1933 Act File No. 33-44737
1940 Act File No. 811-6511
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
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Pre-Effective Amendment No. ..............................
Post-Effective Amendment No. 17 ............................. X
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 18 ............................................. X
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REGIONS FUNDS
(formerly, First Priority Funds)
(Exact Name of Registrant as Specified in Charter)
5800 Corporate Drive, Pittsburgh, Pennsylvania 15237-7010
(Address of Principal Executive Offices)
(412) 288-1900
(Registrant's Telephone Number)
John W. McGonigle, Esquire,
Federated Investors Tower,
1001 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b)
_ on _______________ pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a) (i) X on JANUARY 31, 2000
pursuant to paragraph (a) (i).
75 days after filing pursuant to paragraph (a)(ii) on _________________
pursuant to paragraph (a)(ii) of Rule 485.
If appropriate, check the following box:
This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Copies To:
Matthew G. Maloney, Esquire
Dickstein Shapiro Morin & Oshinsky LLP
2101 L Street, N.W.
Washington, D.C. 20037
[Regions logo]
Family of Funds
COMBINED PROSPECTUS
DATED JANUARY 31, 2000
[Regions logo]
FIRST PRIORITY FUNDS BECAME REGIONS FUNDS EFFECTIVE MAY 15, 1998
[Logo of Regions Funds]
(Formerly, First Priority Funds)
Trust Shares
Investment Shares
- Regions Treasury Money Market Fund - Regions Balanced Fund
- Regions Limited Maturity Government Fund - Regions Value Fund
- Regions Fixed Income Fund - Regions Growth Fund
- Regions Aggressive Growth Fund
Table of Contents
Risk/Return Profile 2
Regions Funds 3
What Are the Fund's Fees and Expenses? 10
Main Risks of Investing in the Regions Funds 12
Principal Strategies 14
Securities Descriptions 16
How to Buy Shares 18
Distribution of Fund Shares 20
How to Exchange Shares 21
How to Redeem Shares 22
Account and Share Information 23
Regions Funds Information 25
Portfolio Managers 26
Financial Highlights 30
Shares of the Regions Funds, like shares of all mutual funds, are not bank
deposits, federally insured, or guaranteed, and may lose value.
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus, and any representation to the contrary is a criminal offense.
Prospectus
January 31, 2000
Risk/Return Profile
The Regions Funds offer investment opportunities to a wide range of investors,
from investors with short-term goals who wish to take little investment risk to
those investors with long-term goals willing to bear the risks of the stock
market for potentially greater rewards. The Capital Management Group, a unit of
the Trust Division of Regions Bank (Adviser), is the investment adviser to the
Regions Funds.
Principal Risks of the Funds
Fixed
Equity Income Mortgage
SecuritiesSecurities Backed Concentration Money Market
Securities
Risks Risks Risks Risks Risks
Regions Treasury Money Market Fund X Regions Limited Maturity Government Fund X
Regions Fixed Income Fund X X X Regions Balanced Fund X X X Regions Value Fund X
X X Regions Growth Fund X X Regions Aggressive Growth Fund X X X A completed
description of these risks can be found in the "Main Risks of Investing in the
Regions Funds" section.
Regions Funds
Treasury Money Market Fund
Goal. To provide current income consistent with stability of principal and
liquidity.
Strategy. The Fund invests in U.S. Treasury obligations maturing in 397 days or
less. The Fund will comply with the requirements of Rule 2a-7 under the
Investment Company Act of 1940, which sets forth portfolio quality and
diversification restrictions for money market mutual funds. Although the Fund
seeks to preserve the value of your investment at $1.00 per share, it is
possible to lose money by investing in the Fund.
Annual Total Return (calendar years 1993-1998)
(To be filed by amendment.)
Average Annual Total Return through 12/31/98
(To be filed by amendment.)
Limited Maturity Government Fund
Goal. To achieve current income.
Strategy. The Fund invests primarily in securities that are guaranteed as to
payment of principal and interest by the U.S. government or U.S. government
agencies or instrumentalities. Under normal circumstances, at least 65% of the
Fund's total assets will be invested in such securities. The net asset value of
the Fund is expected to fluctuate with changes in interest rates and bond market
conditions. The Adviser will attempt to minimize principal fluctuation and
increase return through, among other things, diversification, careful credit
analysis and security selection, and adjustments of the Fund's average portfolio
maturity. The Fund intends to maintain an average dollar-weighted maturity
between one and one-half and three years, although the Fund may purchase
individual securities with longer maturities.
Annual Total Return (calendar years 1994-1998)
(To be filed by amendment.)
Average Annual Total Return through 12/31/98
(To be filed by amendment.)
Fixed Income Fund
Goal. To achieve current income with a secondary goal of capital appreciation.
Strategy. The Fund invests only in high grade debt securities. Under normal
circumstances, at least 65% of the Fund's total assets will be invested in
fixed-rate bonds and debentures. The Fund also invests in U.S. government
securities. The Fund selects securities based upon fundamental macroeconomic,
credit and market analysis. Normally, the Fund's average maturity will be
between three and ten years.
Annual Total Return (calendar years 1993-1998)
(To be filed by amendment.)
Average Annual Total Return through 12/31/98
(To be filed by amendment.)
Balanced Fund
Goal. To provide total return through capital appreciation, dividends and
interest.
Strategy. The Fund invests primarily in common and preferred stock, convertible
securities, and fixed income securities. Under normal market conditions, the
Fund will maintain at least 25% of its assets in fixed-income senior securities
and at least 25% of its assets in common stocks. The remaining 50% may be
invested in these securities, as well as American Depositary Receipts (ADRs),
collateralized mortgage obligations (CMOs), U.S. government securities, or other
investments as determined by the Adviser based on the Adviser's assessment of
the economy and the markets. The Adviser may shift between types of investments
to attempt to maximize returns or reduce risk to the Fund.
Annual Total Return (calendar years 1995-1998)
(To be filed by amendment.)
Average Annual Total Return through 12/31/98
(To be filed by amendment.)
Value Fund
Goal. To provide income and growth of capital.
Strategy. The Fund invests in income-producing equity securities such as common
and preferred stock, warrants, and securities (including debt securities)
convertible into common stocks. Generally, these stocks are issued by companies
with a market capitalization of $1 billion or more. The Fund's investment
approach is based on the conviction that over the long term the economy will
continue to expand and develop and that this economic growth will be reflected
in the growth of the revenues and earnings of major corporations.
Annual Total Return (calendar years 1995-1998)
(To be filed by amendment.)
Average Annual Total Return through 12/31/98
(To be filed by amendment.)
Growth Fund
Goal. To provide growth of capital and income.
Strategy. The Fund invests in common stock of companies with market
capitalizations of $5 billion or more. The Fund's investment approach is based
on the conviction that over the long term the economy will continue to expand
and develop and that this economic growth will be reflected in the growth of the
revenues and earnings of major corporations.
Annual Total Return (calendar years 1993-1998)
(To be filed by amendment.)
Average Annual Total Return through 12/31/98
(To be filed by amendment.)
Aggressive Growth Fund
Goal. To provide long-term capital appreciation.
Strategy. The Fund invests primarily in equity securities of companies with
small to medium-sized market capitalizations of $5 billion or less. The Fund may
also invest in larger companies that, in the opinion of the Adviser, possess
attractive appreciation potential. Under normal market conditions, the Fund
intends to invest in equity securities of companies with prospects for
above-average growth in revenues and/or earnings. Performance Information for
Predecessor Collective Trust Fund The Fund is the successor to the portfolio of
a collective trust fund managed by the Adviser since June 30, 1993. It is
anticipated that, at the Fund's commencement of operations (expected to take
place on or about March 12, 1999), the assets from the collective trust fund
will be transferred to the Fund in exchange for Fund shares. The performance
data includes the performance of the collective trust fund for periods before
the Fund's registration statement became effective. The past performance data is
not necessarily indicative of the Fund's future performance. The collective
trust fund was not registered under the Investment Company Act of 1940 ("1940
Act") and therefore was not subject to certain investment restrictions that are
imposed by the 1940 Act. If the collective trust fund had been registered under
the 1940 Act, the performance may have been adversely effected.
Annual Total Return (calendar years 1994-1998)
(To be filed by amendment.)
Average Annual Total Return through 12/31/98
(To be filed by amendment.)
What Are the Fund's Fees and Expenses?
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Regions Funds.
(To be filed by amendment.)
Main Risks of Investing in the Regions Funds
General Risks. An investment in any of the Regions Funds is not a deposit of a
bank and is not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency. Loss of money is a risk of
investing in any of the Regions Funds.
Equity Securities Risks. The FIXED INCOME FUND, BALANCED FUND, VALUE FUND,
GROWTH FUND, and AGGRESSIVE GROWTH FUND are subject to fluctuations in
the stock markets, which have periods of increasing and decreasing
values. Stocks have greater volatility than debt securities. While
greater volatility increases risk, it offers the potential for greater
reward.
Equity risk is also related to the size of the company issuing stock.
Companies may be categorized as having a small, medium, or large
capitalization (market value). The potential risks are higher with
small- and medium-capitalization companies and generally lower with
large-capitalization companies. Therefore, you should expect that
investments in the GROWTH FUND, the BALANCED FUND and, particularly,
AGGRESSIVE GROWTH FUND will be more volatile than broad stock market
indices such as the S&P 500 or funds that invest in large-capitalization
companies.
Fixed Income Securities Risks. Risks of fixed income securities will impact
the FIXED INCOME FUND and LIMITED MATURITY FUND, but might also affect
the BALANCED FUND, VALUE FUND and AGGRESSIVE GROWTH FUND.
Prices of fixed-rate debt securities generally move in the opposite
direction of interest rates. The interest payments on fixed-rate debt
securities do not change when interest rates change. Therefore, since
the price of these securities can be expected to decrease when interest
rates increase, you can expect that value of investments in a Fund may
go down. Although the Adviser attempts to anticipate interest rate
movements, there is no guarantee that it will be able to do so.
In addition, longer term debt securities will experience greater price
volatility than debt securities with shorter maturities. You can expect
the net asset values of a Fund to fluctuate accordingly.
The credit quality of a debt security is based upon the issuer's ability
to repay the security. If payments on a debt security are not paid when
due, that may cause the net asset value of a Fund holding the security
to go down.
If interest rates decline, an issuer may repay a debt security held by a
Fund prior to its maturity. If this occurs, the Adviser may have to
reinvest the proceeds in debt securities paying lower interest rates. If
this happens, a Fund may have a lower yield.
Mortgage-Backed Securities Risks. Mortgage-backed securities are subject to
risks of prepayment. This is more likely to occur when interest rates
fall because many borrowers refinance mortgages to take advantage of
more favorable rates. Prepayments on mortgage-backed securities are also
affected by other factors, such as the volume of home sales. A Fund's
yield will be reduced if cash from prepaid securities are reinvested in
securities with lower interest rates. The risk of prepayment may also
decrease the value of mortgage-backed securities, as will mortgage
foreclosures or defaults on the underlying obligations.
Futures and Options Risks. On behalf of a Fund, the Adviser may trade in options
or futures in order to hedge the Fund's portfolio against market shifts
as well as to increase returns. However, if the Adviser does not
correctly anticipate market movements or is unable to close an option or
futures position due to conditions in the market, the Fund could lose
money. Funds that use options and futures contracts to protect their
investments or increase their income take a risk that the prices of
securities subject to the futures or options may not correlate with the
prices of the securities in a Fund's portfolio.
Sector Risks. When the Fund emphasizes its investments in securities of issuers
in a particular industry, the Fund's performance is closely tied to
events in that industry. For example, the VALUE FUND is expected to be
overweighted in the utility, energy, transportation, basic industry and
financial sectors. The GROWTH FUND is expected to be weighted in the
technology, consumer services, consumer non-durables and consumer
staples sectors. The AGGRESSIVE GROWTH FUND will emphasize technology
stocks.
Money Market Risks. Prices of fixed income securities rise and fall in
response to interest rate changes for similar securities. Generally,
when interest rates rise, prices of fixed income securities fall.
Interest rate changes have a greater effect on the price of fixed income
securities with longer maturities. Money market funds try to minimize
this risk by purchasing short-term securities. A Fund can also be
affected by the credit quality of the securities in its portfolio. The
credit quality of a security is based upon the ability of the issuer to
repay the security. Money market funds attempt to minimize this risk by
investing in securities with high credit quality.
Any of these risks have an adverse affect on a Fund's total return or
yield.
Principal Strategies
TreasuryMoney Market Fund. The Fund invests primarily in short-term obligations
of the U.S. Treasury. The Fund may also invest in short-term AAA-rated
securities of other investment companies, and engage in when-issued and
delayed-delivery transactions. Consistent with the Fund's AAA rating by
Standard & Poor's, the Fund will maintain an average maturity of 60 days
or less.
The Fund's primary objective is the production of current income while
maintaining liquidity and stability of principal. To the extent that
Fund income is derived from investments in U.S. Treasury securities,
interest earned from the Fund may be exempt from state income taxation.
Limited Maturity Government Fund. The Fund invests in high-grade debt securities
and will, under normal market conditions, have at least 65% of its total
assets invested in U.S. government securities. The Fund manager employs
a "top down" strategy in selecting investment securities. Key factors
include economic trends, inflation expectations, interest rate momentum,
and yield spreads. The Fund generally will invest in debt securities of
the U.S. Treasury and government agencies, mortgage-backed securities,
and investment-grade corporate bonds. When investing in non-governmental
securities, the Fund manager will conduct a thorough credit analysis of
the issuer, and will compare current yield spreads to historical norms.
The average maturity of the Fund's debt securities generally will be in
the range of 1.5 to 3 years. When interest rates are at higher levels
and lower rates are forecasted for the future, the Fund manager may
choose to lengthen the Fund's effective duration. Likewise, when rising
interest rates are expected, the duration of the Fund's bond portfolio
may be shortened.
Consistent with the Fund's primary objective of producing current
income, the Fund will focus on investment-grade fixed-income securities
with short- to intermediate-term maturities.
Fixed Income Fund. The Fund invests in high-grade debt securities and will,
under normal market conditions, have at least 65% of its total assets
invested in fixed-rate bonds. The Fund manager employs a "top down"
strategy in selecting investment securities. Key factors include
economic trends, inflation expectations, interest rate momentum, and
yield spreads. The Fund generally will invest in debt securities of the
U.S. Treasury and government agencies, mortgage-backed securities, and
investment-grade corporate bonds. When investing in non-governmental
securities, the Fund manager will conduct a thorough credit analysis of
the issuer, and will compare current yield spreads to historical norms.
The average maturity of the Fund's debt securities generally will be in
the range of 3 to 10 years. When interest rates are at higher levels and
lower rates are forecasted for the future, the Fund manager may choose
to lengthen the Fund's effective duration. Likewise, when rising
interest rates are expected, the duration of the Fund's bond portfolio
may be shortened.
Consistent with the Fund's primary objective of producing current
income, the Fund will focus on investment-grade, intermediate-term, fixed-income
securities.
BalancedFund. The Fund invests in both equity and fixed-income investments, and
will maintain a minimum of 25% of Fund assets in each asset class. The
remaining 50% of Fund assets may be allocated between stocks and bonds,
at the discretion of the Fund manager.
The Fund's equity allocation will focus on high-quality,
large-capitalization companies. Using a blend of growth and value
styles, the Fund manager seeks to identify companies which have clearly
defined business strategies, produce consistent revenue streams from an
established customer base, enjoy significant market share in their
respective industries, produce healthy cashflows, achieve consistent
increases in sales, operating margins, and corporate earnings, and have
experienced management teams with consistent records of delivering
shareholder value. The Fund manager periodically reviews market prices
in relation to the stock's intrinsic value, and adjusts the Fund's
holdings accordingly.
The Fund's fixed income allocation focuses on intermediate-term debt
securities, with an emphasis on U.S. Treasury and governmental agency
issues. Corporate bond issues with a minimum credit rating of "A" (S &
P/ Moody's) at the time of purchase may also be included as yield
spreads become attractive.
Value Fund. The Fund invests in common and preferred stocks according to a
sector-weighting strategy in which attractive market valuation levels
are assigned priority over prospects for future earnings growth. The
Fund manager attempts to identify those sectors of the economy which,
given the current phase of the business cycle, are likely to realize
gains in share prices as market valuation factors re-adjust over time.
Selected sectors and companies will tend to possess price-to-earnings
(P/E) and price-to-book ratios below broad market averages, while
dividend yields generally will be higher than market averages. Common
and preferred stocks are expected to produce dividends, and will
generally possess market capitalizations of at least $250 million.
Convertible securities of smaller companies may also be included in the
Fund's portfolio.
The Fund manager seeks to identify companies which have clearly defined
business strategies, produce consistent revenue streams from an
established customer base, enjoy significant market share in their
respective industries, produce healthy cashflows, achieve consistent
increases in sales, operating margins, and corporate earnings, and have
experienced management teams with consistent records of delivering
shareholder value. The Fund manager periodically reviews market prices
in relation to the stock's intrinsic value, and adjusts the Fund's
holdings accordingly.
Growth Fund. The Fund invests in the common stocks of companies expecting to
achieve above-average growth in earnings. The Fund manager selects
industry sectors which expect favorable earnings growth, given the
current phase of the business cycle. Future growth prospects take
precedence over current valuation levels in the stock selection process.
Selected companies are expected to exhibit large market capitalizations
and above-average price/earnings (P/E), price-to-book, and return on
assets ratios. Dividend yields may be lower than market averages, owing
to the growth emphasis of the Fund.
In addition to seeking companies with above-average potential for
growth, the Fund manager will seek to identify companies which have
clearly defined business strategies, produce consistent revenue streams
from an established customer base, enjoy significant market share in
their respective industries, produce healthy cashflows, achieve
consistent increases in sales, operating margins, and corporate
earnings, and have experienced management teams with consistent records
of delivering shareholder value. The Fund manager periodically reviews
market prices in relation to the stock's target price, and adjusts the
Fund's holdings accordingly.
Aggressive Growth Fund. The Fund invests primarily in equities of small- to
medium-sized companies whose market capitalization ranges from $300
million to $5 billion. The Fund may, as market conditions warrant,
invest a portion of is assets in large-capitalization companies
exhibiting above-average potential. The Fund manager seeks to identify
companies with superior prospects for growth in revenues and earnings.
Given recent market trends and expectations, the Fund may invest a
substantial portion of its assets in the equities of technology and
technology-related companies. These sectors have achieved substantial
market growth in recent years, but exhibit greater volatility in
earnings, dividends, and share prices than major market indices such as
the S & P 500.
Securities Descriptions
Equity securities are the fundamental unit of ownership in a company. They
represent a share of the issuer's earnings and assets, after the issuer
pays its liabilities. Generally, issuers have discretion as to the
payment of any dividends or distributions. As a result, investors cannot
predict the income they will receive from equity securities. However,
equity securities offer greater potential for appreciation than many
other types of securities, because their value increases directly with
the value of the issuer's business. The following describes the types of
equity securities in which the BALANCED FUND, VALUE FUND, GROWTH FUND,
and AGGRESSIVE GROWTH FUND invest.
Common stocks are the most prevalent type of equity security. Common
stockholders are entitled to the net value of the issuer's earnings and
assets after the issuer pays its creditors and any preferred
stockholders. As a result, changes in an issuer's earnings directly
influence the value of its common stock.
Fixed income securities pay interest, dividends or distributions at a
specified rate. The rate may be fixed or adjusted periodically.
Generally, investors in fixed income securities are creditors of the
issuer. The issuer must repay the principal amount of the security,
normally within a specified time. Fixed income securities provide more
regular income than equity securities. However, the returns on fixed
income securities are limited and normally do not increase with the
issuer's earnings. This limits the potential appreciation of fixed
income securities as compared to equity securities.
A security's yield measures the annual income earned on a security as a
percentage of its price. Securities with higher credit risks generally
have higher yields. A security's yield will increase or decrease
depending upon whether it costs less (a discount) or more (a premium)
than the principal amount. Under normal market conditions, securities
with longer maturities will also have higher yields. If the issuer is
entitled to redeem the security before its scheduled maturity, the price
and yield on the security may change based upon the probability of an
early redemption.
The following describes the types of fixed income securities in which
the Funds invest.
Treasury securities are direct obligations of the federal government of the
United States. Investors regard treasury securities as having the lowest credit
risk.
Agency securities are issued or guaranteed by a federal agency or other
government sponsored entity acting under federal authority. Some
government entities are supported by the full, faith and credit of the
United States. Other government entities receive support through federal
subsidies, loans or other benefits. A few government entities have no
explicit financial support, but are regarded as having implied support
because the federal government sponsors their activities. Investors
regard agency securities as having low credit risk, but not as low as
Treasury securities.
