GREAT HALL
INSTITUTIONAL PRIME MONEY MARKET FUND [LOGO]
60 South Sixth Street
Minneapolis, Minnesota 55402
(800) 934-6674
Great Hall Institutional Prime Money Market Fund (the "Fund"), is a
diversified series of Great Hall Investment Funds, Inc. ("Great Hall"), an
open-end management investment company which currently offers its common shares
in four series.
The Fund's investment objective is to achieve as high a level of current
income obtainable from investments in short-term securities as is consistent
with prudent investment management, the preservation of capital and the
maintenance of liquidity. The Fund invests in a variety of high quality money
market instruments. The Fund seeks to maintain a net asset value of $1.00 per
share. However, investments in the Fund is neither insured nor guaranteed by
the U.S. Government, and there is no assurance that the Fund will be able to
maintain a stable net asset value of $1.00 per share.
AS WITH ALL MUTUAL FUNDS, THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This Prospectus pertains only to the Fund and does not pertain to any
other series of Great Hall. This Prospectus sets forth concisely the
information about the Fund that a prospective investor should know before
investing. Please read this Prospectus carefully before investing and retain
it for future reference. A Statement of Additional Information containing more
information about the Fund, dated August 1, 1997 (which is incorporated herein
by reference), has been filed with the Securities and Exchange Commission (the
"SEC") and is available upon request and without charge by calling Great Hall
at the number listed above.
Prospectus dated August 1, 1997
The "Great Hall" name is a trademark of Interra Financial Inc.
("Interra"). Interra licenses this trademark in connection with a number of
investment products and services (including the Great Hall Investment Funds,
Inc.) sponsored or distributed by Interra or its subsidiaries.
No person is authorized to give any information or to make any
representations not contained in this Prospectus or in the Fund's official
sales literature; and any information or representation not contained herein
must not be relied upon as having been authorized by the Fund. Great Hall is
registered as an open-end management investment company under the Investment
Company Act of 1940 (the "1940 Act"). Such registration does not imply that
the Fund or any of its shares have been guaranteed, sponsored, recommended or
approved by the United States or any state or any agency or officer thereof
This Prospectus does not constitute an offer to sell, or a solicitation
of an offer to buy, securities in any state to any person to whom it is not
lawful to make such an offer or solicitation in such state.
FEES AND EXPENSES
The Fund is sold without a sales charge or any deferred sales load, and
there are no redemption fees or exchange fees. The following table illustrates
all anticipated fees and expenses that a shareholder of a Fund will incur.
Annual Fund Operating Expenses
(as a percentage of average net assets):
Management Fees 0.25%
12b-1 Fees none
Other Expenses 0.15%
Total Fund Operating Expenses 0.40%
Example
You would pay the following expenses on a $1,000 investment assuming
(1) a 5% annual return and (2) redemption at the end of each time period
One Year $4
Three Years 13
The purpose of the above fees and expenses table is to assist the
investor in understanding the various costs and expenses that an investor in a
Fund will bear directly or indirectly. The above example should not be
considered representative of past or future expenses. Actual expenses may be
greater or less than those shown. The Fund's investment adviser, Insight
Investment Management ("Insight"), a division of Interra Advisory Services,
Inc. ("IAS"), and/or each Fund's co-distributors, Dain Bosworth Incorporated
and Rauscher Pierce Refsnes, Inc. (the "Co-Distributors"), from time to time
may voluntarily waive or absorb certain Fund fees and expenses. Any such
program may be instituted or discontinued at any time in the sole discretion of
Insight and/or the Co-Distributors. IAS and the Co-Distributors are wholly-
owned subsidiaries of Interra.
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective (set forth on the cover page), along with
the investment policies identified as "fundamental", may not be changed without
the affirmative vote of the majority of the Fund's outstanding voting shares
(as defined in the 1940 Act). All other policies may be changed by the Board
of Directors of Great Hall without shareholder approval. There can be no
guarantee that the Fund will achieve its investment objective.
The Fund is designed for investors with substantial cash reserves or
temporary cash balances seeking to maximize current income with a minimum of
capital risk and inconvenience while maintaining liquidity on a day-to-day
basis without penalty. The Fund has adopted procedures that are designed to
maintain a net asset value of $1.00 per share for purposes of purchases and
redemptions. However, there can be no assurance that the Fund will be able to
maintain a $1.00 per share net asset value.
The securities in which the Fund invests may not earn as high a level of
current income as longer-term or lower-quality securities, which generally have
less liquidity, greater market risk and more fluctuation in market value.
The Fund may invest in obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities; corporate debt obligations rated
AA or better by Standard & Poor's Corporation ("S&P") or Aa or better by
Moody's Investors Service, Inc. ("Moody's); obligations of banks and savings
and loans that are members of the Federal Deposit Insurance Corporation (the
"FDIC"), which obligations may include, but are not limited to, certificates of
deposit, bankers acceptances (bills of exchange used to finance foreign trade)
and letters of credit (commercial paper backed by a commercial bank or other
financial institution); high grade commercial paper (unsecured indebtedness of
business or banking firms); and repurchase agreements secured by the foregoing.
The Fund does not intend to concentrate its investments in any one industry but
reserves the freedom of action to concentrate in government securities and
securities issued or guaranteed by domestic banks and United States branches of
foreign banks that are subject to the same regulation as United States banks
The Fund may invest in deposit obligations of banks and savings and loans
that are members of the FDIC. Such obligations are not necessarily guaranteed
by the FDIC. Deposit obligations of domestic banks and savings and loans are
insured by the FDIC up to a maximum of $100,000, which limitation applies to
all funds that the Fund may have on deposit at any one bank or savings and
loan.
The Fund may also invest in U.S. dollar-denominated commercial paper and
other short-term obligations issued by foreign entities and U.S.
dollar-denominated obligations of foreign depository institutions and their
foreign branches and subsidiaries, such as certificates of deposit, bankers'
acceptances, time deposits and deposit notes. Obligations of foreign branches
and subsidiaries of foreign deposit institutions may be the general obligation
of the parent institution or may be limited to the issuing branch or subsidiary
by the terms of the specific obligation or by government regulation. The Fund
will not invest more than 25% of its total assets (taken at market value at the
time of each investment) in the obligations specified in this paragraph
The Fund may also invest in obligations of states and their agencies,
instrumentalities and political subdivisions that bear interest generally
includable in gross income for federal income tax purposes (collectively,
"taxable municipal securities"). Certain taxable municipal securities are not
"general obligations" (obligations secured by the full faith and credit or
taxing power of a governmental body) and, in those cases, are repayable only
from such revenues as may be pledged to repay such securities. The Fund will
not invest more than 5% of its total assets (taken at market value at the time
of each investment) in taxable municipal securities.
Investments in foreign securities and taxable municipal securities are
subject to the same general credit review and credit quality standards as are
applicable to the securities in which the Fund is permitted to invest.
However, the financial information available on these obligations may be more
limited than what is available for securities that are registered with the SEC
or that otherwise are issued by entities that are required to file reports
under the Securities Exchange Act of 1934, as amended. Foreign securities are
subject to other risks that may include unfavorable political and economic
developments and possible withholding taxes or other governmental restrictions
that might affect the principal or interest on securities owned by the Fund.
Rule 2a-7 Standards
The Fund is managed in accordance with Rule 2a-7 under the 1940 Act
("Rule 2a-7"), which imposes strict portfolio quality, maturity and
diversification standards on money market funds. Great Hall's Board of
Directors has adopted guidelines designed to ensure the Fund's compliance with
Rule 2a-7, and the Board oversees Insight's day-to-day determinations that the
Fund is in compliance with Rule 2a-7. In certain respects, as described below,
the Fund is managed in accordance with standards that are more strict than
those required by Rule 2a-7.
