<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 1, 1999
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
(File No. 33-41395)
Pre-Effective Amendment No. __ / /
Post-Effective Amendment No. 14 /X/
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
(File No. 811-6340)
Amendment No. 15 /X/
(Check appropriate box or boxes.)
GREAT HALL INVESTMENT FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
60 SOUTH SIXTH STREET, MINNEAPOLIS, MINNESOTA 55402
(Address of Principal Executive Offices) (Zip Code)
(612) 371-7765
(Registrant's Telephone Number, including Area Code)
J. SCOTT SPIKER
60 SOUTH SIXTH STREET, MINNEAPOLIS, MINNESOTA 55402
(Name and Address of Agent for Service)
COPIES TO:
Matthew L. Thompson John R. Houston
Faegre & Benson LLP Lindquist & Vennum PLLP
90 South Seventh Street, Suite 2200 80 South Eighth Street, Suite 4200
Minneapolis, Minnesota 55402 Minneapolis, Minnesota 55402
It is proposed that this filing will become effective (check appropriate
box):
/ / Immediately upon filing pursuant to paragraph (b) of Rule 485
/ / On [date] pursuant to paragraph (b) of Rule 485
/ / 60 days after filing pursuant to paragraph (a)(1) of Rule 485
/X/ On December 1, 1999 pursuant to paragraph (a)(1) of Rule 485
/ / 75 days after filing pursuant to paragraph (a)(2) of Rule 485
/ / on [date] pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
/ / This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Approximate date of proposed public offering: As soon as practicable
following the effective date of this registration statement.
The Registrant has registered an indefinite number of shares of common stock
under the Securities Act of 1933 pursuant to Rule 24f-2 under the Investment
Company Act of 1940. The Registrant's most recent Rule 24f-2 Notice was filed
with the Commission on or about September 15, 1999.
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<PAGE>
GREAT HALL INVESTMENT FUNDS, INC.
REGISTRATION STATEMENT ON FORM N-1A
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
FORM N-1A ITEM NUMBER
- ---------------------
PART A CAPTION IN PROSPECTUSES
- ------ -----------------------
<S> <C>
1. Front and Back Cover Pages...................................... Cover Pages
2. Risk/Return Summary: Investments, Risks
and Performance............................................. Profile of the Funds
3. Risk/Return Summary: Fee Table................................. Fees and Expenses
4. Investment Objectives, Principal Investment Strategies, and
Related Risks............................................... Profile of the Funds
5. Management's Discussion of Fund Performance..................... Not applicable
6. Management, Organization, and Capital Structure................. Fund Management
7. Shareholder Information......................................... Share Price; How to Buy Shares; How
to Redeem Shares; Distributions;
Taxes
8. Distribution Arrangements....................................... How to Buy Shares
9. Financial Highlights Information................................ Financial Highlights
- -----------------------
<CAPTION>
CAPTION IN STATEMENT OF
PART B ADDITIONAL INFORMATION
- ------ -----------------------
<S> <C>
10. Cover Page and Table of Contents................................ Cover Page; Table of Contents
11. Fund History.................................................... General Information
12. Description of the Fund and its Investments and Risks........... Investment Policies; Investment
Restrictions
13. Management of the Fund.......................................... Directors and Officers
14. Control Persons and Principal Holders
of Securities............................................... General Information
15. Investment Advisory and Other Services.......................... Management and Distribution
Agreements
16. Brokerage Allocation and Other Practices........................ Portfolio Transactions
17. Capital Stock and Other Securities.............................. General Information
18. Purchase, Redemption and Pricing of Shares...................... Determination of Net Asset Value;
Management and Distribution
Agreements
19. Taxation of the Fund............................................ Taxes
20. Underwriters.................................................... Management and Distribution
Agreements
21. Calculation of Performance Data................................. Calculation of Performance Data
22. Financial Statements............................................ Financial and Other Information
</TABLE>
<PAGE>
GREAT HALL INVESTMENT FUNDS, INC.
POST-EFFECTIVE AMENDMENT NO. 14 TO THE
REGISTRATION STATEMENT ON FORM N-1A
EXPLANATORY NOTE TO REGISTRATION STATEMENT
Great Hall Investment Funds, Inc. (the "Registrant") currently is
authorized to issue its shares in five series, as follows:
Series A -- Great Hall Prime Money Market Fund ("Prime Fund");
Series B -- Great Hall U.S. Government Money Market Fund
("Government Fund");
Series C -- Great Hall Tax-Free Money Market Fund ("Tax-Free Fund");
Series F -- Great Hall Institutional Prime Money Market Fund
("Institutional Prime Fund"); and
Series G -- Great Hall Institutional Tax-Free Money Market Fund
("Institutional Tax-Free Fund").
Part A consists of two prospectuses -- one prospectus for Prime Fund,
Government Fund and Tax-Free Fund, and a separate prospectus for Institutional
Prime Fund and Institutional Tax-Free Fund.
Part B consists of one Statement of Additional Information ("SAI") covering
all five funds.
<PAGE>
GREAT HALL INVESTMENT FUNDS, INC.
POST-EFFECTIVE AMENDMENT NO. 14 TO THE
REGISTRATION STATEMENT ON FORM N-1A
PART A
PROSPECTUSES
<PAGE>
(Front Cover)
GREAT HALL-Registered Trademark- INVESTMENT FUNDS, INC.
INSTITUTIONAL MONEY MARKET FUNDS
INSTITUTIONAL PRIME MONEY MARKET FUND
INSTITUTIONAL TAX-FREE MONEY MARKET FUND
PROSPECTUS
DECEMBER 1, 1999
AS WITH ALL MUTUAL FUNDS, NEITHER THE SECURITIES AND EXCHANGE COMMISSION
(SEC) NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE
SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
PROFILE OF THE FUNDS
WHAT ARE THE FUNDS?
Great Hall Institutional Prime Money Market Fund (Prime Fund) and
Great Hall Institutional Tax-Free Money Market Fund (Tax-Free Fund) are
professionally managed mutual funds. If you invest in the Funds, you become a
Fund shareholder.
WHAT ARE THE FUNDS' INVESTMENT OBJECTIVES?
Each 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. These objectives cannot be changed without the
approval of Fund shareholders.
WHAT ARE THE FUNDS' MAIN INVESTMENT STRATEGIES?
- PRIME FUND. Prime Fund invests in a variety of high quality money
market instruments, including commercial paper, corporate debt
obligations, U.S. Government securities, bank securities, certificates
of deposit and repurchase agreements.
- TAX-FREE FUND. Tax-Free Fund invests in high quality debt obligations
that pay interest that is exempt from federal income taxes. In normal
conditions, at least 80% of the Fund's assets must be invested in such
tax-exempt securities. However, the Fund's investment adviser will
attempt to keep substantially all of the Fund's assets invested in
tax-exempt securities.
Federal regulations require money market funds to meet strict quality,
maturity and diversification standards. The Funds have adopted policies to
ensure that they meet each of these standards. In certain respects (as discussed
below), the Funds exceed these standards.
- CREDIT QUALITY. Money market funds must invest exclusively in
high quality securities. To be considered high quality, a
security generally must be rated in one of the two highest
short-term credit quality categories by a nationally recognized
rating organization such as Standard & Poors Corporation or
Moody's Investors Service, Inc. If a security is unrated, the
money market fund's investment adviser must consider it to be of
comparable quality to a rated security.
The Funds maintain even higher standards. For example, the Funds
do not invest in unrated securities. Additionally, the Prime Fund
invests only in securities that have received the highest
short-term rating by at least two rating organizations, and the
Tax-Free Fund invests only in securities that have received the
highest rating by at least one rating organization.
- MATURITY. Each Fund must invest exclusively in securities having
remaining maturities of 397 day or less. Each Fund also must
maintain a dollar weighted average portfolio maturity of 90 days
or less.
- DIVERSIFICATION. Immediately after any investment by a Fund
(other than a U.S. Government security or a security that is
"guaranteed" by another party), the Fund may not have more than
5% of its assets invested in securities of such issuer, except
for certain temporary investments. Separate diversification
standards apply to securities subject to guarantees.
-2-
<PAGE>
WHO SHOULD INVEST IN THE FUNDS?
The Funds are designed for investors looking for current income and a
stable investment value. BEFORE YOU INVEST, PLEASE READ THIS PROSPECTUS AND KEEP
IT FOR FUTURE REFERENCE.
WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUNDS?
Each Fund is a "money market fund" and, as such, seeks income by
investing in short-term debt securities and must meet strict standards
established by the Board of Directors. These standards are based on special
rules for money market funds designed to help them maintain a stable share price
of $1.00 per share. However, it is possible to lose money by investing in the
Funds. The Funds could also underperform other short-term debt instruments or
money market funds.
- INTEREST RATE CHANGES. As with any investment whose yield
reflects current interest rates, the Funds' yields will change
over time. During periods when interest rates are low, a Fund's
yield will also be low.
- AN ISSUER OR GUARANTOR OF THE FUNDS' SECURITIES DEFAULTS.
Although the risk of default is generally considered small, any
default on the part of a portfolio investment or downgrade in its
credit rating could cause the Fund's share price or yield to
fall.
- INVESTMENT ADVISER'S JUDGMENT. The Funds are subject to the risk
that the investment adviser's security selection and expectations
regarding interest rate trends will cause the Funds' yields to
lag other funds with similar investment objectives. The Funds'
emphasis on quality and stability could also cause them to
underperform other money market funds, particularly those that
take greater maturity and credit risks.
- THE FUND IS NOT DESIGNED TO OFFER CAPITAL APPRECIATION. In
exchange for their emphasis on stability and liquidity, money
market investments may offer lower long-term performance than
stock or bond investments.
- FUND INVESTMENT IS NOT INSURED. An investment in the Fund is not
insured or guaranteed by the Federal Deposit Insurance
Corporation (FDIC) or any other government agency. Although the
Funds seek to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the Fund.
-3-
<PAGE>
HOW HAVE THE FUNDS PERFORMED OVER TIME?
IF YOU WOULD LIKE TO KNOW A FUND'S CURRENT SEVEN-DAY YIELD, CALL THE
FUND AT 1-800-934-6674.
PRIME FUND. Prime Fund commenced operations on August 11, 1997. Below
is a table demonstrating Prime Fund's performance during the calendar year ended
December 31, 1998 and how Prime Fund's performance compared to a broad-based
market index. These figures assume that all distributions were reinvested. Keep
in mind that the Fund's past performance does not indicate how the Fund will
perform in the future.
[EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC]
<TABLE>
<CAPTION>
Annual Total Return For The Year Ended December 31, 1998
--------------------------------------------------------
1998
<S> <C>
5.20%
</TABLE>
During the period shown, the highest return for a calendar
quarter was 1.32% (quarter ended September, 1998) and the lowest
return for a quarter was 1.28% (quarter ended March, 1998).
<TABLE>
<CAPTION>
Annual Return for the Periods Ended December 31, 1998
-----------------------------------------------------
1 Year Since Inception
-----------------------------------------
<S> <C> <C>
Prime Fund........................... 5.20% 5.16%
IBC First Tier Institutional Money
Market Fund Average................ 5.21% ___%
</TABLE>
Prime Fund's total return for the nine months ended September 30, 1999
was___%.
TAX-FREE FUND. Tax-Free Fund commenced operations on September 23,
1998. It's total return for the nine months ended September 30, 1999 was___%.
-4-
<PAGE>
FEES AND EXPENSES
This table sets forth the fees and expenses you will pay if you invest
in the Funds.
<TABLE>
<CAPTION>
SHAREHOLDER FEES Prime Tax-Free
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)............... Fund Fund
---- ----
<S> <C> <C>
Maximum sales charge (load) on purchases................ None None
Maximum deferred sales charge (load).................... None None
ANNUAL FUND OPERATING EXPENSES
(expenses deducted from fund assets)
Management fee.......................................... 0.25% 0.25%*
Distribution and service fee (12b-1).................... None None
Other expenses.......................................... 0.09% 0.30%
---- ----
Total annual fund operating expenses.................... 0.34% 0.55%*
</TABLE>
- ---------------------------------
* The investment adviser may voluntarily waive fund operating expenses from
time to time. Any such program may be changed or eliminated at any time
without notice. During the year ended July 31, 1999, the investment adviser
voluntarily waived all of Tax-Free Fund's management fee. After such
waiver, Tax-Free Fund's "management fee" and "total annual fund operating
expenses" were 0% and 0.30%, respectively, of the Fund's average daily net
assets.
EXAMPLE
This example helps you to compare the costs of investing in the Funds with the
cost of investing in other mutual funds. Your actual costs may be higher or
lower. The example assumes:
- You invest $10,000 in the Fund for the period shown
- Your investment has a 5% return each year
- You reinvest all distributions and dividends without a sales charge
- The Fund's operating expense levels remain the same from year to year
<TABLE>
<CAPTION>
NUMBER OF YEARS YOU OWN YOUR SHARES
-----------------------------------
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Prime Fund $35 $109 $191 $431
Tax-Free Fund 56 176 307 689
</TABLE>
-5-
<PAGE>
FUND MANAGEMENT
INVESTMENT ADVISER. The Funds have entered into an investment advisory
agreement with Insight Investment Management, Inc. to serve as the Funds'
investment adviser. Insight's address is 60 South Sixth Street, Minneapolis,
Minnesota 55402. Insight selects the Funds' investments and oversees their
operations. Insight has been registered with the SEC as an investment adviser
since 1983, and has been a portfolio manager of publicly offered mutual funds
since 1986. Insight is a wholly-owned subsidiary of Dain Rauscher Corporation.
MANAGEMENT FEE. For its services, Insight earned a fee during each
Fund's last fiscal year equal to .25% per year of the Fund's average daily net
assets. However, Insight waived the entire management fee earned from Tax-Free
Fund during the year ended July 31, 1999.
DISTRIBUTOR. Dain Rauscher Incorporated is the distributor of the
Funds' shares. The firm is a member of the New York Stock Exchange and of the
National Association of Securities Dealers, Inc., and (like Insight) is a
wholly-owned subsidiary of Dain Rauscher Corporation.
YEAR 2000 ISSUES. Certain computer systems and programs may not be able
to properly process and calculate date-related data after December 31, 1999.
Insight, Dain Rauscher and the Funds' other service providers have advised the
Funds that they are taking steps to enable their systems to properly process
date-related data after such date. However, it is impossible to know in advance
exactly how this issue will affect Fund administration, Fund performance or
securities markets in general.
SHARE PRICE
The Funds calculate their share prices at the close of each business
day for the New York Stock Exchange (currently 4:00 p.m. New York time). A
Fund's share price is its net asset value per share (or NAV), which is the value
of the Fund's net assets divided by the number of its outstanding shares. The
Funds seek to maintain a stable NAV of $1.00 per share.
HOW TO BUY SHARES
You may purchase shares of each Fund at their next determined NAV. The
Funds are sold without a sales charge. A minimum investment of $1 million is
required. However, this minimum may be waived for certain investors. You may
open an account to purchase shares by contacting your investment executive or by
contacting the Fund directly at the address or telephone number on the cover of
this Prospectus.
-6-
<PAGE>
HOW TO REDEEM SHARES
You may redeem shares for cash at their next determined NAV by
contacting your investment executive. If you recently purchased your shares by
check, your redemption proceeds will not be sent to you until your check clears.
Redemptions may be suspended or postponed at times when the New York Stock
Exchange is closed, when trading is restricted, or under certain emergency
circumstances as determined by the SEC. Redemptions are treated as sales for
federal income tax purposes.
DISTRIBUTIONS
Each Fund declares a dividend of substantially all of its net
investment income on each business day. These dividends are paid monthly. Each
Fund will distribute its capital gains (if it has any) once a year, typically in
December. Each Fund may make additional distributions if necessary for the Fund
to avoid paying taxes. Each Fund expects distributions to be primarily from
income. The Funds normally will not earn or distribute long-term capital gains.
Dividends and distributions are reinvested in additional Fund shares at NAV.
TAXES
Shortly after the beginning of each year, the Funds provide you with
the information about the distributions and dividends you received during the
previous year.
Because everybody's tax situation is different, you should consult your
tax advisor about the tax implications of your investment in the Fund.
PRIME FUND. 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 permit mutual funds to
"pass through" this tax exemption to their shareholders.
TAX-FREE FUND. Dividends derived from interest on tax-exempt municipal
obligations will generally not be subject to federal income tax. Capital gain
distributions on municipal obligations will be taxed as capital gains, even if
reinvested in additional shares. The Tax-Free Fund anticipates that
substantially all of its dividends will be exempt from federal income taxes
(including the federal alternative minimum tax) and will notify each shareholder
annually of the tax status of all distributions. Distributions, however, may be
subject to state and local taxes.
-7-
<PAGE>
FINANCIAL HIGHLIGHTS
The following tables are intended to help you understand each Fund's
financial performance for each fiscal year of operations. Certain information
reflects financial results for a single share. The total returns in the table
represent the rate that an investor would have earned on a Fund share assuming
reinvestment of all dividends and distributions. The information in the
following tables was audited by KPMG LLP, independent accountants, whose report,
along with the Funds' financial statements, are included in the Funds' annual
report (available upon request).
<TABLE>
<CAPTION>
PRIME FUND
- --------------------------------------------------------------------------------
Period from
August 11, 1997*
Year ended to
July 31, 1999 July 31, 1998
- --------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period . $ 1.00 $ 1.00
- --------------------------------------------------------------------------------
Income from investment operations .... 0.05 0.05
Distributions to shareholders from
investment income .................. (0.05) (0.05)
- --------------------------------------------------------------------------------
Net asset value, end of period ....... $ 1.00 $ 1.00
- --------------------------------------------------------------------------------
Total return ......................... 4.9% 5.2%
Net assets at end of period (000's
omitted) ........................... $ 310,183 $ 213,785
Ratio of expenses to average daily net
assets** ........................... 0.34% 0.39%
Ratio of net investment income to
average daily net assets** ......... 4.85% 5.27%
- --------------------------------------------------------------------------------
</TABLE>
* Commencement of operations.
** Adjusted to an annual basis. Various fund fees and expenses were
voluntarily waived or absorbed by Insight for the Prime Fund during the period
ended July 31, 1998. Had the Fund paid all expenses, the ratio of expenses and
net investment income to average daily net assets would have been 0.42%/5.24%
for the period ended July 31, 1998.
-8-
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE FUND
- --------------------------------------------------------------------------
Period from
September 23, 1998*
to
July 31, 1999
- --------------------------------------------------------------------------
<S> <C>
Net asset value, beginning of period .......... $ 1.00
- --------------------------------------------------------------------------
Income from investment operations ............. 0.03
Distributions to shareholders from investment
income ...................................... (0.03)
- --------------------------------------------------------------------------
Net asset value, end of period ................ $ 1.00
- --------------------------------------------------------------------------
Total return .................................. 2.5%
Net assets at end of period (000's omitted) ... $ 53,149
Ratio of expenses to average daily net assets** 0.30%
Ratio of net investment income to average daily
net assets** ................................ 2.79%
- --------------------------------------------------------------------------
</TABLE>
* Commencement of operations.
** Adjusted to an annual basis. Various fund fees and expenses were
voluntarily waived or absorbed by Insight for the Tax-Free Fund during the
period ended July 31, 1999. Had the Fund paid all expenses, the ratio of
expenses and net investment income to average daily net assets would have been
0.55%/2.54% for the period ended July 31, 1999.
-9-
<PAGE>
(Back Cover)
GREAT HALL-Registered Trademark- INVESTMENT FUNDS, INC.
SHAREHOLDER REPORTS. Additional information about the Funds'
investments is available in the Funds' annual and semi-annual reports to
shareholders. In the Funds' annual report, you will find a discussion of the
market conditions and investment strategies that significantly affected the
Funds' performance during its last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION. The Funds' Statement of Additional
Information provides more detailed information about the Funds and is
incorporated into this prospectus by reference.
You can make inquiries about the Funds or obtain shareholder reports or
the Statement of Additional Information (without charge) by contacting Great
Hall Investment Funds, Inc. at 1-800-934-6674 or by writing to the Funds at
Great Hall Investment Funds, Inc., 60 South Sixth Street, Minneapolis, Minnesota
55402.
You can also copy and review the Funds' shareholder reports, prospectus
and statement of additional information at the Securities and Exchange
Commission's Public Reference Room in Washington, D.C. You can get copies of
these materials for a duplicating fee by writing to the Public Reference Section
of the Commission, Washington, D.C. 20549-6009. Information about the public
reference room may be obtained by calling 1-800-SEC-0330. You can get the same
information free from the Commission's internet web site at http:www.sec.gov.
IN DECIDING WHETHER OR NOT TO INVEST, YOU SHOULD NOT RELY ON ANY
INFORMATION CONCERNING THE FUNDS OTHER THAN INFORMATION CONTAINED OR REFERENCED
IN THIS PROSPECTUS. INFORMATION IN THIS PROSPECTUS IS CURRENT AS OF DECEMBER 1,
1999 BUT MAY CHANGE WITHOUT NOTICE AFTER SUCH DATE.
Investment Company Act File Number 811-6340
GREAT HALL-Registered Trademark- IS A REGISTERED TRADEMARK OF
DAIN RAUSCHER CORPORATION.
M1:540253.03
-10-
<PAGE>
(Front Cover)
GREAT HALL-Registered Trademark- INVESTMENT FUNDS, INC.
MONEY MARKET FUNDS
PRIME MONEY MARKET FUND
U.S. GOVERNMENT MONEY MARKET FUND
TAX-FREE MONEY MARKET FUND
PROSPECTUS
DECEMBER 1, 1999
AS WITH ALL MUTUAL FUNDS, NEITHER THE SECURITIES AND EXCHANGE COMMISSION
(SEC) NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE
SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
PROFILE OF THE FUNDS
WHAT ARE THE FUNDS?
Great Hall Prime Money Market Fund (Prime Fund), Great Hall U.S.
Government Money Market Fund (Government Fund) and Great Hall Tax-Free Money
Market Fund (Tax-Free Fund) are professionally managed mutual funds. If you
invest in the Funds, you become a Fund shareholder.