The Funds treat mortgage-backed securities guaranteed by a government
sponsored entity as if issued or guaranteed by a federal agency.
Although such a guarantee protects against credit risk, it does not
reduce the market and prepayment risks.
Corporate debt securities are fixed income securities issued by businesses.
Notes, bonds, debentures and commercial paper are the most common types
of corporate debt security. The credit risks of corporate debt
securities vary widely among issuers.
Mortgage-backed securities represent interests in pools of mortgages. The
underlying mortgages normally have similar interest rates, maturities
and other terms. Mortgages may have fixed or adjustable interest rates.
Interests in pools of adjustable rate mortgages are known as ARMs.
Mortgage-backed securities come in a variety of forms. Many have
extremely complicated terms. The simplest form of mortgage-backed
securities is a "pass-through certificate." Holders of pass-through
certificates receive a pro rata share of the payments from the
underlying mortgages. Holders also receive a pro rata share of any
prepayments, so they assume all the prepayment risk of the underlying
mortgages.
Collateralized mortgage obligations (CMOs) are complicated instruments
that allocate payments and prepayments from an underlying pass-through
certificate among holders of different classes of mortgage-backed
securities. This creates different prepayment and market risks for each
CMO class.
In addition, CMOs may allocate interest payments to one class (IOs) and
principal payments to another class (POs). POs increase in value when
prepayment rates increase. In contrast, IOs decrease in value when
prepayments increase, because the underlying mortgages generate less
interest payments. However, IOs prices tend to increase when interest
rates rise (and prepayments fall), making IOs a useful hedge against
market risk.
Demand Master Notes. Demand master notes are short-term borrowing arrangements
between a corporation or government agency and an investor. These notes
are payable (in full or in part) on demand by either party, usually with
one to seven days notice. They generally pay a floating or variable
interest rate, and the principal amount may be periodically increased or
decreased at the investor's option.
Portfolio Turnover. Although the Funds do not intend to invest for the purpose
of seeking short-term profits, securities will be sold without regard to
the length of time they have been held when the Funds' Adviser believes
it is appropriate to do so in light of a Fund's investment goal. A
higher portfolio turnover rate involves greater transaction expenses
which must be borne directly by a Fund (and thus, indirectly by its
shareholders), and impact Fund performance. In addition, a high rate of
portfolio turnover may result in the realization of larger amounts of
capital gains which, when distributed to that Fund's shareholders, are
taxable to them.
Temporary Defensive Investments. To minimize potential losses and maintain
liquidity to meet shareholder redemptions during adverse market
conditions, the Funds may temporarily depart from its principal
investment strategy by investing up to 100% of Fund assets in cash or
short-term, high quality money market instruments (e.g., commercial
paper, repurchase agreements, etc.). This may cause a Fund to
temporarily forego greater investment returns for the safety of
principal.
How to Buy Shares
What Do Shares Cost? You can buy shares of a Fund at net asset value (NAV),
without a sales charge, on any day the New York Stock Exchange (NYSE) is
open for business. When the Fund receives your transaction request in
proper form, it is processed at the next determined public offering
price. NAV is determined for the Funds (other than TREASURY MONEY MARKET
FUND) at the end of regular trading (normally 3:00 p.m. Central Time)
each day the NYSE is open. The NAV for the TREASURY MONEY MARKET FUND is
determined twice daily at 11:00 a.m. (Central Time) and 3:00 p.m.
(Central Time).
To open an account with the Regions Funds, your first investment must be
at least $25,000 for Trust Shares and $1,000 for Investment Shares. If
you are an officer, director, employee or retired employee of Regions
Bank, or would like to open an IRA account, the minimum initial
investment is $500 for Investment Shares. However, you can add to your
existing Regions Funds account directly or through the Funds' Systematic
Investment Program for as little as $100. In special circumstances,
these minimums may be waived or lowered at the Funds' discretion. Keep
in mind that investment professionals may charge you fees for their
services in connection with your share transaction.
Sales Charge When You Redeem Aggressive Growth Fund and Investment Shares
Only. Your redemption proceeds may be reduced by a sales charge,
commonly referred to as a contingent deferred sales charge (CDSC). A
CDSC applies to the Aggressive Growth Fund and the Funds that offer
Investment Shares, with the exception of the TREASURY MONEY MARKET FUND,
is as follows:
Shares Held Up To: CDSC
1 year 3.00%
2 years 2.00%
3 years 1.00%
4 years 0.00%
You will not be charged a CDSC when redeeming Shares:
- - if you are an officer, director, employee or retired employee of Regions
Bank, or its affiliates, and your spouse and dependent children; or
- - if you are a trust customer redeeming through the Trust departments of
Regions Bank, or its affiliates. The Trust departments may charge fees for
services provided.
In addition, you will not be charged a CDSC:
- - on the portion of redemption proceeds attributable to increases in the
value of your account due to increases in the NAV;
- - on shares acquired through reinvestment of dividends and capital gains;
- - on shares held more than 3 years after the end of the calendar month of
acquisition;
- - if your redemption is a required distribution and you are over the age of
701/2 from an individual retirement account or other retirement plan;
- - upon the death or disability of the last surviving shareholder(s) of the
account;
- - on shares purchased prior to June 1, 1997; or
- - if the Fund redeems your Shares and closes your account for not meeting the
minimum balance requirement.
If your redemption qualifies the Distributor must be notified at the
time of redemption to eliminate the CDSC.
To keep the sales charge as low as possible, the Funds will sell your
shares in the following order:
- Shares that are not subject to a CDSC;
- Shares held the longest; and
-then, the CDSC is based on the NAV at the time you purchased or
redeemed those Shares, whichever is lower.
Dealer Concessions: For Aggressive Growth Fund shares and Investment Shares
redeemed, with the exception of the TREASURY MONEY MARKET FUND, a dealer
may receive up to 100% of the CDSC. The dealer may be advanced a portion
of the CDSC at the time of purchase or upon payment arrangements made
between the dealer and the Distributor. Such payments may be in the form
of cash or promotional incentives.
How Do I Purchase Shares? Trust customers may purchase shares of any Fund by
contacting their local Trust Administrator or by telephoning Regions Bank at
1-800-433-2829.
You may purchase the AGGRESSIVE GROWTH FUND and Investment Shares by
contacting your local Regions Investment Company, Inc. (RICI) office or
telephone RICI at 1-800-456-3244. Texas residents must purchase shares
through Federated Securities Corp. at 1-800-356-2805.
You may purchase shares through a broker-dealer, investment
professional, or financial institution (Authorized Dealers). Some
Authorized Dealers may charge a transaction fee for this service. If you
purchase shares of a Fund through a program of services offered or
administered by a Authorized Dealer or other service provider, you
should read the program materials, including information relating to
fees, in conjunction with the Funds' prospectus. Certain features of a
Fund may not be available or may be modified in connection with the
program of services provided.
Your purchase order must be received by the Fund by 11:00 a.m. (Central
Time) for the TREASURY MONEY MARKET FUND or 3:00 p.m. (Central Time) for
all other Funds to get that day's NAV. Payment for the purchase of
TREASURY MONEY MARKET FUND shares is normally required the same business
day. For settlement of an order for the other Funds, payment must be
received within three business days of receipt of the order. Each Fund
reserves the right to reject any purchase request. It is the
responsibility of the Trust Administrator, RICI, any Authorized Dealer
or other service provider that has entered into an agreement with the
Funds, its distributor, or administrative or shareholder services agent,
to promptly submit purchase orders to the Funds. Orders placed through
one of these entities are considered received when the Funds are
notified of the purchase or redemption order. However, you are not the
owner of Fund shares (and therefore will not receive dividends) until
payment for the shares is received.
Distribution of Fund Shares
Federated Securities Corp., a subsidiary of Federated Investors, Inc.,
is the principal distributor for shares of the Funds and a number of
other investment companies. The Distributor may offer certain items of
nominal value from time to time to any shareholder or investor in
connection with the sale of Fund shares. The Distributor may select
brokers, dealers and administrators (including depository or other
institutions such as commercial banks and savings associations) to
provide distribution and/or administrative services for which they will
receive fees from the distributor based upon shares owned by their
clients or customers. These services include general marketing services
distributing prospectuses and other information, providing account
assistance, and communicating or facilitating purchases and redemptions
of the Funds' shares.
Rule 12b-1 Plan (Aggressive Growth Fund and Investment Shares only). The
Regions Funds has adopted a Rule 12b-1 Plan on behalf of the AGGRESSIVE
GROWTH FUND and Investment Shares of the Funds. The 12b-1 fees paid by
the AGGRESSIVE GROWTH FUND and Investment Shares of the other Funds are
as follows:
Fund 12b-1 Fee Paid as a
Percentage
Investment Shares Assets
Limited Maturity
Government Fund 0.25%
Fixed Income Fund 0.30%
Balanced Fund 0.30%
Value Fund 0.30%
Growth Fund 0.30%
Aggressive Growth Fund 0.30%
Treasury Money
Market Fund 0.40%
The Distributor and financial intermediaries are paid a 12b-1 fee for
the sale, distribution and customer servicing of the AGGRESSIVE GROWTH
FUND and Investment Shares of the Funds. Because these shares pay
marketing fees on an ongoing basis, your investment cost may be higher
over time than shares with different sales charges and marketing fees.
How to Exchange Shares
Exchange Privilege. You may exchange Shares of a Fund into Shares of the same
class of another Fund at NAV by calling or writing to Regions Bank or RICI, as
appropriate. AGGRESSIVE GROWTH FUND shareholders may exchange their shares for
Shares of any of the other Regions Funds. Shareholders of AGGRESSIVE GROWTH FUND
should contact their Trust Administrator or RICI representative, as appropriate,
to determine which class of shares of the other Regions Funds they are eligible
to acquire by exchange. Texas residents must telephone Federated Securities
Corp. at 1-800-356-2805 to exchange shares. To do this, you must:
- meet any minimum initial investment requirements; and
- receive a prospectus for the Fund into which you wish to exchange.
Signatures must be guaranteed if you request an exchange into another
Fund with a different shareholder registration.
Investment Shares of any Fund may be exchanged-for Investment Shares of
another Fund without the imposition of a contingent deferred sales
charge. However, if the shareholder redeems the exchange-for shares
within three years of the original purchase of exchanged shares, a
contingent deferred sales charge will be imposed.
The Fund may modify or terminate the exchange privilege at any time.
Shareholders will be notified of the modification or termination of the
exchange privilege. The Fund's management or Adviser may determine from
the amount, frequency and pattern of exchanges that a shareholder is
engaged in excessive trading which is detrimental to the Fund and other
shareholders. If this occurs, the Fund may terminate the availability of
exchanges to that shareholder and may bar that shareholder from
purchasing other Funds.
Shareholders contemplating exchanges into the Regions Funds should
consult their tax advisers since the tax advantages of each Fund may
vary. An exchange is treated as a redemption and a subsequent purchase,
and is a taxable transaction.
By Telephone: Telephone exchange instructions must be received before
3:00 p.m. (Central Time) for Shares to be exchanged that day. Orders for
exchange received after 3:00 p.m. (Central Time) on any business day
will be executed at the close of the next business day.
Your telephone instructions may be recorded. If a Fund does not follow
reasonable procedures, it may be liable for losses due to unauthorized
or fraudulent telephone instructions. The Funds will notify you if it
changes telephone transaction privileges.
How to Redeem Shares
You may redeem your Fund shares by several methods. You should note that
redemptions will be made only on days when the Fund computes its NAV.
When your redemption request is received in proper form, it is processed
at the next determined NAV.
Additional Conditions for Redemptions
Signature Guarantees. In the following instances, you must have a signature
guarantee on written redemption requests:
-when you want a redemption to be sent to an address other than
the one you have on record with the Fund; -when you want the
redemption payable to someone other than the shareholder of
record; or -when your redemption is to be sent to an address of
record that was changed within the last 90 days.
A signature guarantee is designed to protect your account from fraud.
Obtain a signature guarantee from a bank or trust company, savings
association, credit union, or broker, dealer, or securities exchange
member. A notary public cannot provide a signature guarantee.
Limitations on Redemption Proceeds. Redemption proceeds normally are wired or
mailed within one business day after receiving a request in proper form.
However, payment may be delayed up to seven days:
- to allow your purchase payment to clear;
- during periods of market volatility; or
- when a shareholder's trade activity or amount adversely impacts the
Fund's ability to manage its assets.
To redeem Trust Shares, trust customers of Regions Bank should telephone
their Trust Administrator. Investment Shares may be redeemed by
telephoning their local RICI office. Shareholders of AGGRESSIVE GROWTH
FUND should contact their Trust Administrator or RICI representative, as
appropriate. Shareholders who purchased shares through an Authorized
Dealer should contact their Authorized Dealer for specific instructions
on how to redeem by telephone.
To redeem Shares by mail, written requests must be received in proper
form and can be made through the trust Department, RICI or any
Authorized Dealer. The redemption request should include the
shareholder's name, Fund name and class of shares, account number and
the share or dollar amount to be redeemed. It is the responsibility of
the service provider to promptly submit redemption requests to the Fund.
Shareholders are encouraged to telephone the Trust Department, or RICI
for assistance in redeeming by mail.
Redemption requests for the Funds must be received by 11:00 a.m.
(Central Time) for the TREASURY MONEY MARKET FUND or 3:00 p.m. (Central
Time) for all other Funds in order for shares to be redeemed at that
day's NAV. Redemption proceeds will normally be mailed, or wired to the
shareholder's account at Regions Bank within five business days, but in
no event more than seven days, after the request is made.
Will I be Charged a Fee for Redemption? Trust Shares of any of the Funds and
Investment Shares of the TREASURY MONEY MARKET FUND are not subject to a
redemption fee. Depending on when you redeem your AGGRESSIVE GROWTH FUND
and Investment Shares of the other Funds, you may be charged a fee by
the Fund for redeeming your shares. See "How to Buy Shares" - "Sales
Charge When You Redeem Aggressive Growth Fund and Investment Shares
Only." You may also be charged a transaction fee if you redeem Fund
shares through an Authorized Dealer or service provider (other than RICI
or the Regions Banks). Consult your Authorized Dealer or service
provider for more information, including applicable fees.
Account and Share Information
Confirmation and Account Statements. You will receive confirmation of purchases,
redemptions and exchanges (except for systematic program transactions). The
TREASURY MONEY MARKET FUND sends you monthly confirmations to report all
transactions including dividends paid during the month. In addition, you will
receive periodic statements reporting all account activity, including systematic
program transactions, dividends and capital gains paid.
You may request photocopies of historical confirmations from prior
years. The Funds may charge a fee for this service.
Dividends and Capital Gains
Fund Dividends Declared and Paid
Balanced Fund
Value Fund
Growth Fund quarterly
Aggressive Growth
Fund
- -------------------------- -----------------------------
Treasury Money
Market Fund
Fixed Income Fund monthly
Limited Maturity
Government Fund
Dividends are declared and paid to shareholders invested in a Fund on
the record date.
In addition, each Fund pays any capital gains at least annually. Your
dividends and capital gains distributions will be automatically
reinvested in additional Shares, unless you elect cash payments.
If you purchase shares just before a Fund declares a dividend or capital
gain distribution, you will pay the full price for the shares and then
receive a portion of the price back in the form of a distribution,
whether or not you reinvest the distribution in shares. Therefore, you
should consider the tax implications of purchasing shares shortly before
the Fund declares a dividend or capital gain. Contact your investment
professional or the Fund for information concerning when dividends and
capital gains will be paid.
Accounts with Low Balances. Due to the high cost of maintaining
accounts with low balances, a Fund may redeem shares in your account and
pay you the proceeds if your account balance falls below the required
minimum initial investment amount. Before shares are redeemed to close
an account, you will be notified in writing and allowed 30 days to
purchase additional shares to meet the minimum.
Share Certificates. The Funds will not issue share certificates.
Year 2000 Readiness
The "Year 2000" problem is the potential for computer errors or failures
because certain computer systems may be unable to interpret dates after
December 31, 1999. The Year 2000 problem may cause systems to process
information incorrectly and could disrupt businesses that rely on
computers, like the Fund.
While it is impossible to determine in advance all of the risks to the
Fund, the Fund could experience interruptions in basic financial and
operational functions. Fund shareholders could experience errors or
disruptions in Fund share transactions or Fund communications.
The Fund's service providers are making changes to their computer
systems to fix any Year 2000 problems. In addition, they are working to
gather information from third-party providers to determine their Year
2000 readiness.
Year 2000 problems would also increase the risks of the Fund's
investments. To assess the potential effect of the Year 2000 problem,
the Adviser is reviewing information regarding the Year 2000 readiness
of issuers of securities the Fund may purchase.
However, this may be difficult with certain issuers. For example, funds
dealing with foreign service providers or investing in foreign
securities, will have difficulty determining the Year 2000 readiness of
those entities. This is especially true of entities or issuers in
emerging markets.
The financial impact of these issues for the Fund is still being
determined. There can be no assurance that potential Year 2000 problems
would not have a material adverse effect on the Fund.
Tax Information
Federal Income Tax. The Funds send you a timely statement of your account
activity to assist you in completing your federal, state and local tax
returns. Fund distributions of dividends and capital gains are taxable
to you whether paid in cash or reinvested in the Fund. Capital gains
distributions are taxable at different rates depending upon the length
of time a Fund holds its assets.
Fund distributions are expected to be primarily dividends for the
TREASURY MONEY MARKET FUND and LIMITED MATURITY GOVERNMENT FUND and both
dividends and capital gains for all other Funds. Redemptions and
exchanges are taxable sales.
Please consult your tax adviser regarding your federal, state, and local
tax liability.
Regions Fund Information
Management of the Regions Funds. The Board of Trustees governs the Trust. The
Board selects and oversees the Adviser, The Capital Management Group, a
unit of the Trust Division of Regions Bank. The Adviser manages each
Fund's assets, including buying and selling portfolio securities. The
Adviser's address is 417 North 20th Street, 12th Floor, Birmingham,
Alabama, 35203.
Advisory Fees. The Adviser is entitled to receive an annual investment
advisory fee equal to a percentage of each Fund's average daily net assets as
follows:
FUND ADVISORY FEE
TREASURY MONEY MARKET FUND 0.50%
LIMITED MATURITY GOVERNMENT FUND 0.70%
FIXED INCOME FUND 0.75%
GROWTH FUND 0.80%
BALANCED FUND 0.80%
VALUE FUND 0.80%
AGGRESSIVE GROWTH FUND 0.75%
The Adviser has the discretion to voluntarily waive a portion of its fee.
However, any waivers by the Adviser are voluntary and may be terminated at any
time in its sole discretion. Adviser's Background. The Capital Management Group
is a unit of the Trust Division of Regions Bank, which is a wholly owned
subsidiary of Regions Financial Corp., a bank
holding company organized under the laws of the State of Delaware.
Regions Financial Corporation has achieved Thomson Bank Watch's highest
rating of "A," a distinction earned by less than 1% of U.S. financial
institutions. Regions Bank was selected for inclusion in the S&P
500-Standard & Poor's widely followed index of the 500 most prominent
companies in the nation. As of December 31, 1998, Regions Financial
Corp. was one of the 25 largest bank holding companies in the United
States with total assets of approximately $35 billion.
Performance Information for Predecessor Collective Trust Fund
The Fund is the successor to the portfolio of a collective trust fund managed by
the Adviser since June 30, 1993. It is anticipated that, at the Fund's
commencement of operations (expected to take place on or about March 12, 1999),
the assets from the collective trust fund will be transferred to the Fund in
exchange for Fund shares. The Adviser has represented that the Fund's investment
objective, policies and limitations are all in material respects equivalent to
those of the collective trust fund. The Fund's average annual compounded total
returns for the one-, three-, five- and since inception periods ended October
31, 1998, reflecting the contingent deferred sales charge (See the section
entitled "How to Buy Shares - What Do Shares Cost" in this prospectus) were
- -7.24%, 14.26%, 11.54% and 11.02%, respectively. The Fund's average annual
compounded total returns for the one-, three-, five-, and since inception
periods ended October 31, 1998, without reflecting the contingent deferred sales
charge were -4.37%, 14.65%, 11.54% and 11.02%, respectively. The quoted
performance data includes the performance of the collective trust fund for
periods before the Fund's registration statement became effective and reflects
projected Fund expenses absent waivers. The past performance data shown above is
not necessarily indicative of the Founds future performance. The collective
trust fund was not registered under the Investment Company Act of 1940 ("1940
Act") and therefore was not subject to certain investment restrictions that are
imposed by the 1940 Act. If the collective trust fund had been registered under
the 1940 Act, the performance may have been adversely effected.
Portfolio Managers
Portfolio Manager Funds Managed Biography
J. Kenneth Alderman, CFA Director, Senior Vice President.
Regions Funds Director, Capital
Management
Group. Responsible for
[photo of J. Kenneth the comprehensive
Alderman] investment policy of
the group and the
Regions Family of
Mutual Funds
(1992-present).