Quality Standards. The Fund must invest exclusively in U.S. dollar-
denominated investments that present minimal credit risk and are within Rule
2a-7's definition of "Eligible Securities." Eligible Securities include, among
others, securities that are rated by two Nationally Recognized Statistical
Rating Organizations ("NRSROs") (or if only one NRSRO has rated such security,
then by that one NRSRO) in one of the two highest short-term rating categories
(such as A-1 or A-2 by S&P and/or Prime-1 or Prime-2 by Moody's). The Fund
currently intends to invest exclusively in securities with two NRSRO ratings.
Maturity Standards. Each Fund investment must mature (or be deemed by
Rule 2a-7 to mature) within 397 days of the time of investment. In addition,
the Fund must maintain a dollar-weighted average portfolio maturity of 90 days
or less.
Diversification Standards. Immediately after the purchase of any
investment (other than a U.S. Government security or a security that is subject
to a certain form of unconditional demand feature), the Fund may not have
invested more than 5% of its total assets in securities issued by such issuer,
except for certain temporary investments.
In addition, Rule 2a-7 imposes strict limits on the Fund's investments in
"Second Tier Securities," generally requiring that at least 95% of the Fund's
investments must be in "First Tier Securities." The Fund will invest
exclusively in First Tier Securities. "First Tier Securities" are defined
generally as Eligible Securities rated by two NRSROs (or if only one NRSRO has
rated such security, then by that one NRSRO) in the highest short-term rating
categories (such as A-1 by S&P and/or Prime-1 by Moody's), or unrated
securities that are deemed to be of comparable quality. Second Tier Securities
are all Eligible Securities other than First Tier Securities.
CERTAIN INVESTMENT STRATEGIES AND RESTRICTIONS
Repurchase Agreements. The Fund may invest in repurchase agreements. A
repurchase agreement involves the purchase by a Fund of securities with the
condition that, after a stated period of time, the original seller (which must
be approved by the Board of Directors of Great Hall and which must be among the
100 largest commercial banks or a primary reporting dealer that reports to the
Federal Reserve Bank of New York) will repurchase the security at a mutually
agreed upon time and price. Repurchase agreements, and risks associated with
investments therein, are more fully described in the Statement of Additional
Information.
Section 4(2) Commercial Paper. The Fund may invest without limitation in
commercial paper issued pursuant to Section 4(2) of the Securities Act of 1933
provided that Insight has determined such paper to be liquid in accordance with
guidelines established by Great Hall's Board of Directors. For additional
information, see "Investment Policies--Illiquid Investments: Liquidity
Guidelines" in the Statement of Additional Information.
Investment Restrictions. The Fund has adopted certain fundamental
investment restrictions (set forth in their entirety in the Statement of
Additional Information), which may not be changed without approval of
shareholders owning a majority of the Fund's outstanding shares, as defined in
the 1940 Act. These restrictions provide, among other matters, that the Fund
may not invest more than 25% of its total assets in any one industry. This
restriction will not apply to securities issued or guaranteed by United States
banks or United States branches of foreign banks that are subject to the same
regulation as United States banks, or to securities issued or guaranteed by the
U.S. Government, its agencies or instrumentalities (including repurchase
agreements fully collateralized by such U.S. Government or agency securities).
In addition, the Fund has adopted certain non-fundamental investment
restrictions (also set forth in their entirety in the Statement of Additional
Information), which may be changed by Great Hall's Board of Directors without
approval by the Fund's shareholders. These restrictions provide, among other
matters, that the Fund may not invest in securities issued by other investment
companies in excess of limits imposed by applicable law, or invest more than
10% of its net assets in illiquid investments, including but not limited to
repurchase agreements maturing in more than seven days. If any fundamental or
non-fundamental percentage restriction is adhered to at the time of investment,
a later increase or decrease in such percentage resulting from a change in
values or net assets will not be considered a violation of such restriction.
INVESTMENT MANAGEMENT
Insight, 60 South Sixth Street, Minneapolis, Minnesota 55402, serves as
the Fund's investment adviser. Pursuant to the investment advisory agreement
in effect between the Fund and Insight (the "Advisory Agreement"), Insight
manages the investment and reinvestment of the Fund's assets in accordance with
the Fund's investment objective, policies and limitations, subject to the
general supervision and control of Great Hall's Board of Directors. In
addition, Insight is responsible for the overall management of the Fund's
business affairs, subject to the authority of the Board of Directors of Great
Hall. Under the Advisory Agreement, Insight furnishes office facilities and
clerical and administrative services to the Fund and, together with its
affiliates, the Co-Distributors, may also bear certain promotional expenses,
including a portion of the costs of printing and distributing prospectuses
utilized for promotional purposes. Insight also performs and bears the
internal costs of research, statistical analysis and continuous supervision of
the investment portfolios of the Fund. Insight has been registered with the
SEC as an investment adviser since 1983, and has been a portfolio manager of
publicly offered investment companies since 1986.
Under the Advisory Agreement, Insight is entitled to receive a monthly
advisory fee equal on an annual basis to 0.25% of the Fund's average daily net
assets.
The Fund pays all its expenses that are not expressly assumed by Insight.
These expenses include, among others, the advisory fee, the fees and expenses
of directors of Great Hall who are not "affiliated persons" of Insight,
interest expense, taxes, brokerage fees and commissions, fees and expenses of
registering and qualifying the Fund and its shares for distribution under
federal and state securities laws, expenses of preparing prospectuses and of
printing and distributing prospectuses annually to existing shareholders,
custodian and portfolio accounting charges, auditing and legal expenses,
insurance expense, association membership dues, and the expense of
shareholders' reports, meetings and proxy solicitations. The Fund is also
liable for such nonrecurring expenses as may arise, including litigation to
which the Fund may be a party. The Fund and/or Great Hall has an obligation to
indemnify its directors and officers with respect to such litigation except in
certain limited circumstances.
HOW TO INVEST
You may purchase shares of the Fund through the Co-Distributors at the
net asset value next determined following receipt of an order in federal funds.
The Fund is sold without a sales charge. A minimum investment of $1 million is
required.
You may open an account and make your initial investment in the Fund by
contacting your investment executive. See "Shareholder Services." Great Hall
and the Co-Distributors reserve the right to reject in whole or in part any
order to purchase shares of the Fund. The Fund does not issue share
certificates.
HOW TO REDEEM SHARES
You may redeem shares for cash through one of the Co-Distributors at the
net asset value next computed after receipt of a redemption request in proper
form. If shares have been purchased by check and are being redeemed, the
purchase check must be collected before payment for the redemption can be made.
Redemption will be treated as a sale for federal income tax purposes. See
"Taxes."
Under the 1940 Act, the right of redemption may be suspended or the date
of payment postponed for more than seven days at times when the New York Stock
Exchange, Inc. (the "NYSE") is closed other than customary weekend or holiday
closings, or when trading on the NYSE is restricted, or under certain emergency
circumstances as determined by the SEC.
NET ASSET VALUE
The net asset value of the Fund is determined as of the primary closing
time of the NYSE (currently 4:00 p.m. New York time), Monday through Friday,
except on: (a) days during which no Fund shares are tendered for redemption and
no order to purchase or sell Fund shares is received by the Fund; or (b) the
following national holidays: New Year's Day, President's Day, Good Friday,
Memorial Day (observed), Independence Day, Labor Day, Thanksgiving Day and
Christmas Day.