WHAT ARE THE FUNDS' INVESTMENT OBJECTIVES?
Each 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. These objectives cannot be changed without the
approval of Fund shareholders.
WHAT ARE THE FUNDS' MAIN INVESTMENT STRATEGIES?
- PRIME FUND. Prime Fund invests in a variety of high quality money
market instruments, including commercial paper, corporate debt
obligations, U.S. Government securities, bank securities, certificates
of deposit and repurchase agreements.
- GOVERNMENT FUND. Government Fund invests only in U.S. Treasury bills,
notes, bonds and other obligations issued or guaranteed by the U.S.
Government or its agencies or instrumentalities and in repurchase
agreements secured by such obligations.
- TAX-FREE FUND. Tax-Free Fund invests in high quality debt obligations
that pay interest that is exempt from federal income taxes. In normal
market conditions, at least 80% of the Fund's assets must be invested
in such tax-exempt securities. However, the Fund's investment adviser
will attempt to keep substantially all of the Fund's assets invested
in tax-exempt securities.
Federal regulations require money market funds to meet strict quality,
maturity and diversification standards. The Funds have adopted policies to
ensure that they meet each of these standards. In certain respects (as discussed
below), the Funds exceed these standards.
- CREDIT QUALITY. Money market funds must invest exclusively in
high quality securities. To be considered high quality, a
security generally must be rated in one of the two highest
short-term credit quality categories by a nationally recognized
rating organization such as Standard & Poors Corporation or
Moody's Investors Service, Inc. If a security is unrated, the
money market fund's investment adviser must consider it to be of
comparable quality to a rated security.
The Funds maintain even higher standards. For example, the Funds
do not invest in unrated securities. Additionally, the Prime Fund
and the Government Fund invest only in securities that have
received the highest short-term rating by at least two rating
organizations, and the Tax-Free Fund invests only in securities
that have received the highest short-term rating by at least one
rating organization.
- MATURITY. Each Fund must invest exclusively in securities having
remaining maturities of 397 day or less. Each Fund also must
maintain a dollar weighted average portfolio maturity
-2-
<PAGE>
of 90 days or less. Government Fund voluntarily maintains a
shorter dollar weighted average portfolio maturity of 60 days or
less.
- DIVERSIFICATION. Immediately after any investment by a Fund
(other than a U.S. Government security or a security that is
"guaranteed" by another party), the Fund may not have more than
5% of its assets invested in securities of such issuer, except
for certain temporary investments. Separate diversification
standards apply to securities subject to guarantees.
WHO SHOULD INVEST IN THE FUNDS?
The Funds are designed for investors looking for current income and a
stable investment. BEFORE YOU INVEST, PLEASE READ THIS PROSPECTUS AND KEEP IT
FOR FUTURE REFERENCE.
WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUNDS?
Each Fund is a "money market fund" and, as such, seeks income by
investing in short-term debt securities and must meet strict standards
established by the Board of Directors. These standards are based on special
rules for money market funds designed to help them maintain a stable share price
of $1.00 per share. However, it is possible to lose money by investing in the
Funds. The Funds could also underperform other short-term debt instruments or
money market funds.
- INTEREST RATE CHANGES. As with any investment whose yield
reflects current interest rates, the Funds' yields will change
over time. During periods when interest rates are low, a Fund's
yield will also be low.
- AN ISSUER OR GUARANTOR OF THE FUNDS' SECURITIES DEFAULTS.
Although the risk of default is generally considered small, any
default on the part of a portfolio investment or downgrade in its
credit rating could cause the Fund's share price or yield to
fall.
- INVESTMENT ADVISER'S JUDGMENT. The Funds are subject to the risk
that the investment adviser's security selection and expectations
regarding interest rate trends will cause the Funds' yields to
lag other funds with similar investment objectives. The Funds'
emphasis on quality and stability could also cause them to
underperform other money market funds, particularly those that
take greater maturity and credit risks.
- THE FUND IS NOT DESIGNED TO OFFER CAPITAL APPRECIATION. In
exchange for their emphasis on stability and liquidity, money
market investments may offer lower long-term performance than
stock or bond investments.
- FUND INVESTMENT IS NOT INSURED. An investment in the Fund is not
insured or guaranteed by the Federal Deposit Insurance
Corporation (FDIC) or any other government agency. Although the
Funds seek to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the Fund.
HOW HAVE THE FUNDS PERFORMED OVER TIME?
Below are a chart and a table for each Fund showing how the Fund's
performance has varied from year to year and how it has averaged out over time.
The tables also show how each Fund's performance has compared to a broad-based
market index. These figures assume that all distributions
-3-
<PAGE>
were reinvested. Keep in mind that each Fund's past performance does not
indicate how the Fund will perform in the future.
Each fund commenced operations on November 1,1991.
IF YOU WOULD LIKE TO KNOW A FUND'S CURRENT SEVEN-DAY YIELD, CALL THE
FUND AT 1-800-934-6674.
PRIME FUND
[EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC]
<TABLE>
<CAPTION>
Annual Total Returns for the Years Ended December 31,
----------------------------------------------------
1992 1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C> <C>
3.25% 2.55% 3.54% 5.22% 4.83% 4.98% 5.00%
</TABLE>
During the period shown in the above chart, the highest return for a
calendar quarter was 1.34% (quarter ended June, 1995) and the lowest
return for a quarter was 0.62% (quarter ended June, 1993).
<TABLE>
<CAPTION>
Annual Total Returns for the Periods Ended December 31, 1998
------------------------------------------------------------
1 Year 5 Years Since Inception
------------------------------------------------------------
<S> <C> <C> <C>
Prime Fund........................... 5.00% 4.71% 4.20%
IBC First Tier Taxable Money
Market Fund Average............. 4.85% 4.69% 4.19%
</TABLE>
Prime Fund's total return for the nine months ended September 30,
1999 was___%.
GOVERNMENT FUND
[EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC]
<TABLE>
<CAPTION>
Annual Total Returns for the Years Ended December 31,
----------------------------------------------------
1992 1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C> <C>
3.11% 2.47% 3.48% 5.16% 4.76% 4.93% 4.89%
</TABLE>
-4-
<PAGE>
During the period shown in the above chart, the highest return for a
calendar quarter was 1.33% (quarter ended June, 1995) and the lowest
return for a quarter was 0.60% (quarter ended June, 1993).
<TABLE>
<CAPTION>
Annual Total Returns for the Periods Ended December 31, 1998
------------------------------------------------------------
1 Year 5 Years Since Inception
------------------------------------------------------------
<S> <C> <C> <C>
Government Fund...................... 4.89% 4.65% 4.12%
IBC U.S. Government and Agencies
Money Market Fund Average......... 4.79% 4.61% 4.12%
</TABLE>
Government Fund's total return for the nine months ended September
30, 1999 was___%.
TAX-FREE FUND
[EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC]
<TABLE>
<CAPTION>
Annual Total Returns for the Years Ended December 31,
----------------------------------------------------
1992 1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C> <C>
2.55% 1.97% 2.34% 3.28% 2.94% 3.08% 2.95%
</TABLE>
During the period shown in the above chart, the highest return for a
calendar quarter was 0.88% (quarter ended June, 1995) and the lowest
return for a quarter was 0.45% (quarter ended March, 1994).
<TABLE>
<CAPTION>
Annual Total Returns for the Periods Ended December 31, 1998
------------------------------------------------------------
1 Year 5 Years Since Inception
------------------------------------------------------------
<S> <C> <C> <C>
Tax-Free Fund........................ 2.95% 2.92% 2.75%
IBC Stockbroker and General Purpose
Money Market Fund Average....... 2.89% 2.89% 2.70%
</TABLE>
Tax-Free Fund's total return for the nine months ended September 30,
1999 was___%.
-5-
<PAGE>
FEES AND EXPENSES
This table sets forth the fees and expenses you will pay if you invest
in the Funds.
<TABLE>
<CAPTION>
SHAREHOLDER FEES Prime Government Tax-Free
(FEES PAID DIRECTLY FROM YOUR INVESTMENT) Fund Fund Fund
---- ---- ----
<S> <C> <C> <C>
Maximum sales charge (load) on purchases................ None None None
Maximum deferred sales charge (load).................... None None None
ANNUAL FUND OPERATING EXPENSES
(expenses deducted from fund assets)
Management fee.......................................... 0.44% 0.44% 0.50%
Distribution and service fee (12b-1).................... None None None
Other expenses.......................................... 0.17% 0.15% 0.09%
---- ---- ----
Total annual fund operating expenses.................... 0.61% 0.59% 0.59%
</TABLE>
The investment adviser may voluntarily waive fund operating expenses from time
to time. Any such program may be changed or eliminated at any time without
notice.
EXAMPLE
This example helps you to compare the costs of investing in the Funds with the
cost of investing in other mutual funds. Your actual costs may be higher or
lower. The example assumes:
- You invest $10,000 in the Fund for the period shown
- Your investment has a 5% return each year
- You reinvest all distributions and dividends without a sales charge
- The Fund's operating expenses levels remain the same from year to year
<TABLE>
<CAPTION>
NUMBER OF YEARS YOU OWN YOUR SHARES
-----------------------------------
1 year 3 years 5 years 10 years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Prime Fund $62 $195 $340 $762
Government Fund 60 189 329 738
Tax-Free Fund 60 189 329 738
</TABLE>
-6-
<PAGE>
FUND MANAGEMENT
INVESTMENT ADVISER. The Funds have entered into an investment advisory
agreement with Insight Investment Management, Inc. to serve as the Funds'
investment adviser. Insight's address is 60 South Sixth Street, Minneapolis,
Minnesota 55402. Insight selects the Funds' investments and oversees their
operations. Insight has been registered with the SEC as an investment adviser
since 1983, and has been a portfolio manager of publicly offered mutual funds
since 1986. Insight is a wholly-owned subsidiary of Dain Rauscher Corporation.
MANAGEMENT FEE. For its services, Insight received a fee during the
Fund's last fiscal year equal to the amount shown below:
<TABLE>
<CAPTION>
Management fee
(AS A PERCENTAGE OF THE FUND'S
FUND AVERAGE DAILY NET ASSETS)
---- -------------------------
<S> <C>
Prime Fund 0.44%
Government Fund 0.44%
Tax-Free Fund 0.50%
</TABLE>
DISTRIBUTOR. Dain Rauscher Incorporated is the distributor of the
Funds' shares. The firm is a member of the New York Stock Exchange and of the
National Association of Securities Dealers, Inc., and (like Insight) is a
wholly-owned subsidiary of Dain Rauscher Corporation.
YEAR 2000 ISSUES. Certain computer systems and programs may not be able
to properly process and calculate date-related data after December 31, 1999.
Insight, Dain Rauscher and the Funds' other service providers have advised the
Funds that they are taking steps to enable their systems to properly process
date-related data after such date. However, it is impossible to know in advance
exactly how this issue will affect Fund administration, Fund performance or
securities markets in general.
SHARE PRICE
The Funds calculate their share prices at the close of each business
day for the New York Stock Exchange (currently 4:00 p.m. New York time). A
Fund's share price is its net asset value per share (or NAV), which is the value
of the Fund's net assets divided by the number of its outstanding shares. The
Funds seek to maintain a stable NAV of $1.00 per share.
HOW TO BUY SHARES
You may purchase shares of each Fund at their next determined NAV. The
Funds are sold without a sales charge. You may open an account to purchase
shares by contacting your investment executive or by contacting the Fund
directly at the address or telephone number on the cover of this Prospectus.
-7-
<PAGE>
HOW TO REDEEM SHARES
You may redeem shares for cash at their next determined NAV by
contacting your investment executive. If you recently purchased your shares by
check, your redemption proceeds will not be sent to you until your check clears.
Redemptions may be suspended or postponed at times when the New York Stock
Exchange is closed, when trading is restricted, or under certain emergency
circumstances as determined by the SEC. Redemptions are treated as sales for
federal income tax purposes.
DISTRIBUTIONS
Each Fund declares a dividend of substantially all of its net
investment income on each business day. These dividends are paid monthly. Each
Fund will distribute its capital gains (if it has any) once a year, typically in
December. Each Fund may make additional distributions if necessary for the Fund
to avoid paying taxes. Each Fund expects distributions to be primarily from
income. The Funds normally will not earn or distribute long-term capital gains.
Dividends and distributions are reinvested in additional Fund shares at NAV.
TAXES
Shortly after the beginning of each year, the Funds provide you with
information about the distributions and dividends you received during the
previous year.
Because everybody's tax situation is different, you should consult with
your tax advisor about the tax implications of your investment in a Fund.
PRIME FUND AND GOVERNMENT FUND. 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
permit mutual funds to "pass through" this tax exemption to their shareholders.
TAX-FREE FUND. Dividends derived from interest on tax-exempt municipal
obligations will generally not be subject to federal income tax. Capital gain
distributions on municipal obligations will be taxed as capital gains, even if
reinvested in additional shares. The Tax-Free Fund anticipates that
substantially all of its dividends will be exempt from federal income taxes
(including the federal alternative minimum tax) and will notify each shareholder
annually of the tax status of all distributions. Distributions, however, may be
subject to state and local taxes.
-8-
<PAGE>
FINANCIAL HIGHLIGHTS
The following tables are intended to help you understand each Fund's
financial performance for the past 5 years. Certain information reflects
financial results for a single share. The total returns in the table represent
the rate that an investor would have earned on a Fund share assuming
reinvestment of all dividends and distributions. The information in the
following tables was audited by KPMG LLP, independent accountants, whose report,
along with the Funds' financial statements, are included in the Funds' annual
report (available upon request).
<TABLE>
<CAPTION>
PRIME FUND
- ---------------------------------------------------------------------------------------------------------------------------------
Year ended Year ended Year ended Year ended Year ended,
July 31, 1999 July 31, 1998 July 31, 1997 July 31, 1996 July 31, 1995
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period ... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------------------------------------------------------------------------------------
Income from investment
operations ............ 0.05 0.05 0.05 0.05 0.05
Distributions to
shareholders from
investment income ..... (0.05) (0.05) (0.05) (0.05) (0.05)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of
period ................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------------------------------------------------------------------------------------
Total return ............ 4.6% 5.0% 4.9% 5.0% 4.9%
Net assets at end
of period (000's
omitted) .............. $ 4,522,700 $ 4,844,352 $ 3,129,854 $ 2,405,456 $ 1,598,925
Ratio of expenses to
average daily net
assets ................ 0.61% 0.63% 0.64% 0.70% 0.77%
Ratio of net investment
income to average daily
net assets ............ 4.62% 5.04% 4.90% 4.93% 4.93%
</TABLE>
-9-
<PAGE>
<TABLE>
<CAPTION>
GOVERNMENT FUND
- ---------------------------------------------------------------------------------------------------------------------------------
Year ended Year ended Year ended Year ended Year ended,
July 31, 1999 July 31, 1998 July 31, 1997 July 31, 1996 July 31, 1995
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period ... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------------------------------------------------------------------------------------
Income from investment
operations ............ 0.05 0.05 0.05 0.05 0.05
Distributions to
shareholders from
investment income ..... (0.05) (0.05) (0.05) (0.05) (0.05)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of
period ................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------------------------------------------------------------------------------------
Total return ............ 4.5% 5.0% 4.8% 4.9% 4.8%
Net assets at end
of period (000's
omitted) .............. $ 271,376 $ 228,929 $ 182,155 $ 146,685 $ 122,249
Ratio of expenses to
average daily net
assets ................ 0.59% 0.59% 0.60% 0.65% 0.73%
Ratio of net investment
income to average daily
net assets ............ 4.50% 4.98% 4.85% 4.87% 4.94%
</TABLE>
<TABLE>
<CAPTION>
TAX-FREE FUND
- ---------------------------------------------------------------------------------------------------------------------------------
Year ended Year ended Year ended Year ended Year ended,
July 31, 1999 July 31, 1998 July 31, 1997 July 31, 1996 July 31, 1995
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period ... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------------------------------------------------------------------------------------
Income from investment
operations ............ 0.03 0.03 0.03 0.03 0.03
Distributions to
shareholders from
investment income ..... (0.03) (0.03) (0.03) (0.03) (0.03)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of
period ................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------------------------------------------------------------------------------------
Total return ............ 2.7% 3.1% 3.0% 3.0% 3.1%
Net assets at end
of period (000's
omitted) .............. $ 497,139 $ 545,849 $ 422,740 $ 359,153 $ 363,273
Ratio of expenses to
average daily net
assets ................ 0.59% 0.58% 0.58% 0.59% 0.60%
Ratio of net investment
income to average daily
net assets ............ 2.65% 3.05% 3.02% 3.03% 3.14%
</TABLE>
-10-
<PAGE>
(Back Cover)
GREAT HALL-Registered Trademark- INVESTMENT FUNDS, INC.
SHAREHOLDER REPORTS. Additional information about the Funds'
investments is available in the Funds' annual and semi-annual reports to
shareholders. In the Funds' annual report, you will find a discussion of the
market conditions and investment strategies that significantly affected the
Funds' performance during its last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION. The Funds' Statement of Additional
Information provides more detailed information about the Funds and is
incorporated into this prospectus by reference.
You can make inquiries about the Funds or obtain shareholder reports or
the Statement of Additional Information (without charge) by contacting Great
Hall Investment Funds, Inc. at 1-800-934-6674 or by writing to the Funds at
Great Hall Investment Funds, Inc., 60 South Sixth Street, Minneapolis, Minnesota
55402.
You can also copy and review the Funds' shareholder reports, prospectus
and statement of additional information at the Securities and Exchange
Commission's Public Reference Room in Washington, D.C. You can get copies of
these materials for a duplicating fee by writing to the Public Reference Section
of the Commission, Washington, D.C. 20549-6009. Information about the public
reference room may be obtained by calling 1-800-SEC-0330. You can get the same
information free from the Commission's internet web site at http:www.sec.gov.
IN DECIDING WHETHER OR NOT TO INVEST, YOU SHOULD NOT RELY ON ANY
INFORMATION CONCERNING THE FUNDS OTHER THAN INFORMATION CONTAINED OR REFERENCED
IN THIS PROSPECTUS. INFORMATION IN THIS PROSPECTUS IS CURRENT AS OF DECEMBER 1,
1999 BUT MAY CHANGE WITHOUT NOTICE AFTER SUCH DATE.
Investment Company Act File Number 811-6340
GREAT HALL-Registered Trademark- IS A REGISTERED TRADEMARK OF
DAIN RAUSCHER CORPORATION.
M1:522898.07
-11-
<PAGE>
GREAT HALL INVESTMENT FUNDS, INC.
POST-EFFECTIVE AMENDMENT NO. 14 TO THE
REGISTRATION STATEMENT ON FORM N-1A
PART B
STATEMENT OF ADDITIONAL INFORMATION
<PAGE>
B-20
GREAT HALL -Registered Trademark- INVESTMENT FUNDS, INC.
PRIME MONEY MARKET FUND
INSTITUTIONAL PRIME MONEY MARKET FUND
U.S. GOVERNMENT MONEY MARKET FUND
TAX-FREE MONEY MARKET FUND
INSTITUTIONAL TAX-FREE MONEY MARKET FUND
60 SOUTH SIXTH STREET
MINNEAPOLIS, MINNESOTA 55402
(800) 934-6674
-------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
DATED DECEMBER 1, 1999
-------------------------------------------------
Great Hall Prime Money Market Fund ("Prime Fund"), Great Hall Institutional
Prime Money Market Fund ("Institutional Prime Fund"), Great Hall U.S. Government
Money Market Fund ("Government Fund"), Great Hall Tax-Free Money Market Fund
("Tax-Free Fund") and Great Hall Institutional Tax-Free Money Market Fund
("Institutional Tax-Free Fund") (collectively, the "Funds") are diversified
series of Great Hall Investment Funds, Inc. ("Great Hall"), an open-end mutual
fund which currently offers its shares of common stock in five series
This Statement of Additional Information is not a prospectus and should be
read in conjunction with the Prospectus of the Funds, dated December 1, 1999,
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-8
Taxes..................................................... B-11
Portfolio Transactions.................................... B-12
Management and Distribution Agreements.................... B-13
Determination of Net Asset Value.......................... B-14
Calculation of Performance Data........................... B-15
Directors and Officers.................................... B-16
General Information....................................... B-18
Counsel and Auditors...................................... B-20
Financial and Other Information........................... B-20
Appendix--Ratings of Investments.......................... A-1
Financial Statements...................................... F-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 DECEMBER 1, 1999, AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MAY NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY GREAT HALL OR THE DISTRIBUTOR (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 AFFAIRS OF ANY OF THE FUNDS SINCE THE DATE HEREOF.
B-1
<PAGE>
INVESTMENT POLICIES
The following information supplements that set forth in the Prospectus and
does not, standing alone, present a complete explanation of the matters
disclosed. You must also refer to the Prospectus to obtain information on the
matters disclosed below.
ALL FUNDS
RULE 2a-7 STANDARDS. Each Fund is managed in accordance with Rule 2a-7
("Rule 2a-7) under the Investment Company Act of 1940, as amended (the "1940
Act"), 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 compliance with Rule 2a-7 by each Fund, and the
Board oversees the day-to-day determinations by Insight Investment Management,
Inc., each Fund's investment adviser ("Insight"), that each Fund is in
compliance with Rule 2a-7. In certain respects, as described below, the Funds
are managed in accordance with standards that are more strict than those
required by Rule 2a-7.
Each Fund may invest exclusively in U.S. dollar-denominated investment 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 on 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 Standard &
Poors Corporation ("S&P") and/or Prime-1 or Prime-2 by Moody's Investors
Service, Inc. ("Moody's")). Prime Fund, Institutional Prime Fund and Government
Fund invest exclusively in securities with two NRSRO ratings, and Tax-Free Fund
and Institutional Tax Free Fund's investments must have at least one NRSRO
rating. The Funds currently do not invest in unrated securities.
Each investment by a Fund must mature (or be deemed by Rule 2a-7 to mature)
within 397 days of the time of investment. In addition, each Fund must maintain
a dollar-weighted average portfolio maturity of 90 days or less. Government Fund
voluntarily maintains a shorter dollar-weighted average portfolio maturity of 60
days or less.