Experience: 16 years
investment experience,
including ten years of
investment experience
with the Trust Division
of Regions Bank; two
years commercial bank
experience. Education:
B.S., Accounting,
Auburn University,
1973; M.B.A., Florida
State University, 1976;
Certified Public
Accountant, 1975;
National Graduate Trust
School, 1985; Chartered
Financial Analyst,
1989. Affiliations:
Member, Institute of
Chartered Financial
Analysts, Association
for Investment
Management and
Research, and American
Institute of Certified
Public Accountants.
W. Jackson Parham, Jr., Manager, Vice President.
CFA Regions Funds Director, Investment
Services. Responsible
for measuring the
[photo of W. Jackson quarterly performance
Parham, Jr.] and style specificity
of Regions Funds, and
for supervising fund
administration.
Responsible for
providing investment
consulting services to
institutional investors
and offering corporate
finance and business
planning/strategy
services to growing
businesses. Experience:
11 years investment
management/banking
experience. Education:
B.A., History,
Freed-Hardeman College,
1984; M.B.A.,
University of Virginia,
1987; Chartered
Financial Analyst,
1995. Affiliations:
Member, Institute of
Chartered Financial
Analysts and
Association for
Investment Management
and Research.
Lee S. Cox Sales Manager, Vice President.
Regions Funds Responsible for sales
and marketing of the
Regions Funds. Works
[photo of Lee S. Cox] with regional
presidents, local bank
presidents and branch
managers, trust
administrators, branch
personnel and Regions
Investment Company,
Inc. sales managers and
brokers to promote
Regions Bank's
proprietary mutual
fund. Experience: two
years as vice president
and trust investment
officer with Regions
Bank; eight years as
regional vice president
and investment
representative with
Citigroup's Primerica;
four years as
legislative aide to
U.S. Senator Howell
Heflin. Education:
B.A., Christian
Ministries, Asbury
College, 1984; M.A.,
Public Policy, Regent
University, 1986.
Mary Lynn Bronner, CFA Fixed Income Fund Vice President, Chief
Balanced Fund Investment Strategist
(co-manager) and Senior
[photo of Mary Lynn Fixed Income Portfolio
Bronner] Manager. Responsible
for the day-to-day
management of the Regions
Fixed Income Fund (July,
1997) and co-manager of
the Regions Balanced Fund.
Ms. Bronner served as
portfolio manager for the
Regions Limited Maturity
Government Fund from
January, 1997 until taking
over the Fixed Income Fund
in July, 1997. She also
serves as a member of the
Capital Management Group
and assists other
portfolio and Fund
managers in the management
of institutional
portfolios. Experience: 19
years investment
experience, specifically
seven years as Portfolio
Manager for Regions
Financial Corporation
under its predecessor,
First Alabama Bank (April
1996 to the present and
1981 - 1986); seven years
as a Registered Investment
Advisor with The Bronner
Group (September 1989 -
March 1996). Education:
B.S., Finance, University
of Tennessee, 1977;
M.B.A., Auburn University
at Montgomery, 1980;
Jurisdoctor Law, Jones Law
Institute, 1984; and
Chartered Financial
Analyst, 1982.
Affiliations: Member,
Alabama State Bar,
Institute of Chartered
Financial Analysts, and
Association for Investment
Management and Research.
John M. Haigler Limited Maturity Vice President and
Government Fund Portfolio Manager.
Responsible for the
[photo of John M. Haigler] day-to-day management
of the Regions Limited
Maturity Government
Fund (July, 1997). Mr.
Haigler previously
served as portfolio
manager of the Regions
Treasury Money Market
Fund (April,
1992-December, 1993)
and as portfolio
manager of the Regions
Limited Maturity
Government Fund
(December,
1993-Janaury, 1997). He
is responsible for
management of the Trust
Division's short-term
income funds and for
commercial paper and
certificates of deposit
investments. Mr.
Haigler also serves as
an active member of the
Capital Management
Group and as a
portfolio manager and
analyst. Experience: 24
years investment
experience, 33 years
with Regions Bank.
Education: B.A.,
Huntington College,
1963. Affiliations:
Member, Alabama Society
of Financial Analysts
and Association for
Investment Management
and Research.
John E. Steiner, CFA Growth Fund Vice President and
Balanced Fund Senior Equity Portfolio
(co-manager) Manager.
Responsible for the
[photo of John E. Steiner] day-to-day management
of the Regions Growth
Fund and co-manager of
the Regions Balanced
Fund. Served as
portfolio manager of
the Regions Treasury
Money Market Fund from
December, 1993 until
taking over the
Balanced Fund on June
1, 1996. He actively
manages employee
benefit and personal
trust accounts as well
as contributes to the
formulation of equity
and fixed income
strategies. Experience:
14 years investment
experience,
specifically Employee
Benefits, Personal
Trust, and Endowments;
16 years with Regions
Bank. Education: B.S.,
Business
Administration/Industrial
Management, Auburn
University, 1981;
Chartered Financial
Analysts 1996.
Affiliations: Member,
Chartered Financial
Analysts and the
Association for
Investment Management
and Research.
James L. Savage, CFA Value Fund Vice President and
Senior Equity Analyst.
[photo of James L. Savage] Responsible for the
day-to-day management
of the Regions Value
Fund (January, 1996).
Also serves as an
active member of the
Capital Management
Group as portfolio
manager and analyst.
Experience: eight years
investment analysis and
portfolio management.
Joined Regions Bank
(November, 1995) to
bring further expertise
to investment team.
Previously had been a
trust portfolio manager
for a large regional
bank in the Southeast
which utilized a value
style of equity
management (March, 1992
- October, 1995).
Education: B.S.,
Finance, Auburn
University, 1987; M.S.,
Finance, Georgia State
University, 1991;
Chartered Financial
Analyst, 1995.
Affiliations: Member,
Chartered Financial
Analysts, Member &
Board of Directors,
Alabama Society of
Financial Analysts and
Association for
Investment Management
and Research.
Charles A. Murray, CFA Aggressive Growth Fund Vice President and
Portfolio Manager.
[photo of Charles A. Served as Portfolio
Murray] Manager and Analyst in
the Capital Management
Group managing equity
portfolios and balanced
accounts since 1974.
Joined Regions Bank in
June, 1972. Served as a
Portfolio Manager for
small/mid-cap common
trust funds, a
convertible income fund
and a fixed income fund
from 1978 through 1992.
Portfolio Manager of
the Regions Growth Fund
(formerly, First
Priority Equity Fund)
from 1992 through 1995.
Education: B.S.,
University of Alabama,
1970; Chartered
Financial Analyst,
1993. Affiliations:
Member, Alabama Society
of Financial Analysts
and Association for
Investment Management
and Research.
David B. Rees, Jr. Treasury Money Market Portfolio Manager.
Fund Responsible for the
day-to-day management
of the Regions Treasury
Money Market Fund
(April, 1999). Also
serves as an active
member of the Capital
Management Group as a
portfolio manager.
Experience: Five years
investment analysis and
portfolio management
including four years
with a publicly-held
national brokerage firm
(January, 1995 - March,
1998). Education: B.S.,
Finance, Auburn
University, 1992;
M.B.A., Auburn
University, 1994.
[photo of David B. Rees,
Jr.]
Financial Highlights
[To be filed by amendment.]
Regions Funds
A Statement of Additional Information (SAI) dated January 31, 2000 is
incorporated by reference into this prospectus. Additional information about the
Fund's investments is available in the Funds' annual report to shareholders. The
annual report discusses market conditions and investment strategies that
significantly affected the Fund's performance during its last fiscal year. To
obtain the SAI, the annual report and other information without charge write to
or call Regions Funds at 1-800-433-2829.
You can obtain information about the Regions Funds (including the SAI) by
visiting or writing the Public Reference Room of the Securities and Exchange
Commission in Washington, D.C., 20549-6009, or from the SEC's Internet Web site
at: http://www.sec.gov. You can call 1-800-SEC-0330 for information on the
Public Reference Room's operations and copying charges.
Regions Funds
417 North 20th Street
12th Floor
P.O. Box 10247 (Zip code: 35202)
Birmingham, Alabama 35203
1-800-433-2829
Federated Securities Corp.
Distributor
007576 (1/00)
SEC File No. 811-6511
Regions Aggressive Growth Fund RAGRX 75913Q845
Regions Balanced Fund Trust Shares FPALX 75913Q209
Regions Balanced Fund Investment Shares FPBLX 75913Q100
Regions Fixed Income Fund Trust Shares RFIFX 75913Q803
Regions Fixed Income Fund Investment Shares FPFTX 75913Q704
Regions Growth Fund Trust Shares RGRAX 75913Q407
Regions Growth Fund Investment Shares FPETX 75913Q308
Regions Limited Maturity Gov't Fund
Trust Shares RLMGX 75913Q852
Regions Limited Maturity Gov't Fund
Investment Shares FPLGX 75913Q860
Regions Treasury Money Market Fund
Trust Shares FITXX 75913Q878
Regions Treasury Money Market Fund
Investment Shares FPIXX 75913Q886
Regions Value Fund Trust Shares RVLAX 75913Q605
Regions Value Fund Investment Shares FPEIX 75913Q506
Federated Securities Corp., Distributor
007576 (1/00)
[Logo of Regions Funds]
TRU160
REGIONS FUNDS
(FORMERLY, FIRST PRIORITY FUNDS)
TRUST SHARES
INVESTMENT SHARES
STATEMENT OF ADDITIONAL INFORMATION
January, 31, 2000
O REGIONS TREASURY MONEY MARKET FUND O REGIONS BALANCED FUND
O REGIONS LIMITED MATURITY GOVERNMENT FUND O REGIONS VALUE FUND
O REGIONS FIXED INCOME FUND O REGIONS GROWTH FUND
O REGIONS AGGRESSIVE GROWTH FUND
This Statement of Additional Information (SAI) is not a prospectus. Read
this SAI in conjunction with the prospectus for the Regions Funds, dated
January 31, 2000. This SAI incorporates by reference the Funds' Annual
Report. Obtain the prospectus or Annual Report, without charge by calling
the Trust at 1-800-433-2829.
5800 CORPORATE DRIVE
PITTSBURGH, PENNSYLVANIA 15237-7010
CUSIP
75913Q886 75913Q878
75913Q860 75913Q852
75913Q704 75913Q803
75913Q100 75913Q209
75913Q506 75913Q605
75913Q308 75913Q407
75913Q845
007580 (1/00)
FEDERATED SECURITIES CORP.
Distributor
A subsidiary of FEDERATED INVESTORS, INC.
<PAGE>
TABLE OF CONTENTS
- -----------------------------------------------------------------------------
HOW ARE THE FUNDS ORGANIZED 1
SECURITIES IN WHICH THE FUNDS INVEST 1
SECURITIES DESCRIPTIONS, TECHNIQUES AND RISKS 2
INVESTMENT LIMITATIONS 10
DETERMINING MARKET VALUE OF SECURITIES 12
WHAT DO SHARES COST? 13
HOW IS THE FUND SOLD? 13
HOW TO BUY SHARES 14
MASSACHUSETTS PARTNERSHIP LAW 14
ACCOUNT AND SHARE INFORMATION 15
WHAT ARE THE TAX CONSEQUENCES 15
WHO MANAGES THE FUNDS 15
HOW DOES THE FUND MEASURE PERFORMANCE 21
PERFORMANCE COMPARISONS 22
ECONOMIC AND MARKET INFORMATION 25
FINANCIAL STATEMENTS 25
APPENDIX 26
ADDRESSES 28
<PAGE>
HOW ARE THE FUNDS ORGANIZED
The Regions Funds (Trust) was established as a Massachusetts business trust
under a Declaration of Trust dated October 15, 1991. Effective May 15, 1998, the
Trust changed its name from "First Priority Funds" to "Regions Funds." As of the
date of this Statement, the Trust consists of seven separate portfolios of
securities (Funds) which are as follows: Regions Treasury Money Market Fund
(Treasury Money Market Fund); Regions Limited Maturity Government Fund (Limited
Maturity Government Fund); Regions Fixed Income Fund (Fixed Income Fund);
Regions Balanced Fund (Balanced Fund); Regions Value Fund, (Value Fund,
formerly, Regions Equity Income Fund); Regions Growth Fund, (Growth Fund,
formerly, Regions Equity Fund); and Regions Aggressive Growth Fund (Aggressive
Growth Fund). Shares of the Funds, except the Aggressive Growth Fund, are
offered in two classes of shares, Trust Shares and Investment Shares
(individually and collectively referred to as "Shares" as the context may
require). This SAI relates to both classes of the above-mentioned Shares of the
Funds. The Funds (other than Treasury Money Market Fund and Aggressive Growth
Fund) did not offer the Trust Shares class until January 1998.
SECURITIES IN WHICH THE FUNDS INVEST
Following is a table that indicates which types of securities are a: o P =
PRINCIPAl investment of a Fund; (shaded in chart) o A = ACCEPTABLe (but not
principal) investment of a Fund; or o N = NOT AN ACCEPTABLe investment of a
Fund.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------------- ----------- ----------- -------- -------- ------- ---------- ---------
SECURITIES TREASURY LIMITED FIXED BALANCED VALUE GROWTH AGGRESSIVE
MONEY MATURITY INCOME FUND FUND FUND GROWTH
MARKET GOVERNMENT FUND FUND
FUND FUND
- -------------------------------------- ----------- ----------- -------- -------- ------- ---------- ---------
- --------------------------------------- ---------- ----------- -------- -------- ------- ---------- ---------
AMERICAN DEPOSITARY RECEIPTS N N N A A A A
- --------------------------------------- ---------- ----------- -------- -------- ------- ---------- ---------
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ASSET-BACKED SECURITIES N A A A N N N
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BANK INSTRUMENTS N A A A A A A
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BORROWING A A A A A A A
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COMMERCIAL PAPER N A A A A A A
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COMMON STOCK1 N N N P P P P
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CONVERTIBLE SECURITIES2 N N N A A A A
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DERIVATIVE CONTRACTS AND SECURITIES N A A A A A A
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CORPORATE FIXED RATE DEBT OBLIGATIONS3 N A P P N N N
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CORPORATE FLOATING RATE DEBT N A A P N N N
OBLIGATIONS3
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FOREIGN SECURITIES N A A A A A A
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FUTURES AND OPTIONS TRANSACTIONS N A A A A A A
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ILLIQUID SECURITIES4 A A A A A A A
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LENDING OF PORTFOLIO SECURITIES A A A A A A A
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MORTGAGE-BACKED SECURITIES N A A A N N N
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MUNICIPAL DEBT OBLIGATIONS N A A A N N N
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OTHER MONEY MARKET INSTRUMENTS N A A A A A A
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PREFERRED STOCKS N N N A A A A
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REPURCHASE AGREEMENTS N A A A A A A
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SECURITIES OF OTHER INVESTMENT A A A A A A A
COMPANIES
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STRIPPED BONDS N A A A N N N
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U.S. GOVERNMENT SECURITIES P P P P A A A
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WARRANTS N N A A A A A
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WHEN-ISSUED AND DELAYED DELIVERY A A A A A A A
TRANSACTIONS
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- --------------------------------------- ---------- ----------- -------- -------- ------- ---------- ---------
ZERO COUPON CONVERTIBLE SECURITIES N N N A A A A
- --------------------------------------- ---------- ----------- -------- -------- ------- ---------- ---------
</TABLE>
1. The VALUE FUND will invest in common stocks of companies with market
capitalizations of $1 billion or more, the GROWTH FUND will invest in
common stocks of companies with market capitalizations of $5 billion or
more and the AGGRESSIVE GROWTH FUND will invest will invest in common
stocks of companies with market capitalizations of $5 billion or less.
2. The BALANCED FUND and VALUE FUND may invest up to 25% of their respective
total assets in below investment grade convertible securities (rated BB and
below by a nationally recognized statistical rating organization (NRSRO)).
An NRSRO is Moody's, S&P and Fitch
3. The Corporate Debt Obligations that the Funds invest will be rated in one
of the three highest rating categories by an NRSRO.
4. ALL FUNDS, except the TREASURY MONEY MARKET FUND, may invest up to 15% of
their respective assets in illiquid securities. The TREASURY MONEY MARKET
FUND may invest up to 10% of its assets in illiquid securities.
SECURITIES DESCRIPTIONS, TECHNIQUES AND RISKS
EQUITY SECURITIES
Equity securities represent a share of an issuer's earnings and assets, after
the issuer pays its liabilities. The Fund cannot predict the income it will
receive from equity securities because issuers generally have discretion as to
the payment of any dividends or distributions. However, equity securities offer
greater potential for appreciation than many other types of securities, because
their value increases directly with the value of the issuer's business. The
following describes the types of equity securities in which the Fund invests.
COMMON STOCKS
Common stocks are the most prevalent type of equity security. Common stocks
receive the issuer's earnings after the issuer pays its creditors and any
preferred stockholders. As a result, changes in an issuer's earnings
directly influence the value of its common stock. PREFERRED STOCKS Preferred
stocks have the right to receive specified dividends or distributions before
the issuer makes payments on its common stock. Some preferred stocks also
participate in dividends and distributions paid on common stock. Preferred
stocks may also permit the issuer to redeem the stock. The Fund may also
treat such
redeemable preferred stock as a fixed income security.
INTERESTS IN OTHER LIMITED LIABILITY COMPANIES
Entities such as limited partnerships, limited liability companies, business
trusts and companies organized outside the United States may issue
securities comparable to common or preferred stock.
REAL ESTATE INVESTMENT TRUSTS (REITS)
REITs are real estate investment trusts that lease, operate and finance
commercial real estate. REITs are exempt from federal corporate income tax
if they limit their operations and distribute most of their income. Such tax
requirements limit a REIT's ability to respond to changes in the commercial
real estate market. WARRANTS Warrants give the Fund the option to buy the
issuer's equity securities at a specified price (the exercise price) at a
specified future date (the expiration date). The Fund may buy the designated
securities by paying the exercise price before the expiration date. Warrants
may become worthless if the price of the stock does not rise above the
exercise price by the expiration date. This increases the market risks of
warrants as compared to the underlying security. Rights are the same as
warrants, except companies typically issue rights to existing stockholders.
FIXED INCOME SECURITIES
Fixed income securities pay interest, dividends or distributions at a specified
rate. The rate may be a fixed percentage of the principal or adjusted
periodically. In addition, the issuer of a fixed income security must repay the
principal amount of the security, normally within a specified time. Fixed income
securities provide more regular income than equity securities. However, the
returns on fixed income securities are limited and normally do not increase with
the issuer's earnings. This limits the potential appreciation of fixed income
securities as compared to equity securities. A security's yield measures the
annual income earned on a security as a percentage of its price. A security's
yield will increase or decrease depending upon whether it costs less (a
discount) or more (a premium) than the principal amount. If the issuer may
redeem the security before its scheduled maturity, the price and yield on a
discount or premium security may change based upon the probability of an early
redemption. Securities with higher risks generally have higher yields. The
following describes the types of fixed income securities in which the Fund
invests.
TREASURY SECURITIES
Treasury securities are direct obligations of the federal government of the
United States. Investors regard treasury securities as having the lowest
credit risks. AGENCY SECURITIES Agency securities are issued or guaranteed
by a federal agency or other government sponsored entity acting under
federal authority (a GSE). The United States supports some GSEs with its
full, faith and credit. Other GSEs receive support through federal
subsidies, loans or other benefits. A few GSEs have no explicit financial
support, but are regarded as having implied support because the federal
government sponsors their activities. Agency securities are generally
regarded as having low
credit risks, but not as low as treasury securities.
The Fund treats mortgage backed securities guaranteed by GSEs as agency
securities. Although a GSE guarantee protects against credit risks, it does
not reduce the market and prepayment risks of these mortgage backed
securities. CORPORATE DEBT SECURITIES Corporate debt securities are fixed
income securities issued by businesses. Notes, bonds, debentures and
commercial paper are the most prevalent types of corporate debt securities.
The Fund may also purchase interests in bank loans to companies. The credit
risks of corporate debt securities vary widely amount issuers. The credit
risk of an issuer's debt security may also vary based on its priority for
repayment. For example, higher ranking (senior) debt securities have a
higher priority than lower ranking (subordinated) securities. This means
that the issuer might not make payments on subordinated securities while
continuing to make payments on senior securities. In addition, in the event
of bankruptcy, holders of senior securities may receive amounts otherwise
payable to the holders of subordinated securities. Some subordinated
securities, such as trust preferred and capital securities notes, also
permit the issuer to defer payments under certain circumstances. For
example, insurance companies issue securities known as surplus notes that
permit the insurance company to defer any payment that would reduce its
capital below regulatory requirements.