The Fund seeks to maintain a net asset value of $1.00 per share; however,
there is no assurance that the Fund will be able to maintain a stable net asset
value of $1.00 per share. Net asset value per share is calculated by
subtracting the Fund's liabilities from the value of its assets (based on the
amortized cost method) and dividing the result by the number of outstanding
shares of the Fund. The amortized cost method values the Fund's portfolio
securities at the Fund's acquisition cost as adjusted for amortization of
premium or accretion of discount rather than at their value based on current
market factors.
DISTRIBUTIONS
The Fund will declare dividends from net investment income daily, Monday
through Friday (except on customary national business holidays or when the
Fund's transfer agent is not open for business) at 3:00 p.m. Central time,
immediately prior to the determination of net asset value. The Fund will
distribute such dividends monthly on the last business day of each month. The
Fund does not expect to realize any net long-term capital gains. If such gains
are realized, however, they will be distributed at least annually and will be
taxable as "long-term" capital gains, regardless of the length of time the
shareholder has held the shares. Each daily dividend is payable on "shares of
record" at the time of its declaration. For this purpose, "shares of record"
means shares purchased for which payment has been received by the Co-
Distributors or the applicable Fund and excludes shares redeemed on the day of
the dividend declaration.
All dividends and distributions of the Fund will be reinvested in
additional shares of the Fund (including fractional shares where necessary) at
net asset value.
TAXES
The Fund intends to qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"),
during each taxable year. If so qualified, the Fund will not be subject to
federal income taxes to the extent net investment income and net capital gain
are timely distributed to shareholders.
All dividends other than capital gain dividends that will be paid to
shareholders will be taxable as ordinary income, even if reinvested in
additional shares. In the case of corporate shareholders, no dividends paid by
the Fund will qualify for the dividends received deduction for corporations.
Capital gain dividends will be taxable as capital gain, even if reinvested in
additional shares.
Under federal law, the income derived from obligations issued by the U.S.
Government and certain of its agencies and instrumentalities is exempt from
state individual income taxes. Most states that tax personal income permit
mutual funds to pass through this tax exemption to shareholders.
SHAREHOLDER SERVICES
Shareholder inquiries may be directed to Insight or your investment
executive. Written inquiries to Insight should be directed to Insight
Investment Management at the address set forth on the cover of this Prospectus.
You may call Insight, toll free, at (800) 934-6674.
The Fund intends to send to shareholders written notification of their
purchase or redemption transactions on a monthly basis in lieu of immediate
confirmation, within five business days after the end of each month. If there
is no purchase or redemption activity in a shareholder's account, a quarterly
statement will be sent.
PERFORMANCE
From time to time, the Fund may advertise its yield, which reflects the
rate of income the Fund earns on its investments as a percentage of its price
per share. All yield figures are based on historical earnings and are not
intended to indicate future performance.
The current yield of the Fund refers to the income generated over a
seven-day period (which period will be stated in the advertisement). The
income is then annualized. That is, the amount of income generated by the
investment that week is assumed to be generated each week over a 52-week period
and is shown as a percentage of the investment. The Fund's effective or
compounded yield is calculated similarly, but, when annualized, the income
earned by an investment in the Fund is assumed to be reinvested. The effective
or compounded yield will be slightly higher than the current yield because of
the compounding effect of this assumed reinvestment.
Performance advertising by the Fund may include total return data. The
Fund's total return refers to its overall change in value, assuming all
dividends and gains distributions are reinvested. Total return is calculated
by finding the average annual compounded rates of return of a hypothetical
investment over a specified period of time that would compare the initial
amount to the ending redeemable value of such investment.
The Fund may also use aggregate total return figures for various periods,
representing the cumulative change in value of an investment in the Fund for
the specific period (again reflecting change in Fund share prices and assuming
reinvestment of dividends and distributions). Aggregate total returns may be
shown by means of schedules, charts or graphs, and may indicate subtotals of
the various components of total return (i.e., change in value of initial
investment, income dividends and capital gains distributions).
The Fund's performance from time to time in reports or promotional
literature may be compared to generally accepted indices or analyses such as
those provided by Lipper Analytical Service, Inc., S&P, Dow Jones, CDA
Investment Technologies, Inc., Morningstar and Investment Company Data
Incorporated. Performance ratings reported periodically in national financial
publications also may be used.
DESCRIPTION OF THE FUND
Great Hall was incorporated under the laws of the State of Minnesota in
June 1991 and is registered with the SEC under the 1940 Act as an open-end
management investment company (commonly known as a "mutual fund"). This
registration does not involve supervision of management or investment policy by
an agency of the federal government. Currently, Great Hall offers its shares
in four separate series, including the Fund. One hundred billion shares have
been designated for issuance by the Fund.
Great Hall is not required under Minnesota law to hold annual or
periodically scheduled regular meetings of shareholders, and does not intend to
hold such meetings. The Board of Directors may convene shareholder meetings
when it deems appropriate and is required under Minnesota law to schedule
regular or special meetings in certain circumstances. Additionally, under
Section 16(c) of the 1940 Act, the Board of Directors of Great Hall must
promptly call a meeting of shareholders for the purpose of voting upon the
question of removal of any director when requested in writing to do so by the
record holders of not less than 10% of the outstanding shares.
Under Minnesota law, the Board of Directors has overall responsibility
for managing Great Hall in good faith, in a manner reasonably believed to be in
the best interests of Great Hall, and with the care an ordinarily prudent
person in a like position would exercise in similar circumstances. The Articles
of Incorporation of Great Hall limit the liability of directors to the fullest
extent permitted by law.
CUSTODIAN AND ACCOUNTING SERVICES AGENTS
Norwest Bank Minnesota, N.A., 733 Marquette Avenue, Minneapolis,
Minnesota 55479-0040, serves as the Fund's custodian. Rodney Square Management
Corporation, 1105 North Market Street, Fifth Floor, Wilmington, Delaware 19890-
0001 serves as the Fund's transfer agent. Investors Fiduciary Trust Company,
127 West 10th Street, Kansas City, Missouri 64105-1716, serves as the Fund's
fund accounting agent. The Co-Distributors and Interra Clearing Inc., also a
wholly-owned subsidiary of Interra, perform certain shareholder accounting
services for the Fund.
TABLE OF CONTENTS
Page
Fees and Expenses 2
Investment Objective and Policies 3
Certain Investment Strategies and Restrictions 5
Investment Management 6
How To Invest 7
How To Redeem Shares 7
Net Asset Value 7
Distributions 8
Taxes 8
Shareholder Services 8
Performance 9
Description of the Fund 9
Custodian and Accounting Services Agents 10
<PAGE>
GREAT HALL
INSTITUTIONAL PRIME MONEY MARKET FUND
60 South Sixth Street
Minneapolis, Minnesota 55402
(800) 934-6674
_________________________________________________
STATEMENT OF ADDITIONAL INFORMATION
dated August 1, 1997
_________________________________________________
Great Hall Institutional Prime Money Market Fund (the "Fund") is a
diversified series of Great Hall Investment Funds, Inc. ("Great Hall"), an
open-end management investment company which currently offers its common shares
in four series. This Statement of Additional Information relates only to the
Fund and does not relate to any other series of Great Hall.
This Statement of Additional Information is not a prospectus and should
be read in conjunction with the Fund's Prospectus dated August 1, 1997, which
has been filed with the Securities and Exchange Commission (the "SEC"). To
obtain a copy of the Prospectus, please call Great Hall or your investment
executive.