Immediately after the purchase of any investment by a Fund (other than a
U.S. Government security or a security that is subject to a "guarantee"), the
Fund may not have invested more than 5% of its total assets in securities issued
by such issuer, except for certain temporary investments. Securities subject to
guarantees are not subject to this test. However, immediately after a Fund
acquires a security subject to a guarantee, then with respect to 75% of the
Fund's total assets, not more than 10% of the Fund's total assets may be
invested in securities either issued or guaranteed by such guarantor.
In addition, Rule 2a-7 imposes strict limits on Prime Fund, Institutional
Prime Fund and Government Fund by limiting invests in "Second Tier Securities."
Rule 2a-7 generally requires that at least 95% of each such Fund's investments
must be in "First Tier Securities." THE FUNDS CURRENTLY 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 defined as Eligible Securities
that do not qualify as First Tier Securities.
GOVERNMENT SECURITIES. Each 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 ANY FUND'S SHARES.
B-2
<PAGE>
REPURCHASE AGREEMENTS. Each 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 a 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, each 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, each 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, no
Fund will invest more than 10% of its net assets in repurchase agreements
maturing in more than seven days and other illiquid investments.
ILLIQUID INVESTMENTS; LIQUIDITY GUIDELINES. Each 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 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 believes that a similar market exists for commercial paper
issued pursuant to the private placement exemption of Section 4(2) of the 1933
Act. Each 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 each Fund's illiquidity to the extent that qualified purchasers of the
securities become, for a time, uninterested in purchasing these securities.
GREAT HALL PRIME MONEY MARKET FUND AND INSTITUTIONAL PRIME MONEY MARKET FUND
Prime Fund and Institutional Prime Fund invests in high quality, domestic
money market instruments, including but not limited to Government Obligations
(described above under "All Funds - Government Securities"); high-grade
corporate debt obligations; 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 and Institutional Prime Fund may have on
deposit at any one bank or savings and loan. Bankers' acceptances and letters
B-3
<PAGE>
of credit are not so insured. Deposit obligations of foreign banks or domestic
branches of foreign 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.
Prime Fund and Institutional Prime Fund currently are permitted to purchase
commercial paper and other corporate and bank debt obligations only if the
issuer has received the highest short-term rating from at least two Nationally
Recognized Statistical Rating Organizations (such as "Prime-1" by Moody's
Investor Services, Inc. and "A-1" by Standard & Poor's Corporation) with respect
to either the obligation to be purchased or with respect to a class of debt
obligations that is comparable in priority and security with the obligation to
be purchased.
Prime Fund and Institutional Prime 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. Neither Prime Fund nor Institutional Prime Fund will 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.
Prime Fund and Institutional Prime 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 Prime Fund and Institutional Prime Fund
are 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 a Fund.
GREAT HALL U.S. GOVERNMENT MONEY MARKET FUND
Government Fund may invest only in Government Obligations (described above
under "All Funds - Government Securities") and in repurchase agreements fully
collateralized by Government Obligations.
GREAT HALL TAX-FREE MONEY MARKET FUND AND INSTITUTIONAL TAX-FREE
MONEY MARKET FUND
Tax-Free Fund and Institutional Tax-Free Fund invest in debt obligations
issued by or on behalf of any state, territory or possession of the United
States or the District of Columbia or their political subdivisions, agencies or
instrumentalities, and participation interests therein, the interest on which
is, in the opinion of counsel for the issuer, wholly exempt from federal income
taxation.
The types of obligations that such Funds may purchase include bond
anticipation notes, construction loan notes, revenue anticipation notes and tax
anticipation notes that are Eligible Securities. Tax-Free Fund and Institutional
Tax-Free Fund may also invest in municipal bonds and participation interests
therein, including industrial development revenue bonds and pollution control
revenue bonds, and other types of tax-exempt municipal obligations, such as
short-term discount notes, all of which must be Eligible Securities.
Securities purchased by such Funds mature within 397 days from the date of
purchase or carry variable or floating rates that are adjusted at least every
397 days and have demand features and quality characteristics that
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under applicable law and interpretations of such law permit the securities to be
treated as if they mature in 397 days or less from the date of purchase.
Bond anticipation notes are issued in anticipation of a later issuance of
bonds and are usually payable from the proceeds of the sale of the bonds
anticipated or of renewal notes. Construction loan notes, issued to provide
construction financing for specific projects, are often redeemed after the
projects are completed and accepted with funds obtained from the Federal Housing
Administration under "Fannie Mae" (Federal National Mortgage Association) or
"Ginnie Mae" (Government National Mortgage Association). Revenue anticipation
notes are issued by governmental entities in anticipation of revenues to be
received later in the then current fiscal year. Tax anticipation notes are
issued by state and local governments in anticipation of collection of taxes to
finance the current operations of such governments. These notes are generally
repayable only from tax collections and often only from the proceeds of the
specific tax levy whose collection they anticipate.
Municipal bonds are usually issued to obtain funds for various public
purposes, to refund outstanding obligations, to meet general operating expenses
or to obtain funds to lend to other public institutions and facilities. They are
generally classified as either "general obligation" or "revenue" bonds and
frequently have maturities in excess of 397 days at the time of issuance,
although a number of such issues now have variable or floating interest rates
and demand features that may permit Tax-Free Fund and Institutional Tax-Free
Fund to treat them as having maturities of less than 397 days. There are many
variations in the terms of, and the underlying security for, the various types
of municipal bonds. General obligation bonds are issued by states, counties,
regional districts, cities, towns and school districts for a variety of purposes
including mass transportation, highway, bridge, school, road, and water and
sewer system construction, repair or improvement. Payment of these bonds is
secured by a pledge of the issuer's full faith and credit and taxing (usually
property tax) power.
Revenue bonds are payable solely from the revenues generated from the
operations of the facility or facilities being financed or from other non-tax
sources. These bonds are often secured by debt service revenue funds, rent
subsidies and/or mortgage collateral to finance the construction of housing,
highways, bridges, tunnels, hospitals, university and college buildings, port
and airport facilities, and electric, water, gas and sewer systems. Industrial
development revenue bonds and pollution control revenue bonds are usually issued
by local government bodies or their authorities to provide funding for
commercial or industrial facilities, privately operated housing, sports
facilities, health care facilities, convention and trade show facilities, port
facilities and facilities for controlling or eliminating air and water
pollution. Payment of principal and interest on such bonds is not secured by the
taxing power of the governmental body. Rather, payment is dependent solely upon
the ability of the users of the facilities financed by the bonds to meet their
financial obligations and the pledge, if any, of real and personal property
financed as security for payment.
Although Tax-Free Fund and Institutional Tax-Free Fund may invest more than
25% of their net assets in: (a) municipal obligations whose issuers are in the
same state; (b) municipal obligations the interest upon which is paid solely
from revenues of similar projects; and (c) industrial development and pollution
control revenue bonds that are not variable or floating rate demand municipal
obligations, it does not presently intend to do so on a regular basis. The
identification of the issuer of a tax-exempt security for purposes of the 1940
Act depends on the terms and conditions of the security. When the assets and
revenues of an agency, authority, instrumentality or other political subdivision
are separate from those of the government creating the subdivision and the
security is backed only by the assets and revenues of the subdivision, such
subdivision would be deemed to be the sole issuer. Similarly, in the case of an
industrial development bond, if that bond is backed by the assets and revenues
of the non-governmental user, then such non-governmental user would be deemed to
be the sole issuer. Generally, the District of Columbia, each state, each of its
political subdivisions, agencies, instrumentalities and authorities, and each
multi-state agency of which a state is a member, is a separate "issuer" as that
term is used in the Prospectus and this Statement of Additional Information with
respect to Tax-Free Fund and Institutional Tax-Free Fund, and the
non-governmental user of facilities financed by industrial development or
pollution control revenue bonds is also considered to be an issuer.
Legislation to restrict or eliminate the federal income tax exemption for
interest on certain municipal obligations that may be purchased by Tax-Free Fund
and Institutional Tax-Free Fund has been introduced in Congress; other such
legislation also may be introduced in the future by Congress or by state
legislatures. If enacted, any such legislation could adversely affect the
availability of municipal obligations for Tax-Free Fund and Institutional
Tax-Free Fund's portfolio. Upon the effectiveness of any such legislation that
materially affects the
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Tax-Free Fund and Institutional Tax-Free Fund's ability to achieve its
investment objective, the Board of Directors of Great Hall will reevaluate
such Funds' investment objective and submit to its shareholders for approval
necessary changes in its objectives and policies.
VARIABLE AND FLOATING RATE DEMAND MUNICIPAL OBLIGATIONS. Variable and
floating rate demand municipal obligations are tax-exempt obligations that
provide for a periodic adjustment in the interest rate paid on the obligations
and permit the holder to demand payment of the unpaid principal balance plus
accrued interest upon a specified number of days' notice either from the issuer
or by drawing on a bank letter of credit or comparable guarantee issued with
respect to such obligations. The issuer of such an obligation may have a
corresponding right to prepay in its discretion the outstanding principal of the
obligation plus accrued interest upon notice comparable to that required for the
holder to demand payment.
The variable or floating rate demand municipal obligations in which
Tax-Free Fund and Institutional Tax-Free Fund may invest are payable on demand
at any time on no more than 30 days' notice or at specified intervals not
exceeding 397 days and upon no more than 30 days' notice. The terms of such
obligations must provide that interest rates are adjustable at intervals ranging
from weekly up to annually. The adjustments are based upon the prime rate of a
bank or other appropriate interest rate adjustment index as provided in the
respective obligations. Such obligations are subject to the quality
characteristics for municipal obligations set forth above and described in the
Prospectus. Tax-Free Fund and Institutional Tax-Free Fund may invest, without
limitation, in such obligations.
The principal and accrued interest payable to the Funds on demand will be
supported by an irrevocable letter of credit or comparable guarantee of a
financial institution (generally a commercial bank) whose short-term taxable
debt meets the quality criteria for investment by the Funds in municipal
obligations, except in cases where the security itself meets the credit criteria
of the Funds without such letter of credit or comparable guarantee. Thus,
although the underlying variable or floating rate demand obligation may be
unrated, Tax-Free Fund and Institutional Tax-Free Fund in such cases will have
at all times an alternate credit source to draw upon for payment with respect to
such security.
Tax-Free Fund and Institutional Tax-Free Fund may also purchase
participation interests in variable or floating rate obligations. Such
participation interests will have, as part of the participation agreement
between the Funds and the selling financial institution, a demand feature that
permits the Funds to demand payment from the seller of the principal amount of
the Funds' participation plus accrued interest thereon. This demand feature
always will be supported by a letter of credit or comparable guarantee provided
by the selling financial institution. Such financial institution will retain a
service fee, a letter of credit fee and a fee for issuing commitments to
purchase on demand in an amount equal to the excess of the interest paid on the
variable or floating rate obligation in which the Funds have a participation
interest over the negotiated yield at which the participation interest was
purchased. Accordingly, Tax-Free Fund and Institutional Tax-Free Fund will
purchase such participation interests only when the yield to the Funds, net of
such fees, is equal to or greater than the yield then available on other
variable rate demand securities or short-term, fixed rate, tax-exempt securities
of comparable quality and where the fees are reasonable in relation to the
services provided by the financial institution and the security and liquidity
provided by the letter of credit or guarantee.
While variable and floating rate demand municipal obligations are expected
to have maturities in excess of 397 days, Great Hall currently expects that
Tax-Free Fund and Institutional Tax-Free Fund will exercise their right to
demand payment of principal and accrued interest on such an obligation if it no
longer meets the Funds' quality standards, unless, of course, the obligation can
be sold for a greater amount in the market.
STAND-BY COMMITMENTS. Consistent with the requirement of Rule 2a-7,
Tax-Free Fund and Institutional Tax-Free Fund may also acquire "stand-by
commitments" with respect to obligations held in its portfolio. Under a
"stand-by commitment," a dealer agrees to purchase, at the Funds' option,
specified obligations at a specified price. "Stand-by commitments" are the
equivalent of a "put" option acquired by the Funds with respect to particular
obligations held in its portfolio.
The amount payable to Tax-Free Fund or Institutional Tax-Free Fund upon its
exercise of a "stand-by commitment" will normally be: (a) the Funds' acquisition
cost of the obligation (excluding any accrued interest that the Fund paid on its
acquisition), less any amortized market premium or plus any amortized market or
original issue discount during the period the Fund owned the obligation; plus
(b) all interest accrued on the obligations since the
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last interest payment date during the period such obligation is owned by the
Fund. "Stand-by commitments" may be acquired when the remaining maturity of the
underlying obligation is greater than 60 days, but will be exercisable by
Tax-Free Fund and Institutional Tax-Free Fund only during the 60 day period
before the maturity of such obligation. Absent unusual circumstances, Tax-Free
Fund and Institutional Tax-Free Fund will value the underlying obligation on an
amortized cost basis. Accordingly, the amount payable by a dealer during the
time a "stand-by commitment" is exercisable is substantially the same as the
value of the underlying obligation. Tax-Free Fund and Institutional Tax-Free
Fund's right to exercise "stand-by commitments" must be unconditional and
unqualified. A "stand-by commitment" is not transferable by the Funds, although
it may sell the underlying obligation to a third party at any time.
Tax-Free Fund and Institutional Tax-Free Fund expect that "stand-by
commitments" will generally be available without the payment of any direct or
indirect consideration. However, if necessary and advisable, it may pay for
"stand-by commitments" either separately in cash or by paying a higher price for
obligations that are acquired subject to such a commitment (thus reducing the
yield to maturity otherwise available for the same securities). The total amount
paid in either manner for outstanding "stand-by commitments" held in the Funds'
portfolio may not exceed 1/2 of 1% of the value of the Funds' total assets
calculated immediately after each "stand-by commitment" is acquired.
Tax-Free Fund and Institutional Tax-Free Fund intend to enter into
"stand-by commitments" only with dealers, banks and broker-dealers that, in the
opinion of Insight, present minimum credit risks. The Funds' reliance upon the
credit of these dealers, banks and broker-dealers is secured by the value of the
underlying obligations that are subject to the commitment. However, the failure
of a party to honor a "stand-by commitment" could have an adverse impact on the
liquidity of Tax-Free Fund or Institutional Tax-Free Fund during periods of
rising interest rates.
Tax-Free Fund and Institutional Tax-Free Fund intend to acquire "stand-by
commitments" solely to facilitate portfolio liquidity and does not intend to
exercise its rights thereunder for trading purposes. The acquisition of a
"stand-by commitment" will not affect the valuation or maturity of the
underlying obligation, which will continue to be valued in accordance with the
amortized cost method. "Stand-by commitments" will be valued at zero in
determining net asset value. Where Tax-Free Fund or Institutional Tax-Free Fund
pays directly or indirectly for a "stand-by commitment," its cost will be
reflected as unrealized depreciation for the period during which the commitment
is held. "Stand-by commitments" will not affect the average weighted maturity of
Tax-Free Fund or Institutional Tax-Free Fund's portfolio.
"WHEN-ISSUED" OBLIGATIONS. Tax-Free Fund and Institutional Tax-Free Fund
may make commitments to purchase municipal obligations on a "when-issued" basis,
I.E., delivery and payment for the obligations normally takes place at a date
after the commitment to purchase although the payment obligation and the coupon
rate have been established before the time the Funds enters into the commitment.
The settlement date usually occurs within one week of the purchase of notes and
within one month of the purchase of bonds. Great Hall intends that Tax-Free Fund
and Institutional Tax-Free Fund will make commitments to purchase obligations
with the intention of actually acquiring them, but may sell the obligations
before settlement date if such action is advisable or necessary as a matter of
investment strategy. At the time the Funds make a commitment to purchase an
obligation, it will record the transaction and reflect the value of the
obligation in determining its net asset value. The Custodian will maintain on a
daily basis a separate account for the Funds consisting of cash or liquid debt
securities with a value at least equal to the amount of the Funds' commitments
to purchase "when-issued" obligations.
Obligations purchased on a "when-issued" basis or held in the Funds'
portfolio are subject to changes in market value based not only upon the
public's perception of the creditworthiness of the issuer but also upon changes
in the level of interest rates. In the absence of a change in credit
characteristics, which, of course, will cause changes in value, the value of
portfolio investments can be expected to decline in periods of rising interest
rates and to increase in periods of declining interest rates. Therefore, if to
achieve higher interest income the Funds remain substantially fully invested at
the same time that it has purchased obligations on a "when-issued" basis, there
will be a greater possibility that the market value of Tax-Free Fund and
Institutional Tax-Free Fund's assets will vary from $1.00 per share. See "Net
Asset Value." However, Tax-Free Fund and Institutional Tax-Free Fund do not
believe that under normal circumstances its net asset value or income will be
affected by its purchase of obligations on a "when-issued" basis.
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When payment is made for "when-issued" securities, Tax-Free Fund and
Institutional Tax-Free Fund will meet its obligations from its then available
cash flow, sale of securities held in the separate account, sale of other
securities or, although it would normally not expect to do so, from sale of the
"when-issued" securities themselves (which may have a market value greater or
less than the Funds' obligation). Sale of securities to meet such obligations
would involve a greater potential for the realization of capital gains, which
could cause the Funds to realize income not exempt from federal income taxation.
STATE AND MUNICIPAL LEASE OBLIGATIONS. Tax-Free Fund and Institutional
Tax-Free Fund are permitted to invest in state and municipal lease obligations
("municipal leases"). Traditionally, municipal leases have been viewed by the
SEC staff as illiquid investments. However, subject to Board standards similar
to the standards applicable to restricted securities (as discussed in the
Prospectus), Insight may treat certain municipal leases as liquid investments
and not subject to the policy limiting investments in illiquid investments.
Municipal leases are issued by state and local governments or authorities
to finance the acquisition of equipment and facilities. Municipal leases may
take the form of a lease, an installment purchase or conditional sale contract
or a participation certificate in such a lease or contract. Municipal leases
frequently have the special risks described below which are not associated with
general obligation or revenue bonds issued by public bodies. In determining
municipal leases in which the Fund will invest, Insight will evaluate the credit
rating of the lessee and the terms of the lease. Additionally, Insight may
require that certain municipal leases be secured by a letter of credit or put
arrangement with an independent financial institution.
The constitution and statutes of many states contain requirements with
which the state and municipalities must comply whenever incurring debt. These
requirements may include approving voter referendums, debt limits, interest rate
limits and public sale requirements. Municipal leases have evolved as a means
for public bodies to acquire property and equipment without needing to comply
with all of the constitutional and statutory requirements for the issuance of
debt. The debt-issuance limitations may be inapplicable for one or more of the
following reasons: (a) the inclusion in many municipal leases of a
"nonappropriation clause" that provides that the public body has no obligation
to make future payments under the lease or contract unless money is appropriated
for such purpose by the appropriate legislative body on a yearly or other
periodic basis; (b) the exclusion of a municipal lease from the definition of
indebtedness under relevant state law; or (c) the provision in the municipal
lease for termination at the option of the public body at the end of each fiscal
year for any reason or, in some cases, automatically if not affirmatively
renewed.
If a municipal lease is terminated by the public body for nonappropriation
or other reason not constituting a default under the lease, the rights of the
lessor or holder of a participation interest therein are limited to repossession
of the leased property without any recourse to the general credit of the public
body. The disposition of the leased property by the lessor in the event of
termination of the lease might, in many cases, prove difficult or result in a
loss.
Municipal leases represent a relatively new type of financing that has not
yet developed the depth of marketability associated with more conventional
municipal obligations. Therefore, as mentioned above, municipal leases held by
Tax-Free Fund and Institutional Tax-Free Fund will be treated as illiquid unless
they are determined to be liquid pursuant to the aforementioned liquidity
guidelines. Additionally, the lack of an established trading market for
municipal leases may make the determination of fair market value more difficult.
INVESTMENT RESTRICTIONS
In addition to the investment objectives and those policies identified as
fundamental in the Prospectus, each of the Funds has adopted the following
investment restrictions and limitations, which may not be changed without
approval of shareholders owning a majority of the outstanding shares of each
such Fund, which as used in the Prospectus and this Statement of Additional
Information means the lesser of: (a) 67% or more of the shares present at a
shareholders' meeting if more than 50% of such Fund's shares are represented at
the meeting in person or by proxy; or (b) more than 50% of the outstanding
shares of such Fund.
As a fundamental policy, Prime Fund, Government Fund, and Tax-Free Fund may
not:
(1) purchase common stocks, preferred stocks, warrants or other
equity securities;
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(2) purchase securities, if immediately after such purchase more than
5% of its total assets would be invested in the securities of any one issuer
(excluding securities issued or guaranteed by the U.S. Government, its agencies
or instrumentalities), except that, subject to applicable SEC rules (see the
discussion of Rule 2a-7 below), up to 25% of its total assets may be invested
without regard to this 5% limitation;
(3) invest more than 25% of its total assets in any one industry,
except that (i) with respect to Tax-Free Fund, this restriction shall not apply
to municipal obligations; (ii) with respect to Prime Fund and Tax-Free Fund this
restriction shall 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; and (iii) this restriction shall not apply to
securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities. 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 foregoing test;
(4) invest more than 5% of its assets in securities of issuers which,
with their predecessors, have a record of less than three years continuous
operation. (Securities of such issuers will not be deemed to fall within this
limitation if they are guaranteed by an entity in continuous operation, with its
predecessor, for more than three years);
(5) borrow money, except 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;
(6) pledge, mortgage or hypothecate its assets, except that to secure
borrowings permitted by (5) above, it may pledge securities having a market
value at the time of such pledge not exceeding 15% of its total assets;
(7) sell securities short or purchase any securities on margin, except
for such short-term credits as are necessary for clearance of portfolio
transactions;
(8) write, purchase or sell put or call options, straddles, spreads or
any combination thereof except that Tax-Free Fund may acquire rights to resell
obligations as set forth herein under "Great Hall Tax-Free Money Market Fund and
Institutional Tax-Free Money Market Fund -- Variable and Floating Rate Demand
Municipal Obligations" and "Stand-By Commitments";
(9) underwrite any securities issued by others;
(10) purchase or sell real estate or real estate mortgage loans
(although the Funds 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;
(11) 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; provided, however, that it may not enter into
a repurchase agreement if, as a result thereof, more than 10% of its total
assets would be subject to repurchase agreements maturing in more than seven
days;
(12) invest in companies for the purpose of exercising control or
management of another company; or
(13) invest in securities of other investment companies, except as they
may be acquired as part of a merger, consolidation or acquisition of assets.