COMMERCIAL PAPER
Commercial paper is an issuer's obligation with a maturity of less than
nine months. Companies typically issue commercial paper to pay for
current expenditures. Most issuers constantly reissue their commercial
paper and use the proceeds or bank loans to repay maturing paper. If the
issuer cannot continue to obtain liquidity in this fashion, its
commercial paper may default. The short maturity of commercial paper
reduces both the market and credit risks as compared to other debt
securities of the same issuer. DEMAND INSTRUMENTS Demand instruments are
corporate debt securities that the issuer must repay upon demand. Other
demand instruments require a third party, such as a dealer or bank, to
repurchase the security for its face value upon demand. The Fund treats
demand instruments as short-term securities, even though their stated
maturity may extend beyond one year.
MUNICIPAL SECURITIES
Municipal securities are issued by states, counties, cities and other
political subdivisions and authorities. Although many municipal securities
are exempt from federal income tax, the Fund may invest in taxable municipal
securities. MORTGAGE BACKED SECURITIES Mortgage backed securities represent
interests in pools of mortgages. The mortgages that comprise a pool normally
have similar interest rates, maturities and other terms. Mortgages may have
fixed or adjustable interest rates. Interests in pools of adjustable rate
mortgages are know as ARMs. Mortgage backed securities come in a variety of
forms. Many have extremely complicated terms. The simplest form of mortgage
backed securities are pass-through certificates. An issuer of pass-through
certificates gathers monthly payments from an underlying pool of mortgages.
Then, the issuer deducts its fees and expenses and passes the balance of the
payments onto the certificate holders once a month. Holders of pass-through
certificates receive a pro rata share of all payments and pre-payments from
the underlying mortgages. As a result, the holders assume all the prepayment
risks of the underlying mortgages.
<PAGE>
COLLATERALIZED MORTGAGE OBLIGATIONS (CMOS)
CMOs, including interests in real estate mortgage investment conduits
(REMICs), allocate payments and prepayments from an underlying pass-through
certificate among holders of different classes of mortgage backed
securities. This creates different prepayment and market risks for each CMO
class.
SEQUENTIAL CMOS
In a sequential pay CMO, one class of CMOs receives all principal
payments and prepayments. The next class of CMOs receives all principal
payments after the first class is paid off. This process repeats for
each sequential class of CMO. As a result, each class of sequential pay
CMOs reduces the prepayment risks of subsequent classes.
PACS, TACS AND COMPANION CLASSES
More sophisticated CMOs include planned amortization classes (PACs) and
targeted amortization classes (TACs). PACs and TACs are issued with
companion classes. PACs and TACs receive principal payments and
prepayments at a specified rate. The companion classes receive principal
payments and prepayments in excess of the specified rate. In addition,
PACs will receive the companion classes' share of principal payments, if
necessary, to cover a shortfall in the prepayment rate. This helps PACs
and TACs to control prepayment risks by increasing the risks to their
companion classes.
IOS AND POS
CMOs may allocate interest payments to one class (Interest Only or IOs)
and principal payments to another class (Principal Only or POs). POs
increase in value when prepayment rates increase. In contrast, IOs
decrease in value when prepayments increase, because the underlying
mortgages generate less interest payments. However, IOs tend to increase
in value when interest rates rise (and prepayments decrease), making IOs
a useful hedge against market risks.
FLOATERS AND INVERSE FLOATERS
Another variant allocates interest payments between two classes of CMOs.
One class (Floaters) receives a share of interest payments based upon a
market index such as LIBOR. The other class (Inverse Floaters) receives
any remaining interest payments from the underlying mortgages. Floater
classes receive more interest (and Inverse Floater classes receive
correspondingly less interest) as interest rates rise. This shifts
prepayment and market risks from the Floater to the Inverse Floater
class, reducing the price volatility of the Floater class and increasing
the price volatility of the Inverse Floater class.
Z CLASSES AND RESIDUAL CLASSES
CMOs must allocate all payments received from the underlying mortgages
to some class. To capture any unallocated payments, CMOs generally have
an accrual (Z) class. Z classes do not receive any payments from the
underlying mortgages until all other CMO classes have been paid off.
Once this happens, holders of Z class CMOs receive all payments and
prepayments. Similarly, REMICs have residual interests that receive any
mortgage payments not allocated to another REMIC class.
The degree of increased or decreased prepayment risks depends upon the
structure of the CMOs. However, the actual returns on any type of
mortgage backed security depend upon the performance of the underlying
pool of mortgages, which no one can predict and will vary among pools.
ASSET BACKED SECURITIES
Asset backed securities are payable from pools of obligations other than
mortgages. Most asset backed securities involve consumer or commercial debts
with maturities of less than ten years. However, almost any type of fixed
income assets (including other fixed income securities) may be used to
create an asset backed security. Asset backed securities have prepayment
risks. Like most CMOs, asset backed securities may be structured like
Floaters, Inverse Floaters, IOs and POs. Historically, borrowers are more
likely to refinance their mortgage than any other type of consumer or
commercial debt. In addition, some asset backed securities use prepayment to
buy additional assets, rather than paying off the securities. Therefore,
while asset backed securities may have some prepayment risks, they generally
do not present the same degree of risk as mortgage backed securities.
<PAGE>
ZERO COUPON SECURITIES
Zero coupon securities do not pay interest or principal until final maturity
unlike debt securities that provide periodic payments of interest (referred
to as a coupon payment). Investors buy zero coupon securities at a price
below the amount payable at maturity. The difference between the purchase
price and the amount paid at maturity represents interest on the zero coupon
security. An investor must wait until maturity to receive interest and
principal, which increases the market and credit risks of a zero coupon
security. There are many forms of zero coupon securities. Some are issued at
a discount and are referred to as zero coupon or capital appreciation bonds.
Others are created from interest bearing bonds by separating the right to
receive the bond's coupon payments from the right to receive the bond's
principal due at maturity, a process known as coupon stripping. Treasury
STRIPs, IOs and POs are the most common forms of stripped zero coupon
securities. In addition, some securities give the issuer the option to
deliver additional securities in place of cash interest payments, thereby
increasing the amount payable at maturity. These are referred to as
pay-in-kind or PIK securities. BANK INSTRUMENTS Bank instruments are
unsecured interest bearing deposits with banks. Bank instruments include
bank accounts, time deposits, certificates of deposit and banker's
acceptances. Yankee instruments are denominated in U.S. dollars and issued
by U.S. branches of foreign banks. Eurodollar instruments are denominated in
U.S. dollars and issued by non-U.S. branches of U.S. or foreign banks.
CREDIT ENHANCEMENT Credit enhancement consists of an arrangement in which a
company agrees to pay amounts due on a fixed income security after the
issuer defaults. In some cases the company providing credit enhancement
makes all payments directly to the security holders and receives
reimbursement from the issuer. Normally, the credit enhancer has greater
financial resources and liquidity than the issuer. For this reason, the
Adviser may evaluate the credit risk of a fixed income security based solely
upon its credit enhancement. Common types of credit enhancement include
guarantees, letters of credit, bond insurance and surety bonds. Credit
enhancement also includes arrangements where securities or other liquid
assets secure payment of a fixed income security. Following a default, these
assets may be sold and the proceeds paid to security's holders. Either form
of credit enhancement reduces credit risks by providing another source of
payment for a fixed income security.
CONVERTIBLE SECURITIES
Convertible securities are fixed income securities that the Fund has the option
to exchange for equity securities at a specified conversion price. The option
allows the Fund to realize additional returns if the market price of the equity
securities exceeds the conversion price. For example, the Fund may hold fixed
income securities that are convertible into shares of common stock at a
conversion price of $10 per share. If the market value of the shares of common
stock reached $12, the Fund could realize an additional $2 per share by
converting its fixed income securities. Convertible securities have lower yields
than comparable fixed income securities. In addition, at the time a convertible
security is issued the conversion price exceeds the market value of the
underlying equity securities. Thus, convertible securities may provide lower
returns than non-convertible fixed income securities or equity securities
depending upon changes in the price of the underlying equity securities.
However, convertible securities permit the Fund to realize some of the potential
appreciation of the underlying equity securities with less risk of losing its
initial investment. The Fund treats convertible securities as both fixed income
and equity securities for purposes of its investment policies and limitations,
because of their unique characteristics. FOREIGN SECURITIES Foreign securities
are securities of issuers based outside the United States. The Fund considers an
issuer to be based outside the United States if: o it is organized under the
laws of, or has a principal office located in, another country; o the principal
trading market for its securities is in another country; or o it (or its
subsidiaries) derived in its most current fiscal year at least 50% of its total
assets, capitalization, gross revenue or profit from goods produced,
services performed, or sales made in another country.
Foreign securities are primarily denominated in foreign currencies. Along with
the risks normally associated with domestic securities of the same type, foreign
securities are subject currency risks and risks of foreign investing. Trading in
certain foreign markets is also subject to liquidity risks.
DEPOSITARY RECEIPTS
Depositary receipts represent interests in underlying securities issued by a
foreign company. Depositary receipts are not traded in the same market as
the underlying security. The foreign securities underlying American
Depositary Receipts (ADRs) are traded in the United States. ADRs provide a
way to buy shares of foreign-based companies in the United States rather
than in overseas markets. ADRs are also traded in U.S. dollars, eliminating
the need for foreign exchange transactions. The foreign securities
underlying European Depositary Receipts (EDRs), Global Depositary Receipts
(GDRs), and International Depositary Receipts (IDRs), are traded globally or
outside the United States. Depositary Receipts involve many of the same
risks of investing directly in foreign securities, including currency risks
and risks of foreign investing.
DERIVATIVE CONTRACTS
Derivative contracts are financial instruments that require payments based upon
changes in the values of designated (or underlying) securities, currencies,
commodities, financial indices or other assets. Some derivative contracts (such
as futures, forwards and options) require payments relating to a future trade
involving the underlying asset. Other derivative contracts (such as swaps)
require payments relating to the income or returns from the underlying asset.
The other party to a derivative contract is referred to as a counterparty. Many
derivative contracts are traded on securities or commodities exchanges. In this
case, the exchange sets all the terms of the contract except for the price.
Investors make payments due under their contracts through the exchange. Most
exchanges require investors to maintain margin accounts through their brokers to
cover their potential obligations to the exchange. Parties to the contract make
(or collect) daily payments to the margin accounts to reflect losses (or gains)
in the value of their contracts. This protects investors against potential
defaults by the counterparty. Trading contracts on an exchange also allows
investors to close out their contracts by entering into offsetting contracts.
For example, the Fund could close out an open contract to buy an asset at a
future date by entering into an offsetting contract to sell the same asset on
the same date. If the offsetting sale price is more than the original purchase
price, the Fund realizes a gain; if it is less, the Fund realizes a loss.
Exchanges may limit the amount of open contracts permitted at any one time. Such
limits may prevent the Fund from closing out a position. If this happens, the
Fund will be required to keep the contract open (even if it is losing money on
the contract), and to make any payments required under the contract (even if it
has to sell portfolio securities at unfavorable prices to do so). Inability to
close out a contract could also harm the Fund by preventing it from disposing of
or trading any assets it has been using to secure its obligations under the
contract. The Fund may also trade derivative contracts over-the-counter (OTC) in
transactions negotiated directly between the Fund and the counterparty. OTC
contracts do not necessarily have standard terms, so they cannot be directly
offset with other OTC contracts. In addition, OTC contracts with more
specialized terms may be more difficult to price than exchange traded contracts.
Depending upon how the Fund uses derivative contracts and the relationships
between the market value of a derivative contract and the underlying asset,
derivative contracts may increase or decrease the Fund's exposure to market and
currency risks, and may also expose the Fund to liquidity and leverage risks.
OTC contracts also expose the Fund to credit risks in the event that a
counterparty defaults on the contract. The Fund may trade in the following types
of derivative contracts.
FUTURES CONTRACTS
Futures contracts provide for the future sale by one party and purchase by
another party of a specified amount of an underlying asset at a specified
price, date, and time. Entering into a contract to buy an underlying asset
is commonly referred to as buying a contract or holding a long position in
the asset. Entering into a contract to sell an underlying asset is commonly
referred to as selling a contract or holding a short position in the asset.
Futures CONTRACTS are considered to be commodity contracts. Futures
contracts traded OTC are frequently referred to as forward contracts.
OPTIONS Options are rights to buy or sell an underlying asset for a
specified price (the exercise price) during, or at the end of, a specified
period. A call option gives the holder (buyer) the right to buy the
underlying asset from the seller (writer) of the option. A put option gives
the holder the right to sell the underlying asset to the writer of the
option. The writer of the option receives a payment, or premium, from the
buyer, which the writer keeps regardless of whether the buyer uses (or
exercises) the option. The Fund may: Buy call options on securities,
securities indices and futures contracts in anticipation of an increase in
the value of the underlying asset. Buy put options on securities, securities
indices and futures contracts in anticipation of a decrease in the value of
the underlying asset. Write call options on securities, securities indices
and futures contracts to generate income from premiums, and in anticipation
of a decrease or only limited increase in the value of the underlying asset.
If a call written by the Fund is exercised, the Fund foregoes any possible
profit from an increase in the market price of the underlying asset over the
exercise price plus the premium received. Write put options on securities,
securities indices and futures contracts (to generate income from premiums,
and in anticipation of an increase or only limited decrease in the value of
the underlying asset). In writing puts, there is a risk that the Fund may be
required to take delivery of the underlying asset when its current market
price is lower than the exercise price. When the Fund writes options on
futures contracts, it will be subject to margin requirements similar to
those applied to futures contracts. Buy or write options to close out
existing options positions.
TEMPORARY DEFENSIVE INVESTMENTS
For temporary defensive purposes and to maintain liquidity, the Funds may
invest in cash and cash items, including short-term money market instruments;
securities issued and/or guaranteed as to payment of principal and interest by
the U.S. government, its agencies or instrumentalities; and repurchase
agreements.
SPECIAL TRANSACTIONS
REPURCHASE AGREEMENTS
Repurchase agreements are transactions in which the Fund buys a security
from a dealer or bank and agrees to sell the security back at a mutually
agreed upon time and price. The repurchase price exceeds the sale price,
reflecting the Fund's return on the transaction. This return is unrelated to
the interest rate on the underlying security. The Fund will enter into
repurchase agreements only with banks and other recognized financial
institutions, such as securities dealers, deemed creditworthy by the
Adviser. The Fund's custodian or subcustodian will take possession of the
securities subject to repurchase agreements. The Adviser or subcustodian
will monitor the value of the underlying security each day to ensure that
the value of the security always equals or exceeds the repurchase price.
Repurchase agreements are subject to credit risks. REVERSE REPURCHASE
AGREEMENTS Reverse repurchase agreements are repurchase agreements in which
the Fund is the seller (rather than the buyer) of the securities, and agrees
to repurchase them at an agreed upon time and price. A reverse repurchase
agreement may be viewed as a type of borrowing by the Fund. Reverse
repurchase agreements are subject to credit risks. In addition, reverse
repurchase agreements create leverage risks because the Fund must repurchase
the underlying security at a higher price, regardless of the market value of
the security at the time of repurchase. DELAYED DELIVERY TRANSACTIONS When
issued transactions are arrangements in which the Fund buys securities for a
set price, with payment and delivery of the securities scheduled for a
future time. During the period between purchase and settlement, no payment
is made by the Fund to the issuer and no interest accrues to the Fund. The
Fund records the transaction when it agrees to buy the securities and
reflects their value in determining the price of its shares. Settlement
dates may be a month or more after entering into these transactions so that
the market values of the securities bought may vary from the purchase
prices. Therefore, when issued transactions create market risks for the
Fund. When issued transactions also involve credit risks in the event of a
counterparty default. Some Funds may have leverage risks.
TO BE ANNOUNCED SECURITIES (TBAS)
As with other when issued transactions, a seller agrees to issue a TBA
security at a future date. However, the seller does not specify the
particular securities to be delivered. Instead, the Fund agrees to
accept any security that meets specified terms. For example, in a TBA
mortgage backed transaction, the Fund and the seller would agree upon
the issuer, interest rate and terms of the underlying mortgages.
However, the seller would not identify the specific underlying mortgages
until it issues the security. TBA mortgage backed securities increase
market risks because the underlying mortgages may be less favorable than
anticipated by the Fund.
<PAGE>
SECURITIES LENDING
The Fund may lend portfolio securities to borrowers that the Adviser deems
creditworthy. In return, the Fund receives cash or liquid securities from
the borrower as collateral. The borrower must furnish additional collateral
if the market value of the loaned securities increases. Also, the borrower
must pay the Fund the equivalent of any dividends or interest received on
the loaned securities. The Fund will reinvest cash collateral in securities
that qualify as an acceptable investment for the Fund. However, the Fund
must pay interest to the borrower for the use of cash collateral. Loans are
subject to termination at the option of the Fund or the borrower. The Fund
will not have the right to vote on securities while they are on loan, but it
will terminate a loan in anticipation of any important vote. The Fund may
pay administrative and custodial fees in connection with a loan and may pay
a negotiated portion of the interest earned on the cash collateral to a
securities lending agent or broker. Securities lending activities are
subject to market risks and credit risks. Some Funds may have leverage
risks.
ASSET COVERAGE
In order to secure its obligations in connection with derivatives contracts or
special transactions, the Fund will either own the underlying assets, enter into
an offsetting transaction or set aside readily marketable securities with a
value that equals or exceeds the Fund's obligations. Unless the Fund has other
readily marketable assets to set aside, it cannot trade assets used to secure
such obligations entering into an offsetting derivative contract or terminating
a special transaction. This may cause the Fund to miss favorable trading
opportunities or to realize losses on derivative contracts or special
transactions.
STOCK MARKET RISKS
o The value of equity securities in the Fund's portfolio will rise and fall.
These fluctuations could be a sustained trend or a drastic movement. The
Fund's portfolio will reflect changes in prices of individual portfolio
stocks or general changes in stock valuations. Consequently, the Fund's
share price may decline.
o The Adviser attempts to manage market risk by limiting the amount the Fund
invests in each company's equity securities. However, diversification will
not protect the Fund against widespread or prolonged declines in the stock
market.
LIQUIDITY RISKS
o Trading opportunities are more limited for equity securities that are not
widely held. This may make it more difficult to sell or buy a security at a
favorable price or time. Consequently, the Fund may have to accept a lower
price to sell a security, sell other securities to raise cash or give up an
investment opportunity, any of which could have a negative effect on the
Fund's performance. Infrequent trading of securities may also lead to an
increase in their price volatility.
o Liquidity risk also refers to the possibility that the Fund may not be able
to sell a security or close out a derivative contract when it wants to. If
this happens, the Fund will be required to continue to hold the security or
keep the position open, and the Fund could incur losses.
o OTC derivative contracts generally carry greater liquidity risk than
exchange-traded contracts.
RISKS RELATED TO INVESTING FOR GROWTH
o Due to their relatively high valuations, growth stocks are typically more
volatile than value stocks. For instance, the price of a growth stock may
experience a larger decline on a forecast of lower earnings, a negative
fundamental development, or an adverse market development. Further, growth
stocks may not pay dividends or may pay lower dividends than value stocks.
This means they depend more on price changes for returns and may be more
adversely affected in a down market compared to value stocks that pay higher
dividends.
RISKS RELATED TO INVESTING FOR VALUE
o Due to their relatively low valuations, value stocks are typically less
volatile than growth stocks. For instance, the price of a value stock may
experience a smaller increase on a forecast of higher earnings, a positive
fundamental development, or positive market development. Further, value
stocks tend to have higher dividends than growth stocks. This means they
depend less on price changes for returns and may lag behind growth stocks in
an up market.
<PAGE>
CREDIT RISKS
o Credit risk includes the possibility that a party to a transaction involving
the Fund will fail to meet its obligations. This could cause the Fund to
lose the benefit of the transaction or prevent the Fund from selling or
buying other securities to implement its investment strategy.
BOND MARKET RISKS
o Prices of fixed income securities rise and fall in response to interest rate
changes for similar securities. Generally, when interest rates rise, prices
of fixed income securities fall.
O Interest rate changes have a greater effect on the price of fixed income
securities with longer durations. Duration measures the price sensitivity of
a fixed income security to changes in interest rates.
CREDIT RISKS
o Credit risk is the possibility that an issuer will default on a security by
failing to pay interest or principal when due. If an issuer defaults, the
Fund will lose money.
o Many fixed income securities receive credit ratings from services such as
Standard & Poor's and Moody's Investor Services. These services assign
ratings to securities by assessing the likelihood of issuer default. Lower
credit ratings correspond to higher credit risk. If a security has not
received a rating, the Fund must rely entirely upon the Adviser's credit
assessment.
o Fixed income securities generally compensate for greater credit risk by
paying interest at a higher rate. The difference between the yield of a
security and the yield of a U.S. Treasury security with a comparable
maturity (the spread) measures the additional interest paid for risk.