TABLE OF CONTENTS
Page
Investment Policies B-2
Investment Restrictions B-3
Taxes B-4
Portfolio Transactions B-5
Management and Distribution Agreements B-6
Determination of Net Asset Value B-7
Calculation of Performance Data B-7
Directors and Officers B-8
General Information B-10
Counsel and Auditors B-11
Financial and Other Information B-11
Appendix--Ratings of Investments A-1
No person has been authorized to give any information or to make any
representations other than those contained in this Statement of Additional
Information or the Prospectus dated August 1, 1997, and, if given or made, such
information or representations may not be relied upon as having been authorized
by Great Hall or the Co-Distributors (as defined herein). This Statement of
Additional Information does not constitute an offer to sell, or a solicitation
of an offer to buy, securities in any state or jurisdiction in which such
offering or solicitation may not lawfully be made. The delivery of this
Statement of Additional Information at any time shall not imply that there has
been no change in the Fund's affairs since the date hereof.
INVESTMENT POLICIES
The following information supplements that set forth under "Investment
Objective and Policies" and "Certain Investment Strategies and Restrictions"
in the Prospectus and does not, standing alone, present a complete explanation
of the matters disclosed.
The Fund invests in high quality, domestic money market instruments,
including but not limited to marketable obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities (described below); corporate
debt obligations that are rated AA or better by Standard & Poor's Corporation
("S&P"), or Aa or better by Moody's Investors Service, Inc. ("Moody's");
obligations of banks and savings and loans that are members of the Federal
Deposit Insurance Corporation (the "FDIC"), which obligations may include, but
are not limited to, certificates of deposit, bankers' acceptances and
documented discount notes and letters of credit; high-grade commercial paper
guaranteed or issued by domestic corporations; and instruments (including
repurchase agreements) secured by such obligations.
Investments in obligations of banks and savings and loans are limited to:
(a) certificates of deposit issued by banks with assets in excess of
$500,000,000 or branches of such banks; (b) certificates of deposit or other
deposit obligations of savings and loans with assets in excess of $500,000,000;
and (c) bankers' acceptances, letters of credit or other obligations guaranteed
by banks meeting the above criteria. Bankers' acceptances are short-term
credit instruments used to finance the import, export, transfer or storage of
goods. They are termed "accepted" when a bank guarantees their payment at
maturity. Obligations issued or guaranteed by FDIC member institutions are not
necessarily guaranteed by the FDIC. Deposit obligations of domestic banks and
savings and loans are only insured by the FDIC up to a maximum of $100,000,
which limitation applies to all funds that Prime Fund may have on deposit at
any one bank or savings and loan. Bankers' acceptances and letters of credit
are not so insured. Deposit obligations of foreign banks or foreign branches
of domestic banks also are not covered by FDIC insurance; in addition, such
investments may involve other risks different from risks associated with
investments in deposit obligations of domestic banks, such as future political
and economic developments and the possible imposition of governmental
restrictions.
Permissible commercial paper investments generally consist of obligations
rated Prime-1 or A-1, or their subsequent equivalents, by Moody's or S&P, or
unrated commercial paper issued by companies with an unsecured debt issue
outstanding that is rated Aa or better by Moody's or AA or better by S&P.
Commercial paper constitutes unsecured indebtedness of business or banking
firms issued to finance their short-term financial needs. The Fund may also
purchase corporate debt obligations maturing within 397 days from the date of
acquisition with a minimum rating of Aa or AA.
Government Securities. The Fund may invest without limitation in
obligations of the United States Government or agencies or instrumentalities of
the United States Government ("Government Obligations"). Government Obligations
are backed in a variety of ways by the U.S. Government or its agencies or
instrumentalities. Some Government Obligations, such as U.S. Treasury bills,
notes and bonds and securities issued by the Government National Mortgage
Association ("GNMA"), are backed by the full faith and credit of the United
States Treasury. Others, such as those of the Federal Home Loan Banks, are
backed by the right of the issuer to borrow from the U.S. Treasury. Still
other Government Obligations, such as those issued by the Federal National
Mortgage Association ("FNMA"), the Federal Home Loan Mortgage Corporation
("FHLMC") and the Student Loan Marketing Association, are backed only by the
credit of the agency or instrumentality issuing the obligations and, in certain
instances, by the discretionary authority of the U.S. Government to purchase
certain obligations of the agency or instrumentality. In none of these cases,
however, does the United States Government guarantee the value or yield of the
Government Obligations themselves or the net asset value of the Fund's shares.
Repurchase Agreements. The Fund may enter into repurchase agreements with
respect to any of the securities in which the Fund may invest directly. A
repurchase agreement is an agreement under which the Fund will purchase a
security subject to resale to a bank or dealer at an agreed-upon price and
date. The transaction requires the collateralization of the seller's
obligation by the transfer to the Fund's custodian of eligible securities with
an initial market value, including accrued interest, equal to at least the
dollar amount invested by the Fund in each agreement, and with the value of the
underlying securities marked to market daily to maintain at least 100%
collateralization of the repurchase price (including accrued interest). A
default by the seller might cause the Fund to experience a loss or delay in the
liquidation of the collateral securing the repurchase obligation and might also
cause the Fund to incur disposition costs in liquidating the collateral.
However, the Fund intends to enter into repurchase agreements only with primary
dealers that report to the Federal Reserve Bank of New York or with the 100
largest U.S. commercial banks (as measured by domestic deposits).
Additionally, the Fund intends to follow the collateral custody, protection and
perfection guidelines recommended by the Comptroller of the Currency for the
use of national banks in their direct repurchase agreement activities. As a
non-fundamental policy, the Fund will not invest more than 10% of its net
assets in repurchase agreements maturing in more than 7 days and other illiquid
investments.
Illiquid Investments; Liquidity Guidelines. The Fund is permitted to
invest up to 10% of its assets in all forms of "illiquid" investments and may
invest without limitation in "restricted" securities which Insight (pursuant to
liquidity standards established by Great Hall's Board of Directors) has
determined are liquid. An investment is generally deemed to be "illiquid" if
it cannot be disposed of within seven days in the ordinary course of business
at approximately the amount at which the investment company is valuing the
investment. "Restricted securities" are securities which were originally sold
in private placements and which have not been registered under the Securities
Act of 1933 (the "1933 Act"). Such securities generally have been considered
illiquid by the staff of the Securities and Exchange Commission (the "SEC"),
since such securities may be resold only subject to statutory restrictions and
delays or if registered under the 1933 Act. However, the SEC has acknowledged
that a market exists for certain restricted securities (for example, securities
qualifying for resale to certain "qualified institutional buyers" pursuant to
Rule 144A under the 1933 Act). Additionally, Insight and the Fund believe that
a similar market exists for commercial paper issued pursuant to the private
placement exemption of Section 4(2) of the 1933 Act. The Fund may invest
without limitation in these forms of restricted securities if such securities
are deemed by Insight to be liquid in accordance with liquidity guidelines
established by Great Hall's Board of Directors. Under these guidelines,
Insight must consider (a) the frequency of trades and quotes for the security,
(b) the number of dealers willing to purchase or sell the security and the
number of other potential purchasers, (c) dealer undertakings to make a market
in the security, and (d) the nature of the security and the nature of the
marketplace trades (for example, the time needed to dispose of the security,
the method of soliciting offers and the mechanics of transfer). Investing in
restricted securities could have the effect of increasing the level of the
Fund's illiquidity to the extent that qualified purchasers of the securities
become, for a time, uninterested in purchasing these securities.
