FIRST AMERICAN MUTUAL FUND
SUPPLEMENT DATED JUNE 7, 1994
TO PROSPECTUS DATED JANUARY 31, 1994
FOR THE MANAGED INCOME FUND
Effective June 10, 1994, the following changes are incorporated into the
Prospectus for the Fund:
1. The first paragraph under the Section entitled "Distribution of Fund
Shares" beginning on page 9 of the Prospectus is replaced with the following:
SEI Financial Services Company ("SFS") is the principal distributor for
shares of the Fund. It is a Pennsylvania corporation organized on July 20,
1981, and is the principal distributor for a number of investment companies.
SFS is a wholly-owned subsidiary of SEI Corporation ("SEI").
2. The first five Subsections under the Section entitled "Administration of
the Fund" beginning on page 10 of the Prospectus are replaced by the
following:
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES.
SEI Financial Management Corporation ("SFM"), which is a wholly-owned
subsidiary of SEI, provides the Trust with the administrative personnel
and services necessary to operate the Fund. Such services include
shareholder servicing and certain legal and accounting services. SFM
provides these services at an annual rate of .20% of each Fund's average
daily net assets.
The administrative fee received during any fiscal year shall aggregate at
least $50,000 with respect to the Fund. SFM may choose voluntarily to
reimburse a portion of its fee at any time.
Prior to May 1, 1994, Federated Administrative Services served as
administrator to the Trust and was paid for these services at an annual
rate as specified below:
<TABLE>
<CAPTION>
Average Aggregate Daily
Maximum Administrative Fee Net Assets of the Trust
<S> <C>
.150 of 1% on the first $250 million
.125 of 1% on the next $250 million
.100 of 1% on the next $250 million
.075 of 1% on assets in excess of $750 million
</TABLE>
CUSTODIAN.
Effective June 20, 1994, First Trust National Association (the
"Custodian"), St. Paul, Minnesota, is custodian for the securities and
cash of the Fund. The Custodian is a subsidiary of First Bank System,
Inc., which also controls the Adviser.
TRANSFER AGENT.
Supervised Service Company, Kansas City, Missouri, is transfer agent for
the shares of the Fund and dividend disbursing agent for the Fund.
LEGAL COUNSEL.
Legal counsel for the Fund is provided by Dorsey & Whitney, Minneapolis,
Minnesota.
INDEPENDENT ACCOUNTANTS.
The independent accountants for the Fund are KPMG Peat Marwick,
Minneapolis, Minnesota.
3. The successive Sections entitled "Investing in the Fund", "Exchange
Privilege", and "Redeeming Shares" beginning on page 12 of the Prospectus
are replaced with the following:
INVESTING IN THE FUNDS
SHARE PURCHASES
Shares are sold on days on which the New York Stock Exchange is open for
business. Shares of the Fund may be purchased through a financial institution
which has a sales agreement with the Distributor, or directly from the
Distributor. The Fund reserves the right to reject any purchase request.
THROUGH A FINANCIAL INSTITUTION.
An investor may call their financial institution (such as FBS Investment
Services, Inc.) to place an order. Orders placed through a financial
institution are considered received when the Fund is notified of the
purchase order. Purchase orders must be received by the financial
institution by 2:00 p.m. (Central time) or as otherwise specified by the
Institution to be assured same day processing and purchase orders must be
transmitted to and received by the Fund by 3:00 P.M. (Central time) in
order for shares to be purchased at that day's price. It is the financial
institution's responsibility to transmit orders promptly.
DIRECTLY FROM THE TRANSFER AGENT.
An investor may place an order to purchase shares of the Fund directly
from the Transfer Agent. To do so:
* complete and sign the new account form;
* enclose a check made payable to (Fund name); and
* Mail both to Supervised Service Company, P.O. Box 419382, Kansas City,
Missouri 64141-6382.
Texas residents must purchase shares of the Fund through the distributor at
1-800-637-2548.
Orders by mail are considered received after payment by check is converted by
First Bank National Association into federal funds. This is generally the
next business day after First Bank National Association receives the check.