"Investment companies" refers only to companies registered as investment
companies under the 1940 Act.
With respect to the application of the 5% limitation contained in
investment restriction (2) above to Tax-Free Fund, the non-governmental user of
facilities financed by industrial development or pollution control revenue bonds
and a financial institution issuing a letter of credit or comparable guarantee
supporting a variable rate demand municipal obligation are considered to be
issuers. In addition to the above restrictions and limitations, Tax-Free
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Fund may not purchase securities that are not municipal obligations and the
income from which is subject to federal income tax, if such purchase would cause
more than 20% of its total assets to be invested in such securities, except that
Tax-Free Fund may invest more than 20% of its total assets in such securities
during other than normal market conditions. Bonds subject to the alternative
minimum tax are considered taxable for this test.
As fundamental policies, Institutional Prime Fund and Institutional
Tax-Free Fund may not:
(1) borrow money or issue senior securities (as defined the Investment
Company Act of 1940, as amended), except 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 a
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, except
that (i) with respect to Institutional Tax-Free Fund, this restriction shall not
apply to municipal obligations; (ii) with respect to Insitutional Prime Fund and
Institutional Tax-Free Fund this restriction shall 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; and (iii)
this restriction shall not apply to securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities. 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 foregoing test.;
(4) purchase or sell real estate or real estate mortgage loans
(although a 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.
NON-FUNDAMENTAL INVESTMENT RESTRICTIONS. In addition, each Fund has adopted
certain non-fundamental investment restrictions, which may be changed by the
Board of Directors of Great Hall without the approval by such Fund's
shareholders.
As a non-fundamental policy, Prime Fund, Government Fund, and Tax-Free Fund
may not invest more than 10% of its net assets in all forms of illiquid
investments, as set forth in the Prospectus under "Illiquid Investments."
As non-fundamental policies, Institutional Prime Fund and Institutional
Tax-Free 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 off 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. With respect to each of the Funds, if a
fundamental or 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.
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TAXES
TAXATION OF THE FUNDS--IN GENERAL
Each of the Funds has qualified as a "regulated investment company" under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code") and
intends to continue to do so. To so qualify, a 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"); and (b) satisfy certain diversification
requirements at the close of each quarter of such Fund's taxable year.
Furthermore, in order to be entitled to pay exempt-interest dividends to
shareholders, Tax-Free Fund and Institutional Tax-Free Fund must satisfy the
requirement that, at the close of each quarter of its taxable year, at least 50%
of the value of its total assets consists of obligations the interest on which
is exempt from federal income tax ("tax-exempt obligations").
As a regulated investment company, a 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 (including tax-exempt income net of any disallowed deductions
relating thereto) and net short-term capital gain for the taxable year is
distributed. However, if for any taxable year a 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 such Fund's current or
accumulated earnings and profits.
Each Fund will be liable for a nondeductible 4% excise tax on amounts not
distributed on a timely basis in accordance with a calendar year distribution
requirement. To avoid the tax, during each calendar year a 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 such
Fund so elects); and (c) any portion (not taxed to such Fund) of the respective
balances from the prior year. Each Fund intends to make sufficient distributions
to avoid this 4% excise tax.
If Tax-Free Fund or Institutional Tax-Free Fund disposes of a tax-exempt
obligation that it acquired after April 30, 1993 at a market discount, it must
recognize any gain it realizes on the disposition as ordinary income (and not as
capital gain) to the extent of the accrued market discount.
If a shareholder receives an exempt-interest dividend with respect to any
share and sells or exchanges such share after holding it for six months or less,
any loss on the sale or exchange of such share will be disallowed to the extent
of the amount of such exempt-interest dividend. In certain limited instances,
the portion of Social Security benefits received by shareholders that are
subject to federal income tax may be affected by the amount of tax-exempt
interest income, including exempt-interest dividends, received by shareholders
of the Fund.
Distributions of exempt-interest dividends by Tax-Free Fund and
Institutional Tax-Free Fund may be subject to state and local taxes even though
a substantial portion of such distributions may be derived from interest on
tax-exempt obligations that, if realized by the shareholder directly, would be
exempt from such taxes. Tax-Free Fund and Institutional Tax-Free Fund will
report to its shareholders annually after the close of its taxable year the
percentage and source, on a state-by-state basis, of interest income earned on
tax-exempt obligations held by such Fund during the preceding year. Shareholders
of Tax-Free Fund and Institutional Tax-Free Fund are advised to consult their
tax advisers concerning the application of state and local taxes.
Under the Code, investors will not be allowed to deduct interest on
indebtedness incurred or continued to purchase or carry shares of an investment
company paying exempt-interest dividends to the extent such interest expenses
relate to exempt-interest dividends received by the shareholder. State laws may
also restrict the deductibility of interest on indebtedness incurred or
continued to purchase or carry shares of a Fund. Indebtedness may be allocated
to shares of a Fund even though not directly traceable to the purchase of such
shares.
B-11
<PAGE>
Tax-Free Fund and Institutional Tax-Free Fund may acquire variable and
floating rate demand municipal obligations and "stand-by commitments" or "puts"
from banks and municipal securities dealers. See "Great Hall Tax-Free Money
Market Fund and Institutional Tax-Free Money Market Fund - Variable and Floating
Rate Demand Municipal Obligations" and "Stand-By Commitments" in this Statement
of Additional Information. With respect to each such acquisition, an opinion of
issuer's counsel will be issued that Tax-Free Fund and Institutional Tax-Free
Fund will be treated for federal income tax purposes as the owner of the
municipal obligations acquired subject to such demand features or to such
stand-by commitments; the interest on such municipal obligations will be
tax-exempt to Tax-Free Fund and Institutional Tax-Free Fund; and the purchase
prices of municipal obligations subject to stand-by commitments must be
allocated between such securities and stand-by commitments based upon their
relative fair market values.
A Fund, or a shareholder's broker with respect to a 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 such
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 such Fund or broker that the shareholder has provided such 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 Funds and their shareholders. No attempt
is made to present a detailed explanation of the federal or state income tax
treatment of the Funds or their 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 Funds, Insight makes investment decisions and decisions as to the
execution of portfolio transactions for the Funds, 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 Fund, in which case the transactions will be allocated as to amount and
price in a manner considered equitable to each Fund. In some cases this
procedure may possibly have a detrimental effect on the price or volume of the
security as far as one or more Funds are concerned. On the other hand, the
ability of the Funds to participate in volume transactions may produce better
executions for the Funds in some cases. It is the opinion of the Board of
Directors that the benefits available because of Insight's organization outweigh
any disadvantages that may arise from exposure to simultaneous transactions.
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 a 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.
B-12
<PAGE>
Insight, in effecting purchases and sales of portfolio securities for the
accounts of the Funds, will place orders in such manner as in its opinion will
offer the best price and market for the execution of each transaction. Given the
best price and market obtainable, it is the practice of the Funds when
purchasing through dealers to select them primarily on the basis of the
furnishing by such dealers, in addition to satisfactory execution of the
transaction, 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. Such Funds may also consider, subject to the
requirement of best execution, dealers' sales of the Funds' shares when
selecting dealers to execute portfolio transactions. While Insight will be
primarily responsible for the placement of such Funds' business, the policies
and practices of the Funds in this regard must be consistent with the foregoing
and will at all times be subject to review by the Board of Directors of Great
Hall.
Because brokerage commissions as such are not usually paid in connection
with the purchase or sale of the securities in which the Funds invest and
because transactional costs are small, portfolio turnover is not expected to
materially affect net asset value or yields. None of the Funds paid any
brokerage commissions during the year ended July 31, 1999. Securities with
maturities of less than one year are excluded from required portfolio turnover
rate calculations, and therefore, each Fund's turnover rate for reporting
purposes will be zero.
MANAGEMENT AND DISTRIBUTION AGREEMENTS
INVESTMENT ADVISER; INVESTMENT ADVISORY AGREEMENT
Insight serves as each Fund's investment adviser. Insight is a wholly-owned
subsidiary of Dain Rauscher Corporation ("DRC").
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 investment portfolio of each Fund and
furnishes office facilities and certain clerical and administrative services to
the Funds. In addition, Insight bears all promotional expenses, including the
cost of printing and distributing prospectuses utilized for promotional
purposes. Other expenses are borne by whichever Fund incurs the expense and such
expenses include, but are 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 Funds and their
shares with the SEC and the various states; services of custodians, transfer
agent, dividend disbursing agent, accounting services agents, shareholder
services agents, 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 Distributor 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 Distributor under its
agreement with Great Hall); redemption of Fund shares; printing and mailing of
stock certificates representing shares of the Funds; 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 Fund will be allocated to that Fund; expenses that are not specifically
allocable will be allocated to each 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 based
upon the average value of each Fund's daily net assets. The Tax-Free Fund pays
Insight a fee at an annual rate of .50% of its average daily net assets. The
Prime Fund and the Government Fund each pay an advisory fee that is scaled
downward as net assets increase. The fee for the Prime Fund is paid at an annual
rate of .55% on average daily net assets up to $700 million, .50% on average
daily net assets of over $700 million up to $1.2 billion, .45% on average daily
net assets of over $1.2 billion up to $2 billion, and .40% on average daily net
assets of over $2 billion. The fee for the Government Fund is paid at an annual
rate of .50% on average daily net assets up to $100 million, .40% on average
daily net assets of over $100 million up to $300 million, and .35% on average
daily net assets over $300 million. Institutional Prime Fund and Institutional
Tax-Free Fund pays Insight a fee at an annual rate of .25% of its average net
assets.
B-13
<PAGE>
The Funds have paid advisory fees to Insight as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Year Ended Prime Fund Institutional Government Fund Tax-Free Fund Institutional
Prime Fund Tax-Free Fund
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
July 31, 1999 $20,639,795 $714,258 $1,177,276 $2,661,827 $100,138*
- ----------------------------------------------------------------------------------------------------------------------
July 31, 1998 $17,513,185 $237,858* $963,402 $2,371,641 N/A
- ----------------------------------------------------------------------------------------------------------------------
July 31, 1997 $13,295,885 N/A $796,320 $2,007,198 N/A
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
* Insight voluntarily waived $100,138 of Institutional Tax-Free Fund's advisory
fees for the year ended July 31, 1999 and $28,050 of Institutional Prime Fund's
advisory fees for the year ended July 31, 1998.
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 DISTRIBUTOR
The Funds are distributed by Dain Rauscher Incorporated, 60 South Sixth
Street, Minneapolis, MN 55402 (the "Distributor"), a member firm of the New York
Stock Exchange (the "NYSE"), the National Association of Securities Dealers,
Inc. and a wholly owned subsidiary of DRC. The Funds have agreed to indemnify
the Distributor and its affiliates, to the extent permitted by applicable law,
against certain liabilities under the Securities Act of 1933. The Distributor
serves as the Funds' distributor without separate compensation.
DETERMINATION OF NET ASSET VALUE
The net asset value per share of each Fund is calculated separately for
each Fund. The assets and liabilities of each Fund are determined in accordance
with generally accepted accounting principles and the applicable rules and
regulations of the SEC. Assets and liabilities attributable to a specific Fund
are allocated to that Fund. Assets and liabilities not readily identifiable to a
Fund will be allocated among the Funds in a manner and on a basis determined in
good faith pursuant to procedures established by the Board of Directors,
including a majority of the Directors who are not "interested persons" of Great
Hall or Insight, to be fair and equitable.
The Funds value their 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 a Fund's shareholders in the daily dividend, the value of such 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 a Fund's securities, as determined by amortized cost,
is higher or lower than the price such Fund would receive if it sold the
securities. During such periods, the yields on shares of such Fund 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. For example, if the use of
amortized cost by any Fund resulted in lower aggregate portfolio value on a
particular day, prospective investors in such Fund would be able to obtain a
somewhat higher yield than would result from investments in a similar fund
utilizing solely market values. The converse would apply during a period of
rising interest rates.
On July 31, 1999, the net asset value and the maximum public offering price
per share for the Funds were calculated as follows:
B-14
<PAGE>
<TABLE>
<CAPTION>
PRIME FUND
<S> <C>
Net Assets ($4,522,699,797) = Net Asset Value Per Share ($1.00)
----------------------------------------------
Shares Outstanding (4,522,699,797)
INSTITUTIONAL PRIME FUND
Net Assets ($310,183,097) = Net Asset Value Per Share ($1.00)
--------------------------------------------
Shares Outstanding (310,183,097)
GOVERNMENT FUND
Net Assets ($271,376,485) = Net Asset Value Per Share ($1.00)
---------------------------------------------
Shares Outstanding (271,376,485)
TAX-FREE FUND
Net Assets ($497,138,632) = Net Asset Value Per Share ($1.00)
--------------------------------------------
Shares Outstanding (497,138,632)
INSTITUTIONAL TAX-FREE FUND
Net Assets ($53,148,681) = Net Asset Value Per Share ($1.00)
-------------------------------------------
Shares Outstanding (53,148,681)
</TABLE>
CALCULATION OF PERFORMANCE DATA
YIELD
As stated in the Prospectus, each Fund from time to time may advertise its
yield.
The current yield of the Funds is 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.
For the seven-day period ended July 31, 1999, the current yields of Prime
Fund, Institutional Prime Fund, Government Fund, Tax-Free Fund and Institutional
Tax-Free Fund were 4.53%, 4.88%, 4.36%, 2.58% and 2.78%, respectively.
The effective or compounded yield for the Funds is 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
For the seven-day period ended July 31, 1999, the effective yields of Prime
Fund, Institutional Prime Fund, Government Fund, Tax-Free Fund and Institutional
Tax-Free Fund were 4.63%, 5.00%, 4.45%, 2.61% and 2.82%, respectively.
The taxable equivalent yield of Tax-Free Fund and Institutional Tax-Free
Fund is calculated by applying the stated income tax rate only to that portion
of the Fund's seven-day yield or effective yield that is exempt from taxation.
The stated income tax rate is subtracted from the number 1 (E.G., 1 minus 36%
equals 64%), and the tax-
B-15
<PAGE>
exempt portion of the yield is divided by the difference. The result is then
added to that portion of the Fund's yield, if any, that is not tax-exempt.
Assuming federal marginal tax rates of 28%, 31%, 36% and 39.6%, the taxable
equivalent current yields of Tax-Free Fund for the seven-day period ended July
31, 1999 were 3.58%, 3.74%, 4.03% and 4.27%, respectively. The taxable
equivalent current yields of Institutional Tax-Free Fund for the seven-day
period ended July 31, 1999 were 3.63%, 3.78%, 4.08% and 4.32%, respectively.
Assuming the same federal marginal tax rates, the taxable equivalent effective
yields of Tax-Free Fund for the seven-day period ended July 31, 1999 were 3.86%,
4.03%, 4.34% and 4.32%, respectively. The taxable equivalent effective yields of
Institutional Tax-Free Fund for the seven-day period ended July 31, 1999 were
3.92%, 4.09%, 4.41% and 4.67%, respectively.
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.
<TABLE>
<CAPTION>
Principal Occupations During the
Name and Address Position Past Five Years and Other Affiliations
- --------------- ------- --------------------------------------
<S> <C> <C>
T. Geron ("Jerry") Bell Director President of the Minnesota Twins Baseball Club
Age: 58 Incorporated since 1987.
34 Puckett Place
Minneapolis, MN 55415
Sandra J. Hale Director President of Enterprise Management, Int'l. since
Age: 64 1991; Minnesota Commissioner of
2308 West Lake of the Isles Pkwy. Administration from 1982 to 1990.
Minneapolis, MN 55405
Ron James Director Formerly President and Chief Executive Officer
Age: 48 of Ceridian Corporation-Human Resources
300 Sycamore Lane Group (January 1996-January 1998); Vice
Plymouth, MN 55441 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.
Jay H. Wein Director Independent consultant since April 1995;
Age: [__] Director of Information Advantage, Inc. since
5305 Elm Ridge Circle 1992 and Chairman from 1992 to April 1995;
Excelsior, MN 55331 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 Executive Officer Senior Executive Vice President of the
Age: 44 Distributor; Chief Executive Officer and
Director of Insight; Senior Vice President
and Business Manager, Employee Benefit Services,
of Norwest Corporation from 1990 through
January 1994; Product Manager,
Institutional Collective Funds,
of Norwest Corporation from 1989 through
January 1994.
B-16
<PAGE>
<CAPTION>
Principal Occupations During the
Name and Address Position Past Five Years and Other Affiliations
- --------------- ------- --------------------------------------
<S> <C> <C>
Raye C. Kanzenbach Chief Investment Officer Managing Director and Chief Investment Officer
Age: 50 of Insight; prior to 1991, Director, Senior
Vice President and Secretary of Insight Bond
Management, Inc. since 1983.
Julie K. Getchell Chief Financial Officer President and Chief Operating Officer of
Age: 44 Insight and Senior Vice President of the
Distributor.
Matthew L. Thompson Secretary Partner of Faegre & Benson LLP, Great Hall's
Age: 42 general counsel, since May 1995; Vice
2200 Norwest Center President, Assistant Secretary and
90 South Seventh Street Corporate/Fund Counsel of DRC from January
Minneapolis, MN 55402 1994 to May 1995; prior thereto, Partner of
Dorsey & Whitney since 1993 and Associate of
Dorsey & Whitney from 1985 through 1992.
Thomas D. Vogel Compliance Officer Managing Director and Controller of Insight and
Age: 35 the Distributor's Business Services Group;
Assistant Controller of Insight from
1993 to 1995.
</TABLE>
Effective July 1, 1999, the annual compensation of each Director was
increased to $12,000 plus $1,000 for each meeting attended. Prior to such time,
the annual compensation of each Director was $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, 1999:
COMPENSATION TABLE
<TABLE>
<CAPTION>
Pensions or Retirement
Aggregate Benefits Accrued
Compensation as part of
Name Of Director from Great Hall Great Hall Expenses
---------------- --------------- ----------------------
<S> <C> <C>
T. Geron (Jerry) Bell $10,000 None
Sandra J. Hale $10,000 None
Ron James $10,000 None
Jay H. Wein $10,000 None
</TABLE>
Additional directors of Insight are as follows:
<TABLE>
<CAPTION>
Name Other Positions
---- ---------------
<S> <C>
Irving Weiser Chairman, Chief Executive Officer and
President of the Distributor
John C. Appel Vice Chairman and Chief Financial Officer
of the Distributor
Ronald A. Tschetter Senior Executive Vice President of the Distributor
(Private Client Group)
Nelson D. Civello Senior Executive Vice President of the Distributor
(Fixed Income Capital Markets Group)
Kenneth J. Wessels Senior Executive Vice President of the Distributor
(Equity Capital Markets Group)
</TABLE>
B-17
<PAGE>
GENERAL INFORMATION
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-ended
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. Great Hall is authorized to issue shares
representing interests in separate series. Currently, Great Hall offers its
shares in five separate series. One hundred billion shares have been designated
for each of the Prime Fund, the Government Fund and the Tax-Free Fund. Ten
billion shares have been designated for each of the Institutional Prime Fund and
the Institutional Tax-Free Fund.
Under the terms of the Custodian Agreement, Norwest Bank Minnesota, N.A.,
733 Marquette Avenue, Minneapolis, Minnesota 55479-0040 (the "Custodian") holds
and safekeeps all of the assets of each Fund. For its services, the Custodian
receives from each Fund a monthly fee based upon the average market value of
such Fund's securities 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, 127 West 10th Street, Kansas City, Missouri 64105-1716, (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 the Transfer Agency Agreement, PFPC, Inc., 400 Bellevue
Parkway, Wilmington, Delaware 19890-0001, (the "Transfer Agent") maintains the
shareholder account records for each Fund, handles certain communications
between shareholders and each Fund, distributes dividends and distributions
payable by each Fund and produces statements with respect to account activity
for each Fund and its shareholders. For these services, the Transfer Agent
receives a flat monthly fee and is also reimbursed for certain out-of-pocket
expenses.
The Distributor also performs certain shareholder account services for the
Funds pursuant to a Shareholder Account Service Agreement. Under the terms of
the Shareholder Account Service Agreement, the Distributor disburses or credits
all proceeds of redemptions, dividends and other distributions to shareholders,
handles certain communications between shareholders and each Fund, prepares
shareholder records, maintains a master account with the Transfer Agent on
behalf of shareholders and performs other related services. For its services,
the Distributor receives a monthly fee computed on the basis of the number of
shareholder accounts that are maintained for each Fund during the month and also
is 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 objectives, 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.
Dain Rauscher Incorporated is the record owner of all outstanding shares of
each Fund. Set forth below are the names, addresses and number of shares of each
Fund beneficially owned by persons known to Great Hall and Dain Rauscher
Incorporated to beneficially own more than 5% of any Fund's common shares as of
September,__ 1999:
B-18
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF SHARES % OF
NAME AND ADDRESS BENEFICIALLY OWNED OUTSTANDING SHARES
--------------- ----------------- ------------------
<S> <C> <C>
PRIME FUND:
INSTITUTIONAL PRIME FUND:
GOVERNMENT FUND:
TAX-FREE FUND:
INSTITUTIONAL TAX-FREE FUND:
</TABLE>
Depending on prevailing economic and market conditions, the presence of one
or more large beneficial owners in a Fund could pose certain risks to the Fund
and its other shareholders. For example, the presence of such a shareholder
could raise liquidity concerns which could require the Fund to invest in a
manner that may not optimize investment returns. As of the date of this
Statement of Additional Information, Insight does not believe that the presence
of any of the aforementioned beneficial owners poses such a risk.
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 15 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 90 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 15
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.