INVESTMENT RESTRICTIONS
Fundamental Investment Restrictions. In addition to the Fund's
investment objective and those policies identified as fundamental in the
Prospectus, the Fund has adopted the following fundamental investment
restrictions, which may not be changed without approval of shareholders owning
a majority of the Fund's outstanding shares, which as used in the Prospectus
and this Statement of Additional Information means the lesser of: (a) 67% or
more of the Fund's shares present at a shareholders' meeting if more than 50%
of the Fund's shares are represented at the meeting in person or by proxy; or
(b) more than 50% of the Fund's outstanding shares. The Fund may not:
(1) borrow money or issue senior securities (as defined the
Investment Company Act of 1940, as amended), except that the Fund may
borrow money for temporary or emergency non-investment purposes such as
to accommodate abnormally heavy redemption requests, and then only in an
amount not exceeding 5% of the value of its total assets at the time of
borrowing;
(2) underwrite securities issued by other persons, except insofar
as the Fund may be deemed an underwriter under the Securities Act of
1933, as amended, in selling portfolio securities;
(3) invest more than 25% of its total assets in any one industry;
provided that this restriction shall not apply to (i) securities issued
or guaranteed by United States banks or United States branches of foreign
banks that are subject to the same regulation as United States banks, or
(ii) securities issued or guaranteed by the U.S. Government, its agencies
or instrumentalities and to repurchase agreements fully collateralized by
securities that are issued or guaranteed by the U.S. Government, its
agencies or instrumentalities;
(4) purchase or sell real estate or real estate mortgage loans
(although the Fund may invest in obligations secured by interests in real
estate), commodities, commodity contracts (including futures contracts),
real estate partnership interests and oil, gas and mineral leases; or
(5) make loans, other than by entering into repurchase agreements
and through the purchase of other permitted investments in accordance
with its investment objective and policies.
If the issuer of a security is within a given industry and the security
is guaranteed by an entity within a different industry, the industry of the
guarantor rather than that of the issuer shall be deemed to be the industry for
purposes of applying the test in investment restriction number 3 above.
Non-Fundamental Investment Restrictions. In addition, the Fund has
adopted certain non-fundamental investment restrictions, which may be changed
by the Board of Directors of Great Hall without approval by the Fund's
shareholders. As non-fundamental policies, the Fund may not:
(1) invest in companies for the purpose of exercising control or
management;
(2) invest in securities issued by other investment companies in
excess of limits imposed by applicable law.
(3) invest more than 10% of its net assets in illiquid
investments, including but not limited to repurchase agreements maturing
in more than seven days;
(4) pledge, mortgage or hypothecate its assets, except that to
secure permitted borrowings; or
(5) sell securities short or purchase any securities on margin,
except for such short-term credits as are necessary for clearance of
portfolio transactions.
Percentage Restrictions. If a fundamental or a non-fundamental
percentage restriction or limitation is adhered to at the time of investment, a
later increase or decrease in such percentage resulting from a change in values
or net assets will not be considered a violation thereof.
TAXES
Taxation of the Fund-In General
The Fund intends to qualify as a "regulated investment company" under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). To
so qualify, the Fund must, among other things; (a) derive in each taxable year
at least 90% of its gross income from dividends, interest, payments with
respect to securities loans, gains from the sale or other disposition of stock,
securities or foreign currencies, or other income derived with respect to its
business of investing in such stock, securities or currencies (the "90% test");
(b) derive in each taxable year less than 30% of its gross income from the sale
or other disposition of stock or securities held for less than three months
(the "30% test"); and (c) satisfy certain diversification requirements at the
close of each quarter of the Fund's taxable year.
As a regulated investment company, the Fund will not be liable for
federal income taxes on the part of its taxable net investment income and net
capital gains, if any, that it distributes to shareholders if at least 90% of
its net investment income and net short-term capital gain for the taxable year
is distributed. However, if for any taxable year the Fund does not satisfy the
requirements of Subchapter M of the Code, all of its taxable income will be
subject to tax at regular corporate rates without any deduction for
distributions to shareholders, and such distributions will be taxable to
shareholders as ordinary income to the extent of the Fund's current or
accumulated earnings and profits.
The Fund will be liable for a nondeductible 4% excise tax on amounts not
distributed on a timely basis. To avoid the tax, during each calendar year the
Fund must distribute: (a) at least 98% of its ordinary income (not taking into
account any capital gains or losses) for the calendar year; (b) at least 98% of
its capital gain net income for the twelve-month period ending on October 31
(or December 31, if the Fund so elects); and (c) any portion (not taxed to the
Fund) of the respective balances from the prior year. The Fund intends to make
sufficient distributions to avoid this 4% excise tax.
The Fund, or a shareholder's broker with respect to the Fund, is required
to withhold federal income tax at a rate of 31% of the dividends, capital gains
distributions and proceeds of redemptions if a shareholder fails to furnish the
Fund with a correct taxpayer identification number ("TIN") or to certify that
the shareholder is exempt from such withholding or if the Internal Revenue
Service notifies the Fund or broker that the shareholder has provided the Fund
with an incorrect TIN or failed to properly report dividend or interest income
for federal income tax purposes. Any such withheld amount will be fully
creditable on each shareholder's individual federal income tax return. An
individual's TIN is his or her social security number.
The foregoing is only a summary of some of the important federal tax
considerations generally affecting the Fund and its shareholders. No attempt
is made to present a detailed explanation of the federal or state income tax
treatment of the Fund or its shareholders, and this discussion is not intended
as a substitute for careful tax planning. Each investor is advised to consult
his or her tax adviser regarding specific questions as to federal, state, local
and foreign taxation.
PORTFOLIO TRANSACTIONS
As provided in the investment advisory agreement in effect between
Insight and the Fund, Insight makes investment decisions and decisions as to
the execution of portfolio transactions for the Fund, subject to the general
supervision of the Board of Directors of Great Hall. At times, investment
decisions may be made to purchase or sell the same investment security for more
than one account over which Insight exercises investment discretion (including
the Fund), in which case the transactions will be allocated as to amount and
price in a manner considered equitable to each such account.
Under the 1940 Act, persons affiliated with Great Hall are prohibited
from dealing with Great Hall as a principal in the purchase and sale of
investments. Since over-the-counter transactions are usually principal
transactions, affiliated persons of Great Hall may not serve as a dealer in
connection with such transfers or commitments. The 1940 Act also prohibits
Great Hall from purchasing a security being publicly underwritten from a
syndicate in which any affiliated person is a principal underwriter except in
accordance with certain limitations. Furthermore, Great Hall may not use any
affiliated person as a broker or dealer in executing portfolio transactions
without complying with the limitations imposed by the rules of the SEC, which
rules require the commissions, fees or other remuneration received by such
affiliated broker or dealer be: (a) reasonable and fair compared to the
commissions, fees or other remuneration paid to other brokers or dealers in
connection with comparable transactions involving similar securities being
purchased or sold on a securities exchange during a comparable period of time;
and (b) at least as favorable as commissions contemporaneously charged by such
affiliated broker or dealer on comparable transactions for its most favored
comparable unaffiliated customers.
Most purchase and sale transactions with respect to the Fund are with the
issuer or an underwriter or with major dealers of securities acting as
principals. Such transactions are normally on a net basis and generally do not
involve payment of brokerage commissions. However, the cost of securities
purchased from an underwriter normally includes a commission paid by the issuer
to the underwriter. Purchases or sales from or to dealers will normally
reflect the spread between bid and ask prices.
