FIRST PRIORITY EQUITY INCOME FUND
FIRST PRIORITY BALANCED FUND
(PORTFOLIOS OF FIRST PRIORITY FUNDS)
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SUPPLEMENT TO COMBINED PROSPECTUS DATED JANUARY 31, 1995
A. The following information supplements the "Summary of Fund Expenses" table
for Equity Income Fund and Balanced Fund on page 3 of the Combined
Prospectus:
FIRST PRIORITY EQUITY INCOME FUND
FIRST PRIORITY BALANCED FUND
SUMMARY OF FUND EXPENSES
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<TABLE>
<CAPTION>
EQUITY
INCOME BALANCED
FUND FUND
------ --------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases (as a percentage of offering price)............................... 2.00% 2.00%
Maximum Sales Load Imposed on Reinvested Dividends (as a percentage of offering price).................... None None
Contingent Deferred Sales Charge (as a percentage of original purchase price or redemption proceeds, as applicable)... None None
Redemption Fees (as a percentage of amount redeemed, if applicable)....................................... None None
Exchange Fee.............................................................................................. None None
ANNUAL FUND OPERATING EXPENSES*
(As a percentage of projected average net assets)
Management Fee (after waiver)(1).......................................................................... 0.25% 0.25%
12b-1 Fees(2)............................................................................................. 0.00% 0.00%
Other Expenses............................................................................................ 0.51% 0.38%
Total Fund Operating Expenses(3)....................................................................... 0.76% 0.63%
</TABLE>
(1) The estimated management fee has been reduced to reflect the anticipated
voluntary waiver of the investment advisory fee by the investment adviser. The
adviser can terminate this voluntary waiver at any time at its sole discretion.
The maximum management fee is 0.80%.
(2) The Funds have no present intention of paying or accruing 12b-1 fees during
the fiscal year ending November 30, 1995. If either Fund were paying or accruing
12b-1 fees, it would be able to pay up to 0.30% of its average daily net assets
for 12b-1 fees.
(3) Total Fund Operating Expenses, absent the anticipated voluntary waiver of
the advisory fees, are estimated to be 1.31% for the Equity Income Fund, and
1.18% for the Balanced Fund.
* Annual Fund Operating Expenses are estimated based on average expenses
expected to be incurred during the fiscal year ending November 30, 1995.
During the course of this period, expenses may be more or less than the
average amount shown.
The purpose of this table is to assist an investor in understanding the
various costs and expenses that a shareholder of the Fund will bear, either
directly or indirectly. For more complete descriptions of the various costs and
expenses, see "The First Priority Information" and "Investing in the Funds."
Wire-transferred redemptions of less than $5,000 may be subject to additional
fees.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years
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<S> <C> <C>
You would pay the following expenses on a $1,000 investment assuming (1) 5% annual return; (2)
redemption at the end of each time period; and (3) payment of the maximum sales load of 2.00%, if
applicable. The Funds charge no redemption fees.
Equity Income Fund................................................................................... $ 28 $44
Balanced Fund........................................................................................ $ 26 $40
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. THIS EXAMPLE
IS BASED ON ESTIMATED DATA FOR THE FUND'S FISCAL YEAR ENDING NOVEMBER 30, 1995.
B. Please insert these new "Financial Highlights" tables as page 9 and 10 of the
Combined Prospectus.
FIRST PRIORITY FUNDS
FINANCIAL HIGHLIGHTS
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(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
BALANCED
PERIOD ENDED MAY 31, 1995(A) (UNAUDITED) FUND
--------
EQUITY INCOME
FUND
-------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00 $10.00
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INCOME FROM INVESTMENT OPERATIONS
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Net investment income 0.18 0.21
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Net realized and unrealized gain on investments 1.02 0.79
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Total from investment operations 1.20 1.00
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LESS DISTRIBUTIONS
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Distributions from net investment income (0.14) (0.12)
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NET ASSET VALUE, END OF PERIOD $ 11.06 $10.88
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TOTAL RETURN (B) 12.10% 10.11%
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RATIOS TO AVERAGE NET ASSETS
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Expenses 0.84%(c) 0.65%(c)
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Net investment income 4.27%(c) 4.61%(c)
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Expense waiver/reimbursement (d) 0.56%(c) 0.56%(c)
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SUPPLEMENTAL DATA
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Net assets, end of period (000 omitted) $38,132 $46,149
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Portfolio turnover 43% 20%
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</TABLE>
(a) Reflects operations for the period from December 19, 1994 (date of initial
public investment) to May 31, 1995.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
C. Please delete the reference to "$1 billion" in last sentence under the
subheading entitled "Common and Preferred Stocks" on page 12 of the Combined
Prospectus and replace it with "$500 million."
D. Please delete the third sentence under the section entitled "Equity
Investment Considerations" on page 18 of the Combined Prospectus and replace
it with the following:
"There are some additional risk factors associated with investments in these
Funds because these Funds may invest in small-to-medium capitalization stocks."
E. Please add the following after the sub-section entitled "Investing in
Securities of Other Investment Companies" located on page 23 of the Combined
Prospectus:
"DERIVATIVE CONTRACTS AND SECURITIES. The term "derivative" has traditionally
been applied to certain contracts (including, futures, forward, option and swap
contracts) that "derive" their value from changes in the value of an underlying
security, currency, commodity or index. Certain types of securities that
incorporate the performance characteristics of these contracts are also referred
to as "derivatives". The term has also been applied to securities "derived" from
the cash flows from underlying securities, mortgages or other obligations.