B-19
<PAGE>
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 Exchange 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 Funds'
Prospectus and Statement of Additional Information, each share of a Fund 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 shares of any Fund are entitled to receive, as a class, the
underlying assets of such 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 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, 1999.
FINANCIAL AND OTHER INFORMATION
The 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 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 form a part, each such
statement being qualified in all respects by such reference.
B-20
<PAGE>
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 Funds 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.
A-1
<PAGE>
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.
A-2
<PAGE>
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.
A-3
<PAGE>
Audited Financial Statements
Great Hall Investment Fund, Inc.
July 31, 1999
F-1
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
JULY 31, 1999
<TABLE>
<CAPTION>
PRIME U.S. GOVERNMENT TAX-FREE INST'L PRIME INST'L TAX-FREE
MONEY MONEY MONEY MONEY MONEY
MARKET FUND MARKET FUND MARKET FUND MARKET FUND MARKET FUND
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
ASSETS:
Investments in securities
at market value (note
2), amortized cost
$4,508,972,711;
$269,955,551;
$495,442,943;
$308,611,703; and
$52,872,294,
respectively........... $4,508,972,711 $269,955,551 $ 495,442,943 $ 308,611,703 $52,872,294
Cash in bank on demand
deposit................ 985,051 68,282 57,060 46,595 44,401
Accrued interest
receivable............. 15,480,907 1,613,156 2,059,968 1,730,760 260,987
Organization costs (note
2)..................... -- -- -- 5,099 --
- ----------------------------------------------------------------------------------------------------------------
Total assets............. 4,525,438,669 271,636,989 497,559,971 310,394,157 53,177,682
- ----------------------------------------------------------------------------------------------------------------
LIABILITIES:
Accrued investment
advisory fee........... 1,714,632 99,924 219,148 69,512 --
Other accrued expenses... 1,024,240 160,580 202,191 141,548 29,001
- ----------------------------------------------------------------------------------------------------------------
Total liabilities........ 2,738,872 260,504 421,339 211,060 29,001
- ----------------------------------------------------------------------------------------------------------------
Net assets applicable to
outstanding capital
stock.................. $4,522,699,797 $271,376,485 $ 497,138,632 $ 310,183,097 $53,148,681
- ----------------------------------------------------------------------------------------------------------------
REPRESENTED BY:
Capital stock -
authorized 100 billion
shares of $.01 par
value for each Fund,
outstanding
4,522,699,797;
271,376,485; and
497,138,632 shares,
respectively........... $ 45,226,998 $ 2,713,765 $ 4,971,386 $ -- $ --
Capital stock -
authorized 10 billion
shares of $.01 par
value for each Fund,
outstanding
310,183,097; and
53,148,681 shares,
respectively........... -- -- -- 3,101,831 531,487
Additional paid-in
capital................ 4,477,472,799 268,662,720 492,167,246 307,081,266 52,617,194
- ----------------------------------------------------------------------------------------------------------------
Total - representing
net assets
applicable to
outstanding capital
stock.............. $4,522,699,797 $271,376,485 $ 497,138,632 $ 310,183,097 $53,148,681
- ----------------------------------------------------------------------------------------------------------------
Net asset value per share
of outstanding capital
stock.................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
F-2
<PAGE>
STATEMENTS OF OPERATIONS
YEAR ENDED JULY 31, 1999
<TABLE>
<CAPTION>
PRIME U.S. GOVERNMENT TAX-FREE INST'L PRIME INST'L TAX-FREE
MONEY MONEY MONEY MONEY MONEY
MARKET FUND MARKET FUND MARKET FUND MARKET FUND MARKET FUND*
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
INCOME:
Interest............... $244,054,713 $13,723,708 $17,258,735 $14,811,433 $1,237,071
- ------------------------------------------------------------------------------------------------------------
EXPENSES (NOTE 4):
Investment advisory
fee.................. 20,639,795 1,177,276 2,661,827 714,258 100,138
Custodian, accounting
and
transfer agent
fees................. 239,700 46,300 74,650 33,050 22,800
Sub-accounting fees.... 5,187,000 141,400 137,900 2,400 1,050
Reports to
shareholders......... 1,568,074 40,250 31,300 3,000 900
Amortization of
organization costs... -- -- -- 1,683 --
Directors' fees........ 6,199 6,199 6,199 8,799 7,500
Audit and legal fees... 73,500 31,000 41,000 29,900 21,726
Registration fees...... 463,089 121,995 200,690 158,227 56,244
Administrative......... 27,750 2,200 2,400 5,200 1,000
Other expenses......... 60,434 28,165 6,676 2,849 8,670
- ------------------------------------------------------------------------------------------------------------
Total expenses........... 28,265,541 1,594,785 3,162,642 959,366 220,028
Less expenses voluntarily
waived or absorbed by
Advisor................ -- -- -- -- (100,138)
- ------------------------------------------------------------------------------------------------------------
Total net expenses....... 28,265,541 1,594,785 3,162,642 959,366 119,890
- ------------------------------------------------------------------------------------------------------------
Investment income --
net.................... 215,789,172 12,128,923 14,096,093 13,852,067 1,117,181
- ------------------------------------------------------------------------------------------------------------
Net increase in net
assets resulting from
operations............. $215,789,172 $12,128,923 $14,096,093 $13,852,067 $1,117,181
- ------------------------------------------------------------------------------------------------------------
</TABLE>
* Period from September 23, 1998 (commencement of operations) to July 31,
1999.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
F-3
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
U.S. GOVERNMENT
PRIME MONEY MARKET FUND MONEY MARKET FUND
- -----------------------------------------------------------------------------------------
Year Year Year Year
Ended Ended Ended Ended
July 31, 1999 July 31, 1998 July 31, 1999 July 31, 1998
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------
Operations:
Investment income,
net.................. $ 215,789,172 $ 196,120,553 $ 12,128,923 $ 10,786,378
- -----------------------------------------------------------------------------------------
Net increase in net
assets resulting from
operations........... 215,789,172 196,120,553 12,128,923 10,786,378
- -----------------------------------------------------------------------------------------
Distributions to
shareholders from:
Investment income --
net.................. (215,789,172) (196,120,553) (12,128,923) (10,786,378)
- -----------------------------------------------------------------------------------------
Total distributions to
shareholders......... (215,789,172) (196,120,553) (12,128,923) (10,786,378)
- -----------------------------------------------------------------------------------------
Capital share
transactions at net
asset
value of $1.00 per
share:
Proceeds from
sales.............. 2,663,848,899 5,231,760,076 325,052,784 295,197,283
Shares issued for
reinvestment
of distributions... 215,789,172 196,120,553 12,128,923 10,786,378
Payment for shares
redeemed........... (3,201,289,989) (3,713,382,899) (294,734,706) (259,209,672)
- -----------------------------------------------------------------------------------------
Increase/(decrease) in
net assets from
capital share
transactions......... (321,651,918) 1,714,497,730 42,447,001 46,773,989
- -----------------------------------------------------------------------------------------
Total increase/(decrease)
in net assets.......... (321,651,918) 1,714,497,730 42,447,001 46,773,989
- -----------------------------------------------------------------------------------------
Net assets at beginning
of period.............. 4,844,351,715 3,129,853,985 228,929,484 182,155,495
- -----------------------------------------------------------------------------------------
Net assets at end of
period................. $ 4,522,699,797 $ 4,844,351,715 $ 271,376,485 $ 228,929,484
- -----------------------------------------------------------------------------------------
</TABLE>
* Commencement of operations.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
F-4
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE INSTITUTIONAL PRIME
MONEY MARKET FUND MONEY MARKET FUND INSTITUTIONAL
TAX-FREE
MONEY MARKET
FUND
-------------------------------------------------------------------------
Period from Period from
Aug. 11, Sept. 23,
Year Year Year 1997* 1998*
Ended Ended Ended to July 31, to July 31,
July 31, 1999 July 31, 1998 July 31, 1999 1998 1999
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
Operations:
Investment income,
net.................. $ 14,096,093 $ 14,463,281 $ 13,852,067 $ 5,595,853 $ 1,117,181
- ----------------------------------------------------------------------------------------------------
Net increase in net
assets resulting from
operations........... 14,096,093 14,463,281 13,852,067 5,595,853 1,117,181
- ----------------------------------------------------------------------------------------------------
Distributions to
shareholders from:
Investment income --
net.................. (14,096,093) (14,463,281) (13,852,067) (5,595,853) (1,117,181)
- ----------------------------------------------------------------------------------------------------
Total distributions to
shareholders......... (14,096,093) (14,463,281) (13,852,067) (5,595,853) (1,117,181)
- ----------------------------------------------------------------------------------------------------
Capital share
transactions at net
asset
value of $1.00 per
share:
Proceeds from
sales.............. 568,704,391 599,371,172 784,765,959 439,240,574 159,109,858
Shares issued for
reinvestment
of distributions... 14,096,093 14,463,281 13,852,067 5,595,853 1,117,181
Payment for shares
redeemed........... (631,510,518) (490,726,196) (702,220,139) (231,051,217) (107,078,358)
- ----------------------------------------------------------------------------------------------------
Increase/(decrease) in
net assets from
capital share
transactions......... (48,710,034) 123,108,257 96,397,887 213,785,210 53,148,681
- ----------------------------------------------------------------------------------------------------
Total increase/(decrease)
in net assets.......... (48,710,034) 123,108,257 96,397,887 213,785,210 53,148,681
- ----------------------------------------------------------------------------------------------------
Net assets at beginning
of period.............. 545,848,666 422,740,409 213,785,210 -- --
- ----------------------------------------------------------------------------------------------------
Net assets at end of
period................. $ 497,138,632 $ 545,848,666 $ 310,183,097 $ 213,785,210 $ 53,148,681
- ----------------------------------------------------------------------------------------------------
</TABLE>
* Commencement of operations.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
F-5
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
Great Hall Investment Funds, Inc. (the Company) was incorporated on June 24,
1991 and is registered under the Investment Company Act of 1940 (as amended)
as an open-end management investment company and presently includes five
funds; Prime, U.S. Government, Tax-Free, Institutional Prime, and the
Institutional Tax-Free Money Market Funds (the funds). The Company's articles
of incorporation permit the board of directors to create additional funds in
the future.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies followed by the funds are as follows:
INVESTMENTS IN SECURITIES
Pursuant to Rule 2a-7 of the Investment Company Act of 1940 (as amended),
securities are valued at amortized cost, which approximates market value, in
order to maintain a constant net asset value of $1 per share.
Security transactions are accounted for on the date the securities are
purchased or sold. Interest income, including amortization of discount and
premium, is accrued daily.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
FEDERAL TAXES
The funds' policy is to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of
its taxable income to shareholders. Therefore, no income tax provision is
required. Each fund is treated as a separate entity for federal income tax
purposes. In addition, on a calendar-year basis, each fund intends to
distribute substantially all of its net investment income and realized gains,
if any, to avoid payment of any federal excise taxes.
DISTRIBUTION TO SHAREHOLDERS
Distribution to shareholders from net investment income are declared daily
and paid monthly through reinvestment in additional shares of the funds at
net asset value or payable in cash.
F-6
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
ORGANIZATION COSTS
Organization expenses were incurred in connection with the start-up and
initial registration of both Institutional Prime and Institutional Tax-Free
Money Market Funds. The Institutional Prime organizational expenses are being
amortized over 60 months while the Institutional Tax-Free organizational
expenses were expensed during the period.
REPURCHASE AGREEMENTS
Securities pledged as collateral for repurchase agreements are held by the
funds' custodian bank until maturity of the repurchase agreement. Procedures
for all agreements ensure that the daily market value of the collateral is in
excess of the repurchase agreement in the event of default.
3. INVESTMENT SECURITY TRANSACTIONS
Cost of purchases and proceeds from sales of securities from August 1, 1998
to July 31, 1999 (September 23, 1998 to July 31, 1999 for Institutional
Tax-Free Money Market Fund) were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES PROCEEDS
<S> <C> <C>
- -----------------------------------------------------------------------------------------------
Prime Money Market Fund.................................. $ 65,587,783,941 $ 65,909,916,018
U.S. Government Money Market Fund........................ 8,459,142,198 8,417,132,171
Tax-Free Money Market Fund............................... 1,080,231,905 1,129,084,670
Institutional Prime Money Market Fund.................... 5,365,406,857 5,269,691,269
Institutional Tax-Free Money Market Fund................. 204,623,322 151,751,028
</TABLE>
4. FEES AND EXPENSES
The Company has entered into an investment advisory and management agreement
with Insight Investment Management (IIM), a wholly-owned subsidiary of Dain
Rauscher Corporation, under which IIM manages each fund's assets and
furnishes related office facilities, equipment, research and personnel. The
agreement requires each fund to pay IIM a monthly fee based upon average
daily net assets. The fee for the Prime Money Market Fund is equal to an
annual rate of 0.55% of the first $700 million in net assets and then
decreasing in reduced percentages to 0.40% of net assets in excess of $2
billion. The fee for the U.S. Government Money Market Fund is equal to an
annual rate of 0.50% of the first $100 million in net assets and then
decreasing in reduced percentages to 0.35% of net assets in excess of $300
million. The fee for the Tax-Free Money Market Fund is equal to an annual
rate of 0.50% of net assets. The fees for both the Institutional Prime and
Institutional Tax-Free Money Market Funds are equal to an annual rate of
0.25% of net assets. IIM voluntarily waived its advisory fees for the
Institutional Tax-Free Money Market Fund for the current period.
F-7
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
4. FEES AND EXPENSES (continued)
Each of the five funds has also entered into sub-accounting agreements with
affiliate Dain Rauscher Incorporated (DRI) where the firm performs various
transfer and dividend disbursing agent services. The fee, which is paid
monthly to DRI for providing such service, is equal to an annual rate of $18
per shareholder account plus certain out-of-pocket expenses. Under a prior
agreement which ended November 17, 1998 the fee was equal to an annual rate
of $12 per shareholder account plus certain out of pocket expenses.
In addition to the investment advisory and management fee and the shareholder
account servicing fee, each fund is responsible for paying most other
operating expenses including outside directors' fees and expenses, custodian
fees, registration fees, printing and shareholder reports, transfer agent
fees and expenses, legal, auditing and accounting services, organizational
costs, insurance, interest and other miscellaneous expenses.
Legal fees and expenses of $49,525 for the period ended July 31, 1999 were
paid to a law firm of which the Secretary of the funds is a partner.
F-8
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
5. FINANCIAL HIGHLIGHTS
Per share data for a share of capital stock outstanding throughout each
period and selected information for the period are as follows:
<TABLE>
<CAPTION>
PRIME MONEY MARKET FUND
- -----------------------------------------------------------------------------------------------------------
Year ended
Year ended Year ended Year ended Year ended July 31,
July 31, 1999 July 31, 1998 July 31, 1997 July 31, 1996 1995
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
Net asset value,
beginning of period.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -----------------------------------------------------------------------------------------------------------
Income from investment
operations............. 0.05 0.05 0.05 0.05 0.05
Distributions to
shareholders from
investment income...... (0.05) (0.05) (0.05) (0.05) (0.05)
- -----------------------------------------------------------------------------------------------------------
Net asset value, end of
period................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -----------------------------------------------------------------------------------------------------------
Total return............. 4.6% 5.0% 4.9% 5.0% 4.9%
Net assets at end
of period (000's
omitted)............... $ 4,522,700 $ 4,844,352 $ 3,129,854 $ 2,405,456 $1,598,925
Ratio of expenses to
average daily net
assets................. 0.61% 0.63% 0.64% 0.70% 0.77%
Ratio of net investment
income to average daily
net assets............. 4.62% 5.04% 4.90% 4.93% 4.93%
- -----------------------------------------------------------------------------------------------------------
</TABLE>
F-9
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
5. FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
U.S. GOVERNMENT MONEY MARKET FUND
- ----------------------------------------------------------------------------------------------------------
Year ended
Year ended Year ended Year ended Year ended July 31,
July 31, 1999 July 31, 1998 July 31, 1997 July 31, 1996 1995
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------
Net asset value,
beginning of period.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------------------------------------------------------------------------
Income from investment
operations............. 0.05 0.05 0.05 0.05 0.05
Distributions to
shareholders from
investment income...... (0.05) (0.05) (0.05) (0.05) (0.05)
- ----------------------------------------------------------------------------------------------------------
Net asset value, end of
period................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------------------------------------------------------------------------
Total return............. 4.5% 5.0% 4.8% 4.9% 4.8%
Net assets at end
of period (000's
omitted)............... $ 271,376 $ 228,929 $ 182,155 $ 146,685 $122,249
Ratio of expenses to
average daily net
assets................. 0.59% 0.59% 0.60% 0.65% 0.73%
Ratio of net investment
income to average daily
net assets............. 4.50% 4.98% 4.85% 4.87% 4.94%
- ----------------------------------------------------------------------------------------------------------
</TABLE>
F-10
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
5. FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
TAX-FREE MONEY MARKET FUND
- ----------------------------------------------------------------------------------------------------------
Year ended
Year ended Year ended Year ended Year ended July 31,
July 31, 1999 July 31, 1998 July 31, 1997 July 31, 1996 1995
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------
Net asset value,
beginning of period.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------------------------------------------------------------------------
Income from investment
operations............. 0.03 0.03 0.03 0.03 0.03
Distributions to
shareholders from
investment income...... (0.03) (0.03) (0.03) (0.03) (0.03)
- ----------------------------------------------------------------------------------------------------------
Net asset value, end of
period................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------------------------------------------------------------------------
Total return............. 2.7% 3.1% 3.0% 3.0% 3.1%
Net assets at end
of period (000's
omitted)............... $ 497,139 $ 545,849 $ 422,740 $ 359,153 $363,273
Ratio of expenses to
average daily net
assets................. 0.59% 0.58% 0.58% 0.59% 0.60%
Ratio of net investment
income to average
daily net assets....... 2.65% 3.05% 3.02% 3.03% 3.14%
- ----------------------------------------------------------------------------------------------------------
</TABLE>
F-11
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
5. FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
INSTITUTIONAL PRIME MONEY MARKET FUND
- ----------------------------------------------------------------------------
Period from
August 11, 1997*
Year ended to
July 31, 1999 July 31, 1998
<S> <C> <C>
- ----------------------------------------------------------------------------
Net asset value, beginning of period.... $ 1.00 $ 1.00
- ----------------------------------------------------------------------------
Income from investment operations....... 0.05 0.05
Distributions to shareholders from
investment income..................... (0.05) (0.05)
- ----------------------------------------------------------------------------
Net asset value, end of period.......... $ 1.00 $ 1.00
- ----------------------------------------------------------------------------
Total return............................ 4.9% 5.2%
Net assets at end of period (000's
omitted).............................. $ 310,183 $213,785
Ratio of expenses to average daily net
assets**.............................. 0.34% 0.39%
Ratio of net investment income to
average daily net assets**............ 4.85% 5.27%
- ----------------------------------------------------------------------------
</TABLE>
* Commencement of operations.
** Adjusted to an annual basis. Various fund fees and expenses were
voluntarily waived or absorbed by IIM for the Institutional Prime Money
Market Fund during the period ended July 31, 1998. Had the Fund paid all
expenses, the ratio of expenses and net investment income to average daily
net assets would have been 0.42%/5.24% for the period ended July 31, 1998.
F-12
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
5. FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
INSTITUTIONAL TAX-FREE MONEY MARKET FUND
- ------------------------------------------------------------------------
Period from
September 23, 1998*
to
July 31, 1999
<S> <C>
- ------------------------------------------------------------------------
Net asset value, beginning of period.............. $ 1.00
- ------------------------------------------------------------------------
Income from investment operations................. 0.03
Distributions to shareholders from investment
income.......................................... (0.03)
- ------------------------------------------------------------------------
Net asset value, end of period.................... $ 1.00
- ------------------------------------------------------------------------
Total return...................................... 2.5%
Net assets at end of period (000's omitted)....... $53,149
Ratio of expenses to average daily net assets**... 0.30%
Ratio of net investment income to average daily
net assets**.................................... 2.79%
- ------------------------------------------------------------------------
</TABLE>
* Commencement of operations.
** Adjusted to an annual basis. Various fund fees and expenses were
voluntarily waived or absorbed by IIM for the Institutional Tax-Free Money
Market Fund during the period ended July 31, 1999. Had the Fund paid all
expenses, the ratio of expenses and net investment income to average daily
net assets would have been 0.55%/2.54% for the period ended July 31, 1999.
F-13
<PAGE>
PRIME MONEY MARKET FUND
INVESTMENTS IN SECURITIES
JULY 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL MARKET
NAME OF ISSUER AMOUNT VALUE (a)
<S> <C> <C>
- ----------------------------------------------------------------------------------
(Percentages of each investment category relate to total net assets.)
