated
November 16, 1994) to Registrant's Declaration of Trust; (8)
(iii) Conformed copy of Amendment No. 5 (dated
August 23, 1995) to Registrant's Declaration of Trust;(8)
(b) Copy of By-Laws of the Registrant;(1)
(c) (i) Copy of Specimen Certificate for Shares of Beneficial Interest
of RIMCO Monument U.S. Treasury Money Market Fund, RIMCO Monument
Bond Fund and RIMCO Monument Stock Fund;(2) (ii) Copy of Specimen
Certificate for Shares of Beneficial Interest of RIMCO Monument
Small Capitalization Equity Fund;(6) (iii) Copy of Specimen
Certificate for Shares of Beneficial Interest of RIMCO Monument
Prime Money Market Fund - Class A Shares and Class B Shares; (8)
(d) Conformed copy of Investment Advisory Contract of the Registrant
and Exhibits A through E of the Investment Advisory Contract; (7)
(e) Conformed copy of Distributor's Contract of the Registrant and
Exhibits A and B thereto; (7) (i) Conformed copy of Exhibit C to
Registrant's Distributor's Contract;(10) (ii) Conformed copy of
Exhibits D & E to Registrant's Distributor's Contract; (13)
+ All exhibits have been filed electronically.
1. Response is incorporated by reference to Registrant's Initial Registration
Statement on Form N-1A filed May 9, 1991. (File Nos. 33-40428 and
811-6309).
2. Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 1 on Form N-1A filed July 19, 1991. (File Nos. 33-40428 and
811-6309).
6. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 4 on Form N-1A filed June 28, 1994. (File Nos. 33-40428 and
811-6309).
7. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 7 on Form N-1A filed June 27, 1995. (File Nos. 33-40428 and
811-6309).
8. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 8 on Form N-1A filed October 10, 1995. (File Nos. 33-40428
and 811-6309).
10.Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 10 on Form N-1A filed June 26, 1997. (File Nos. 33-40428 and
811-6309).
13.Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 13 on Form N-1A filed June 18, 1999. (File Nos. 33-40428 and
811-6309).
<PAGE>
(f) Not applicable;
(g) Conformed copy of Custodian Agreement of the Registrant;(1)
(i) Copy of Custodial Compensation;(11)
(ii) Conformed copy of Custody Agreement between Riggs Bank N.A and The
Bank of New York dated June 8, 1998; (13) (h) (i) Conformed copy of Transfer
Agency and Service Agreement of the Registrant;(5)
(ii) Conformed copy of Administrative Services
Agreement; (5)
(iii) Conformed copy of Shareholder Services Agreement;(12) (iv) Conformed
Copy of Shareholder Services Plan;(12)
(i) Conformed copy of Opinion and Consent of Counsel as to legality of shares
being registered; (9) (j) Auditors' Consent;+ (k) Not applicable; (l) Conformed
copy of Initial Capital Understanding; (9) (m) (i) Conformed copy of Rule 12b-1
Distribution Plan; (8)
(ii) Conformed copy of Exhibits B & C to the Distribution Plan;(13) (iii)
Copy of Registrant's Rule 12b-1 Agreement; (8)
(n) Copy of Financial Data Schedules;(12)
Item 24. Persons Controlled by or Under Common Control with Registrant:
None
+ All exhibits have been filed electronically.
1. Response is incorporated by reference to Registrant's Initial Registration
Statement on Form N-1A filed May 9, 1991. (File Nos. 33-40428 and
811-6309).
3. Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 2 on Form N-1A filed August 26, 1992. (File Nos. 33-40428 and
811-6309).
5. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 4 on Form N-1A filed June 28, 1994. (File Nos. 33-40428 and
811-6309).
8. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 8 on Form N-1A filed October 10, 1995. (File Nos. 33-40428
and 811-6309).
9. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 9 on Form N-1A filed June 27, 1996. (File Nos. 33-40428 and
811-6309).
11.Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 11 on Form N-1A filed April 24, 1998. (File Nos. 33-40428 and
811-6309).
12.Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 12 on Form N-1A filed June 29, 1998. (File Nos. 33-40428 and
811-6309).
13.Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 13 on Form N-1A filed June 18, 1999. (File Nos. 33-40428 and
811-6309).
<PAGE>
(o) (i) Conformed copy of Registrant's Multiple Class Plan;(10) (ii) Conformed
copy of Registrant's Multiple Class Plan,
as Amended, Effective May 16, 1996;(10)
(iii) Conformed copy of Registrant's Multiple Class Plan, as amended,
effective July 1, 1998;(13) (iv) Conformed copy of Multiple Class Plan, as
amended, effective September 1, 1998; (13)
(p) (i) Conformed copy of Power of Attorney;(12)
(ii) Conformed copy of Power of Attorney of John S. Walsh, Trustee;(13)
(iii) Conformed copy of Power of Attorney; (14)
Item 25. Indemnification: (2)
Item 26. Business and Other Connections of Investment Adviser:
For a description of the other business of the investment adviser, see
the section entitled "Who Manages the Funds?" in Part A. The business
address of each of the Officers of the investment adviser is: Riggs
Investment Management Corp., 800 17th Street, N.W., Washington, D.C.