In effecting purchases and sales of portfolio securities for the Fund,
Insight will place orders in such manner as in its opinion will offer the best
price and market for the execution of each transaction. Among two or more
dealers offering the best price and execution, such dealers may also evaluated
by Insight on the basis of their furnishment of research information and
statistical and other services to Insight. It is not always possible to place
a dollar value on information and services received from dealers. Since it is
only supplementary to Insight's own research efforts, the receipt of research
information is not expected to reduce significantly Insight's expenses.
Insight may also consider, subject to its requirement to seek best execution,
sales by dealers of the Fund shares.
MANAGEMENT AND DISTRIBUTION AGREEMENTS
Investment Adviser; Investment Advisory Agreement
Insight serves as the Fund's investment adviser. Insight is a division
of Interra Advisory Services Inc. ("IAS"), a wholly-owned subsidiary of Interra
Financial Incorporated ("Interra"). Each Co-Distributor likewise is a wholly-
owned subsidiary of Interra.
Pursuant to an investment advisory agreement (the "Advisory Agreement"),
Insight performs and bears the internal cost of research, statistical analysis
and continuous supervision of the Fund's investment portfolio and furnishes
office facilities and certain clerical and administrative services to the Fund.
In addition, Insight bears all promotional expenses, including the cost of
printing and distributing prospectuses utilized for promotional purposes.
Other expenses are borne by the Fund including, but not limited to, taxes,
interest, brokerage fees and commissions, and costs and expenses associated
with the following matters and services: registration and qualification of
Great Hall, the Fund and its shares with the SEC and the various states;
services of the Fund's custodian, transfer agent, dividend disbursing agent,
accounting services agent, shareholder services agent, independent auditors and
outside legal counsel; maintenance of corporate existence; preparation,
printing and distribution of prospectuses to existing Fund shareholders;
services of Great Hall directors who are not employees of Insight or of the Co-
Distributors or any of their affiliates; directors' and shareholders' meetings,
including the printing and mailing of proxy materials; insurance premiums for
fidelity and other coverage; issuance and sale of Fund shares (to the extent
not borne by the Co-Distributors under their agreement with Great Hall);
redemption of Fund shares; association membership dues; preparation, printing
and mailing of shareholder reports; and portfolio pricing services, if any.
Expenses borne by Great Hall and attributable to only one series of Great Hall
will be allocated to that series; expenses that are not specifically allocable
to any one series will be allocated among all series (including the Fund) in a
manner and on a basis determined in good faith by the Board of Directors of
Great Hall, including a majority of the Directors who are not "interested"
persons of Great Hall or Insight, to be fair and equitable.
Under the Advisory Agreement, Insight receives a monthly advisory fee
equal on an annual basis to .25% of the average daily value of the Fund's net
assets.
The Advisory Agreement continues in effect from year to year, if
specifically approved at least annually by a vote cast in person at a meeting
called for such purpose by a majority of the Directors of Great Hall, and a
majority of the Directors who are not "interested persons" (as defined in the
1940 Act) of Great Hall or Insight ("Independent Directors"). The Advisory
Agreement may be terminated by either party thereto, by the Independent
Directors or by a vote of the holders of a majority of the outstanding
securities of Great Hall, at any time, without penalty, upon 60 days' written
notice, and automatically terminates in the event of an assignment.
Termination will not affect the right of Insight to receive payment of any
unpaid balance of the compensation earned prior to termination.
The Co-Distributors
Shares of the Fund are continuously offered by and through the Co-
Distributors pursuant to a Co-Distributor Agreement. The Co-Distributors are
not obligated under such agreement to sell any certain number of Fund shares.
The Co-Distributors may enter into dealer agreements with other dealers,
pursuant to which such dealers also may sell Fund shares. The Fund has agreed
to indemnify the Co-Distributors and their affiliates, to the extent permitted
by applicable law, against certain liabilities under the 1933 Act.
DETERMINATION OF NET ASSET VALUE
The Fund's net asset value per share will be calculated in accordance
with generally accepted accounting principles and the applicable rules and
regulations of the SEC. The Fund values its portfolio securities using the
amortized cost method. This method involves valuing a security at its cost and
thereafter accruing any discount or premium at a constant rate to maturity. By
declaring these accruals to the Fund's shareholders in the daily dividend, the
value of the Fund's assets and, thus, its net asset value per share, will
generally remain constant. Although this method provides certainty in
valuation, it may result in periods during which the value of the Fund's
securities, as determined by amortized cost, is higher or lower than the price
the Fund would receive if it sold the securities. During such periods, the
yields on Fund shares may differ somewhat from that obtained in similar funds
with identical investments utilizing a method of valuation based upon market
prices and estimates of market prices for all of their portfolio securities.
In connection with the use of the amortized cost method, the Fund
maintains a dollar-weighted average portfolio maturity of 90 days or less and
purchases only portfolio securities having remaining maturities of 397 days or
less. Great Hall's Board of Directors has established procedures designed to
stabilize, to the extent reasonably possible, the Fund's net asset value per
share, as computed for purposes of sales and redemptions, at $1.00. Such
procedures include review of the Fund's portfolio holdings by the Board of
Directors of Great Hall at such intervals as it may deem appropriate to
determine whether the Fund's net asset value calculated by using available
market quotations deviates from $1.00 per share and, if so, whether such
deviation may result in material dilution or may be otherwise unfair to
existing shareholders. In the event that the Board of Directors determines
that a material deviation from net asset value exists, the Board will take such
corrective action as it deems necessary and appropriate, which action might
include selling portfolio securities prior to maturity to realize capital gains
or losses or to shorten average portfolio maturity, withholding dividends, or
establishing net asset values per share by using available market quotations.
CALCULATION OF PERFORMANCE DATA
Yield
As stated in the Prospectus, the Fund from time to time may advertise its
yield.
The Fund's current yield will be computed by determining the change,
exclusive of capital changes, in the value of a hypothetical pre-existing
account having a balance of one share at the beginning of a seven-day period,
and dividing the change by the value of the account at the beginning of the
base period to obtain the base period return, and then multiplying the base
period return by (365/7), with the resulting yield figure carried to at least
the nearest hundredth of one percent.
The Fund's effective or compounded yield will be computed by determining
the change, exclusive of capital changes, in the value of a hypothetical pre-
existing account having a balance of one share at the beginning of a seven-day
period, and dividing the change by the value of the account at the beginning of
the base period to obtain the base period return, and then compounding the base
period return by adding 1, raising the sum to a power equal to 365 divided by
7, and subtracting 1 from the result, according to the following formula:
Effective yield = [(Base period return + 1) 365/7] - 1
DIRECTORS AND OFFICERS
Directors and officers of Great Hall, together with information as to
their principal occupations during the past five years, are set forth below.
Except as otherwise set forth below, the address of each officer and director
is the same as that of Great Hall - 60 South Sixth Street, Minneapolis,
Minnesota 55402.
Principal Occupations During the
Name and Address Position Past Five Years and Other Affiliations
- ---------------- -------- --------------------------------------
T. Geron ("Jerry") Bell Director President of the Minnesota Twins
34 Puckett Place Baseball Club Incorporated since 1987.
Minneapolis, MN 55415
Sandra J. Hale Director President of Enterprise Management,
2308 West Lake of the Int'l. since 1991; Minnesota
Isles Pkwy. Commissioner of Administration from
Minneapolis, MN 55405 1982 to 1990.
Ron James* Director President and Chief Executive Officer
150 South Fifth Street, of Ceridian Corporation-Human Resources
Suite 3300 Group since January 1996; Vice-
Minneapolis, MN 55402 President - Minnesota of U.S. West
Communications from 1990 to
December 1995; Vice President and
General Manager-Large Business
Markets of U.S. West
Communications from 1987 to 1990;
Director of The St. Paul Companies
since 1993.