Spreads may increase generally in response to adverse economic or market
conditions. A security's spread may also increase if the security's rating
is lowered, or the security is perceived to have an increased credit risk.
An increase in the spread will cause the price of the security to decline.
o Credit risk includes the possibility that a party to a transaction involving
the Fund will fail to meet its obligations. This could cause the Fund to
lose the benefit of the transaction or prevent the Fund from selling or
buying other securities to implement its investment strategy.
CALL RISKS
o Call risk is the possibility that an issuer may redeem a fixed income
security before maturity (a call) at a price below its current market price.
An increase in the likelihood of a call may reduce the security's price.
o If a fixed income security is called, the Fund may have to reinvest the
proceeds in other fixed income securities with lower interest rates, higher
credit risks, or other less favorable characteristics.
PREPAYMENT RISKS
o Generally, homeowners have the option to prepay their mortgages at any time
without penalty. Homeowners frequently refinance high interest rate
mortgages when mortgage rates fall. This results in the prepayment of
mortgage backed securities with higher interest rates. Conversely,
prepayments due to refinancings decrease when mortgage rates increase. This
extends the life of mortgage backed securities with lower interest rates. As
a result, increases in prepayments of high interest rate mortgage backed
securities, or decreases in prepayments of lower interest rate mortgage
backed securities, may reduce their yield and price. This relationship
between interest rates and mortgage prepayments makes the price of mortgage
backed securities more volatile than most other types of fixed income
securities with comparable credit risks.
o Fixed income securities generally compensate for greater prepayment risk by
paying interest at a higher rate. The difference between the yield of a
security and the yield of a U.S. Treasury security with a comparable
maturity (the spread) measures the additional interest paid for risk.
Spreads may increase generally in response to adverse economic or market
conditions. A security's spread may also increase if the security's rating
is lowered, or the security is perceived to have an increased credit risk.
An increase in the spread will cause the price of the security to decline.
o If a fixed income security is called, the Fund may have to reinvest the
proceeds in other fixed income securities with lower interest rates, higher
credit risks, or other less favorable characteristics.
<PAGE>
RISKS ASSOCIATED WITH COMPLICATED CMOS
o CMOs with complicated terms, such as companion classes, IOs, POs, Inverse
Floaters and residuals, generally entail greater market, prepayment and
liquidity risks than other mortgage backed securities. For example, their
prices are more volatile and their trading market may be more limited.
INVESTMENT LIMITATIONS
FUNDAMENTAL LIMITATIONS
The following investment limitations are fundamental and cannot be changed
without shareholder approval.
ISSUING SENIOR SECURITIES AND BORROWING MONEY
The Funds may borrow money, directly or indirectly, and issue senior securities
to the maximum extent permitted under the 1940 Act.
LENDING CASH OR SECURITIES
The Funds may not make loans, provided that this restriction does not prevent
the Funds from purchasing debt obligations, entering into repurchase agreements,
lending their assets to broker/dealers or institutional investors and investing
in loans, including assignments and participation interests.
INVESTING IN COMMODITIES
The Funds may not purchase or sell physical commodities, provided that the Funds
may purchase securities of companies that deal in commodities. As a
non-fundamental policy, for purposes of this restriction, investments in
transactions involving futures contracts and options, forward currency
contracts, swap transactions and other financial contracts that settle by
payment of cash are not deemed to be investments in commodities.
INVESTING IN REAL ESTATE
The Funds may not purchase or sell real estate, provided that this restriction
does not prevent the Funds from investing in issuers which invest, deal, or
otherwise engage in transactions in real estate or interests therein, or
investing in securities that are secured by real estate or interests therein.
The Funds may exercise their rights under agreements relating to such
securities, including the right to enforce security interests and to hold real
estate acquired by reason of such enforcement until that real estate can be
liquidated in an orderly manner.
DIVERSIFICATION OF INVESTMENTS
With respect to securities comprising 75% of the value of its total assets, the
Funds will not purchase securities of any one issuer (other than cash; cash
items; securities issued or guaranteed by the government of the United States or
its agencies or instrumentalities and repurchase agreements collateralized by
such U.S. government securities; and securities of other investment companies)
if, as a result, more than 5% of the value of their total assets would be
invested in securities of that issuer, or the Funds would own more than 10% of
the outstanding voting securities of that issuer.
CONCENTRATION OF INVESTMENTS
The Funds will not make investments that will result in the concentration of
their investments in the securities of issuers primarily engaged in the same
industry. Government securities, municipal securities and bank instruments will
not be deemed to constitute an industry. To conform to the current view of the
SEC staff that only domestic bank instruments may be excluded from industry
concentration limitations, as a matter of non-fundamental policy, the Funds will
not exclude foreign bank instruments from industry concentration tests so long
as the policy of the SEC remains in effect. As a non-fundamental operating
policy, the Funds will consider concentration to be the investment of more than
25% of the value of their total assets in any one industry.
UNDERWRITING
The Funds may not underwrite the securities of other issuers, except that
the Funds may engage in transactions involving the acquisition, disposition or
resale of their portfolio securities, under circumstances where they may be
considered to be underwriters under the Securities Act of 1933.
NON-FUNDAMENTAL LIMITATIONS
The following investment limitations are non-fundamental and, therefore, may be
changed by the Trustees without shareholder approval. Shareholders will be
notified before
any material change in these limitations becomes effective.
BUYING ON MARGIN
The TREASURY MONEY MARKET FUND and the LIMITED MATURITY GOVERNMENT FUND will not
purchase securities on margin, provided that these Funds may obtain short-term
credits necessary for the clearance of purchases and sales of securities. The
FIXED INCOME FUND, BALANCED FUND, VALUE FUND and GROWTH FUND will not purchase
securities on margin, provided that these Funds may obtain short-term credits
necessary for the clearance of purchases and sales of securities, and further
provided that these Funds may make margin deposits in connection with their use
of financial options and futures, forward and spot currency contracts, swap
transactions and other financial contracts or derivative instruments.
PLEDGING ASSETS
The Funds will not mortgage, pledge, or hypothecate any of their assets,
provided that this shall not apply to the transfer of securities in connection
with any permissible borrowing or to collateral arrangements in connection with
permissible activities.
INVESTING IN ILLIQUID SECURITIES
The TREASURY MONEY MARKET FUND will not purchase securities for which there is
no readily available market, or enter in to repurchase agreements or purchase
time deposits maturing in more than seven days, if immediately after and as a
result, the value of such securities would exceed, in the aggregate, 10% of the
Fund's net assets.
The LIMITED MATURITY GOVERNMENT FUND, FIXED INCOME FUND, BALANCED FUND, VALUE
FUND, GROWTH FUND and AGGRESSIVE GROWTH FUND will not purchase securities for
which there is no readily available market, or enter in to repurchase agreements
or purchase time deposits maturing in more than seven days, if immediately after
and as a result, the value of such securities would exceed, in the aggregate,
15% of the Funds' net assets. INVESTING IN SECURITIES OF OTHER INVESTMENT
COMPANIES
The Funds may invest their assets in securities of other investment companies.
REVERSE REPURCHASE AGREEMENTS
The Funds may engage in reverse repurchase agreements. Reverse repurchase
agreements are repurchase agreements in which the Fund is the seller (rather
than the buyer) of the securities, and agrees to repurchase them at an agreed
upon time and price. A reverse repurchase agreement may be viewed as a type of
borrowing by the Fund. Reverse repurchase agreements are subject to credit
risks. In addition, reverse repurchase agreements create leverage risks because
the Fund must repurchase the underlying security at a higher price, regardless
of the market value of the security at the time of repurchase. CONCENTRATION OF
INVESTMENTS
In applying the Fund's concentration restriction: (a) utility companies will be
divided according to their services, for example, gas, gas transmission,
electric and telephone will each be considered a separate industry; (b)
financial service companies will be classified according to the end users of
their services, for example, automobile finance, bank finance and diversified
finance will each be considered a separate industry; and (c) asset-backed
securities will be classified according to the underlying assets securing such
securities.
ARBITRAGE TRANSACTIONS
The Funds will not enter into transactions for the purpose of engaging in
arbitrage.
Except with respect to borrowing money, if a percentage limitation is adhered to
at the time of investment, a later increase or decrease in percentage resulting
from any change in value or net assets will not result in a violation of such
restriction. For purposes of their policies and limitations, the Funds consider
instruments (such as certificates of deposit and demand and time deposits)
issued by a U.S. branch of a domestic bank or savings and loan having capital,
surplus, and undivided profits in excess of $100,000,000 at the time of
investment to be cash items. REGULATORY COMPLIANCE. The TREASURY MONEY
MARKET FUND may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth in the
prospectus and this statement of additional information, in order to comply with
applicable laws and regulations. In particular, the TREASURY MONEY MARKET FUND
will comply with the various requirements of Rule 2a-7 under the Act, which
regulates money market mutual funds. For example, Rule 2a-7 generally prohibits
the investment of more than 5% of the TREASURY MONEY MARKET FUND'S total assets
in the securities of any one issuer, although the TREASURY MONEY MARKET FUND'S
fundamental investment limitation only requires such 5% diversification with
respect to 75% of its assets. The TREASURY MONEY MARKET FUND will also determine
the effective maturity of its investments, as well as its ability to consider a
security as having received the requisite short-term ratings by NRSROs,
according to Rule 2a-7. The TREASURY MONEY MARKET FUND may change these
operational policies to reflect changes in the laws and regulations without
shareholder approval. PORTFOLIO TURNOVER. For the fiscal years ended November
30, 1998 and 1997, the portfolio turnover rates were 69% and 40%, respectively,
for LIMITED MATURITY GOVERNMENT Fund; 64% and 37%, respectively, for the FIXED
INCOME FUND; 41% and 40%, respectively, for the GROWTH FUND; 63% and 31%,
respectively, for the VALUE FUND; and 31% and 34%, respectively, for the
BALANCED FUND. DETERMINING MARKET VALUE OF SECURITIES
USE OF THE AMORTIZED COST METHOD (TREASURY MONEY MARKET FUND ONLY)
The Trustees have decided that the best method for determining the value of
portfolio instruments for the TREASURY MONEY MARKET FUND is amortized cost.
Under this method, portfolio instruments are valued at the acquisition cost as
adjusted for amortization of premium or accumulation of discount rather than at
current market value. The TREASURY MONEY MARKET FUND's use of the amortized cost
method of valuing portfolio instruments depends on its compliance with the
provisions of Rule 2a-7 (the Rule) promulgated by the Securities and Exchange
Commission under the Act. Under the Rule, the Trustees must establish procedures
reasonably designed to stabilize the net asset value per share, as computed for
purposes of distribution and redemption, at $1.00 per share, taking into account
current market conditions and the Fund's investment objective. Under the Rule,
the TREASURY MONEY MARKET FUND is permitted to purchase instruments which are
subject to demand features or standby commitments. As defined by the Rule, a
demand feature entitles the Fund to receive the principal amount of the
instrument from the issuer or a third party on (1) no more than 30 days' notice
or (2) at specified intervals not exceeding 397 days on no more than 30 days'
notice. A standby commitment entitles the Fund to achieve same-day settlement
and to receive an exercise price equal to the amortized cost of the underlying
instrument plus accrued interest at the time of exercise. The TREASURY MONEY
MARKET FUND acquires instruments subject to demand features and standby
commitments to enhance the instrument's liquidity. The Fund treats demand
features and standby commitments as part of the underlying instruments, because
the Fund does not acquire them for speculative purposes and cannot transfer them
separately from the underlying instruments. Therefore, although the Fund defines
demand features and standby commitments as puts, the Fund does not consider them
to be corporate investments for purposes of its investment policies. MONITORING
PROCEDURES. The Trustees' procedures include monitoring the relationship between
the amortized cost value per share and the net asset value per share based upon
available indications of market value. The Trustees will decide what, if any,
steps should be taken if there is a difference of more than 0.5 of 1% between
the two values. The Trustees will take any steps they consider appropriate (such
as redemption in kind or shortening the average portfolio maturity) to minimize
any material dilution or other unfair results arising from differences between
the two methods of determining net asset value. INVESTMENT RESTRICTIONS. The
Rule requires that the TREASURY MONEY MARKET FUND limit its investments to
instruments that, in the opinion of the Trustees, present minimal credit risks
and have received the requisite rating from one or more NRSROs. If the
instruments are not rated, the Trustees must determine that they are of
comparable quality. The Rule also requires the Fund to maintain a
dollar-weighted average portfolio maturity (not more than 90 days) appropriate
to the objective of maintaining a stable net asset value of $1.00 per share. In
addition, no instrument with a remaining maturity of more than 397 days can be
purchased by the Fund. Should the disposition of a portfolio security result in
a dollar-weighted average portfolio maturity of more than 90 days, the TREASURY
MONEY MARKET FUND will invest its available cash to reduce the average maturity
to 90 days or less as soon as possible. Shares of investment companies purchased
by the Fund will meet these same criteria and will have investment policies
consistent with Rule 2a-7. Under the amortized cost method of valuation, neither
the amount of daily income nor the net asset value is affected by any unrealized
appreciation or depreciation of the portfolio. In periods of declining interest
rates, the indicated daily yield on shares of the TREASURY MONEY MARKET FUND,
computed based upon amortized cost valuation, may tend to be higher than a
similar computation made by using a method of valuation based upon market prices
and estimates. In periods of rising interest rates, the indicated daily yield on
shares of the Fund computed the same way may tend to be lower than a similar
computation made by using a method of calculation based upon market prices and
estimates. MARKET VALUES (ALL OTHER FUNDS)
Market values of portfolio securities are determined as follows:
o for equity securities, according to the last sale price in the market in
which they are primarily traded (either a national securities exchange or
the over-the-counter market), if available;
o in the absence of recorded sales for equity securities, according to the
mean between the last closing bid and asked prices;
o for bonds and other fixed income securities, at the last sale price on a
national securities exchange, if available, otherwise, as determined by an
independent pricing service;
o for short-term obligations, according to the mean between bid and asked
prices as furnished by an independent pricing service, except that
short-term obligations with remaining maturities of less than 60 days at
the time of purchase may be valued at amortized cost or at fair market
value as determined in good faith by the Board; and
o for all other securities, at fair value as determined in good faith by the
Board.
Prices provided by independent pricing services may be determined without
relying exclusively on quoted prices and may consider: institutional trading in
similar groups of securities, yield, quality, stability, risk, coupon rate,
maturity, type of issue, trading characteristics, and other market data or
factors.
A Fund values futures contracts and options at their market values established
by the exchanges on which they are traded at the close of trading on such
exchanges. Options traded in the over-the-counter market are valued according to
the mean between the last bid and the last asked price for the option as
provided by an investment dealer or other financial institution that deals in
the option. The Board may determine in good faith that another method of valuing
such investments is necessary to appraise their fair market value.
WHAT DO SHARES COST?
The TREASURY MONEY MARKET FUND attempts to stabilize the net asset value (NAV)
of Shares at $1.00 by valuing its portfolio securities using the amortized cost
method. Shares of the other Funds are sold at their NAV and redeemed at NAV less
any applicable Contingent Deferred Sales Charge (CDSC) (applies to Investment
Shares and AGGRESSIVE GROWTH FUND only) on days on which the New York Stock
Exchange is open for business. The NAV for each class of Shares may differ due
to the variance in daily net income realized by each class. Such variance will
reflect only accrued net income to which the shareholders of a particular class
are entitled.
REDUCING OR ELIMINATING THE CONTINGENT DEFERRED SALES CHARGE
These reductions or eliminations are offered because: no sales commissions have
been advanced to the investment professional selling Share; the shareholder has
already paid a CDSC; or nominal sales efforts are associated with the original
purchase of Shares.
Upon notification to the Distributor or the Funds' transfer agent, no CDSC will
be imposed on redemptions:
o if you are an officer, director, employee or retired employee of Regions
Bank, or its affiliates, and your spouse and dependent children;
o if you are a trust customer redeeming through the Trust departments of
Regions Bank, or its affiliates. The Trust departments may charge fees for
services provided;
o on the portion of redemption proceeds attributable to increases in the
value of your account due to increases in the NAV;
o on shares acquired through reinvestment of dividends and capital gains;
o on shares held more than 3 years after the end of the calendar month of
acquisition;
o upon the death or disability of the last surviving shareholder(s) of the
account;
o if your redemption is a required distribution and you are over the age of
70-1/2 from an individual retirement account or other retirement plan;
o on shares purchased prior to June 1, 1997; or
o when the Fund redeems your Shares and closes your account for failing to
meet the minimum balance requirement.
HOW IS THE FUND SOLD?
Under the Distributor's Contract with the Funds, the Distributor (Federated
Securities Corp.), located at Federated Investors Tower, 1001 Liberty Avenue,
Pittsburgh, PA 15222-3779, offers Shares on a continuous, best-efforts basis.
RULE 12B-1 PLAN (AGGRESSIVE GROWTH FUND AND INVESTMENT SHARES ONLY)
As a compensation-type plan, the Rule 12b-1 Plan is designed to pay the
Distributor (who may then pay investment professional such as banks,
broker/dealers, trust departments of bank, and registered investment advisers)
for marketing activities (such as advertising, printing and distributing
prospectuses, and providing incentives to investment professional) to promote
sales of Shares so that overall Fund assets are maintained or increased. This
helps the Fund achieve economies of scale, reduce per share expenses, and
provide cash for orderly portfolio management and Share redemptions. Also, the
Fund's service providers that receive asset-based fees also benefit from stable
or increasing Fund assets. The Funds may compensate the Distributor more or less
than its actual marketing expenses. In no event will a Fund pay for any expenses
of the Distributor that exceed the maximum Rule 12b-1 Plan fee. SHAREHOLDER
SERVICES
The Funds (except the AGGRESSIVE GROWTH FUND and TREASURY MONEY MARKET FUND) may
pay Federated Shareholder Services, a subsidiary of Federated Investors, Inc.,
for providing shareholder services and maintaining shareholder accounts.
Federated Shareholder Services may select others, including Regions Bank and
RICI, to perform these services for their customers and may pay them fees.
SUPPLEMENTAL PAYMENTS
Investment professionals may be paid fees out of the assets of the Distributor
and/or Federated Shareholder Services (but not out of Fund assets). The
Distributor and/or Federated Shareholder Services may be reimbursed by the
Adviser or its affiliates.
Investment professional receive such fees for providing distribution-related or
shareholder services such as sponsoring sales, providing sales literature,
conducting training seminars for employees, and engineering sales-related
computer software programs and systems. Also, investment professionals may be
paid cash or promotional incentives, such as reimbursement of certain expenses
relating to attendance at informational meetings about the Fund or other special
events at recreational-type facilities, or items of material value. These
payments will be based upon the amount of Shares the investment professional
sells or may sell and/or upon the type and nature of sales or marketing support
furnished by the investment professional.
HOW TO BUY SHARES
EXCHANGING SECURITIES FOR FUND SHARES
You may contact the Distributor to request a purchase of Shares in an exchange
for securities you own. The Fund reserves the right to determine whether to
accept your securities and the minimum market value to accept. The Fund will
value your securities in the same manner as it values its assets. This exchange
is treated as a sale of your securities for federal tax purposes. EXCHANGE
PRIVILEGE Before the exchange, the shareholder must receive a copy of the
Prospectus. Please refer to the "How to Exchange Shares" section in the
Prospectus. REDEMPTION IN KIND
Although the Funds intend to pay share redemptions in cash, it reserves the
right, as described below, to pay the redemption price in whole or in part by a
distribution of the Fund's portfolio securities. Because the Trust has elected
to be governed by Rule 18f-1 under the Investment Company Act or 1940, the Funds
are obligated to pay share redemptions to any one shareholder in cash only up to
the lesser of $250,000 or 1% of a Fund's net assets represented by such share
class during any 90-day period. Any share redemption payment greater than this
amount will also be in cash unless the Funds' Trustees determine that payment
should be in kind. In such a case, a Fund will pay all or a portion of the
remainder of the redemption in portfolio securities, valued in the same way as
the Fund determines its net asset value. The portfolio securities will be
selected in a manner that the Funds' Trustees deems fair and equitable and, to
the extent available, such securities will be readily marketable. Redemption in
kind is not as liquid as a cash redemption. If redemption is made in kind,
shareholders receiving their portfolio securities and selling them before their
maturity could receive less than the redemption value of their securities and
could incur transaction costs. MASSACHUSETTS PARTNERSHIP LAW Under certain
circumstances, shareholders may be held personally liable under Massachusetts
law for acts or obligations of the Trust. To protect shareholders, the Trust has
filed legal documents with Massachusetts that expressly disclaim the liability
of shareholders for such acts or obligations of the Trust. These documents
require notice of this disclaimer to be given in each agreement, obligation, or
instrument the Trust or its Trustees enter into or sign. In the unlikely event a
shareholder is held personally liable for the Trust's obligations, the Trust is
required to use its property to protect or compensate the shareholder. On
request, the Trust will defend any claim made and pay any judgment against a
shareholder for any act or obligation of the Trust. Therefore, financial loss
resulting from liability as a shareholder will occur only if the Trust cannot
meet its obligations to indemnify shareholders and pay judgments against them.