Derivative contracts and securities can be used to reduce or increase the
volatility of an investment portfolio's total performance. While the response of
certain derivative contracts and securities to market changes may differ from
traditional investments, such as stock and bonds, derivatives do not necessarily
present greater market risks than traditional investments. The Funds will only
use derivative contracts for the purposes disclosed in the applicable sections
above. To the extent that the Funds invest in securities that could be
characterized as derivatives, such as asset-backed securities and
mortgage-backed securities, including CMOs, they will only do so in a manner
consistent with their investment objectives, policies and limitations."
FEDERATED SECURITIES CORP.
(LOGO)
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Distributor
335931804
335931887
G01186-01 (6/95)
FIRST PRIORITY EQUITY INCOME FUND
FIRST PRIORITY BALANCED FUND
(PORTFOLIO OF FIRST PRIORITY FUNDS)
Supplement to Combined Statement of Additional Information dated January 31,
1995
A. Please delete the last sentence in the sub-section entitled "Portfolio
Turnover" on page 5 of the Combined Statement of Additional Information
and insert the following:
"For the period from December 19, 1994 (date of initial public
investment) to May 31, 1995, the portfolio turnover rates for
Equity Income Fund and Balanced Fund were 43% and 20%, respectively."
B. Please delete the section entitled "Fund Ownership" on page 12 of the
Combined Statement of Additional Information and replace it with the
following:
"Fund Ownership
Officers and Trustees own less than 1% of the Fund's outstanding shares.
The following list indicates the beneficial ownership of shareholders
who are the beneficial owners of more than 5% of the outstanding shares
of the following portfolios as of June 6, 1995: HUBCO, c/o of First
Alabama Bank of Birmingham, Birmingham, Alabama, owned approximately
96,897,028 Trust Shares (100%) of the Treasury Money Market Fund;
approximately 6,196,228 shares (99%) of the Limited Maturity Government
Fund; approximately 15,101,164 shares (94%) of the Fixed Income Fund;
approximately 12,737,639 shares (96%) of the Equity Fund; approximately
3,454,738 shares (100%) of the Equity Income Fund; and 4,233,006 shares
(100%) of the Balanced Fund; Jean Robertson, Hermitage, Tennessee, owned
approximately 1,835,347 of the Investment shares (7.71%) of the Treasury
Money Market Fund; Aronov Realty Management, Inc., Montgomery, Alabama,
owned approximately 1,593,243 of the Investment shares (6.69%) of the
Treasury Money Market Fund."
C. Please delete the section entitled "Officers and Trustees Compensation"
located on page 13 of the Combined Statement of Additional Information
and replace it with the following:
"Officers and Trustees Compensation
Name , Aggregate Total Compensation
Position With Compensation From Paid To Trustees From
Trust Trust+ Trust And Fund Complex*
John F. Donahue, $0 $0 for the Trust and
Chairman and Trustee 1 investment company
Thomas G. Bigley, $891 $1,610 for the Trust and
Trustee 1 investment company
John T. Conroy, Jr., $1,622 $6,379 for the Trust and
Trustee 1 investment company
William J. Copeland, $1,622 $6,379 for the Trust and
Trustee 1 investment company
James E. Dowd, $1,622 $6,379 for the Trust and
Trustee 1 investment company
Lawrence D. Ellis, M.D., $1,461 $5,769 for the Trust and
Trustee 1 investment company
Edward L. Flaherty, Jr., $1,622 $6,379 for the Trust and
Trustee 1 investment company
Edward C. Gonzales, $0 $0**
President and Trustee
Peter E. Madden, $1,245 $5,553 for the Trust and ,
Trustee 1 investment company
Gregor F. Meyer, $1,461 $5,769 for the Trust and
Trustee 1 investment company
John Murray, $514 $514**
Trustee
Wesley W. Posvar, $1,461 $5,769 for the Trust and
Trustee 1 investment company
Marjorie P. Smuts, $1,461 $5,769 for the Trust and
Trustee 1 investment company
+ The aggregate compensation is provided for the Trust which is
comprised of six portfolios. Information for the Trust is furnished for
the period ended April 30, 1995.
* Information for the 1 investment company is provided for the last
calendar year.
** For the last calendar year, this person was not a Trustee of the
other investment company in the Fund Complex."
D. Please insert the following information at the end of the first
paragraph under the sub-section entitled "Advisory Fees" on page 14 of
the Combined Statement of Additional Information:
"For the period from the start of business, December 19, 1994, to May
31, 1995, the Adviser earned fees from Equity Income Fund and Balanced
Fund of $95,128 and $153,680, respectively, of which $66,700 and
$108,235 was waived, respectively."
E. Please insert the following information as the last sentence under the
sub-section entitled "Administrative Services":
"For the period from the start of business, December 19, 1994, to May
31, 1995, FAS earned fees from Equity Income Fund and Balanced Fund of
$22,863 and $25,916, respectively."
F. Please insert the following information as the last sentence of the
third paragraph under the sub-section entitled "Distribution Plan" on
page 16 of the Combined Statement of Additional Information:
"For the period from December 19, 1994 to May 31, 1995, brokers and
administrators received no fees with respect to Equity Income Fund and
Balanced Fund."
G. Please insert the following information at the end of the second
paragraph under the section entitled "Total Return" on page 19 of the
Combined Statement of Additional Information:
"Equity Income Fund's and Balanced Fund's cumulative total returns for
the period between December 19, 1994 (effective date) and May 31, 1995
were 9.91% and 7.95%, respectively."
H. Please insert the following information at the end of the third
paragraph under the section entitled "Yield" on page 19 of the Combined
Statement of Additional Information:
"The yield for the 30-day period ended May 31, 1995 was: 3.73% for
Equity Income Fund and 4.04% for Balanced Fund."
FEDERATED SECURITIES CORP.
Distributor
G01264-01 (6/95)