COMMERCIAL PAPER & OTHER CORPORATE OBLIGATIONS (99.37%):
- ----------------------------------------------------------------------------------
AGRICULTURAL PRODUCTS (1.78%)
Archer Daniels Midland Company, 5.10%,
9/21/99 $ 3,000,000 $ 2,978,325
Cargill Inc., 5.12%-5.42%, 9/3/99-1/19/00 78,480,000 77,555,799
------------------
80,534,124
------------------
BANKS - DOMESTIC (15.13%)
Bank of America, 5.25%, 2/25/00 30,000,000 30,000,000
Branch Banking & Trust Company,
5.03%-5.25%, 9/15/99-10/8/99 14,000,000 14,016,831
COFCO Capital Corporation, 5.11%, 8/17/99,
LOC Bank of America 10,100,000 10,077,062
Comerica Bank, 5.17%, 7/13/00 20,000,000(d) 19,992,508
Fifth Third Bank, Cincinatti, 5.19%,
10/20/99 25,000,000 25,000,000
First National Bank of Chicago,
5.15%-5.20%, 9/2/99-10/19/99 43,740,000 43,740,000
First Tennessee Bank, 4.93%-5.05%,
8/10/99-8/16/99 42,000,000 42,000,000
First Union National Bank, Charlotte,
5.05%-5.32%, 10/21/99-11/10/99 64,700,000(d) 64,700,000
Key Bank N.A., Cleveland, 4.98%-5.14%,
9/23/99-2/18/00 50,000,000(d) 50,004,244
LaSalle Bank, Chicago, 5.01%-5.26%,
8/18/99-2/1/00 80,000,000 79,996,238
NationsBank, 5.17%, 9/21/99 10,000,000 10,000,000
Old Kent Bank, 5.00%, 8/17/99 30,000,000 30,000,000
PNC Bank N.A., 5.15%, 8/3/99-6/7/00 75,000,000(d) 74,987,285
Regionsbank N.A., Birmingham, 4.87%-5.73%,
8/18/99-7/14/00 46,100,000 46,099,792
Southtrust Bank N.A., Atlanta, 4.89%,
8/12/99 25,000,000 25,000,146
Southtrust Bank N.A., Birmingham,
5.09%-5.20%, 9/20/99-4/28/00 64,300,000 64,285,347
U.S. Bank N.A., Minneapolis, 4.85%-5.14%,
8/10/99-9/7/99 54,000,000 54,000,000
------------------
683,899,453
------------------
BANKS - OTHER (19.11%)
ABN - AMRO, 5.01%, 11/17/99 20,000,000 19,997,716
Accor S.A., 4.96%-5.13%, 8/6/99-9/14/99,
LOC Banque Nationale De Paris 65,000,000 64,767,383
Abbey National Treasury Services,
4.99%-5.13%, 10/19/99-5/4/00 61,200,000(d) 61,006,457
Banco Nationale De Mexico, 5.13%, 9/16/99,
LOC Barclays Bank 20,000,000 19,868,900
Banque National De Paris, 5.14%, 9/23/99 20,000,000 20,000,000
Bank of Nova Scotia, 4.86%-5.53%,
8/6/99-1/21/00 80,000,000 79,959,000
Canadian Imperial Bank of Commerce,
5.03%-5.17%, 1/24/00-2/23/00 67,000,000 67,154,029
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
F-14
<PAGE>
PRIME MONEY MARKET FUND
INVESTMENTS IN SECURITIES (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
NAME OF ISSUER AMOUNT VALUE (a)
- ----------------------------------------------------------------------------------
<S> <C> <C>
COMMERCIAL PAPER & OTHER CORPORATE OBLIGATIONS (CONTINUED)
- ----------------------------------------------------------------------------------
BANKS - OTHER (CONTINUED)
Deutsche Bank, 4.79%-5.10%, 8/4/99-4/19/00 $ 87,250,000 $ 87,158,970
Dresdner Bank A.G., New York, 5.06%-5.14%,
1/14/00-7/24/00 60,000,000 59,989,897
Formosa Plastics USA, 5.05%-5.18%,
8/17/99-10/12/99,
LOC ABN - AMRO & Bank of America 45,000,000 44,736,689
JMG Funding Inc., 5.12%-5.25%,
9/1/99-9/14/99,
LOC Societe Generale 31,300,000 31,120,285
National Westminster Bank, 4.98%-5.08%,
1/7/00-4/10/00 45,000,000 44,988,200
Pemex Capital Capital Corporation,
5.13%-5.15%, 9/20/99-9/24/99,
LOC Societe Generale 37,519,000 37,241,135
Petroleo Brasilieiro, 4.82%, 8/9/99, LOC
Barclays Bank 20,000,000 19,978,578
Presbyterian Healthcare Services, 5.11%,
9/8/99,
LOC Toronto-Dominion Bank 22,850,000 22,726,750
Rabobank Nederland, 4.98%-5.11%,
1/10/00-2/16/00 29,000,000 28,995,453
Royal Bank of Canada, 5.04%, 2/8/00 11,000,000 10,997,489
Sinochem America, 5.00%-5.13%,
8/12/99-9/15/99,
LOC ABN - AMRO 30,000,000 29,880,896
Toronto Dominion Holdings, Inc.,
5.00%-5.16%, 10/29/99-1/5/00 49,000,000 48,614,935
United Bank of Switzerland A.G.,
5.20%-5.70%, 3/1/00-7/10/00 65,000,000 64,978,815
------------------
864,161,577
------------------
CHEMICALS (1.58%)
Air Products and Chemicals, Inc., 5.08%,
8/13/99 20,000,000 19,966,133
Henkel Corporation, 5.10%-5.19%,
9/16/99-11/12/99 52,100,000(c) 51,577,271
------------------
71,543,404
------------------
CONGLOMERATES (1.11%)
Diageo Capital PLC, 5.10%, 8/2/99 50,000,000(c) 49,992,917
------------------
DRUGS AND COSMETICS (1.93%)
American Home Products, 4.92%-5.72%,
8/3/99-2/15/00 48,375,000(c) 48,198,634
Becton Dickinson Company, 5.16%-5.38%,
10/21/99-1/13/00 40,000,000 39,274,633
------------------
87,473,267
------------------
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
F-15
<PAGE>
PRIME MONEY MARKET FUND
INVESTMENTS IN SECURITIES (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
NAME OF ISSUER AMOUNT VALUE (a)
- ----------------------------------------------------------------------------------
<S> <C> <C>
COMMERCIAL PAPER & OTHER CORPORATE OBLIGATIONS (CONTINUED)
- ----------------------------------------------------------------------------------
FINANCIAL - AUTO (1.40%)
Ford Motor Credit Corporation,
5.02%-5.11%, 8/26/99-9/8/99 $ 33,400,000 $ 33,245,408
General Motors Acceptance Corporation,
4.97%, 8/17/99 10,000,000 9,977,911
Toyota Motor Credit Corporation, 5.77%,
7/6/00 20,000,000 20,000,000
------------------
63,223,319
------------------
FINANCIAL - AVIATION (2.15%)
AlliedSignal Inc., 5.10%-5.20%,
8/19/99-10/12/99 68,815,000(c) 68,291,220
International Lease Finance Corporation,
4.79%-4.90%, 8/3/99-8/5/99 29,000,000 28,988,107
------------------
97,279,327
------------------
FINANCIAL - DIVERSIFIED BUSINESS (13.95%)
American General Finance Corporation,
4.90%-5.19%, 8/2/99-2/15/00 91,450,000 91,260,911
Associates Corporation of North America,
5.10%-5.28%, 8/2/99-9/1/99 75,655,000 75,662,786
CIT Group Holdings, 5.29%, 1/14/00 30,000,000(d) 29,988,606
Commercial Credit Corporation,
4.90%-5.12%, 8/4/99-9/14/99 84,405,000 84,217,321
General Electric Capital Corporation,
4.96%, 8/10/99 25,000,000 24,969,000
Goldman Sachs Group, 5.18%-5.41%,
11/17/99-1/13/00 65,000,000 65,000,000
Household Finance Company, 5.10%, 9/13/99 30,000,000 29,817,250
Merrill Lynch & Co., 4.98%-5.50%,
9/30/99-3/6/00 82,000,000(d) 82,032,097
Morgan (J.P.) and Company, 5.00%, 8/20/99 20,000,000 19,947,222
Morgan Stanley Dean Witter Discover,
4.98%-5.14%, 8/13/99-3/2/00 70,000,000(d) 69,984,041
U.S. Bancorp Inc., 4.97%-5.10%,
8/13/99-9/7/99 24,240,000 24,148,792
Wells Fargo Company, 5.01%-5.02%,
8/10/99-8/25/99 33,940,000 33,855,607
------------------
630,883,633
------------------
FINANCIAL - DIVERSIFIED BUSINESS, ASSET-BACKED (20.49%)
Asset Securitization Coop. Corporation,
5.10%-5.17%, 8/24/99-9/17/99 84,750,000(c) 84,326,980
Barton Capital Corporation, 5.05%-5.18%,
8/10/99-10/8/99 100,080,000(c) 99,506,522
Delaware Funding Corporation, 5.05%-5.12%,
8/26/99-9/10/99 98,800,000(c) 98,331,171
Edison Asset Securitization, 4.82%-5.18%,
8/20/99-10/5/99 87,117,000(c) 86,673,165
Falcon Asset Securitization, 4.84%-5.22%,
8/12/99-10/29/99 84,000,000(c) 83,679,328
Fleet Funding Corporation, 5.11%, 9/3/99 11,000,000(c) 10,948,474
Park Avenue Receivables Corporation,
5.11%-5.17%, 8/20/99-9/10/99 80,733,000(c) 80,429,675
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
F-16
<PAGE>
PRIME MONEY MARKET FUND
INVESTMENTS IN SECURITIES (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
NAME OF ISSUER AMOUNT VALUE (a)
- ----------------------------------------------------------------------------------
<S> <C> <C>
COMMERCIAL PAPER & OTHER CORPORATE OBLIGATIONS (CONTINUED)
- ----------------------------------------------------------------------------------
FINANCIAL - DIVERSIFIED BUSINESS,
ASSET-BACKED (CONTINUED)
Preferred Receivables Funding Corporation,
4.94%-5.13%, 8/5/99-9/16/99 $ 66,890,000(c) $ 66,604,014
Receivables Capital Corporation,
4.98%-5.18%, 8/6/99-10/7/99 94,415,000(c) 93,856,282
Thunder Bay Funding, 4.82%-5.16%,
8/3/99-10/4/99 90,675,000(c) 90,251,889
Triple A One Funding, 5.04%-5.13%,
8/5/99-9/9/99 43,104,000(c) 42,929,937
Windmill Funding Corporation, 5.07%-5.14%,
8/6/99-9/27/99 89,830,000(c) 89,413,249
------------------
926,950,686
------------------
FOOD AND BEVERAGE (4.86%)
Anheuser Busch Companies Inc., 5.08%,
7/6/00 36,200,000 36,176,618
Bestfoods Company, 5.12%, 9/16/99 15,000,000 14,901,867
Coca Cola Company, 4.87%-5.08%,
8/2/99-8/26/99 98,750,000 98,536,144
H.J. Heinz Company, 4.90%-5.10%,
8/5/99-8/24/99 70,250,000 70,127,777
------------------
219,742,406
------------------
GOVERNMENT - DOMESTIC (0.88%)
Private Export Funding Corporation,
5.08%-5.16%, 9/15/99-10/12/99 40,340,000 39,984,591
------------------
HOUSEHOLD PRODUCTS (4.86%)
Clorox Corporation, 5.00%-5.10%,
8/13/99-9/16/99 60,170,000 59,884,759
Fortune Brands Inc., 5.00%-5.14%,
8/2/99-10/1/99 60,290,000(c) 60,062,107
Proctor & Gamble Company, 4.88%-5.09%,
8/6/99-8/23/99 100,000,000 99,786,972
------------------
219,733,838
------------------
MANUFACTURING (0.76%)
Caterpillar Financial Services Inc.,
4.80%-5.62%, 8/12/99-3/15/00 34,250,000 34,242,017
------------------
OIL SERVICES (1.90%)
American Petrofina Holding Company, 5.03%,
8/16/99 5,000,000 4,989,521
Halliburton Company, 4.90%-4.95%,
8/4/99-8/11/99 56,110,000 56,056,368
Petrofina Delaware, 5.00%, 8/12/99 25,000,000 24,961,806
------------------
86,007,695
------------------
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
F-17
<PAGE>
PRIME MONEY MARKET FUND
INVESTMENTS IN SECURITIES (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
NAME OF ISSUER AMOUNT VALUE (a)
- ----------------------------------------------------------------------------------
<S> <C> <C>
COMMERCIAL PAPER & OTHER CORPORATE OBLIGATIONS (CONTINUED)
- ----------------------------------------------------------------------------------
TELECOMMUNICATIONS (2.73%)
AT&T Company, 5.27%, 7/13/00 $ 30,000,000(d) $ 29,988,623
BellSouth Telecommunications, 4.88%-5.14%,
8/3/99-9/13/99 93,765,000(c) 93,584,407
------------------
123,573,030
------------------
UTILITIES - ELECTRIC (2.82%)
Baltimore Gas & Electric Company,
4.97%-5.10%, 8/13/99-9/1/99 48,275,000(d) 48,250,733
Carolina Power & Light, 5.05%, 9/13/99 32,000,000 31,806,978
Northern States Power Company, 5.10%,
9/20/99 23,000,000 22,837,083
Southern California Edison, 5.11%, 9/10/99 25,000,000 24,858,056
------------------
127,752,850
------------------
UTILITIES - FINANCIAL (1.93%)
National Rural Utilities Cooperative
Finance Corporation,
4.78%-5.18%, 8/9/99-6/26/00 87,400,000 87,144,577
- ----------------------------------------------------------------------------------
Total Commercial Paper & Other Corporate
Obligations (cost: $4,494,122,711) $ 4,494,122,711
- ----------------------------------------------------------------------------------
TAXABLE MUNICIPALS (0.33%):
- ----------------------------------------------------------------------------------
New York City G.O., 4.90%, 8/11/99, FGIC
Insured 10,450,000 10,450,000
State of Connecticut G.O. 5.65%, 8/1/99 4,400,000 4,400,000
- ----------------------------------------------------------------------------------
Total Taxable Municipals (cost: $14,850,000) $ 14,850,000
- ----------------------------------------------------------------------------------
Total Investment in Securities (cost:
$4,508,972,711) (b) $ 4,508,972,711
- ----------------------------------------------------------------------------------
</TABLE>
NOTES TO INVESTMENTS IN SECURITIES:
(a) Securities are valued in accordance with procedures described in note 2 to
the financial statements.
(b) Also represents cost for federal income tax purposes.
(c) All or a portion consists of commercial paper sold within terms of a
private placement memorandum, exempt from registration under section 4(2)
of the Securities Act of 1933, as amended, and may be sold only to dealers
in that program or other "accredited investors." These securities have been
determined to be liquid under guidelines established by the Board of
Directors.
(d) All or a portion consists of short-term securities with interest rates that
reset at set intervals at rates that are based on specific market indices.
Rate shown is the effective rate on July 31, 1999.
F-18
<PAGE>
U.S. GOVERNMENT MONEY MARKET FUND
INVESTMENTS IN SECURITIES
JULY 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL MARKET
NAME OF ISSUER AMOUNT VALUE (a)
<S> <C> <C>
- ----------------------------------------------------------------------------------
(Percentages of each investment category relate to total net assets.)
GOVERNMENT & AGENCIES SECURITIES (91.26%):
- ----------------------------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (13.45%)
5.05%-6.15%, 9/24/99-5/12/00 $ 36,500,000 $ 36,498,358
FEDERAL HOME LOAN MORTGAGE CORPORATION (36.76%)
4.76%-6.13%, 8/19/99-7/14/00 99,970,000(c) 99,764,772
FEDERAL HOME LOAN BANK (18.57%)
4.75%-5.15%, 8/20/99-5/12/00 50,500,000(c) 50,385,371
FEDERAL FARM CREDIT BANK (12.90%)
5.00%-5.06%, 3/10/00-7/3/00 35,000,000(c) 34,995,542
STUDENT LOAN MARKETING ASSOCIATION (9.21%)
5.16%-5.31%, 12/10/99-7/27/00 25,000,000(c) 25,006,018
TENNESSEE VALLEY AUTHORITY (0.37%)
4.86%, 10/1/99 1,000,000 1,005,490
- ----------------------------------------------------------------------------------
Total Government & Agencies Securities (cost:
$247,655,551) $ 247,655,551
- ----------------------------------------------------------------------------------
REPURCHASE AGREEMENT (8.22%)
- ----------------------------------------------------------------------------------
Merrill Lynch, 5.05%, acquired 7/30/99 and
due 8/2/99 with accrued interest of
$9,385 (collateralized by $23,065,000
Federal National Mortgage Association
Note, 5.90%, 4/12/04) (cost:
$22,300,000) 22,300,000 22,300,000
- ----------------------------------------------------------------------------------
Total Investment in Securities (cost:
$269,955,551) (b) $ 269,955,551
- ----------------------------------------------------------------------------------
</TABLE>
NOTES TO INVESTMENTS IN SECURITIES:
(a) Securities are valued in accordance with procedures described in note 2 to
the financial statements.
(b) Also represents cost for federal income tax purposes.
(c) All or a portion of the balance consists of securities with interest rates
that reset at set intervals at rates that are based on specific market
indices. Rate shown is the effective rate on July 31, 1999.
F-19
<PAGE>
TAX FREE MONEY MARKET FUND
INVESTMENTS IN SECURITIES
JULY 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL MARKET
NAME OF ISSUER (c) AMOUNT VALUE (a)
<S> <C> <C>
- ----------------------------------------------------------------------------------
(Percentages of each investment category relate to total net assets.)
ALABAMA (1.62%)
Morgan County Decatur General Hospital,
3.55%, 3/1/00,
AMBAC Insured $ 965,000 $ 975,130
Town of Chatom Independent Development
Board, 3.35%, 8/13/99,
Guaranty: National Rural Coop Finance
Corporation 7,100,000 7,100,000
------------------
8,075,130
------------------
ALASKA (0.76%)
Anchorage General Obligation, 3.60%,
8/1/00, MBIA Insured 2,000,000 2,019,414
Anchorage Alaska Water Revenue, 3.50%,
8/1/99, FSA Insured 1,000,000 1,000,000
Fairbanks North Star Borough, 3.25%,
4/1/00, FSA Insured 745,000 759,527
------------------
3,778,941
------------------
ARIZONA (2.79%)
Maricopa County PCR (El Paso Elect),
3.10%, 7/1/14-12/1/14,
LOC Barclays Bank 12,300,000(b) 12,300,000
Scottsdale Arizona IDA Hospital, 3.24%,
9/1/99, AMBAC Insured 1,560,000 1,563,884
------------------
13,863,884
------------------
CALIFORNIA (1.29%)
Los Angeles Regional Airports Improvement
Corp. Lease Revenue
3.40%, 12/1/24, LOC Wachovia Bank of
Georgia 6,400,000(b) 6,400,000
------------------
COLORADO (4.39%)
Adams County Family Housing Revenue
(Hunters Cove Project)
Series 1985A, 3.25%, 1/15/14, LOC GECC 7,500,000(b) 7,500,000
Association of School Boards (Pueblo
School District),
3.20%, 12/1/99, Prerefunded 1,555,470 1,534,593
Aurora Centretech Metro District, 3.40%,
12/1/99,
LOC Banque National De Paris 1,000,000 1,000,000
Central Platte Valley Metro District,
3.55%, 10/1/99, MBIA Insured 1,000,000 999,998
Dove Valley Metro District, 3.38%,
11/1/99,
LOC Banque National De Paris 4,925,000 4,925,000
Health Facilities Authority Revenue
(Visiting Nurses), 3.40%, 7/1/22,
LOC Norwest Bank 1,030,000(b) 1,030,000
Interstate South Metro District, 3.38%,
11/1/99,
LOC Banque National De Paris 3,270,000 3,270,000
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
F-20
<PAGE>
TAX FREE MONEY MARKET FUND
INVESTMENTS IN SECURITIES (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
NAME OF ISSUER (c) AMOUNT VALUE (a)
- ----------------------------------------------------------------------------------
<S> <C> <C>
COLORADO (CONTINUED)
SBC Metro District, 3.35%, 12/1/99, LOC
U.S. Bank $ 1,555,000 $ 1,555,000
------------------
21,814,591
------------------
DELAWARE (1.25%)
Delaware Valley Regional Finance
Authority, 3.05%, 12/1/20,
LOC Credit Suisse 2,600,000(b) 2,600,000
New Castle County Development Authority,
3.15%, 8/15/20,
LOC First Union National Bank 3,592,500(b) 3,592,500
------------------
6,192,500
------------------
DISTRICT OF COLUMBIA (0.30%)
District of Columbia G.O., 3.10%, 12/1/99,
FSA Insured 1,485,000 1,494,732
------------------
FLORIDA (3.93%)
Hillsborough County Florida Utility,
3.05%-3.45%, 8/1/99, MBIA Insured 2,500,000 2,500,000
Jacksonville Education Facility Revenue,
3.15%, 10/1/22, LOC First Union 4,000,000(b) 4,000,000
Orange County Housing Finance Authority
Housing Revenue,
3.10%, 12/1/22 LOC Citibank 2,200,000(b) 2,200,000
Palm Beach Housing Finance Development
Authority, 3.00%, 11/1/07,
LOC Credit Suisse 5,000,000(b) 5,000,000
West Orange Memorial Hospital,
3.25%-3.30%, 8/2/99-8/10/99,
LOC Rabobank Nederland 5,850,000 5,850,000
------------------
19,550,000
------------------
GEORGIA (5.47%)
De Kalb Private Hospital Authority, 3.05%,
3/1/24, LOC Suntrust Bank 7,000,000(b) 7,000,000
Fulton County Residential Home Care,
3.45%, 1/1/18,
LOC Rabobank Nederland 1,100,000(b) 1,100,000
Hapeville Development Authority, 3.40%,
11/1/15, LOC Deutsche Bank 2,200,000(b) 2,200,000
Municipal Electric Authority of Georgia,
3.15%, 1/1/26, LOC ABN-AMRO 16,900,000(b) 16,900,000
------------------
27,200,000
------------------
ILLINOIS (10.66%)
Chicago O'Hare International Airport,
3.00%, 1/1/15,
LOC Societe Generale 3,200,000(b) 3,200,000
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
F-21
<PAGE>
TAX FREE MONEY MARKET FUND
INVESTMENTS IN SECURITIES (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
NAME OF ISSUER (c) AMOUNT VALUE (a)
- ----------------------------------------------------------------------------------
<S> <C> <C>
ILLINOIS (CONTINUED)
City of Springfield Community Improvement
Revenue Bonds Series 1985, (Realty
Restoration Project), 3.40%, 12/1/15,
collateralized in U.S. Governments $ 3,100,000(b) $ 3,100,000
City of Springfield MFHR (OT Center
Limited Project), 3.40%, 12/1/15,
collateralized in U.S. Governments 7,700,000(b) 7,700,000
Cook County Community College #508, 3.15%,
12/1/99, MBIA Insured 1,000,000 1,013,547
Development Finance Authority (A.E.