ACCOUNT AND SHARE INFORMATION
VOTING RIGHTS
Each Share of a Fund gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All classes of each Fund in a
Trust have equal voting rights, except that in matters affecting only a
particular Fund or class, only Shares of that Fund or class are entitled to
vote. Trustees may be removed by the Trustees or by shareholders at a special
meeting. A special meeting of shareholders will be called by the Trustees upon
the written request of shareholders who own at least 10% of each Trust's
outstanding shares of all series entitled to vote. As of _____ , the following
list indicates the shareholders who owned of record, beneficially or both 5% or
more of the outstanding shares of the following portfolios: [To be filed by
amendment.]
Shareholders owing 25% or more of outstanding Shares may be in control and be
able to affect the outcome of certain mattes presented for a vote of
shareholders.
WHAT ARE THE TAX CONSEQUENCES?
FEDERAL INCOME TAX
The Funds will pay no federal income tax because each Fund expects to meet the
requirements of Subchapter M of the Internal Revenue Code (Code) applicable to
regulated investment companies and to receive the special tax treatment afforded
to such companies. Each Fund will be treated as a single, separate entity for
federal income tax purposes so that income earned and capital gains and losses
realized by the Trust's other portfolios will be separate from those realized by
each Fund. Each Fund is entitled to a loss carry-forward, which may reduce the
taxable income or gain that each Fund would realize, and to which the
shareholder would be subject, in the future. The dividends received deduction
for corporations will apply to ordinary income distributions to the extent the
distribution represents amounts that would qualify for the dividends received
deduction to the Funds if the Funds were a regular corporation, and to the
extent designated by the Funds as so qualifying. Otherwise, these dividends and
any short-term capital gains are taxable as ordinary income. No portion of any
income dividends paid by the other Funds is eligible for the dividends received
deduction available to corporations. These dividends, and any short-term capital
gains, are taxable as ordinary income. CAPITAL GAINS
Capital gains, when experienced by the Funds, could result in an increase in
dividends. Capital losses could result in a decrease in dividends. When a Fund
realizes net long-term capital gains, it will distribute them at least once
every 12 months.
WHO MANAGES THE FUNDS?
OFFICERS AND TRUSTEES
The Board is responsible for managing the Trust's business affairs and for
exercising all the Trust's powers except those reserved for the shareholders.
Information about each Board member is provided below and includes each
person's: name, address, birthdate, present position(s) held with the Trust,
principal occupations for the past five years, total compensation received as a
Trustee from the Trust for its most recent fiscal year. The Trust is comprised
of seven funds. As of December 31, 1998, the Funds' Board and Officers as a
group owned less than 1% of the Fund's outstanding Shares.
An asterisk (*) denotes a Trustee who is deemed to be an interested person as
defined in the Investment Company Act of 1940. The following symbol (#) denotes
a Member of the Board's Executive Committee, which handles the Board's
responsibilities between its meetings.
<TABLE>
<CAPTION>
NAME AGGREGATE
BIRTHDATE COMPENSATION
ADDRESS PRINCIPAL OCCUPATIONS FROM
POSITION WITH TRUST FOR PAST 5 YEARS TRUST
<S> <C> <C>
JOHN F. DONAHUE*## Chief Executive Officer and Director or $0
Birthdate: July 28, 1924 Trustee of the Federated Fund Complex.
Federated Investors Chairman and Director, Federated Investors,
Tower Inc.; Chairman and Trustee, Federated
1001 Liberty Avenue Advisers, Federated Management, and
Pittsburgh, PA Federated Research; Chairman and Director,
TRUSTEE AND CHAIRMAN Federated Research Corp., and Federated
Global Investment Management Corp.;
Chairman, Passport Research, Ltd.
THOMAS G. BIGLEY Director or Trustee of the Federated Fund $1,732.86
Birthdate: February 3, Complex; Director and Member of Executive
1934 Committee, Children's Hospital of
15 Old Timber Trail Pittsburgh; formerly: Senior Partner, Ernst
Pittsburgh, PA & Young LLP; Director, MED 3000 Group, Inc.;
TRUSTEE Director, Member of Executive Committee,
University of Pittsburgh.
JOHN T. CONROY, JR. Director or Trustee of the Federated Fund $1,906.42
Birthdate: June 23, 1937 Complex; President, Investment Properties
Wood/IPC Commercial Corporation; Senior Vice President,
Dept. John R. Wood and Associates, Inc., Realtors;
John R. Wood Partner or Trustee in private real estate
Associates, Inc. ventures in Southwest Florida; formerly:
Realtors President, Naples Property Management, Inc.
3255 Tamiami Trial and Northgate Village Development
North Naples, FL Corporation.
TRUSTEE
NICHOLAS CONSTANTAKIS Director or Trustee of the Federated Fund $1,732.86
Birthdate: September 3, Complex; formerly: Partner, Andersen
1939 Worldwide SC.
175 Woodshire Drive
Pittsburgh, PA
TRUSTEE
WILLIAM J. COPELAND Director or Trustee of the Federated Fund $1,906.42
Birthdate: July 4, 1918 Complex; Director and Member of the
One PNC Plaza-23rd Floor Executive Committee, Michael Baker, Inc.;
Pittsburgh, PA formerly: Vice Chairman and Director, PNC
TRUSTEE Bank, N.A., and PNC Bank Corp.; Director,
Ryan Homes, Inc.
Retired: Director, United Refinery;
Director, Forbes Fund; Chairman, Pittsburgh
Foundation; Chairman, Pittsburgh Civic Light
Opera.
Director or Trustee of some of the Federated $0
JOHN F. CUNNINGHAM Fund Complex; Chairman, President and Chief
Birth Date: March 5, Executive Officer, Cunningham & Co., Inc.
1943 (strategic business consulting) ; Trustee
353 El Brillo Way Associate, Boston College; Director, EMC
Palm Beach, FL Corporation (computer storage systems);
TRUSTEE formerly: Director, Redgate Communications.
Previous Positions: Chairman of the Board
and Chief Executive Officer, Computer
Consoles, Inc.; President and Chief
Operating Officer, Wang Laboratories;
Director, First National Bank of Boston;
Director, Apollo Computer, Inc.
JAMES E. DOWD, ESQ. Director or Trustee of the Federated Fund $1,906.42
Birthdate: May 18, 1922 Complex; Attorney-at-law; Director, The
571 Hayward Mill Road Emerging Germany Fund, Inc.
Concord, MA
TRUSTEE Retired: President, Boston Stock Exchange,
Inc.; Regional Administrator, United States
Securities and Exchange Commission.
LAWRENCE D. ELLIS, M.D.* Director or Trustee of the Federated Fund $1,732.86
Birthdate: October 11, Complex; Professor of Medicine, University
1932 of Pittsburgh; Medical Director, University
3471 Fifth Avenue of Pittsburgh Medical Center - Downtown;
Suite 1111 Hematologist, Oncologist, and Internist,
Pittsburgh, PA Presbyterian and Montefiore Hospitals;
TRUSTEE Member, National Board of Trustees, Leukemia
Society of America.
EDWARD L. FLAHERTY, Director or Trustee of the Federated Fund $1,906.42
JR., ESQ. # Complex; Attorney, of Counsel, Miller,
Birthdate: June 18, 1924 Ament, Henny & Kochuba; Director, Eat'N Park
Miller, Ament, Henny & Restaurants, Inc.; formerly: Counsel,
Kochuba Horizon Financial, F.A., Western Region;
205 Ross Street Partner, Meyer and Flaherty.
Pittsburgh, PA
TRUSTEE
<PAGE>
EDWARD C. GONZALES* Trustee or Director of some of the Funds in $0
Birthdate: October 22, the Federated Fund Complex; President,
1930 Executive Vice President and Treasurer of
Federated Investors some of the Funds in the Federated Fund
Tower Complex; Vice Chairman, Federated Investors,
1001 Liberty Avenue Inc.; Vice President, Federated Advisers,
Pittsburgh, PA Federated Management, Federated Research,
TRUSTEE Federated Research Corp., Federated Global
Investment Management Corp. and Passport
Research, Ltd.; Executive Vice President and
Director, Federated Securities Corp.;
Trustee, Federated Shareholder Services
Company.
PETER E. MADDEN Director or Trustee of the Federated Fund $1,732.86
Birthdate: March 16, Complex; formerly: Representative,
1942 Commonwealth of Massachusetts General Court;
One Royal Palm Way President, State Street Bank and Trust
100 Royal Palm Way Company and State Street Corporation.
Palm Beach, FL
TRUSTEE Retired: Director, VISA USA and VISA
International; Chairman and Director,
Massachusetts Bankers Association; Director,
Depository Trust Corporation.
CHARLES F. MANSFIELD, Director or Trustee of some of the Federated $0
JR. Fund Complex; Management Consultant.
Birth Date: April 10,
1945 Previous Positions: Chief Executive Officer,
80 South Road PBTC International Bank; Partner, Arthur
Westhampton Beach, NY Young & Company (now Ernst & Young LLP);
TRUSTEE Chief Financial Officer of Retail Banking
Sector, Chase Manhattan Bank; Senior Vice
President, Marine Midland Bank; Vice
President, Citibank; Assistant Professor of
Banking and Finance, Frank G. Zarb School of
Business, Hofstra University.
JOHN E. MURRAY, JR., Director or Trustee of the Federated Fund $1,732.86
J.D., S.J.D. Complex; President, Law Professor, Duquesne
Birthdate: December 20, University; Consulting Partner, Mollica &
1932 Murray.
President, Duquesne
University Retired: Dean and Professor of Law,
Pittsburgh, PA University of Pittsburgh School of Law; Dean
TRUSTEE and Professor of Law, Villanova University
School of Law.
WESLEY W. POSVAR Director or Trustee of the Federated Fund $1,732.86
Birthdate: September Complex; President, World Society of
14, 1925 Ekistics, Athens; Professor, International
1202 Cathedral of Politics; Management Consultant; Trustee,
Learning Carnegie Endowment for International Peace,
University of Pittsburgh RAND Corporation, Online Computer Library
Pittsburgh, PA Center, Inc., National Defense University
TRUSTEE and U.S. Space Foundation; President
Emeritus, University of Pittsburgh; Founding
Chairman, National Advisory Council for
Environmental Policy and Technology, Federal
Emergency Management Advisory Board and
Czech Management Center, Prague.
Retired: Professor, United States Military
Academy; Professor, United States Air Force
Academy.
MARJORIE P. SMUTS Director or Trustee of the Federated Fund $1,732.86
Birthdate: June 21, 1935 Complex; Public
4905 Bayard Street Relations/Marketing/Conference Planning.
Pittsburgh, PA
TRUSTEE Retired: National Spokesperson, Aluminum
Company of America; business owner.
JOHN S. WALSH Director or Trustee of the Federated Fund $0
Birthdate: November 28, Complex; President and Director, Heat Wagon,
1957 Inc.; President and Director, Manufacturers
2007 Sherwood Drive Products, Inc.; President, Portable Heater
Valparaiso, IN Parts, a division of Manufacturers Products,
TRUSTEE Inc.; Director, Walsh & Kelly, Inc.;
Formerly, Vice President, Walsh & Kelly, Inc.
J. CHRISTOPHER President or Executive Vice President of the $0
DONAHUE*## Federated Fund Complex; Director or Trustee
Birthdate: April 11, of some of the Funds in the Federated Fund
1949 Complex; President and Director, Federated
Federated Investors Investors, Inc.; President and Trustee,
Tower Federated Advisers, Federated Management,
1001 Liberty Avenue and Federated Research; President and
Pittsburgh, PA Director, Federated Research Corp. and
EXECUTIVE VICE Federated Global Investment Management
PRESIDENT and TRUSTEE Corp.; President, Passport Research, Ltd.;
Trustee, Federated Shareholder Services
Company; Director, Federated Services
Company.
JOHN W. MCGONIGLE Executive Vice President and Secretary of $0
Birthdate: October 26, the Federated Fund Complex; Executive Vice
1938 President, Secretary, and Director,
Federated Investors Federated Investors, Inc.; Trustee,
Tower Federated Advisers, Federated Management,
1001 Liberty Avenue and Federated Research; Director, Federated
Pittsburgh, PA Research Corp. and Federated Global
EXECUTIVE VICE PRESIDENT Investment Management Corp.; Director,
Federated Services Company; Director,
Federated Securities Corp.
RICHARD B. FISHER President or Vice President of some of the $0
Birthdate: May 17, 1923 Funds; Director or Trustee of some of the
Federated Investors Funds; Executive Vice President, Federated
Tower Investors, Inc.; Chairman and Director,
1001 Liberty Avenue Federated Securities Corp.
Pittsburgh, PA
VICE PRESIDENT
RICHARD J. THOMAS Treasurer of the Federated Fund Complex; $0
Birthdate: June 17, Vice President - Funds Financial Services
1954 Division, Federated Investors, Inc.;
Federated Investors Formerly: various management positions
Tower within Funds Financial Services Division of
1001 Liberty Avenue Federated Investors, Inc.
Pittsburgh, PA
TREASURER
CHARLES L. DAVIS, JR. Vice President and Assistant Treasurer of $0
Birthdate: March 23, some of the Funds.
</TABLE>
1960 Federated Investors Tower 1001 Liberty Avenue Pittsburgh, PA VICE PRESIDENT
AND ASSISTANT TREASURER
## Mr. Donahue is the father of J. Christopher Donahue, Executive Vice
President of the Trust.
ADVISER TO THE FUNDS
The Funds' investment adviser is the Capital Management Group, a unit of the
Trust Division of Regions Bank (Adviser), which is a wholly-owned subsidiary of
Regions Financial Corp. Because of internal controls maintained by Regions Bank
to restrict the flow of non-public information, Fund investments are typically
made without any knowledge of Regions Bank or its affiliates' lending
relationships with an issuer.
The Adviser shall not be liable to the Trust, the Funds or any shareholder of
the Funds for any losses that may be sustained in the purchase, holding, or sale
of any security, or for anything done or omitted by it, except acts or omissions
involving willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties imposed upon it by its contract with the Trust.
BANKING LAWS
Banking laws and regulations presently prohibit a bank holding company
registered under the federal Bank Holding Company Act of 1956 or any bank or
non-bank affiliate thereof from sponsoring, organizing, controlling or
distributing the shares of a registered, open-end management investment company
continuously engaged in the issuance of its shares, and prohibit banks generally
from issuing, underwriting, or distributing securities. However, such banking
laws and regulations do not prohibit such a holding company, affiliate, or banks
generally from acting as investment adviser, transfer agent or custodian to such
an investment company or from purchasing shares of such a company as agent for
and upon the order of such a customer. Regions Bank is subject to such banking
laws and regulations. Regions Bank believes, based on the advice of its counsel,
that it may perform the services contemplated by the investment advisory and
custody agreement with the Trust without violation of the Glass-Steagall Act or
other applicable banking laws or regulations. Changes in either federal or state
statutes and regulations relating to the permissible activities of banks and
their subsidiaries or affiliates, as well as further judicial or administrative
decisions or interpretations of such present or future statutes and regulations,
could prevent Regions Bank from continuing to perform all or a part of the
services described in the prospectus for its customers and/or the Fund. If
Regions Bank were prohibited from engaging in these activities, the Trustees
would consider alternative service providers and means of continuing available
investment services. In such event, changes in the operation of the Fund may
occur, including possible termination of any automatic or other Fund share
investment and redemption services then being provided by Regions Bank. It is
not expected that existing shareholders would suffer any adverse financial
consequences if another adviser with equivalent abilities to Capital Management
Group is found as a result of any of these occurrences.
BROKERAGE TRANSACTIONS
The Adviser may select brokers and dealers who offer brokerage and research
services. These services may be furnished directly to a Fund or the Adviser, and
may include: advice as to the advisability of investing in securities; security
analysis and reports; economic studies; industry studies; receipt of quotations
for portfolio evaluations; and similar services. The Adviser and its affiliates
exercise reasonable business judgment in selecting brokers who offer brokerage
and research services to execute securities transactions. They determine in good
faith that commissions charged by such persons are reasonable in relationship to
the value of the brokerage and research services provided. Research services
provided by brokers and dealers may be used by the Adviser in advising the Funds
and other accounts. To the extent that receipt of these services may supplant
services for which the Adviser or its affiliates might otherwise have paid, it
would tend to reduce their expenses.
For the fiscal year ended November 30, 1998, the Funds' Adviser directed
brokerage transactions to certain brokers due to research services they
provided. The total amount of these transactions was $529,838,284 for which the
Funds paid $810,735 in brokerage commissions.
ADMINISTRATOR
Federated Administrative Services, a subsidiary of Federated Investors, Inc.,
provides administrative personnel and services to the Funds for a fee at an
annual rate as specified below:
MAXIMUM AVERAGE AGGREGATE DAILY NET
ADMINISTRATIVE FEE ASSETS OF THE TRUST
.150% on the first $250 million
.125% on the next $250 million
.100% on the next $250 million
.075% on assets in excess of $750 million
The administrative fee received during any fiscal year shall be at least $50,000
per Fund. Federated Administrative Services may choose voluntarily to reimburse
a portion of its fee at any time.
The functions performed by FAS, as administrator include, but are not limited to
the following:
o preparation, filing and maintenance of the Trust's governing documents,
minutes of Trustees' meetings and shareholder meetings;
o preparation and filing with the SEC and state regulatory authorities the
Trust's registration statement and all amendments, and any other documents
required for the Funds to make a continuous offering of their shares;
o prepare, negotiate and administer contracts on behalf of the Fund;
o supervision of the preparation of financial reports;
o preparation and filing of federal and state tax returns;
o assistance with the design, development and operation of a Fund; and
o providing advice to the Funds and Trustees.
TRANSFER AGENT, DIVIDEND DISBURSING AGENT AND PORTFOLIO ACCOUNTING SERVICES
Federated Services Company, Pittsburgh, Pennsylvania, through its
registered transfer agent, Federated Shareholder Services Company, maintains all
necessary shareholder records. For its services, the transfer agent receives a
fee based on the size, type and number of accounts and transactions made by
shareholders. The fee is based on the level of the Funds' average net assets for
the period plus out-of-pocket expenses.
CUSTODIAN
Regions Bank, Birmingham, Alabama, is custodian for the securities and cash of
the Funds. Under the custodian agreement, Regions Bank holds the each Fund's
portfolio securities and keeps all necessary records and documents relating to
its duties. Regions Bank's fees for custody services are based upon the market
value of Fund securities held in custody plus certain securities transaction
charges. INDEPENDENT AUDITORS
Deloitte & Touche LLP, Pittsburgh, Pennsylvania, is the independent auditor for
the Funds.