To purchase shares of the Fund by wire, call (800) 637-2548. All information
needed will be taken over the telephone, and the order is considered received
when First Bank National Association receives payment by wire. Federal funds
should be wired as follows: First Bank National Association, Minneapolis,
Minnesota; ABA Number 091000022; For Credit to: Supervised Service Company,
Account Number 6023458026; For Further Credit To: (Investor Name and Fund
Name). Shares cannot be purchased by Federal Reserve wire on days on which
the New York Stock Exchange is closed and on federal holidays restricting
wire transfers.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in the Fund is $1,000, unless the investment
is in a retirement plan, in which case the minimum initial investment is
$250. Subsequent investments may be in any amounts of $100 or more. The Fund
reserves the right to waive the initial minimum investment for employees of
FBNA and its affiliates from time to time.
WHAT SHARES COST
Fund shares are sold at their net asset value next determined after an order
is received, plus a sales charge as follows:
<TABLE>
<CAPTION>
Sales Charge
Sales Charge as
as Percentage of Maximum Amount of
Percentage of Net Asset Sales Charge Reallowed
Offering Price Value to Participating Institutions
<S> <C> <C> <C>
Less than $50,000 2.00% 2.04% 1.80%
$50,000 but less than 1.50% 1.52% 1.35%
$100,000
$100,000 but less than 1.00% 1.01% 0.90%
$250,000
$250,000 but less than 0.75% 0.76% 0.68%
$500,000
$500,000 but less than 0.50% 0.50% 0.45%
$1,000,000
$1,000,000 and over 0.00% 0.00% 0.00%
</TABLE>
The net asset value is determined at 3:00 p.m. (Central time), Monday
through Friday, except on: (i) days on which there are not sufficient
changes in the value of the Fund's portfolio securities that its net
asset value might be materially affected; (ii) days during which no
shares are tendered for redemption and no orders to purchase shares
are received; or (iii) the following holidays: New Year's Day,
Presidents' Day, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. In addition, the net asset value
will not be calculated on Good Friday.
SALES AT NET ASSET VALUE.
Purchases of the Fund's shares by the Adviser or any of its affiliates, or
any of their or the Trust's officers, directors, employees, retirees,
sales representatives, members of their immediate (parent, child, spouse,
sibling, step or adopted relationships, as well as UTMA accounts naming
qualifying persons) families, accounts managed by a qualified investment
manager, any qualified retirement plans, or any trust, pension, or
profit-sharing or other benefit plan for, or any business entity owned or
controlled by, such persons may be made at net asset value without a sales
charge.
In addition, purchases of shares of the Fund that are funded by the
proceeds from the redemption (within 60 days of the purchase of Fund
shares) of shares of any unrelated open-end investment company that
charges a sales load may be made at net asset value, provided such
redemption was not subject to any deferred sales or redemption charges. To
make such a purchase at net asset value, the investor or the investor's
broker must, at the time of purchase, submit a written request to the
Transfer Agent that the purchase be processed at net asset value pursuant
to this privilege, accompanied by a photocopy of the confirmation (or
similar evidence) showing the redemption from the unrelated fund. The
redemption of the shares of the non-related fund is, for federal income
tax purposes, a sale upon which a gain or loss may be realized.
SALES CHARGE REALLOWANCE.
For sales of shares of the Fund, any authorized broker/dealer will
normally receive up to 90% of the applicable sales charge. Any portion of
the sales charge which is not paid to broker/dealers will be retained by
the distributor. However, the distributor, in its sole discretion, may
uniformly offer to pay to all dealers selling shares of the Fund
additional amounts, all or a portion of which may be paid from the sales
charge it normally retains or from any other source available to it. Such
additional payments, if accepted by the dealer, may be in the form of cash
or promotional incentives and will be predicated upon the amount of shares
of the Fund or other funds of the Trust sold by the dealer. Whenever more
than 90% of a sales charge is paid to a dealer, that dealer may be deemed
to be an underwriter as defined in the Securities Act of 1933.
The sales charge for shares sold other than through registered
broker/dealers will be retained by the distributor. The distributor may
pay fees to banks out of the sales charge in exchange for sales and/or
administrative services performed on behalf of the banks' customers in
connection with the initiation of customer accounts and purchases of Fund
shares.