Jay H. Wein Director Independent consultant since April
5305 Elm Ridge Circle 1995; Chairman of Information
Excelsior, MN 55331 Advantage, Inc. from 1992 to April
1995; Retired in August 1989 after
15 years as Office Managing Partner
of the Minneapolis/St. Paul Office
of Arthur Andersen & Co.
J. Scott Spiker Chief President, Chief Executive Officer
Executive and Director of IAS and Executive
Officer Vice President of Interra since 1994;
Executive Vice President and
Business Manager, Employee Benefits
Services, of Norwest Corporation
from 1990 through January 1994;
Product Manager, Institutional
Collective Funds, of Norwest
Corporation from 1989 through
January 1994.
Raye C. Kanzenbach Vice Vice President and Chief Investment
President Officer of Insight; prior to 1991,
Director, Senior Vice President and
Secretary of Insight Bond Management,
Inc. since 1983.
Julie K. Getchell Chief President and Chief Operating Officer
Financial of Insight and Senior Vice President,
Officer Secretary, Treasurer and Chief
Financial Officer of IAS.
Matthew L. Thompson Secretary Partner of Faegre & Benson LLP,
2200 Norwest Center Great Hall's general counsel, since
90 South Seventh Street May 1995; Vice President, Assistant
Minneapolis, MN 55402 Secretary and Corporate/Fund Counsel
of Interra from January 1994 to May
1995; prior thereto, Partner of
Dorsey & Whitney since 1993 and
Associate of Dorsey & Whitney from
1985 through 1992.
__________________________
* Mr. James may be deemed to be an "interested" Director because he is a
director of The St. Paul Companies, which owns a majority interest in a
registered broker-dealer.
The annual compensation of each Director is $6,000 plus $1,000 for each
meeting attended. No compensation is paid by Great Hall to its officers. The
following table sets forth for such period the aggregate compensation
(excluding expenses) paid by Great Hall to its directors during the fiscal year
ended July 31, 1996:
COMPENSATION TABLE
Pensions or Retirement
Aggregate Benefits Accrued
Compensation as part of
Name of Director from Great Hall Great Hall Expenses
T. Geron (Jerry) Bell $11,000 None
Sandra J. Hale $11,000* None
Ron James $10,000 None
Jay H. Wein $11,000* None
________________________
* Director was paid an additional $6,000 from Insight for additional work
during the year relating to the Board's due diligence responsibilities in
connection with the transfer of two prior series of Great Hall.
Additional directors of IAS are as follows:
Name Other Positions
------------------ --------------------------------------
Irving Weiser Chairman, Chief Executive Officer and
President of Interra; Chairman and Chief
Executive Officer of Dain Bosworth Inc.
John C. Appel President and Chief Operating Officer of
Dain Bosworth Inc.
Louis C. Fornetti Executive Vice President, Chief Financial
Officer and Treasurer of Interra; Chief
Executive Officer and President of Interra
Clearing Services Inc.
William A. Johnstone Chief Executive Officer of Rauscher Pierce
Refsnes Inc.
Sharon R. Quay Executive Vice President and Director of
Human Resources of Interra
GENERAL INFORMATION
Under the terms of the Custodian Agreement, Norwest Bank Minnesota, N.A.
(the "Custodian") holds and safekeeps all of the Fund's assets. For its
services, the Custodian is paid a monthly fee based upon the average market
value of the Fund's assets held in custody plus securities transaction charges;
it is also reimbursed for certain out-of-pocket expenses.
Under the terms of an Investment Account Agreement, Investors Fiduciary
Trust Company (the "Fund Accounting Agent") performs necessary investment
accounting and recordkeeping services for the Fund. For its services, the Fund
Accounting Agent is paid a monthly fee and is reimbursed for certain out-of-
pocket expenses.
Under the terms of a Transfer Agency Agreement, Rodney Square Management
Corporation (the "Transfer Agent") maintains the Fund's shareholder account
records, handles certain shareholder communications, distributes dividends and
distributions and produces activity statements. For these services, the
Transfer Agent receives a monthly fee computed on the basis of the number of
shareholder accounts the Transfer Agent maintains for the Fund during the month
and is also reimbursed for certain out-of-pocket expenses.
The Co-Distributors and Interra Clearing Services Inc. ("Clearing"), also
a wholly-owned subsidiary of Interra, 312 South Third Street, Minneapolis,
Minnesota, perform certain shareholder account services for the Fund pursuant
to a Shareholder Account Service Agreement. Under the terms of the Shareholder
Account Service Agreement, the Co-Distributors and Clearing disburse or credit
all proceeds of redemptions, dividends and other distributions to shareholders,
handle certain shareholder communications, prepare shareholder records,
maintain a master account with the Transfer Agent on behalf of shareholders and
perform other related services. For their services, the Co-Distributors and
Clearing receive a monthly fee computed on the basis of the number of
shareholder accounts that are maintained for the Fund during the month and are
also reimbursed for certain out-of-pocket expenses.
Great Hall maintains accounting records that specifically allocate assets
and liabilities on a series by series basis. The shares of each series
represent an undivided interest in the assets and liabilities specifically
allocated to that series. Creditors and other persons contracting with Great
Hall with respect to a series may look solely to the assets of that series to
satisfy claims against Great Hall.
All Fund shares are the same class and are freely transferable. Each
share has equal dividend rights and is entitled to one vote at all shareholder
meetings. Separate votes are taken by each series of Great Hall except to the
extent that the 1940 Act requires shares of all series to be voted in the
aggregate. Shares have non-cumulative voting rights, so that the holders of
more than 50% of the shares can, if they choose to do so, elect all the
directors of Great Hall, in which event the holders of the remaining shares
will be unable to elect any person as a director. Whenever the approval of a
majority of the outstanding shares of a series of Great Hall is required in
connection with shareholder approval of an investment advisory agreement,
changes in the investment objective, policies or limitations of that series,
or changes in the distribution expense plan, a "majority" shall mean the vote
of the lesser of: (a) 67% or more of the shares of such series present at a
meeting, if the holders of more than 50% of the outstanding shares of such
series are present in person or by proxy; or (b) more than 50% of the
outstanding shares of such series.
Great Hall is not required under Minnesota law to hold annual or
periodically scheduled regular meetings of shareholders, and does not intend to
hold such meetings. The Board of Directors may convene shareholder meetings
when it deems appropriate. In addition, if a regular meeting of shareholders
has not been held during the immediately preceding fifteen months, a
shareholder or shareholders holding three percent or more of the voting shares
of Great Hall may demand a regular meeting of shareholders by written notice of
demand given to the chief executive officer or the chief financial officer of
Great Hall. Within ninety days after receipt of the demand, a regular meeting
of shareholders must be held at the expense of Great Hall. Irrespective of
whether a regular meeting of shareholders has been held during the immediately
preceding fifteen months, in accordance with Section 16(c) of the 1940 Act, the
Board of Directors of Great Hall shall promptly call a meeting of shareholders
for the purpose of voting upon the question of removal of any director when
requested in writing to do so by the record holders of not less than 10% of the
outstanding shares, and Great Hall will assist in communications with other
shareholders as required by the 1940 Act.