Stanley Manufacturing), 3.00%, 12/1/05,
LOC Union Bank of Switzerland 1,600,000(b) 1,600,000
Development Finance Authority (Jewish
Elderly Council), 3.15%, 3/1/25,
LOC LaSalle National Bank 600,000(b) 600,000
Education Facility Authority Demand
Revenue Bond
(Cultural Pool Program), 3.10%,
12/1/25,
LOC First National Bank of Chicago 4,265,000(b) 4,265,000
Galesburg Revenue (Knox College),
3.15%-3.25%, 7/1/24-3/1/31,
LOC LaSalle National Bank 8,500,000(b) 8,500,000
Health Facilities Authority (Alexian
Brothers Medical Center),
3.20%-3.35%, 8/23/99-9/8/99, MBIA
Insured 4,300,000 4,300,000
Health Facilities Authority (Children's
Memorial Hospital Project), Series
1985B, 3.20%, 11/1/15, LOC First
National Bank of Chicago 9,900,000(b) 9,900,000
Joliet Regional Port District Bonds,
3.50%, 7/15/03,
Guaranty: Dow Chemical 8,795,000(b) 8,795,000
------------------
52,973,547
------------------
INDIANA (3.73%)
Health Facilities Financing Authority
Hospital Revenue Bonds Series 1990,
3.00%, 11/1/20, LOC National Bank of
Detroit 2,000,000(b) 2,000,000
Health Facilities Financing Authority,
3.00%, 8/1/06-1/1/22,
LOC First Chicago 7,800,000(b) 7,800,000
Health Facilities Financing Authority
(Capital Access Designated Pool
Program) 3.15%, 12/1/02-4/1/13,
LOC Comerica Bank 6,750,000(b) 6,750,000
Secondary Market for Education Loans,
3.35%, 6/1/00, AMBAC Insured 2,000,000 2,004,025
------------------
18,554,025
------------------
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
F-22
<PAGE>
TAX FREE MONEY MARKET FUND
INVESTMENTS IN SECURITIES (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
NAME OF ISSUER (c) AMOUNT VALUE (a)
- ----------------------------------------------------------------------------------
<S> <C> <C>
IOWA (5.31%)
Financial Authority Revenue (Burlington
Medical Center), 3.20%, 6/1/27, FSA
Insured $ 20,400,000(b) $ 20,400,000
Higher Education Loan Authority Revenue
(Palmer Chiropractic), 3.55%, 4/1/27,
LOC Firstar Bank N.A. 3,000,000(b) 3,000,000
Mount Vernon Private College Project
(Cornell) Series 1985, 3.20%, 10/1/15,
LOC U.S. Bank 3,000,000(b) 3,000,000
------------------
26,400,000
------------------
KANSAS (0.50%)
State Development Authority Revenue,
3.25%, 6/1/00, FSA Insured 2,470,000 2,485,008
------------------
KENTUCKY (0.56%)
Economic Development Finance Authority
(Baptist Healthcare),
3.05%, 8/15/99, MBIA Insured 1,800,000 1,800,642
State Property and Buildings Community
Revenue, 3.05%, 9/1/99 1,000,000 1,000,908
------------------
2,801,550
------------------
LOUISIANA (1.52%)
Orleans Parish School Board, 3.20%,
2/1/00, MBIA Insured 3,000,000 2,953,036
Parish of East Baton Rouge, 3.40%,
11/1/19, Guaranty: Exxon Corporation 4,600,000(b) 4,600,000
------------------
7,553,036
------------------
MARYLAND (5.43%)
Anne Arundel County Port Facilities
Revenue, 3.35%, 8/5/99-10/13/99,
Guaranty: Baltimore Gas & Electric 6,200,000 6,200,000
Baltimore County Consolidated Public
Improvement Bonds, 3.15%, 4/1/00,
Prerefunded and Escrowed in Governments 2,380,000 2,484,550
Montgomery County Housing Opportunity,
3.15%, 11/1/07, LOC FHLMC 18,300,000(b) 18,300,000
------------------
26,984,550
------------------
MASSACHUSETTS (0.31%)
State Construction Loans, 3.15%, 3/1/00,
Escrowed in Governments 1,500,000 1,563,988
------------------
MICHIGAN (2.02%)
Delta County Economic Development
Authority, 3.40%, 12/1/23,
LOC Bank of Nova Scotia 5,800,000(b) 5,800,000
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
F-23
<PAGE>
TAX FREE MONEY MARKET FUND
INVESTMENTS IN SECURITIES (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
NAME OF ISSUER (c) AMOUNT VALUE (a)
- ----------------------------------------------------------------------------------
<S> <C> <C>
MICHIGAN (CONTINUED)
Farmington Public School District, 3.25%,
5/1/00, Guaranty: School Bond Loan
Program $ 815,000 $ 818,739
Kent Hospital Finance Authority (Spectrum
Health), 3.00%, 1/15/26,
MBIA Insured 3,400,000(b) 3,400,000
------------------
10,018,739
------------------
MINNESOTA (3.34%)
City of Duluth Economic Authority, 3.45%,
6/1/19,
LOC Credit Local De France 5,100,000(b) 5,100,000
City of Duluth Tax Increment Revenue,
3.10%, 9/1/10,
LOC Wachovia Bank 1,500,000(b) 1,500,000
Minneapolis/St. Paul State Housing &
Redevelopment Authority, 3.50%,
8/15/25, FSA Insured 4,000,000(b) 4,000,000
St. Paul Housing and Redevelopment
Authority (Science Museum of MN
Project), 3.05%-3.15%, 5/1/27, LOC U.S.
Bank 5,500,000(b) 5,500,000
University of Minnesota, 3.45%, 2/15/00,
Prerefunded 501,120 503,625
------------------
16,603,625
------------------
MISSISSIPPI (2.75%)
Business Finance Corporation (Mississippi
College Project), 3.20%, 2/1/09, LOC
Bank of America 6,400,000(b) 6,400,000
Claiborne County PCR, 3.35%, 8/6/99,
Guaranty: Nat'l Rural Utilities
Cooperative Finance Corp. 2,700,000 2,700,000
Hospital Equipment Finance Authority
Revenue (Baptist Medical Center),
3.10%, 7/1/12, LOC Rabobank 1,200,000(b) 1,200,000
State Highway Revenue Series #39, 3.10%,
2/1/00, Prerefunded 2,745,840 2,323,666
Tupelo School District, 3.20%, 12/1/99,
AMBAC Insured 1,050,000 1,053,232
------------------
13,676,898
------------------
MISSOURI (3.06%)
Kansas City IDA Hospital Revenue (Resh
Health Services), 3.40%, 10/15/14, MBIA
Insured 2,100,000(b) 2,100,000
Kansas City Municipal Assistance
Corporation (Leasehold H Roe Bartle),
3.25%, 4/15/00, Prerefunded and
Escrowed in Governments 1,300,000 1,359,970
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
F-24
<PAGE>
TAX FREE MONEY MARKET FUND
INVESTMENTS IN SECURITIES (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
NAME OF ISSUER (c) AMOUNT VALUE (a)
- ----------------------------------------------------------------------------------
<S> <C> <C>
MISSOURI (CONTINUED)
State Environmental Improvement & Energy
Resource Authority PCR, 3.20%, 8/23/99,
LOC Union Bank of Switzerland $ 1,700,000 $ 1,700,000
State Health and Education Facilities
Authority Revenue Series A
(Christian Health Services Project),
3.10%, 11/1/19,
LOC Morgan Guaranty 1,000,000(b) 1,000,000
State Health and Education Facilities
Authority Revenue
(Kirkwood School District), 3.65%,
9/13/99 2,375,000 2,376,613
State Health and Education Facilities
Authority Revenue
(St. Francis Medical Center), 3.45%,
6/1/26,
LOC Credit Local de France 6,700,000(b) 6,700,000
------------------
15,236,583
------------------
MONTANA (1.83%)
State Health Facilities Authority Revenue
Bonds Series A
(Health Care Pooled Loan Program),
3.05%, 12/1/15, FGIC Insured 9,105,000(b) 9,105,000
------------------
NEVADA (1.50%)
Clark County Airport System Refunding
Revenue Bonds,
3.00%, 7/1/25, LOC Toronto Dominion
Bank 3,000,000(b) 3,000,000
3.00%, 7/1/12, MBIA Insured 4,445,000(b) 4,445,000
------------------
7,445,000
------------------
NEW JERSEY (0.24%)
Economic Development Authority (Volvo
American Corp.), 3.41%, 12/1/04, LOC
Credit Suisse 1,200,000(b) 1,200,000
------------------
NEW YORK (0.20%)
New York City G.O., 3.50%, 10/01/20, FGIC
Insured 1,000,000(b) 1,000,000
------------------
NORTH CAROLINA (4.92%)
Educational Facility Finance Agency
(Gardner Webb University),
3.10%, 7/1/17, LOC First Union Bank 5,870,000(b) 5,870,000
Haywood Regional Medical Center, 3.10%,
5/1/17, LOC First Union Bank 4,885,000(b) 4,885,000
State Medical Care Commission Hospital
(Angel Medical Care Center), 3.10%,
10/1/16, LOC First Union 3,600,000(b) 3,600,000
State Medical Center Commission Revenues
(Carol Woods Project), 3.45%, 4/1/21,
LOC Bank of America 4,300,000(b) 4,300,000
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
F-25
<PAGE>
TAX FREE MONEY MARKET FUND
INVESTMENTS IN SECURITIES (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
NAME OF ISSUER (c) AMOUNT VALUE (a)
- ----------------------------------------------------------------------------------
<S> <C> <C>
NORTH CAROLINA (CONTINUED)
State Medical Care Commission (Carolina
Meadows Project), 3.45%, 6/1/28, LOC
Wachovia Bank $ 1,800,000(b) $ 1,800,000
University of North Carolina Revenue,
3.20%, 11/1/16,
LOC Wachovia Bank 4,000,000(b) 4,000,000
------------------
24,455,000
------------------
OHIO (4.08%)
Warren County Ohio Health Care Facility
(Otterbein Homes), 3.15%, 7/1/23, LOC
Fifth Third Bank 20,300,000(b) 20,300,000
------------------
OKLAHOMA (0.32%)
City of Moore G.O., 3.40%, 4/1/00, MBIA
Insured 600,000 602,325
Garfield County Industrial Authority PCR,
3.20%, 1/1/25,
Guaranty: Oklahoma Gas & Electric 1,000,000(b) 1,000,000
------------------
1,602,325
------------------
PENNSYLVANIA (4.88%)
Allegheny County Hospital Revenue, 3.15%,
8/6/99, LOC PNC Bank 5,200,000 5,200,000
Dauphin County General Authority, 3.35%,
6/1/00, AMBAC Insured 750,000 750,300
Philadelphia Water and Wastewater Revenue,
3.05%, 8/1/99,
AMBAC Insured 1,000,000 1,000,000
Quakertown Hospital Authority, 3.25%,
7/1/05-7/1/26, LOC PNC Bank 17,300,000(b) 17,300,000
------------------
24,250,300
------------------
SOUTH CAROLINA (1.73%)
State Housing Finance and Development
Authority, 3.15%, 7/1/07,
LOC First Union Bank 2,120,000(b) 2,120,000
York County PCR, 3.20%-3.35%,
9/15/99-10/6/99,
Guaranty: Duke Power Company 6,500,000 6,500,000
------------------
8,620,000
------------------
TENNESSEE (2.74%)
Clarksville Public Building Authority,
3.00%, 7/1/13, MBIA Insured 1,911,000(b) 1,911,000
Montgomery County Public Building
Authority, 3.20%, 7/1/15,
LOC NationsBank 5,500,000(b) 5,500,000
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
F-26
<PAGE>
TAX FREE MONEY MARKET FUND
INVESTMENTS IN SECURITIES (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
NAME OF ISSUER (c) AMOUNT VALUE (a)
- ----------------------------------------------------------------------------------
<S> <C> <C>
TENNESSEE (CONTINUED)
Nashville and Davidson County Health and
Education Facility, 3.20%, 8/1/18, LOC
NationsBank $ 6,200,000(b) $ 6,200,000
------------------
13,611,000
------------------
TEXAS (7.12%)
Austin Independent School District, 3.54%,
8/1/99, Texas PSF guaranteed 1,000,000 1,000,000
Brazos River Harbor Navagation District,
3.45%, 8/1/22,
Guaranty: Dow Chemical 2,400,000(b) 2,400,000
Brownsville Utility System Revenue Bond,
3.58%, 9/1/99, AMBAC Insured 1,000,000 1,001,170
City of Austin, 3.30%, 10/14/99, LOC
Morgan Guaranty 1,000,000 1,000,000
Coastal Bend Health Facilities, 3.15%,
8/15/27, LOC First Chicago 355,000(b) 355,000
Dallas County Mental Health Center
Facility Revenue Bond, 3.30%, 9/1/99,
FSA Insured 870,000 871,438
Grand Prairie G.O., 3.25%, 2/15/00, MBIA
Insured 2,390,000 2,418,254
Harris County, 3.00%-3.28%, 10/1/99, MBIA
Insured 8,675,000 8,626,620
Houston Water & Sewer Systems, 3.18%,
12/1/99, MBIA Insured 750,000 754,675
North East Independent School District,
3.15%, 2/1/00,
Texas PSF guaranteed 2,150,000 2,190,621
Nueces River Authority PCR (Reynolds
Metals Co. Project), 3.45%, 12/01/99,
LOC Bank of Nova Scotia 7,300,000 7,300,000
Pflugerville ISD, 3.25%, 8/15/99, Texas
PSF Guaranteed 998,771 998,771
San Antonio Water Revenue Capital
Appreciation Bonds, 3.35%, 5/1/00,
Prerefunded 2,430,048 2,453,411
Tarrant County Housing Finance
Corporation, MFHR - Single Family
Apartments Project, 3.15%, 11/1/17, LOC
Suntrust Bank 4,025,000(b) 4,025,000
------------------
35,394,960
------------------
UTAH (4.34%)
State Board of Regents Student Loan
Revenue Bonds Series B, 3.15%, 11/1/00,
AMBAC Insured 11,900,000(b) 11,900,000
State Highway Improvement, 3.15%, 8/16/99,
LOC State of Utah G.O. 5,400,000 5,400,000
State of Utah G.O., 3.05%, 7/1/16,
Guaranty: State of Utah 4,300,000(b) 4,300,000
------------------
21,600,000
------------------
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
F-27
<PAGE>
TAX FREE MONEY MARKET FUND
INVESTMENTS IN SECURITIES (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
NAME OF ISSUER (c) AMOUNT VALUE (a)
- ----------------------------------------------------------------------------------
<S> <C> <C>
VERMONT (0.25%)
State of Vermont G.O., 3.15%, 2/1/00,
Escrowed in Governments $ 1,210,000 $ 1,255,116
------------------
WASHINGTON (2.13%)
State Housing Finance Commission, 3.40%,
1/1/21, LOC U.S. Bank 8,100,000(b) 8,100,000
State of Washington G.O., 3.55%, 8/1/00,
Prerefunded 2,476,560 2,475,732
------------------
10,575,732
------------------
WEST VIRGINIA (0.20%)
Weirton Hospital Building, 3.10%, 12/1/99,
AMBAC Insured 1,000,000 1,007,183
------------------
WISCONSIN (1.83%)
La Crosse IDA (Dairyland Power
Cooperative), 3.40%, 9/1/14-2/1/15,
AMBAC Insured 9,100,000(b) 9,100,000
------------------
WYOMING (0.34%)
Converse County PCR, 3.35%, 8/4/99, LOC
Deutsche Bank 1,400,000 1,400,000
Uinta County, 3.40%, 8/15/20, Guaranty:
Chevron Inc. 300,000(b) 300,000
------------------
1,700,000
- ----------------------------------------------------------------------------------
Total Investments in Securities (cost:
$495,442,943) (d) $ 495,442,943
- ----------------------------------------------------------------------------------
</TABLE>
NOTES TO INVESTMENTS IN SECURITIES:
(a) Securities are valued in accordance with procedures described in note 2 to
the financial statements.
(b) Interest rate varies to reflect current market conditions; rate shown is
the effective rate on July 31, 1999. The maturity date shown represents
final maturity. However, for purposes of Rule 2a-7, maturity is the next
interest rate reset date at which time the security can be put back to the
issuer.
(c) Portfolio abbreviations: AMBAC - American Municipal Bond Association
Corporation
FGIC - Financial Guaranty Insurance Corporation
FHLMC - Federal Home Loan Mortgage Corporation
FSA - Financial Security Assurance Corporation
G.O. - General Obligation
GECC - General Electric Capital Corporation
IDA - Industrial Development Authority
LOC - Letter of Credit
MBIA - Municipal Bond Insurance Association
MFHR - Multi-Family Housing Revenue
PCR - Pollution Control Revenue
PSF - Permanent School Fund
(d) Also represents cost for federal income tax purposes.
F-28
<PAGE>
INSTITUTIONAL PRIME MONEY MARKET FUND
INVESTMENTS IN SECURITIES
JULY 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL MARKET
NAME OF ISSUER AMOUNT VALUE (a)
<S> <C> <C>
- ----------------------------------------------------------------------------------
(Percentages of each investment category relate to total net assets.)
COMMERCIAL PAPER & OTHER CORPORATE OBLIGATIONS (97.88%):
- ----------------------------------------------------------------------------------
AGRICULTURAL PRODUCTS (2.96%)
Archer Daniels Midland Company, 5.35%,
1/18/00 $ 1,740,000 $ 1,696,041
Cargill Inc., 5.12%, 9/3/99 7,520,000 7,484,706
------------------
9,180,747
------------------
BANKS - DOMESTIC (19.40%)
Branch Banking and Trust Company, 5.03%,
9/15/99 2,000,000 2,002,534
Chemical Bank, 5.40%, 11/02/99, LOC Chase
Manhattan 5,000,000(d) 5,004,959
Comerica Bank, 5.13%, 7/13/00 10,000,000(d) 9,996,254
First National Bank of Chicago, 5.15%,
9/2/99 6,260,000 6,260,000
First Union National Bank, Charlotte,
5.05%, 11/10/99 5,300,000(d) 5,300,000
Key Bank N.A., Cleveland, 5.01%-5.75%,
2/18/00-4/25/00 12,000,000(d) 12,011,131
Regionsbank N.A., Birmingham, 4.87%,
8/18/99 9,900,000 9,900,000
Southtrust Bank N.A., Birmingham, 5.13%,
9/20/99 9,700,000 9,700,000
------------------
60,174,878
------------------
BANKS - OTHER (5.87%)
Petroleo Brasileiro, S.A., 5.09%, 8/20/99,
LOC Barclays Bank 8,730,000 8,706,548
Royal Bank of Canada, 5.04%, 2/8/00 4,000,000 3,999,092
Union Bank of Switzerland A.G, 5.29%,
3/1/00 5,500,000 5,500,156
------------------
18,205,796
------------------
CHEMICALS (10.10%)
Air Products and Chemicals, Inc.,
5.15%-6.01%, 10/25/99-12/15/99 14,880,000 14,826,995
Dow Chemical, 5.10%, 8/2/99 5,500,000 5,499,221
Henkel Corporation, 4.79%, 8/10/99 11,000,000(c) 10,986,828
------------------
31,313,044
------------------
DRUGS AND COSMETICS (4.84%)
American Home Products Corporation, 5.11%,
2/15/00 1,000,000 1,013,171
Schering Corporation, 4.98%, 8/3/99 14,000,000 13,996,127
------------------
15,009,298
------------------
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
F-29
<PAGE>
INSTITUTIONAL PRIME MONEY MARKET FUND
INVESTMENTS IN SECURITIES (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
NAME OF ISSUER AMOUNT VALUE (a)
- ----------------------------------------------------------------------------------
<S> <C> <C>
COMMERCIAL PAPER & OTHER CORPORATE OBLIGATIONS (CONTINUED)
- ----------------------------------------------------------------------------------
FINANCIAL - AUTO (0.64%)
Toyota Motor Credit Corporation, 5.14%,
9/23/99 $ 2,000,000(d) $ 1,999,892
------------------
FINANCIAL - DIVERSIFIED BUSINESS (23.82%)
American General Finance Corporation,
5.15%, 2/15/00 4,000,000 4,057,322
Associates Corporation of North America,
5.10%, 9/17/99 1,500,000 1,502,271
Household Finance Corporation,
5.38%-5.40%, 8/16/99-4/27/00 15,500,000(d) 15,515,280
Merrill Lynch & Co., 5.14%-5.50%,
3/3/00-3/6/00 15,000,000(d) 15,019,604
Morgan (J.P.) and Company, 5.02%-5.13%,
8/9/99-5/18/00,
Guaranty: Morgan Guaranty 14,150,000(d) 14,139,106
Morgan Stanley Dean Witter Discover,
5.43%-7.50%, 9/1/99-3/1/00 11,000,000(d) 11,025,425
Norwest Financial, 6.00%, 8/1/99 1,000,000 1,000,000
Wells Fargo & Company, 5.01%, 8/10/99 11,645,000 11,630,415
------------------
73,889,423
------------------
FINANCIAL - DIVERSIFIED BUSINESS, ASSET-BACKED (8.73%)
Monte Blanc Capital Corporation, 5.08%,
8/6/99, LOC UBS & MBIA 11,660,000(c) 11,651,773
Park Avenue Receivables, 5.25%, 9/9/99,
LOC Chase Manhattan 10,000,000 9,943,125
Preferred Receivables Funding Corporation,
5.25%, 8/5/99 5,500,000(c) 5,496,792
------------------
27,091,690
------------------
FOOD AND BEVERAGE (1.85%)
H.J. Heinz, 5.08%, 8/20/99 4,750,000 4,737,265
Sara Lee Corporation, 6.70%, 9/9/99 1,000,000 1,001,374
------------------
5,738,639
------------------
HOUSEHOLD PRODUCTS (1.87%)
Fortune Brands, Inc., 5.00%-5.10%,
8/2/99-8/9/99 5,790,000(c) 5,788,201
------------------
MANUFACTURING (1.79%)
Caterpillar Financial Services Inc.,
5.80%, 3/15/00 5,550,000 5,553,026
------------------
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
F-30
<PAGE>
INSTITUTIONAL PRIME MONEY MARKET FUND
INVESTMENTS IN SECURITIES (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
NAME OF ISSUER AMOUNT VALUE (a)
- ----------------------------------------------------------------------------------
<S> <C> <C>
COMMERCIAL PAPER & OTHER CORPORATE OBLIGATIONS (CONTINUED)
- ----------------------------------------------------------------------------------
OIL SERVICES (8.39%)
American Petrofina Holding Company, 5.02%,
8/16/99
Guaranty: Petrofina S.A. $ 17,600,000 $ 17,563,186
Halliburton Company, 4.89%, 8/10/99 8,485,000 8,474,627
------------------
26,037,813
------------------
TELECOMMUNICATIONS (3.22%)
AT&T Company, 5.27%, 7/13/00 10,000,000(d) 9,996,208
------------------
TRUCKING (4.40%)
United Parcel Services of America, 5.15%,
8/2/99 13,635,000 13,633,048
- ----------------------------------------------------------------------------------
Total Commercial Paper & Other Corporate
Obligations (cost: $303,611,703) $ 303,611,703
- ----------------------------------------------------------------------------------
GOVERNMENT & AGENCIES SECURITIES (1.61%):
- ----------------------------------------------------------------------------------
Federal Home Loan Bank, 4.90%, 1/14/00 5,000,000 5,000,000
- ----------------------------------------------------------------------------------
Total Government & Agencies Securities (cost:
$5,000,000) $ 5,000,000
- ----------------------------------------------------------------------------------
Total Investment in Securities (cost:
$308,611,703) (b) $ 308,611,703
- ----------------------------------------------------------------------------------
</TABLE>
NOTES TO INVESTMENTS IN SECURITIES:
(a) Securities are valued in accordance with procedures described in note 2 to
the financial statements.