FEES PAID BY THE FUNDS FOR SERVICES
<TABLE>
<CAPTION>
<S> <C> <C> <C>
- --------------------- ------------------------------- --------------------------- ---------------------------
FUND ADVISORY FEE PAID/ BROKERAGE COMMISSIONS PAID ADMINISTRATIVE FEE PAID
ADVISORY FEE WAIVED
--------------------------- ---------------------------
------------------------------- --------------------------- ---------------------------
FOR THE FISCAL YEAR ENDED FOR THE FISCAL YEAR ENDED FOR
THE FISCAL YEAR ENDED NOVEMBER 30, 1998 NOVEMBER 30,
1998 NOVEMBER 30, 1998
------------------------------- --------------------------- ---------------------------
----------------------------------------------------------------------------------------
1998 1997 1996 1998 1997 1996 1998 1997 1996
- ---------------------
----------------------------------------------------------------------------------------
TREASURY MONEY $1,530,439$923,323 $735,258 N/A N/A N/A $322,494 $218,861 $190,715
MARKET FUND $765,219 $461,662 $427,681
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
LIMITED MATURITY $613,188 $554,567 $448,104 N/A N/A N/A $93,041 $94,304 $83,044
GOVERNMENT FUND $0 $0 $48,135
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
FIXED INCOME FUND $1,631,732$1,272,862 $1,135,766 N/A N/A N/A $230,969 $201,589 $196,480
$0 $0 $0
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
BALANCED FUND $813,891 $576,963 $436,997 $30,423 $45,727 $38,576 $107,768 $85,552 $70,893
$0 $0 $48,034
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
VALUE FUND $1,464,460$875,092 $528,160 $394,549 $178,390 $135,984 $194,105 $129,340 $85,580
$0 $0 $42,523
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
GROWTH FUND $2,552,575$1,925,571 $1,242,921 $337,246 $382,723 $269,887 $338,064 $285,419 $201,629
$0 $0 $12,959
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
AGGRESSIVE GROWTH N/A N/A N/A N/A N/A N/A N/A N/A N/A
</TABLE>
FUND*
------------------------------------------
FOR THE FISCAL YEAR ENDED NOVEMBER 30,
1998
- --------------------------------- ------------------------------------------
- --------------------------------- ------------- ----------------------------
FUND 12B-1 FEE SHAREHOLDER SERVICES FEE
- --------------------------------- ------------- ----------------------------
- --------------------------------- ------------- -------------- -------------
INVESTMENT TRUST SHARES INVESTMENT
SHARES SHARES
- --------------------------------- ------------- -------------- -------------
- --------------------------------- ------------- -------------- -------------
TREASURY MONEY MARKET FUND $231,884 N/A N/A
- --------------------------------- ------------- -------------- -------------
- --------------------------------- ------------- -------------- -------------
LIMITED MATURITY GOVERNMENT FUND N/A N/A $42,235
- --------------------------------- ------------- -------------- -------------
- --------------------------------- ------------- -------------- -------------
FIXED INCOME FUND N/A N/A $28,164
- --------------------------------- ------------- -------------- -------------
- --------------------------------- ------------- -------------- -------------
BALANCED FUND N/A N/A $133,862
- --------------------------------- ------------- -------------- -------------
- --------------------------------- ------------- -------------- -------------
VALUE FUND N/A N/A $52,705
- --------------------------------- ------------- -------------- -------------
- --------------------------------- ------------- -------------- -------------
GROWTH FUND N/A N/A $151,720
- --------------------------------- ------------- -------------- -------------
- --------------------------------- ------------- -------------- -------------
AGGRESSIVE GROWTH FUND* N/A N/A N/A
- --------------------------------- ------------- -------------- -------------
* The Aggressive Growth Fund was not effective until December 1, 1998. N/A - Not
Applicable.
HOW DO THE FUNDS MEASURE PERFORMANCE?
The Funds may advertise each Fund's share performance by using the Securities
and Exchange Commission's (SEC) standard method for calculating performance
applicable to all mutual funds. The SEC also permits this standard performance
information to be accompanied by non-standard performance information.
Unless otherwise stated, any quoted share performance reflects the effect of
non-recurring charges, such as maximum sales charges, which, if excluded, would
increase the total return and yield. The performance of shares depends upon such
variables as: portfolio quality; average portfolio maturity; type and value of
portfolio securities; changes in interest rates; changes or differences in a
Fund's or any class of shares' expenses; and various other factors.
Share performance fluctuates on a daily basis largely because net earnings and
offering price per share fluctuate daily. Both net earnings and offering price
per share are factors in the computation of yield and total return.
TOTAL RETURN
Total return represents the change (expressed as a percentage) in the value of
shares over a specific period of time, and includes the investment of income and
capital gains distributions. The average annual total return for a Fund shares
is the average compounded rate of return for a given period that would equate a
$1,000 initial investment to the ending redeemable value of that investment. The
ending redeemable value is computed by multiplying the number of shares owned at
the end of the period by the net asset value per share at the end of the period.
The number of shares owned at the end of the period is based on the number of
shares purchased at the beginning of the period with $1,000, less any contingent
deferred sales charge, adjusted over the period by any additional shares,
assuming the quarterly reinvestment of any dividends and distributions.
YIELD
The TREASURY MONEY MARKET FUND calculates the yield for both classes of shares
daily, based upon the seven days ending on the day of the calculation, called
the base period. This yield is computed by:
o determining the net change in the value of a hypothetical account with a
balance of one Share at the beginning of the base period, with the net
change excluding capital changes but including the value of any
additional Shares purchased with dividends earned from the original one
Share and all dividends declared on the original and any purchased
shares;
o dividing the net change in the account's value by the value of the
account at the beginning of the base period to determine the base
period return; and
o multiplying the base period return by 365/7.
The yield for the other Funds shares is calculated by dividing: (i)the net
investment income per share earned by a Fund's shares over a thirty-day period;
by (ii) the maximum offering price per share of the Fund on the last day of the
period. This number is then annualized using semi-annual compounding. This means
that the amount of income generated during the thirty-day period is assumed to
be generated each month over a 12-month period and is reinvested every six
months. To the extent that financial institutions and broker/dealers charge fees
in connection with services provided in conjunction with an investment in a
Fund's shares, the Fund's shares performance is lower for shareholders paying
those fees. EFFECTIVE YIELD (TREASURY MONEY MARKET FUND ONLY)
The TREASURY MONEY MARKET FUND's effective yield for both classes of shares is
computed by compounding the unannualized base period return by: adding 1 to the
base period return; raising the sum to the 365/7th power; and subtracting 1 from
the result. The TREASURY MONEY MARKET FUND's effective yield for Trust Shares
for the seven-day period ended November 30, 1998, was 4.04%. The TREASURY MONEY
MARKET FUND's effective yield for Investment Shares was 3.62% for the same
period.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
- ---------------------- ------------------------------------ ------------------------------------
FUND AVERAGE ANNUAL TOTAL RETURN YIELD
for the following periods ended for the 30-day period ended
November 30, 1998 November 30, 1998
------------------------------------ ------------------------------------
----------------- ------------------ ----------------- ------------------
TRUST SHARES INVESTMENT SHARES TRUST SHARES INVESTMENT SHARES
One Year One Year
Five Year Five Year
Since Inception Since Inception
- ---------------------- ----------------- ------------------ ----------------- ------------------
- ---------------------- ----------------- ------------------ ----------------- ------------------
TREASURY MONEY 4.71% 4.30% 3.96% 3.56%
MARKET FUND 4.68% 4.27%
4.25%(a) 3.84%(a)
- ---------------------- ----------------- ------------------ ----------------- ------------------
- ---------------------- ----------------- ------------------ ----------------- ------------------
LIMITED MATURITY N/A 3.05% 4.01% 3.76%
GOVERNMENT FUND N/A N/A
3.59%(b) 5.10%(c)
- ---------------------- ----------------- ------------------ ----------------- ------------------
- ---------------------- ----------------- ------------------ ----------------- ------------------
FIXED INCOME FUND N/A 4.60% 4.61% 4.39%
N/A 5.76%
4.87%(b) 6.97%(d)
- ---------------------- ----------------- ------------------ ----------------- ------------------
- ---------------------- ----------------- ------------------ ----------------- ------------------
BALANCED FUND N/A 14.49% 1.98% 1.73%
N/A N/A
6.89%(b) 17.14%(e)
- ---------------------- ----------------- ------------------ ----------------- ------------------
- ---------------------- ----------------- ------------------ ----------------- ------------------
VALUE FUND N/A 8.00% 0.92% 0.67%
N/A N/A
0.50%(b) 20.38%(e)
- ---------------------- ----------------- ------------------ ----------------- ------------------
- ---------------------- ----------------- ------------------ ----------------- ------------------
GROWTH FUND N/A 30.81% 0.15% 0.00%
N/A 21.17%
12.85%(b) 17.35%(d)
- ---------------------- ----------------- ------------------ ----------------- ------------------
- ---------------------- ----------------- ------------------ ----------------- ------------------
AGGRESSIVE GROWTH N/A N/A N/A N/A
FUND*
- ---------------------- ----------------- ------------------ ----------------- ------------------
</TABLE>
(a) April 14, 1992
(b) May 20, 1998
(c) December 12, 1993
(d) April 20, 1992
(e) December 19, 1994
* The Aggressive Growth Fund was not effective and offered until December 1998.
PERFORMANCE COMPARISONS
Advertising and sales literature may include:
o references to ratings, rankings, and financial publications and/or performance
comparisons of the Funds' shares to certain indices;
o charts, graphs and illustrations using the Funds' returns, or returns in
general, that demonstrate investment concepts such as tax-deferred
compounding, dollar-cost averaging and systematic investment;
o discussions of economic, financial and political developments and their impact
on the securities market, including the portfolio manager's views on how such
developments could impact the Funds; and
o information about the mutual fund industry from sources such as the Investment
Company Institute.
The Funds may compare their performance, or performance for the types of
securities in which it invests, to a variety of other investments, including
federally insured bank products such as bank savings accounts, certificates of
deposit, and Treasury bills.
The Funds may quote information from reliable sources regarding individual
countries and regions, world stock exchanges, and economic and demographic
statistics.
You may use financial publications and/or indices to obtain a more complete view
of share performance. When comparing performance, you should consider all
relevant factors such as the composition of the index used, prevailing market
conditions, portfolio compositions of other funds, and methods used to value
portfolio securities and compute offering price. The financial publications
and/or indices which the Funds' use in advertising may include: LIPPER
ANALYTICAL SERVICES, INC., ranks funds in various fund categories by making
comparative calculations using total return. Total return assumes the
reinvestment of all capital gains distributions and income dividends and takes
into account any change in net asset value over a specific period of time. From
time to time, a Fund will quote its Lipper ranking in the appropriate category
in advertising and sales literature.
MORNINGSTAR, INC., an independent rating service, is the publisher of the
bi-weekly MUTUAL FUND VALUES. MUTUAL FUND VALUES rates more than 1,000
NASDAQ-listed mutual funds of all types, according to their risk-adjusted
returns. The maximum rating is five stars, and ratings are effective for two
weeks.
TREASURY MONEY MARKET FUND:
o SALOMON 30-DAY TREASURY BILL INDEX is a weekly quote of the most
representative yields for selected securities, issued by the U.S.
Treasury, maturing in 30 days.
o LEHMAN BROTHERS TREASURY BOND INDEX comprised entirely of U.S.
Treasury obligations. Flower bonds and foreign issues are excluded.
o IBC/DONOHUE'S MONEY FUND REPORT publishes annualized yields of
hundreds of money market funds on a weekly basis and through its Money
Market Insight publication reports monthly reinvestment of dividends
over a specified period of time.
LIMITED MATURITY GOVERNMENT FUND:
o MERRILL LYNCH 1-3 YEAR TREASURY INDEX is an unmanaged index tracking
short-term U.S. government securities with maturities between 1 and
2.99 years. The index is produced by Merrill Lynch, Pierce,
Fenner & Smith, Inc.
o MERRILL LYNCH CORPORATE AND GOVERNMENT INDEX includes issues which
must be in the form of publicly placed, nonconvertible, coupon-bearing
domestic debt with maturities between 1 and 4.99 years. Par amounts
outstanding must be no less than $10 million at the start and at the
close of the performance measurement period. Corporate instruments
must be rated by S&P or by Moody's as investment grade issues (i.e.,
BBB/Baa or better).
o MERRILL LYNCH 1-10 YEAR GOVERNMENT INDEX is an unmanaged index
comprised of U.S. government securities with maturities between 1 and
10 years. Index returns are calculated as total returns for periods of
one, six and twelve months, as well as year-to-date. The index is
produced by Merrill Lynch, Pierce, Fenner & Smith, Inc.
o LEHMAN BROTHERS INTERMEDIATE GOVERNMENT INDEX is an unmanaged index
comprised of all publicly issued, non-convertible domestic debt of the
U.S. government. Only notes and bonds with minimum outstanding
principal of $1 million and minimum maturity of one year and maximum
maturity of ten years are included.
o MERRILL LYNCH 2-YEAR TREASURY CURVE INDEX is comprised of the most
recently issued 2-year U.S. Treasury notes. Index returns are
calculated as total returns for periods of one, three, six, and twelve
months as well as year-to-date.
o 2-YEAR TREASURY NOTE-Source: Wall Street Journal, Bloomberg Financial
Markets, and Telerate.
Investors may use such a reporting service or indices in addition to the
Fund's prospectus to obtain a more complete view of the Fund's performance
before investing.
FIXED INCOME FUND:
O LEHMAN BROTHERS GOVERNMENT/CORPORATE TOTAL INDEX is comprised of
approximately 5,000 issues which include non-convertible bonds
publicly issued by the U.S. government or its agencies; corporate
bonds guaranteed by the U.S. government and quasi-federal
corporations; and publicly issued, fixed-rate, non-convertible
domestic bonds of maturity of nine years. It calculates total return
for one month, three month, twelve month, and ten year periods, and
year-to-date.
o MERRILL LYNCH GOVERNMENT/CORPORATE INDEX is comprised of approximately
4,800 issues which include publicly placed, nonconvertible
coupon-bearing domestic debt carrying a term to maturity of at least
one year, with par amounts outstanding at no less than $10 million at
the start and close of the performance measurement period, and which
must be rated by S&P or Moody's as investment grade issues (i.e.,
BBB/Baa or better).
o MERRILL LYNCH 1-10 YEAR GOVERNMENT INDEX is an unmanaged index
comprised of U.S. Government securities with maturities between 1 and
10 years. Index returns are calculated as total returns for periods of
one, three, six and twelve months as well as year-to-date. The index
is produced by Merrill Lynch, Pierce, Fenner & Smith, Inc.
o LEHMAN BROTHERS GOVERNMENT (LT) INDEX, for example, is an index
composed of bonds issued by the U.S. government or its agencies which
have at least $1 million outstanding in principal and which have
maturities of ten years or longer. Index figures are total return
figures calculated monthly.
BALANCED FUND:
o STANDARD & POOR'S DAILY STOCK PRICE INDEX OF 500 COMMON STOCKS, a
composite index of common stocks in industry, transportation, and
financial and public utility companies, can be used to compare to the
total returns of funds whose portfolios are invested primarily in
common stocks. In addition, the Standard & Poor's Index assumes
reinvestments of all dividends paid by stocks listed on its index.
Taxes due on any of these distributions are not included, nor are
brokerage or other fees calculated in Standard & Poor's figures.
o LEHMAN BROTHERS GOVERNMENT/CORPORATE TOTAL INDEX is comprised of
approximately 5,000 issues which include non-convertible bonds
publicly issued by the U.S. government or its agencies; corporate
bonds guaranteed by the U.S. government and quasi-federal
corporations; and publicly issued, fixed-rate, nonconvertible domestic
bonds of companies in industry, public utilities, and finance. Tracked
by Lehman Brothers, the index has an average maturity of nine years.
It calculates total return for one-month, three-month, twelve-month,
and ten-year periods, and year-to-date.
o S&P 500/LEHMAN BROTHERS GOVERNMENT/CORPORATE (WEIGHTED INDEX) AND THE
S&P 500/LEHMAN GOVERNMENT (WEIGHTED INDEX) combine the components of a
stock-oriented index and a bond-oriented index to obtain results which
can be compared to the performance of a managed fund. The indices'
total returns will be assigned various weights depending upon the
Fund's current asset allocation.
o MERRILL LYNCH 1-10 YEAR GOVERNMENT INDEX is an unmanaged index
comprised of U.S. government securities with maturities between 1 and
10 years. Index returns are calculated as total returns for periods of
one, six and twelve months, as well as year-to-date. The index is
produced by Merrill Lynch, Pierce, Fenner & Smith, Inc.
VALUE FUND:
o STANDARD & POOR'S DAILY STOCK PRICE INDEX OF 500 COMMON STOCKS, a
composite index of common stocks in industry, transportation, and
financial and public utility companies, can be used to compare to the
total returns of funds whose portfolios are invested primarily in
common stocks. In addition, the Standard & Poor's Index assumes
reinvestments of all dividends paid by stocks listed on its index.
Taxes due on any of these distributions are not included, nor are
brokerage or other fees calculated in Standard & Poor's figures.
o S&P/BARRA VALUE INDEX is a sub-index of the S&P 500 composite index of
common stocks. The index represents approximately fifty percent of the
S&P 500 market capitalization and is comprised of those companies with
lower price-to-book ratios. The index is maintained by Standard &
Poor's in conjunction with Barra, an investment technology firm.
GROWTH FUND:
o DOW JONES INDUSTRIAL AVERAGE ("DJIA") is an unmanaged index
representing share prices of major industrial corporations, public
utilities, and transportation companies. Produced by the Dow Jones &
Company, it is cited as a principal indicator of market conditions.
o STANDARD & POOR'S DAILY STOCK PRICE INDEX OF 500 COMMON STOCKS, a
composite index of common stocks in industry, transportation, and
financial and public utility companies, compares total returns of
funds whose portfolios are invested primarily in common stocks. In
addition, the Standard & Poor's index assumes reinvestment of all
dividends paid by stocks listed on the index. Taxes due on any of
these distributions are not included, nor are brokerage or other fees
calculated in the Standard & Poor's figures.
O S&P/BARRA GROWTH INDEX is a sub-index of the S&P 500 composite index
of common stocks. The index represents approximately fifty percent of
the S&P 500 market capitalization and is comprised of those companies
with higher price-to-book ratio (one distinction associated with
"growth stocks"). The index is maintained by Standard and Poor's in
conjunction with BARRA, an investment technology firm.
AGGRESSIVE GROWTH FUND:
Investors may also consult the fund evaluation consulting universes listed
below. Consulting universes may be composed of pension, profit sharing,
commingled, endowment/foundation, and mutual funds.
o FIDUCIARY CONSULTING GRID UNIVERSE, for example, is composed of over
1,000 funds, representing 350 different investment managers, divided
into subcategories based on asset mix. The funds are ranked quarterly
based on performance and risk characteristics.
o SEI data base for equity funds includes approximately 900 funds,
representing 361 money managers, divided into fund types based on
investor groups and asset mix. The funds are ranked every three, six,
and twelve months.
o MERCER MEIDINGER, INC. complies a universe of approximately 600 equity
funds, representing about 500 investment managers, and updates their
rankings each calendar quarter as well as on a one, three, and five
year basis.
o CALLAN ASSOCIATES, INC. maintains a detailed database of approximately
1900 equity mutual funds, representing about 500 investment managers,
and divides them into style groups based on asset mix and fund
objectives. The funds are ranked quarterly based in performance and
risk characteristics.
Advertisements and other sales literature for a Fund may quote total returns
which are calculated on non-standardized base periods. These total returns also
represent the historic change in the value of an investment in either class of
shares based on quarterly reinvestment of dividends over a specified period of
time. Advertisements for Investment Shares and shares of Aggressive Growth Fund
may quote performance information which does not reflect the effect of the
contingent deferred sales charge. Advertising and other promotional literature
may include charts, graphs and other illustrations using the Funds' returns, or
returns in general, that demonstrate basic investment concepts such as
tax-deferred compounding, dollar-cost averaging and systematic investment. In
addition, the Funds can compare their performance, or performance for the types
of securities in which they invest, to a variety of other investments, such as
bank savings accounts, certificates of deposit, and Treasury bills.
ECONOMIC AND MARKET INFORMATION
Advertising and sales literature for a Fund may include discussions of economic,
financial and political developments and their effect on the securities market.
Such discussions may take the form of commentary on these developments by Fund
portfolio managers and their views and analysis on how such developments could
affect a Fund. In addition, advertising and sales literature may quote
statistics and give general information about mutual fund industry, including
the growth of the industry, from sources such as the Investment Company
Institute (ICI). For example, according to the ICI, thirty-seven percent of
American households are pursuing their financial goals through mutual funds.
These investors, as well as businesses and institutions, have entrusted over $5
trillion to the more than 7,300 mutual funds available.
FINANCIAL STATEMENTS
[To be filed by amendment.]
APPENDIX
STANDARD AND POOR'S BOND RATINGS
AAA--Debt rated AAA has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong. AA--Debt rated
AA has a very strong capacity to pay interest and repay principal and differs
from the higher rated issues only in small degree. A--Debt rated A has a strong
capacity to pay interest and repay principal although it is somewhat more
susceptible to the adverse effects of changes in circumstances and economic
conditions than debt in higher rated categories. NR--Indicates that no public
rating has been requested, that there is insufficient information on which to
base a rating, or that Standard & Poor's does not rate a particular type of
obligation as a matter of policy. PLUS (+) OR MINUS (-):--The ratings from AA to
BBB may be modified by the addition of a plus or minus sign to show relative
standing within the major rating categories. MOODY'S INVESTORS SERVICE, INC.
CORPORATE 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 edge. Interest payments are protected by a large
or by an exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
AA--Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long term risks appear somewhat larger than in Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium-grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future. NR--Not rated by
Moody's. FITCH IBCA, INC. LONG-TERM DEBT RATINGS AAA--Bonds considered to be
investment grade and of the highest credit quality. The obligor has an
exceptionally strong ability to pay interest and repay principal, which is
unlikely to be affected by reasonably foreseeable events. AA--Bonds considered
to be investment grade and of very high credit quality. The obligor's ability to
pay interest and repay principal is very strong, although not quite as strong as
bonds rated AAA. Because bonds rated in the AAA and AA categories are not
significantly vulnerable to foreseeable future developments, short-term debt of
these issuers is generally rated F-1+. A--Bonds considered to be investment
grade and of high credit quality. The obligor's ability to pay interest and
repay principal is considered to be strong, but may be more vulnerable to
adverse changes in economic conditions and circumstances than bonds with higher
ratings. NR--NR indicates that Fitch does not rate the specific issue. STANDARD
AND POOR'S COMMERCIAL PAPER RATINGS A-1--This designation indicates that the
degree of safety regarding timely payment is either overwhelming or very strong.