Under Minnesota law, the Board of Directors has overall responsibility
for managing Great Hall in good faith, in a manner reasonably believed to be in
the best interests of Great Hall, and with the care an ordinarily prudent
person in a like position would exercise in similar circumstances. Under
Minnesota law, directors owe Great Hall and its shareholders certain fiduciary
duties, including a duty of "loyalty" (to act in good faith and in the best
interests of Great Hall) and a duty of "care" (to act with the care that a
reasonably prudent person would exercise under similar circumstances).
Minnesota law authorizes corporations to eliminate the personal monetary
liability of directors to the corporation or its shareholders for breach of the
duty of "care." Directors of corporations adopting such a limitation provision
still owe the corporation this duty of "care," but under most circumstances
cannot be sued for monetary damages for breaches of such duty. The Articles of
Incorporation of Great Hall limit the liability of directors to the fullest
extent permitted by law. The directors of Great Hall remain fully liable
(including possibly for monetary damages) for breaches of their duty of
"loyalty," for self-dealing, for bad faith and intentional misconduct, and for
violations of the 1933 Act, the Securities Act of 1934, and certain provisions
of Minnesota corporation law. Additionally, the 1940 Act prohibits limiting a
director's liability for willful misfeasance, bad faith, gross negligence, or
reckless disregard of the director's duties in the conduct of the director's
office, and it is uncertain whether and to what extent directors remain liable
for monetary damages for violations of the 1940 Act. The SEC staff has taken
the position that investment company directors remain liable for monetary
damages under certain circumstances.
Upon issuance and sale in accordance with the terms of the Fund's
Prospectus and Statement of Additional Information, each Fund share will be
fully paid and non-assessable. Shares have no preemptive, subscription or
conversion rights and are redeemable as set forth under "How To Redeem Shares"
in the Prospectus. In the event of the dissolution or liquidation of Great
Hall, the holders of the Fund shares are entitled to receive, as a class, the
underlying assets of the Fund available for distribution to shareholders.
COUNSEL AND AUDITORS
Faegre & Benson LLP, 2200 Norwest Center, 90 South Seventh Street,
Minneapolis, Minnesota 55402, serves as Great Hall's general counsel.
Lindquist & Vennum PLLP, 4200 IDS Center, 80 South Eighth Street, Minneapolis,
Minnesota 55402, serves as counsel to Great Hall's disinterested directors.
KPMG Peat Marwick LLP, 90 South Seventh Street, 4200 Norwest Tower,
Minneapolis, Minnesota 55402, has been selected as the independent auditors of
Great Hall for its fiscal year ending July 31, 1997.
FINANCIAL AND OTHER INFORMATION
The Fund's prospectus and this Statement of Additional Information do not
contain all the information included in Great Hall's Registration Statement
filed with the SEC under the 1933 Act and the 1940 Act (the "Registration
Statement") with respect to the securities offered by the Prospectus and this
Statement of Additional Information. Certain portions of the Registration
Statement have been omitted from the Prospectus and this Statement of
Additional Information pursuant to the rules and regulations of the SEC. The
Registration Statement including the exhibits thereto may be examined at the
office of the SEC in Washington, D.C.
Statements contained in the Fund's Prospectus or in this Statement of
Additional Information as to any contract or other document referred to are not
necessarily complete, and, in each instance, reference is made to the copy of
such contract or other document filed as an exhibit to the Registration
Statement of which the Prospectus and this Statement of Additional Information
for a part, each such statement being qualified in all respects by such
reference.
APPENDIX
RATINGS OF INVESTMENTS
The following is a description of Standard & Poor's Corporation ("S&P")
and Moody's Investors Service, Inc. ("Moody's") commercial paper, loan, note
and bond ratings. To the extent that ratings accorded by S&P or Moody's may
change as a result of changes in such organizations, the Fund will attempt to
use comparable rating standards for their permissible investments.
Description of Moody's Commercial Paper, Loan and Note Ratings.
The rating Prime-1 is the highest commercial paper rating assigned by
Moody's. Issuers rated Prime-1 (or related supporting institutions) have a
superior capacity for repayment of short-term promissory obligations.
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 structures with moderate reliance on debt
and ample asset protection.
Broad margins in earnings coverage of fixed financial charges and
high internal cash generation.
Well established access to a range of financial markets and assured
sources of alternate liquidity.
Issuers rated Prime-2 (or related supporting institutions) have a strong
capacity for repayment of short-term promissory obligations. This will
normally be evidenced by many of the characteristics cited above but to a
lesser degree. Earnings trends and coverage ratios, while sound, will be more
subject to variation. Capitalization characteristics, while still appropriate,
may be more affected by external conditions. Ample alternative liquidity is
maintained.
Issuers rated Prime-3 (or related supporting institutions) have an
acceptable capacity for repayment of short-term promissory obligations. The
effect of industry characteristics and market composition may be more
pronounced. Variability in earnings and profitability may result in changes in
the level of debt protection measurements and the requirement for relatively
high financial leverage. Adequate alternate liquidity is maintained.
Loans bearing the designation MIG-1 by Moody's are of the best quality,
enjoying strong protection from established cash flows, superior liquidity
support or demonstrated broad-based access to the market for refinancing.
Loans bearing the designation of MIG-2 are of high quality, with margins
of protection ample although not so large as the preceding group.
Loans bearing the designation of MIG-3 are of favorable quality. All
security elements are accounted for but there is lacking the undeniable
strength of the preceding grades. Liquidity and cash flow protection may be
narrow and market access for refinancing is likely to be less well established
Description of S&P's Commercial Paper and Municipal Note Ratings
The rating A is the highest commercial paper rating assigned by S&P.
Issues in this category have the greatest capacity for timely payment and are
delineated with the numbers 1, 2 and 3 to indicate the relative degree of
safety.
The designation A-1 indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics are denoted with a plus (+) sign
designation.
The designation A-2 indicates that the capacity for timely payment is
strong. However, the relative degree of safety is not as high as for issues
designated "A-1."
The designation A-3 indicates a satisfactory capacity for timely payment.
However, issues with this designation are somewhat more vulnerable to the
adverse effects of changes in circumstances than issues carrying the higher
designations.
Municipal notes rated SP-1 have a very strong or strong capacity to pay
principal and interest. Those issuers determined to possess overwhelming
safety characteristics will be given a plus (+) designation.
Municipal notes rated SP-2 have a satisfactory capacity to pay principal
and interest.
Municipal notes rated SP-3 have a speculative capacity to pay principal
and interest.
Description of S&P's Bond Ratings
AAA-Bonds rated AAA have the highest rating assigned by S&P to a debt
obligation. Capacity to pay interest and repay principal is extremely strong
AA-Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from AAA issues only in a small degree.
A-Bonds rated A have a strong capacity to pay interest and repay
principal, although they are somewhat more susceptible to the adverse effects
of changes in circumstances and economic conditions than bonds in higher rated
categories.
BBB-Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Although they normally exhibit 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 bonds in this category than for bonds in higher-rated categories.
BB, B, CCC, CC, C-Bonds rated BB, B, CCC, CC and C are regarded, on
balance, as predominantly speculative with respect to capacity to pay interest
and repay principal in accordance with the terms of the obligation. BB
indicates the lowest degree of speculation and C the highest degree of
speculation. While such bonds will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
Plus (+) or (-): The ratings from AA to CCC may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
Description of Moody's Bond Ratings
Aaa-Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt-edged." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
Aa-Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group, they comprise what are generally known
as high-grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than with respect
to 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 rated 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.
Within each rating classification from Aa through B, Moody's has assigned
the numerical modifiers 1, 2 and 3. The modifier 1 indicates that a security
ranks in the high end of that rating category, 2 in the mid-range of a category
and 3 nearer the low end of a category.