(b) Also represents cost for federal income tax purposes.
(c) All or a portion consists of commercial paper sold within terms of a
private placement memorandum, exempt from registration under section 4(2)
of the Securities Act of 1933, as amended, and may be sold only to dealers
in that program or other "accredited investors." These securities have been
determined to be liquid under guidelines established by the Board of
Directors.
(d) All or a portion consists of short-term securities with interest rates that
reset at set intervals at rates that are based on specific market indices.
Rate shown is the effective rate on July 31, 1999.
F-31
<PAGE>
INSTITUTIONAL TAX FREE MONEY MARKET FUND
INVESTMENTS IN SECURITIES
JULY 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL MARKET
NAME OF ISSUER (c) AMOUNT VALUE (a)
<S> <C> <C>
- ----------------------------------------------------------------------------------
(Percentages of each investment category relate to total net assets.)
CALIFORNIA (0.25%)
Oakland-Alameda County, 3.30%, 2/1/00, LOC
CIBC $130,000 $ 130,703
------------------
COLORADO (1.79%)
Health Facilities Authority Revenue
(Visiting Nurses), 3.40%, 7/1/22,
LOC Norwest Bank 950,000(b) 950,000
------------------
DELAWARE (0.19%)
Delaware Valley Regional Finance
Authority, 3.05%, 12/1/20,
LOC Credit Suisse 100,000(b) 100,000
------------------
FLORIDA (8.47%)
Florida Housing Finance Agency
(Multifamily Housing Monterey Meadows),
3.05%, 12/1/07, LOC Citibank 2,500,000(b) 2,500,000
Hillsborough County Florida Utility,
3.12%, 8/1/99, MBIA Insured 1,000,000 1,000,000
West Orange Memorial Hospital, 3.10%,
8/10/99, LOC Rabobank Nederland 1,000,000 1,000,000
------------------
4,500,000
------------------
GEORGIA (11.48%)
De Kalb Private Hospital Authority, 3.05%,
3/1/24, LOC Suntrust Bank 3,200,000(b) 3,200,000
Municipal Electric Authority, 3.15%,
1/1/26, LOC ABN-AMRO 2,900,000(b) 2,900,000
------------------
6,100,000
------------------
ILLINOIS (7.23%)
Cook County G.O., 3.10%, 11/1/99, AMBAC
Insured 720,000 725,517
Education Facility Authority (Cultural
Pool Program), 3.10%, 12/1/25,
LOC First National Bank of Chicago 615,000(b) 615,000
Health Facilities Authority Revenue,
3.20%, 11/1/15,
LOC First National Bank of Chicago 500,000(b) 500,000
Joliet Regional Port District IDR Bonds,
3.50%, 7/15/03,
Guaranty: Dow Chemical 2,000,000(b) 2,000,000
------------------
3,840,517
------------------
INDIANA (14.11%)
Health Facilities Financing Authority,
3.00%, 1/1/22, LOC First Chicago 1,000,000(b) 1,000,000
Health Facilities Financing Authority
(Capital Access Designated Pool
Program), 3.15%, 8/1/06-4/1/13, LOC
Comerica Bank 4,500,000(b) 4,500,000
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
F-32
<PAGE>
INSTITUTIONAL TAX FREE MONEY MARKET FUND
INVESTMENTS IN SECURITIES (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
NAME OF ISSUER (c) AMOUNT VALUE (a)
- ----------------------------------------------------------------------------------
<S> <C> <C>
INDIANA (CONTINUED)
Hospital Equipment Finance Authority,
3.15%, 12/1/15, First Chicago Insured $2,000,000(b) $ 2,000,000
------------------
7,500,000
------------------
IOWA (0.75%)
Higher Education Authority (Palmer
Chiropractic), 3.55%, 4/1/27,
LOC Firststar Bank 400,000(b) 400,000
------------------
KENTUCKY (1.46%)
State Property & Building Commission
(Project Number 49), 3.40%, 12/1/99,
Prerefunded 778,837 774,592
------------------
LOUISIANA (1.13%)
Louisiana Public Facilities Authority
(Kenner Hotel), 3.40%, 12/1/15,
LOC Deutsche Bank 600,000(b) 600,000
------------------
MARYLAND (8.05%)
Anne Arundel County Port Facilities
Revenue, 3.35%, 10/14/99,
Guaranty: Baltimore Gas & Electric 2,380,000 2,380,000
Montgomery County Housing Opportunity,
3.15%, 11/1/07, LOC FHLMC 1,900,000(b) 1,900,000
------------------
4,280,000
------------------
MINNESOTA (5.82%)
Beltrami County Environmental, 3.40%,
12/1/21,
LOC Union Bank of Switzerland 400,000(b) 400,000
City of Cohasset Revenue and Light
Project, 3.45%, 6/1/13,
LOC ABN-AMRO 800,000(b) 800,000
City of Duluth Tax Increment Revenue,
3.10%, 9/1/10, LOC Wachovia Bank 1,300,000(b) 1,300,000
City of Minneapolis Unlimited Tax G.O.,
3.25%, 12/1/99 595,000 595,000
------------------
3,095,000
------------------
MISSISSIPPI (2.38%)
Claiborne County PCR, 3.35%, 8/6/99,
Guaranty: Nat'l Rural Utilities
Cooperative Finance Corp. 800,000 800,000
State Highway Revenue Series #39, 3.10%,
2/1/00, Prerefunded 457,640 464,733
------------------
1,264,733
------------------
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
F-33
<PAGE>
INSTITUTIONAL TAX FREE MONEY MARKET FUND
INVESTMENTS IN SECURITIES (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
NAME OF ISSUER (c) AMOUNT VALUE (a)
- ----------------------------------------------------------------------------------
<S> <C> <C>
MISSOURI (3.76%)
State Health and Education Facilities
Authority (St. Francis Medical Center),
3.45%, 6/1/26, LOC Credit Local De
France $2,000,000(b) $ 2,000,000
------------------
NEVADA (0.56%)
Clark County Airport System Refunding
Revenue Notes 3.00%, 7/1/12,
MBIA Insured 300,000(b) 300,000
------------------
NEW YORK (7.90%)
New York City G.O. 3.40%, 8/15/18, AMBAC
Insured 1,000,000(b) 1,000,000
New York City Municipal Water Finance
Authority, 3.50%, 6/15/23-6/15/25, FGIC
Insured 3,200,000(b) 3,200,000
------------------
4,200,000
------------------
NORTH CAROLINA (0.75%)
State Medical Care Commission Hospital
Revenue Bonds, 3.45%, 10/1/13, LOC
First Union Bank 400,000(b) 400,000
------------------
OHIO (2.45%)
Warren County Ohio Health Care Facility
(Otterbein Homes), 3.15%, 7/1/23, LOC
Fifth Third Bank 1,300,000(b) 1,300,000
------------------
OREGON (0.94%)
Tri-County Trans Dist, 3.05%, 8/1/99,
AMBAC Insured 500,000 500,000
------------------
PENNSYLVANIA (1.51%)
Quakertown Hospital Authority, 3.25%,
7/1/05, LOC PNC Bank 800,000(b) 800,000
------------------
SOUTH CAROLINA (3.57%)
York County PCR, 3.20%-3.25%,
8/2/99-8/18/99,
Guaranty: Duke Power Company 1,900,000 1,900,000
------------------
TENNESSEE (4.52%)
Nashville and Davidson County Health and
Education Facility,
3.20%, 10/1/26, LOC NationsBank 800,000(b) 800,000
3.20%, 8/1/18, LOC NationsBank 1,600,000(b) 1,600,000
------------------
2,400,000
------------------
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
F-34
<PAGE>
INSTITUTIONAL TAX FREE MONEY MARKET FUND
INVESTMENTS IN SECURITIES (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
NAME OF ISSUER (c) AMOUNT VALUE (a)
- ----------------------------------------------------------------------------------
<S> <C> <C>
TEXAS (6.40%)
Grand Prairie Health Facilities
(Dallas/Fort Worth Medical Center),
3.10%, 11/1/99, AMBAC Insured $845,000 $ 851,057
Harris County Housing Finance MFHR, 3.32%,
9/1/99,
LOC Bank of Nova Scotia 230,000 230,435
Northside Texas Independent School
District, 3.13%, 2/1/00, Permanent
School Fund Guaranteed 1,385,000 1,420,698
San Antonio Water Revenue Bonds, 3.35%,
5/1/00, Prerefunded 888,500 897,043
------------------
3,399,233
------------------
VERMONT (1.95%)
State G.O., 3.12%, 2/1/00, Prerefunded 1,055,890 1,037,516
------------------
WASHINGTON (1.88%)
State Health Care Facilities Authority
(Fred Hutchinson Cancer Center),
3.50%, 1/1/29, LOC Bank of America 1,000,000(b) 1,000,000
------------------
WYOMING (0.19%)
Uinta County PCR, 3.40%, 12/1/22,
Guaranty: Chevron 100,000(b) 100,000
- ----------------------------------------------------------------------------------
Total Investments in Securities (cost:
$52,872,294) (d) $ 52,872,294
- ----------------------------------------------------------------------------------
</TABLE>
NOTES TO INVESTMENTS IN SECURITIES:
(a) Securities are valued in accordance with procedures described in note 2 to
the financial statements.
(b) Interest rate varies to reflect current market conditions; rate shown is
the effective rate on July 31, 1999. The maturity date shown represents
final maturity. However, for purposes of Rule 2a-7, maturity is the next
interest rate reset date at which time the security can be put back to the
issuer.
(c) Portfolio abbreviations: AMBAC - American Municipal Bond Association
Corporation
CIBC - Canadian Imperial Bank of Commerce
FGIC - Financial Guaranty Insurance Corporation
FHLMC - Federal Home Loan Mortgage Corporation
G.O. - General Obligation
IDR - Industrial Development Revenue
LOC - Letter of Credit
MBIA - Municipal Bond Insurance Association
MFHR - Multi-Family Housing Revenue
PCR - Pollution Control Revenue
(d) Also represents cost for federal income tax purposes.
F-35
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Great Hall Investment Funds, Inc.
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments in securities, of Prime Money Market Fund, U.S.
Government Money Market Fund, Tax-Free Money Market Fund, Institutional Prime
Money Market Fund and Institutional Tax-Free Money Market Fund (funds within
Great Hall Investment Funds, Inc.) as of July 31, 1999 and the related
statements of operations for the year then ended (period from September 23, 1998
(commencement of operations) to July 31, 1999 for Institutional Tax-Free Money
Market Fund) and the statements of changes in net assets for each of the years
in the two-year period ended July 31, 1999 for the Prime, U.S. Government and
Tax-Free Money Market Funds and for the year ended July 31, 1999 and the period
from August 11, 1997 (commencement of operations) to July 31, 1998 for the
Institutional Prime Money Market Fund and for the period from September 23, 1998
to July 31, 1999 for Institutional Tax-Free Money Market Fund and the financial
highlights for each of the years in the five-year period ended July 31, 1999 for
the Prime, U.S. Government and Tax-Free Money Market Funds and for the year
ended July 31, 1999 and the period from August 11, 1997 to July 31, 1998 for the
Institutional Prime Money Market Fund and for the period from September 23, 1998
to July 31, 1999 for Institutional Tax-Free Money Market Fund. These financial
statements and the financial highlights are the responsibility of the Funds'
management. Our responsibility is to express an opinion on these financial
statements and the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Investment securities held in custody are confirmed to us by the
custodian or brokers. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and the financial highlights referred
to above present fairly, in all material respects, the financial position of
Prime Money Market Fund, U.S. Government Money Market Fund, Tax-Free Money
Market Fund, Institutional Prime Money Market Fund and Institutional Tax-Free
Money Market Fund at July 31, 1999, and the results of their operations, changes
in their net assets and the financial highlights for the periods stated in the
first paragraph above, in conformity with generally accepted accounting
principles.
KPMG LLP
Minneapolis, Minnesota
September 3, 1999
F-36
<PAGE>
GREAT HALL INVESTMENT FUNDS, INC.
POST-EFFECTIVE AMENDMENT NO. 14 TO THE
REGISTRATION STATEMENT ON FORM N-1A
PART C
OTHER INFORMATION
<PAGE>
PART C
OTHER INFORMATION
ITEM 23 -- EXHIBITS
(a) Articles of Incorporation (1)
(b) Bylaws(4)
(c) Not applicable
(d) Investment Advisory Agreement(4)
(e) Distributor Agreement(4)
(f) Not applicable
(g) Custodian Contract(1)
(h)(1) Transfer Agency and Service Agreement(2)
(h)(2) Shareholder Account Services Agreement(5)
(h)(3) Investment Accounting Agreement(3)
(i) Opinion and Consent of Faegre & Benson LLP(4)
(j) Consent of KPMG LLP
(k) Not applicable
(l) Letter of Investment Intent(1)
(m) Not applicable
(n) Not applicable
(o) Code of Ethics(4)
(p) Power of Attorney(1)
(1) Incorporated by reference to Post-Effective Amendment No. 7 to the
Registration Statement filed on or about November 29, 1995.
(2) Incorporated by reference to Post-Effective Amendment No. 8 to the
Registration Statement filed on or about December 1, 1996.
(3) Incorporated by reference to Post-Effective Amendment No. 9 to the
Registration Statement filed on or about August 1, 1997.
(4) Incorporated by reference to Post-Effective Amendment No. 12 to the
Registration Statement filed on or about September 29, 1998.
(5) Incorporated by reference to Post-Effective Amendment No. 13 to the
Registration Statement filed on or about November 25, 1998.
C-1
<PAGE>
ITEM 24 -- PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
See the information set forth under the caption "Fund Management" in the
accompanying Prospectuses (Part A of this Registration Statement) and under the
captions "Management and Distribution Agreements" and "Directors and Officers"
in the accompanying Statements of Additional Information (Part B of this
Registration Statement).
ITEM 25 -- INDEMNIFICATION
The Articles of Incorporation (Exhibit (a)) and Bylaws (Exhibit (b)) of the
Registrant provide that the Registrant shall indemnify such persons, for such
expenses and liabilities, in such manner, under such circumstances, and to the
full extent permitted by Section 302A.521 of the Minnesota Statutes, as now
enacted or hereafter amended, provided that no such indemnification may be made
if it would be in violation of Section 17(h) of the Investment Company Act of
1940, as now enacted or hereafter amended. Section 302A.521 of the Minnesota
Statutes, as now enacted, provides that a corporation shall indemnify a person
made or threatened to be made a party to a proceeding against judgments,
penalties, fines, settlements and reasonable expenses, including attorneys' fees
and disbursements, incurred by the person in connection with the proceeding, if,
with respect to the acts or omissions of the person complained of in the
proceeding, the person: (a) has not been indemnified by another organization for
the same judgments, penalties, fines, settlements and reasonable expenses
incurred by the person in connection with the proceeding with respect to the
same acts or omissions; (b) acted in good faith; (c) received no improper
personal benefit; (d) complied with the Minnesota Statute dealing with
directors' conflicts of interest, if applicable; (e) in the case of a criminal
proceeding, had no reasonable cause to believe the conduct was unlawful; and (f)
reasonably believed that the conduct was in the best interests of the
corporation or, in certain circumstances, reasonably believed that the conduct
was not opposed to the best interests of the corporation.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
ITEM 26 -- BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Information on the business of the Registrant's investment adviser and on
the officers and directors of the investment adviser is set forth under the
caption "Fund Management" in the
C-2
<PAGE>
accompanying Prospectuses (Part A of this Registration Statement) and under the
captions "Management and Distribution Agreements" and "Directors and Officers"
in the accompanying Statements of Additional Information (Part B of this
Registration Statement).
ITEM 27 -- PRINCIPAL UNDERWRITERS
(a) As set forth in the accompanying Prospectus and Statement of Additional
Information, Dain Rauscher Incorporated ("DRI") serves as the principal
underwriter of the Registrant's shares of common stock. As of the date of this
filing, DRI does not serve as a principal underwriter to any other registered
investment companies.
(b) The principal business address of each director and officer of Dain
Rauscher Incorporated is 60 South Sixth Street, Minneapolis, Minnesota 55402 or
CityPlace, 2711 North Haskell Avenue, Dallas, Texas 75204. The names, positions
and offices of the directors and senior officers of DRI are set forth below.
Name Positions and Offices with Underwriter
- ---- --------------------------------------
Appel, John C. Vice Chairman
Civello, Nelson D. Senior Executive Vice President
McFarland, Richard L. Vice Chairman
Pierce, Jr, Charles C. Vice Chairman
Smith, Carla J. Senior VP/ Secretary / General Counsel
Spiker, John Scott Senior Executive Vice President
Tschetter, Ronald A. Senior Executive Vice President
Weiser, Irving Chairman, President and CEO
Wessels, Kenneth Senior Executive Vice President
(c) Not applicable.
ITEM 28 -- LOCATION OF ACCOUNTS AND RECORDS
The custodian of the Registrant is Norwest Bank Minnesota, N.A., 90 South
Seventh Street, Minneapolis, Minnesota 55402. The dividend disbursing agent and
transfer agent of the Registrant is PFPC Inc., 400 Bellevue Parkway, Wilmington,
Delaware 19809. The fund accounting agent of the Registrant is Investors
Fiduciary Trust Company, 127 West 10th Street, Kansas City, Missouri 64105-1716.
Other records will be maintained by the Registrant at its principal offices,
which are located at 60 South Sixth Street, Minneapolis, Minnesota 55402.
ITEM 29 -- MANAGEMENT SERVICES
Not applicable.
ITEM 30 -- UNDERTAKINGS
Not applicable.
C-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Post-Effective Amendment to its Registration Statement on Form N-1A to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Minneapolis, and State of Minnesota, on the 1st day of October, 1999.
GREAT HALL INVESTMENT FUNDS, INC.
By /s/ J. Scott Spiker
---------------------------------------------
J. Scott Spiker
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registration Statement on Form N-1A has been
signed below by the following persons in the capacities and on the date
indicated.
<TABLE>
<CAPTION>
Name/Signature Title Date
- -------------- ----- ----
<S> <C> <C>
/s/ J. Scott Spiker Chief Executive Officer
- ---------------------------- (Principal Executive Officer) October 1, 1999
J. Scott Spiker
/s/ Julie K. Getchell Chief Financial Officer
- ---------------------------- (Principal Financial and Accounting
Julie K. Getchell Officer) October 1, 1999
T. Geron Bell* Director
Sandra J. Hale* Director
Ron James* Director
Jay H. Wein* Director
*By Julie K. Getchell
-------------------------------
Julie K. Getchell,
Attorney-in-Fact October 1, 1999
</TABLE>
(Pursuant to Powers of Attorney dated August 17, 1994, filed as Exhibit 17 to
Post-Effective Amendment No. 7 to the Registration Statement on November 29,
1995.)
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<C> <S> <C>
(a) Articles of Incorporation(1)
(b) Bylaws(4)
(c) Not applicable
(d) Investment Advisory Agreement(4)
(e) Distributor Agreement(4)
(f) Not applicable
(g) Custodian Contract(1)
(h)(1) Transfer Agency and Service Agreement(2)
(h)(2) Shareholder Account Services Agreement(5)
(h)(3) Investment Accounting Agreement(3)
(i) Opinion and Consent of Faegre & Benson LLP(4)
(j) Consent of KPMG LLP Filed Electronically
(k) Not applicable
(l) Letter of Investment Intent(1)
(m) Not applicable
(q) Not applicable
(r) Code of Ethics(4)
(s) Power of Attorney(1)
</TABLE>
- --------------------------------------------------------------------------------
(1) Incorporated by reference to Post-Effective Amendment No. 7 to the
Registration Statement filed on or about November 29, 1995.
(2) Incorporated by reference to Post-Effective Amendment No. 8 to the
Registration Statement filed on or about December 1, 1996.
(3) Incorporated by reference to Post-Effective Amendment No. 9 to the
Registration Statement filed on or about August 1, 1997.
(4) Incorporated by reference to Post-Effective Amendment No. 12 to the
Registration Statement filed on or about September 29, 1998.
(5) Incorporated by reference to Post-Effective Amendment No. 13 to the
Registration Statement filed on or about November 25, 1998.
<PAGE>
EXHIBIT J
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Great Hall Investment Funds, Inc.
We consent to the use of our reports included herein and the reference to our
Firm under the heading "FINANCIAL HIGHLIGHTS" in Part A and "COUNSEL AND
AUDITORS" in Part B of the Registration Statement on Form N-1A.
KPMG LLP
Minneapolis, Minnesota
October 1, 1999