20006-3950
2. Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 1 on Form N-1A filed July 19, 1991. (File Nos. 33-40428 and
811-6309).
10.Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 10 on Form N-1A filed June 26, 1997. (File Nos. 33-40428 and
811-6309).
12.Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 12 on Form N-1A filed June 29, 1998. (File Nos. 33-40428 and
811-6309).
13.Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 13 on Form N-1A filed June 18, 1999. (File Nos. 33-40428 and
811-6309).
14.Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 15 on Form N-1A filed August 13, 1999. (File Nos. 33-40428
and 811-6309).
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
The Officers and Directors of the Investment Adviser are:
Other Substantial
Business, Profession,
Name Position with Adviser Vocation or Employment
- --------------------------------- ------------------------------------- ----------------------------------------------
Timothy C. Coughlin Director - Board President, Riggs National
Corporation; Vice Chairman,
Riggs Bank N.A.
Henry A. Dudley, Jr. Director - Board Senior Executive Vice President,
Riggs & Co., a division of Riggs
Bank N.A.
Lawrence I. Hebert Director - Board Director, Riggs National Corporation, Riggs
Bank N.A., Riggs AP Bank Limited, Allied
Capital II Corp.; President and Vice
Chairman of Allbritton Communications and
Perpetual Corporation and Westfield News
Advertiser, Inc.
Philip D. Tasho Chairman of the Board Executive Director, Riggs &
Directors, Chief Co., a division of Riggs Bank
Executive N.A.
Officer and Chief
Investment Officer
Ronald A. Marsilia President and Chief Managing Director, Riggs &
Operating Officer and Co., a division of Riggs
Director - Board Bank N.A.
Nathan Reischer Director - Fixed Income, Chief Managing Director, Riggs & Co., a division
Fixed Income Strategist and of Riggs Bank N.A.
Director-Board
Timothy M. Williams Treasurer and Director Managing Director, Riggs &
of Compliance Co., a division of Riggs Bank N.A.
Owen B. Burman Director - Director, Riggs & Co., a
Equity Research division of Riggs Bank N.A.
Sean C. Fallon Director - Director, Riggs & Co., a
Performance & Fixed division of Riggs Bank N.A.
Income Research
Rainier D. Flores Director - Assistant Director, Riggs & Co., a division
Operations of Riggs Bank N.A.
<PAGE>
Other Substantial
Business, Profession,
Name Position with Adviser Vocation or Employment
- ---------------------------------- ------------------------------------ ----------------------------------------------
Weijiang Ga Assistant Director - Assistant Director, Riggs &
Performance Measurement Co., a division of Riggs Bank N.A.
Philip S. Brown Director - Client Director, Riggs & Co., a
Services division of Riggs Bank N.A.
Danna Maller Director - Marketing Assistant Director, Riggs &
Co., a division of Riggs Bank N.A.
Joseph E. Konrad Director-Technology Director, Riggs & Co., a division of Riggs
Bank, N.A.
Christine J. Kyle Director - Equity Trading Director, Riggs & Co, a division of Riggs
Bank N.A.
Micheal C. Sahakian Assistant Director-Client Services Assistant Director, Riggs & Co., a division
of Riggs Bank N.A.
Spencer C. Smith Assistant Director-Marketing Assistant Director, Riggs & Co., a division
of Riggs Bank N.A.
Elizabeth Shephard Farrar Assistant Director-Client Services Assistant Director, Riggs & Co., a division
of Riggs Bank N.A.
Colleen H. Doremus Fixed Income Management Officer and Director, Riggs & Co., a division of Riggs
Director Bank N.A.
Jeoffrey Strobel Director, Marketing Assistant Director, Riggs & Co., a division
of Riggs Bank N.A.
</TABLE>
<PAGE>
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:
Automated Government Money Trust; Cash Trust Series II; Cash Trust Series, Inc.;
CCB Funds; Edward D. Jones & Co. Daily Passport Cash Trust; Federated Adjustable
Rate U.S. Government Fund, Inc.; Federated American Leaders Fund, Inc.;
Federated ARMs Fund; Federated Core Trust; Federated Equity Funds; Federated
Equity Income Fund, Inc.; Federated Fund for U.S. Government Securities, Inc.;
Federated GNMA Trust; Federated Government Income Securities, Inc.; Federated
Government Trust; 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 Master Trust; Federated Municipal Opportunities Fund, Inc.; Federated
Municipal Securities Fund, Inc.; Federated Municipal Trust; Federated Short-Term
Municipal Trust; Federated Short-Term U.S. Government Trust; Federated Stock and
Bond Fund, Inc.; Federated Stock Trust; Federated Tax-Free 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.; Fixed Income Securities, Inc.; ; Hibernia Funds;
Independence One Mutual Funds; Intermediate Municipal Trust; International
Series, Inc.; Investment Series Funds, Inc.; Liberty U.S. Government Money
Market Trust; Liquid Cash Trust; Managed Series Trust; Marshall Funds, Inc.;
Money Market Management, Inc.; Money Market Obligations Trust; Money Market
Obligations Trust II; Money Market Trust; Municipal Securities Income Trust;
Newpoint Funds; Regions Funds; RIGGS Funds; SouthTrust Funds; Tax-Free
Instruments Trust; The Planters Funds; The Wachovia Funds; The Wachovia
Municipal Funds; Trust for Government Cash Reserves; Trust for Short-Term U.S.