The issues determined to possess overwhelming safety characteristics are denoted
with a plus (+) sign designation. A-2--Capacity for timely payment on issues
with this designation is strong. However, the relative degree of safety is not
as high as for issues designated A-1.
<PAGE>
MOODY'S INVESTORS SERVICES, INC. COMMERCIAL PAPER RATINGS
P-1--Issuers rated PRIME-1 (for related supporting institutions) have a superior
capacity for repayment of short-term promissory obligations. PRIME-1 repayment
capacity will normally be evidenced by the following characteristics:
conservative capitalization structures with moderate reliance on debt and ample
asset protection; broad margins in earning coverage of fixed financial charges
and high internal cash generation; and well-established access to a range of
financial markets and assured sources of alternate liquidity. P-2--Issuers rated
PRIME-2 (for related supporting institutions) have a strong capacity for
repayment of short-term promissory obligations. This will normally be evidenced
by many of the characteristics cited above but to a lesser degree. Earnings
trends and coverage ratios, while sound, will be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample alternate liquidity is maintained. FITCH IBCA, INC.
SHORT-TERM RATINGS F-1+--(Exceptionally Strong Credit Quality). Issues assigned
this rating are regarded as having the strongest degree of assurance for timely
payment. F-1--(Very Strong Credit Quality). Issues assigned to this rating
reflect an assurance of timely payment only slightly less in degree than issues
rated F-1+. F-2--(Good Credit Quality). Issues carrying this rating have a
satisfactory degree of assurance for timely payment but the margin of safety is
not as great as the F-1+ and F-1 categories.
ADDRESSES
REGIONS TREASURY MONEY MARKET FUND
REGIONS LIMITED MATURITY GOVERNMENT FUND
REGIONS FIXED INCOME FUND
REGIONS BALANCED FUND
REGIONS VALUE FUND
REGIONS GROWTH FUND
REGIONS AGGRESSIVE GROWTH FUND 5800 Corporate Drive
Pittsburgh, PA 15237-7010
Distributor
Federated Securities Corp. Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Adviser to all Funds
Regions Bank P.O. Box 10247
Capital Management Group Birmingham, AL 35202
Custodian
Regions Bank 417 North 20th Street
Birmingham, AL 35203
Transfer Agent, Dividend Disbursing Agent and Portfolio Accounting Services
Federated Shareholder Services Company
Federated Investors Tower
Pittsburgh, PA 15222-3779
Independent Auditors
Deloitte & Touche LLP 2500 One PPG Place
Pittsburgh, PA 15222-5401
PART C. OTHER INFORMATION.
Item 23. Exhibits
(a) (i) Conformed copy of Declaration of Trust of the Registrant, including
conformed copy of Amendment No. 1;(7)
(ii) Conformed copy of Amendment No. 2 to Declaration of Trust (4);
(iii)Conformed Copy of Amendment No. 3 through 5 to the Declaration of
Trust; (12)
(iv) Form of Amendment No. 6 to the Declaration of Trust; (12)
(b) Copy of By-Laws of the Registrant (1);
(i) Copy of Amendment Nos. 1 through 4 to the By-Laws of the Registrant;
(13) (c) Copy of Specimen Certificate for Shares of Beneficial
Interest of the Registrant (4);
(d) (i) Conformed copy of Investment Advisory Contract of the Registrant,
through and including conformed copies of Exhibits A, B, C, and D;(7)
(ii) Conformed Copy of Exhibits E and F to the Investment Advisory
Contract of the Registrant to add First Priority Equity Income Fund
and First Priority Balanced Fund, respectively, to the Investment
Advisory Contract; (11)
(e) (i) Conformed copy of Distributor's Contract of the Registrant,
including conformed copies of Exhibits A, B, and C;(7) (ii) Conformed
Copy of Exhibit D to the Distributor's Contract to add First Priority
Equity Income Fund and First Priority Balanced Fund, respectively, to
the Distributor's Contract; (11)
(iii) Conformed copy of Exhibits E and F to the Distributor's Contract; (13)
(iv) Conformed copy of Exhibits G to the Distributor's Contract; (15)
+ All exhibits have been filed electronically.
(1) Response is incorporated by reference to Registrant's Initial Registration
Statement on Form N-1A filed December 23, 1991 (File Nos. 33-44737 and
811-6511).
(4) Response is incorporated by reference to Post-Effective Amendment No. 5 on
Form N-1A filed January 24, 1994 (File Nos. 33-44737 and 811-6511).
(7) Response is incorporated by reference to Post-Effective Amendment No.7 on
Form N-1A filed October 7, 1994 (File Nos. 33-44737 and 811-6511).
(11) Response is incorporated by reference to Post-Effective Amendment No. 11 on
Form N-1A filed January 22, 1997 (File Nos. 33-44737 and 811-6511).
(12) Response is incorporated by reference to Post-Effective Amendment No. 12 on
Form N-1A filed January 20, 1998 (File Nos. 33-44737 and 811-6511).
(13) Response is incorporated by reference to Post-Effective Amendment No. 13 on
Form N-1A filed September 18, 1998 (File Nos. 33-44737 and 811-6511).
(15) Response is incorporated by reference to Post-Effective Amendment No. 16 on
Form N-1A filed January 29, 1999 (File Nos. 33-44737 and 811-6511).
(f)
<PAGE>
Not applicable;
(g) Conformed copy of Custodian Contract of the
Registrant between First Priority Funds and
Regions Bank; (4)
(h) (i) Conformed copy of Fund Accounting and
Shareholder Recordkeeping Agreement (5);
(ii) Form of Shareholder Services Plan of the
Registrant; (7)
(iii) Conformed copy of Shareholder Services
Agreement with conformed copy of Exhibit A attached
thereto; (13) (iv) Conformed copy of Administrative
Services Agreement;(10)
(a) Amendment No. 1 to Administrative Services
Agreement; (13)
(i) Conformed copy of Opinion and Consent of Counsel as to
legality of shares being registered; (11) (j) Conformed
Copy of Independent Auditors Consent;+ (k) Not applicable;
(l) Conformed Copy of Initial Capital Understanding; (5)
(m) (i) Conformed copy of Distribution Plan of the
Registrant, through and including conformed copies of
Exhibits A and B;(7)
(ii) Conformed Copy of Exhibit C to the
Distribution Plan of the Registrant; (11) (iii)
Copy of Rule 12b-1 Agreement through and including
Exhibit A (1);
(iv) Copy of Amendment No. 1 to Exhibit A of the Rule 12b-1 Agreement; (12)
(v) Copy of Amendment No. 1 to Exhibit A of the Rule 12b-1 Agreement; (15)
+ All exhibits have been filed electronically.
(1) Response is incorporated by reference to Registrant's Initial Registration
Statement on Form N-1A filed December 23, 1991 (File Nos. 33-44737 and
811-6511).
(4) Response is incorporated by reference to Post-Effective Amendment No. 5 on
Form N-1A filed January 24, 1994 (File Nos. 33-44737 and 811-6511).
(5) Response is incorporated by reference to Post-Effective Amendment No. 6 on
Form N-1A filed June 29, 1994 (File Nos. 33-44737 and 811-6511).
(7) Response is incorporated by reference to Post-Effective Amendment No.7 on
Form N-1A filed October 7, 1994 (File Nos. 33-44737 and 811-6511).
(9) Response is incorporated by reference to Post-Effective Amendment No. 9 on
Form N-1A filed June 29, 1995 (File Nos. 33-44737 and 811-6511).
(10) Response is incorporated by reference to Post-Effective Amendment No. 10 on
Form N-1A filed January 26, 1996 (File Nos. 33-44737 and 811-6511).
(11) Response is incorporated by reference to Post-Effective Amendment No. 10 on
Form N-1A filed January 22, 1997 (File Nos. 33-44737 and 811-6511).
(12) Response is incorporated by reference to Post-Effective Amendment No. 12 on
Form N-1A filed January 20, 1998 (File Nos. 33-44737 and 811-6511).
(13) Response is incorporated by reference to Post-Effective Amendment No. 13 on
Form N-1A filed September 18, 1998 (File Nos. 33-44737 and 811-6511).
(15) Response is incorporated by reference to Post-Effective Amendment No. 16 on
Form N-1A filed January 29, 1999 (File Nos. 33-44737 and 811-6511).
(iv) Conformed copy of Exhibit D to the Distribution Plan of the
Registrant; (15)
(n) Copy of Financial Data Schedules; (15)
(o) (i) Conformed Copy of Multiple Class Plan; (9)
(ii) Conformed copy of Exhibits A & B to
Multiple Class Plan; (13)
(p) Conformed copy of Power of Attorney; (15)
Item 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT:
None
Item 25. INDEMNIFICATION: (1)
Item 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER:
(a) The Adviser is a wholly-owned subsidiary of Regions
Financial Corp., a bank holding company organized during
1971 under the laws of the State of Delaware, and is a
member of the Regions Bank organization. Operating out of
more than 700 offices, Regions provides wide range of
banking and fiduciary services to its customers. As of
December 31, 1998, Regions Financial Corp. was one of the 25
largest bank holding companies in the United States with
total assets of approximately $35 billion. Regions Financial
Corporation has achieved Thomson BankWatch's highest rating
of "A", a distinction earned by less than 1% of U.S.
financial institutions. In addition, Veribanc, Inc. has
designated Regions' flagship bank, Regions Bank, as a Blue
Ribbon Bank. The Blue Ribbon rating symbol symbolizes
excellence in asset quality, capital strength, liquidity,
and profitability, as well as other key financial
thresholds. No Blue Ribbon Bank has ever failed. Regions
Bank was selected for inclusion in the S&P 500 - Standard &
Poor's widely followed index of the 500 most prominent
companies in the nation.
As fiduciary, Regions Bank managed over $8 billion in
discretionary assets as of December 31, 1998. It manages ten
common trust funds and collective investment funds having a
market value in excess of $633 million as of December 31,
1998. Regions Bank has been adviser to the Regions Funds
(formerly, First Priority Funds) since inception with a
market value of approximately $1.682 billion as of December
31, 1998.
(1) Response is incorporated by reference to Registrant's Initial Registration
Statement on Form N-1A filed December 23, 1991 (File Nos. 33-44737 and
811-6511). (15) Response is incorporated by reference to Post-Effective
Amendment No. 16 on Form N-1A filed January 29, 1999 (File Nos. 33-44737 and
811-6511).
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Other Substantial
Position with Business, Profession,
NAME THE ADVISER VOCATION OR EMPLOYMENT
J. Stanley Mackin Chairman of the Board
Carl E. Jones, Jr. President and Chief
Executive Officer
Richard D. Horsley Vice Chairman of the
Board and Executive
Financial Officer
Sam P. Faucett President/Region Southwest
Joe M. Hinds President/Regions North
Wilbur B. Hufham President/Regions South
William E. Jordan President/Regions Central
Carl E. Jones, Jr. Chief Executive Officer
Peter D. Miller President/Regions Northeast
William E. Askew Executive Vice President/
Retail Banking
Samuel E. Upchurch, Jr. Executive Vice President/
General Counsel and Secretary
Robert P. Houston Executive Vice President
and Comptroller
E.C. Stone Executive Vice President/
Corporate Banking
Richard E. Wambsganss Executive Vice President/
Trust Group
Sheila S. Blair Director Civic Leader
James B. Boone, Jr. Director Chairman of the Board
Boone Newspapers, Inc.
Albert P. Brewer Director Professor of Law &
Government
Samford University
James S.M. French Director Chairman and President
Dunn Investment Company
Barnett Grace Director President/Regions West
Frank D. Hickingbotham Director Chairman of the Board TCBY Enterprises, Inc.
Richard D. Horsley Director Vice Chairman of the Board and Executive
Financial Officer Regions Financial Corp.
Carl E. Jones, Jr. Director President & Chief Executive Officer/Regions Financial Corporation
Olin B. King Director Chairman of the Board and Chief Executive Officer
SCI Systems, Inc.
J. Stanley Mackin Director Chairman of the Board/
Regions Financial Corp.
Michael W. Murphy Director President/ Marmik Oil Company
Henry E. Simpson Director Attorney
Lange, Simpson, Robinson & Somerville
Robert E. Steiner, III Director Attorney
Steiner, Crum & Baker
Lee J. Styslinger, Jr. Director Chairman
ALTEC Industries, Inc.
Robert J. Williams Director Chairman and Chief Executive Officer Terminix Services, Inc.
</TABLE>
ITEM 27. PRINCIPAL UNDERWRITERS:
(a) Federated Securities Corp. the Distributor for shares of the Registrant,
acts as principal underwriter for the following open-end investment
companies, including the Registrant: Automated Government Money Trust; Cash
Trust Series II; Cash Trust Series, Inc.; CCB Funds; DG Investor Series;
Edward D. Jones & Co. Daily Passport Cash Trust; Federated Adjustable Rate
U.S. Government Fund, Inc.; Federated American Leaders Fund, Inc.;
Federated ARMs Fund; Federated Core Trust; Federated Equity Funds;
Federated Equity Income Fund, Inc.; Federated Fund for U.S. Government
Securities, Inc.; Federated GNMA Trust; Federated Government Income
Securities, Inc.; Federated Government Trust; Federated High Income Bond
Fund, Inc.; Federated High Yield Trust; Federated Income Securities Trust;
Federated Income Trust; Federated Index Trust; Federated Institutional
Trust; Federated Insurance Series; Federated Master Trust; Federated
Municipal Opportunities Fund, Inc.; Federated Municipal Securities Fund,
Inc.; Federated Municipal Trust; Federated Short-Term Municipal Trust;
Federated Short-Term U.S. Government Trust; Federated Stock and Bond Fund,
Inc.; Federated Stock Trust; Federated Tax-Free Trust; Federated Total
Return Series, Inc.; Federated U.S. Government Bond Fund; Federated U.S.
Government Securities Fund: 1-3 Years; Federated U.S. Government Securities
Fund: 2-5 Years; Federated U.S. Government Securities Fund: 5-10 Years;
Federated Utility Fund, Inc.; Fixed Income Securities, Inc.; ; Hibernia
Funds; Independence One Mutual Funds; Intermediate Municipal Trust;
International Series, Inc.; Investment Series Funds, Inc.; Liberty U.S.
Government Money Market Trust; Liquid Cash Trust; Managed Series Trust;
Marshall Funds, Inc.; Money Market Management, Inc.; Money Market
Obligations Trust; Money Market Obligations Trust II; Money Market Trust;
Municipal Securities Income Trust; Newpoint Funds; Regions Funds; RIGGS
Funds; SouthTrust Funds; Tax-Free Instruments Trust; The Planters Funds;
The Wachovia Funds; The Wachovia Municipal FundsTrust for Government Cash
Reserves; Trust for Short-Term U.S. Government Securities; Trust for U.S.
Treasury Obligations; Vision Group of Funds, Inc.; World Investment Series,
Inc.; Blanchard Funds; Blanchard Precious Metals Fund, Inc.; High Yield
Cash Trust; Investment Series Trust; Peachtree Funds; Star Funds; Targeted
Duration Trust; The Virtus Funds; Trust for Financial Institutions;
Federated Securities Corp. also acts as principal underwriter for the
following closed-end investment company: Liberty Term Trust, Inc.- 1999.
(b)
<TABLE>
<CAPTION>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT
<S> <C> <C>
Richard B. Fisher Director, Chairman, Chief Vice President
Federated Investors Tower Executive Officer, Chief
1001 Liberty Avenue Operating Officer, Asst.
Pittsburgh, PA 15222-3779 Secretary and Asst.
Treasurer, Federated
Securities Corp.
Edward C. Gonzales Director, Executive Vice Treasurer and
Federated Investors Tower President, Trustee
1001 Liberty Avenue Federated Securities Corp.
Pittsburgh, PA 15222-3779
Thomas R. Donahue Director, Assistant Secretary
Federated Investors Tower and Assistant Treasurer
1001 Liberty Avenue Federated Securities Corp.
Pittsburgh, PA 15222-3779
James F. Getz President-Broker/Dealer, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
John B. Fisher President-Institutional Sales, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
David M. Taylor Executive Vice President --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Mark W. Bloss Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Richard W. Boyd Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Laura M. Deger Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Theodore Fadool, Jr. Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Bryant R. Fisher Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Christopher T. Fives Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
James S. Hamilton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
James M. Heaton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Keith Nixon Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Ronald Petnuch Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Solon A. Person, IV Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Timothy C. Pillion Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Thomas E. Territ Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Ernest G. Anderson Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Teresa M. Antoszyk Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
John B. Bohnet Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Jane E. Broeren-Lambesis Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
David J. Callahan Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Mary J. Combs Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
R. Edmond Connell, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
R. Leonard Corton, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Kevin J. Crenny Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Daniel T. Culbertson Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
G. Michael Cullen Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Marc C. Danile Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
William C. Doyle Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Jill Ehrenfeld Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Mark D. Fisher Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Joseph D. Gibbons Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
John K. Goettlicher Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Craig S. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Raymond Hanley Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Bruce E. Hastings Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Beth A. Hetzel Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
James E. Hickey Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Charlene H. Jennings Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
H. Joseph Kennedy Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Michael W. Koenig Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Michael R. Manning Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Mark J. Miehl Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Richard C. Mihm Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
J. Michael Miller Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Alec H. Neilly Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Thomas A. Peters III Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Robert F. Phillips Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Richard A. Recker Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Eugene B. Reed Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Paul V. Riordan Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
John Rogers Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Brian S. Ronayne Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Thomas S. Schinabeck Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Edward L. Smith Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
David W. Spears Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
John A. Staley Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Colin B. Starks Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Jeffrey A. Stewart Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
William C. Tustin Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Paul A. Uhlman Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Miles J. Wallace Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
John F. Wallin Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Richard B. Watts Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Edward J. Wojnarowski Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Michael P. Wolff Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Edward R. Bozek Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Terri E. Bush Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Beth C. Dell Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
David L. Immonen Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Renee L. Martin Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Robert M. Rossi Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Matthew S. Hardin Secretary, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Denis McAuley Treasurer, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Leslie K. Ross Assistant Secretary, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
</TABLE>
(c) Not applicable.
Item 28. LOCATION OF ACCOUNTS AND RECORDS:
All accounts and records required to be maintained by Section
31(a) of the Investment Company Act of 1940 and Rules 31a-1 through 31a-3
promulgated thereunder are maintained at one of the following locations:
Regions Funds 5800 Corporate Drive
("Registrant") Pittsburgh, PA 15237-7010
Federated Shareholder Services Company Federated Investors Tower
("Transfer Agent and Dividend 1001 Liberty Avenue
Disbursing Agent) Pittsburgh, PA 15222-3779
Federated Administrative Services Federated Investors Tower
("Administrator") 1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Regions Bank
Mutual Funds Group P.O. Box 10247
("Advisor and Custodian") Birmingham, Alabama 35202
Item 29. MANAGEMENT SERVICES: Not applicable.
Item 30. UNDERTAKINGS:
Registrant hereby undertakes to comply with the provisions of
Section 16(c) of the 1940 Act with respect to the removal of
Trustees and the calling of special shareholder meetings by
shareholders.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, REGIONS FUNDS, has duly caused
this Amendment to its Registration Statement to be signed on its behalf by the
undersigned, thereto duly authorized, all in the City of Pittsburgh and
Commonwealth of Pennsylvania, on the 9th day of December 1999.
REGIONS FUNDS
(formerly, First Priority Funds)
BY: /s/ Gail Cagney
Gail Cagney, Assistant Secretary
Attorney in Fact for John F. Donahue
December 9th, 1999
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to its Registration Statement has been signed below by the following person in
the capacity and on the date indicated:
NAME TITLE DATE
By: /s/Gail Cagney
GAIL CAGNEY Attorney In Fact December 9, 1999
ASSISTANT SECRETARY For the Persons
Listed Below
NAME TITLE
John F. Donahue* Chairman and Trustee
(Chief Executive Officer)
Edward C. Gonzales* President, Treasurer and Trustee
(Principal Financial and
Accounting Officer)
Thomas G. Bigley* Trustee
John T. Conroy, Jr.* Trustee
William J. Copeland* Trustee
James E. Dowd* Trustee
Lawrence D. Ellis, M.D.* Trustee
Edward L. Flaherty, Jr.* Trustee
Peter E. Madden* Trustee
John E. Murray, Jr.* Trustee
Wesley W. Posvar* Trustee
Marjorie P. Smuts* Trustee
John S. Walsh Trustee
* By Power of Attorney