Government Securities; Trust for U.S. Treasury Obligations; Vision Group of
Funds, Inc.; World Investment Series, Inc.; Blanchard Funds; Blanchard Precious
Metals Fund, Inc.; DG Investor Series; High Yield Cash Trust; Investment Series
Trust; Star Funds; Targeted Duration Trust; The Virtus Funds; Trust for
Financial Institutions;
Federated Securities Corp. also acts as principal underwriter for the
following closed-end investment company: Liberty Term Trust, Inc.- 1999.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
(b)
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Distributor With Registrant
Richard B. Fisher Director, Chairman, Chief Vice President
Federated Investors Tower Executive Officer, Chief
1001 Liberty Avenue Operating Officer, Asst.
Pittsburgh, PA 15222-3779 Secretary and Asst.
Treasurer, Federated
Securities Corp.
Edward C. Gonzales Director, Executive Vice President and
Federated Investors Tower President, Treasurer
1001 Liberty Avenue Federated Securities Corp.
Pittsburgh, PA 15222-3779
Thomas R. Donahue Director, Assistant Secretary
Federated Investors Tower and Assistant Treasurer
1001 Liberty Avenue Federated Securities Corp.
Pittsburgh, PA 15222-3779
James F. Getz President-Broker/Dealer, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
John B. Fisher President-Institutional Sales, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
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
<PAGE>
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
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
R. Leonard Corton, 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
<PAGE>
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
Jill Ehrenfeld Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Mark D. Fisher 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
Craig S. Gonzales 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
Dayna C. Haferkamp Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Raymond Hanley 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
Beth A. Hetzel Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
James E. Hickey 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
<PAGE>
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
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
Thomas P. Moretti 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. Peters III 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
<PAGE>
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
Miles J. Wallace Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
John F. Wallin 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
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
Terri E. Bush 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
David L. Immonen 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
Renee L. Martin Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Robert M. Rossi Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Denis McAuley Treasurer, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Leslie K. Ross Assistant Secretary, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
</TABLE>
(c) Not applicable.
<PAGE>
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:
<TABLE>
<CAPTION>
<S> <C>
Registrant 5800 Corporate Drive
Pittsburgh, PA 15237- 7010
Federated Shareholder Services Federated Investors Tower
Company 1001 Liberty Avenue
("Transfer Agent, Dividend Pittsburgh, PA 15222-3779
Disbursing Agent and Portfolio
Recordkeeper")
Federated Services Company Federated Investors Tower
("Administrator") Pittsburgh, PA 15222-3779
Riggs Bank NA 800 17th Street, N.W.
("Adviser") Washington, D.C. 20006-3950
Trend Capital Management 11100 Wayzata Blvd.
(Sub-Adviser to Style Managed Minnetonka, MN 55305
Equity Fund)
J. Bush & Co. 55 Whitney Avenue
(Sub-Adviser to Large Cap New Haven, CT 06510
Growth Fund)
Riggs Bank N.A. RIMCO Funds
("Custodian") 1120 Vermont Avenue, N.W.
Washington, D.C. 20005-3598
</TABLE>
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.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, RIGGS 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 26th day of August, 1999.
RIGGS FUNDS
BY: /s/C. Grant Anderson
C. Grant Anderson, Assistant Secretary
Attorney in Fact for John F. Donahue
August 26, 1999
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:
<TABLE>
<CAPTION>
<S> <C> <C>
NAME TITLE DATE
By: /s/C. Grant Anderson
C. Grant Anderson Attorney In Fact August 26, 1999
ASSISTANT SECRETARY For the Persons
Listed Below
NAME TITLE
John F. Donahue* Chairman and Trustee
(Chief Executive Officer)
Edward C. Gonzales* President, Treasurer
and Trustee
(Principal Financial and
Accounting Officer)
Thomas G. Bigley* Trustee
Nicholas P. Constantakis Trustee
John T. Conroy, Jr.* Trustee
Lawrence D. Ellis, M.D.* Trustee
Peter E. Madden* Trustee
John E. Murray, Jr.* Trustee
Marjorie P. Smuts* Trustee
John S. Walsh* Trustee
* By Power of Attorney
</TABLE>
Exhibit j under Form N-1A
Exhibit 23 under Item 601/Reg. S-K
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use in
Post-Effective Amendment No. 16 to Form N-1A Registration Statement of Riggs
Funds (comprising of Riggs U.S. Treasury Money Market Fund, Riggs Prime Money
Market Fund, Riggs U.S. Government Securities Fund, Riggs Stock Fund and Riggs
Small Company Stock Fund) of our report dated June 22, 1999, on the financial
statements as of April 30, 1999, of Riggs Funds, included in or made a part of
this registration statement.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
August 25, 1999