REDUCING THE SALES CHARGE
The sales charge can be reduced on the purchase of Fund shares through:
* quantity discounts and accumulated purchases;
* signing a 13-month letter of intent;
* using the reinvestment privilege; or
* concurrent purchases.
QUANTITY DISCOUNTS AND ACCUMULATED PURCHASES.
As shown in the table above, larger purchases reduce the sales charge
paid. The Fund will combine purchases made on the same day by the
investor, his spouse, and his children under age 21 when it calculates the
sales charge. In addition, the sales charge, if applicable, is reduced for
purchases made at one time by a trustee or fiduciary for a single trust
estate or a single fiduciary account.
If an additional purchase of Fund shares is made, the Fund will consider
the previous purchase still invested in the Fund. For example, if a
shareholder already owns shares having a current value at the public
offering price of $49,000 and he purchases $1,000 more at the current
public offering price, the sales charge on the additional purchase
according to the schedule now in effect would be 1.50%, not 2.00%.
The sales charge discount applies to the total current market value of the
Fund, plus the current market value of any other mutual funds having a
sales charge and distributed as part of the First American Family of
Funds. An investor who is considering purchasing shares in another such
mutual fund should obtain a prospectus of the fund to be acquired and
should read such prospectus carefully.
To receive the sales charge reduction, the Transfer Agent must be notified
by the shareholder in writing or by his financial institution at the time
the purchase is made that Fund shares are already owned or that purchases
are being combined. The Fund will reduce the sales charge after it
confirms the purchases.
LETTER OF INTENT.
If a shareholder intends to purchase at least $50,000 of shares in the
funds in the Trust or in the First American Family that have a sales
charge over the next 13 months, the sales charge may be reduced by signing
a letter of intent to that effect. This letter includes a provision for a
sales charge adjustment depending on the amount actually purchased within
the 13-month period and a provision for the custodian to hold up to 2.0%
(or such higher or lower applicable amount) of the total amount intended
to be purchased in escrow (in shares) until such purchase is completed.
The amount held in escrow will be applied to the shareholder's account at
the end of the 13-month period, unless the amount specified in the letter
of intent is not purchased. In this event, an appropriate number of
escrowed shares may be redeemed at the then-current redemption price
(which could be less than the purchase price for such shares) in order to
realize the difference in the sales charge.
This letter of intent will not obligate the shareholder to purchase
shares, but if he does, each purchase during the period will be at the
sales charge applicable to the total amount intended to be purchased. This
letter may be dated as of a prior date to include any purchases made
within the past 90 days.
REINVESTMENT PRIVILEGE.
If shares in the Fund have been redeemed, the shareholder has a one-time
right, within 30 days, to reinvest all or a part of the redemption
proceeds at the next-determined net asset value without any sales charge.
The Transfer Agent must be notified by the shareholder in writing or by
his financial institution of the reinvestment in order to eliminate a
sales charge. If the shareholder redeems his shares in the Fund, there may
be tax consequences. Shareholders contemplating such transactions should
consult their own tax adviser.
CONCURRENT PURCHASES.
For purposes of qualifying for a sales charge reduction, a shareholder has
the privilege of combining concurrent purchases of two or more funds in
the Trust, the purchase price of which includes a sales charge. For
example, if a shareholder concurrently invested $30,000 in one of the
other funds in the Trust or in the First American Family with a sales
charge and $20,000 in this Fund, the sales charge would be reduced.
To receive this sales charge reduction, the Transfer Agent must be
notified by the shareholder in writing or by his financial institution at
the time the concurrent purchases are made. The Fund will reduce the sales
charge after it confirms the purchases.
EXCHANGING SECURITIES FOR FUND SHARES
Investors may exchange certain securities or a combination of certain
securities and cash for Fund shares. The Fund reserves the right to determine
the acceptability of securities to be exchanged. On the day securities are
accepted by the Fund, they are valued in the same manner as the Fund values
its assets. Investors wishing to exchange securities should first contact the
Transfer Agent.
SYSTEMATIC INVESTMENT PROGRAM
Once an account has been opened, shareholders may add to their investment on
a regular basis in a minimum amount of $100. Under this program, funds may be
automatically withdrawn periodically from the shareholder's checking account
and invested in Fund shares at the net asset value next determined after an
order is received, plus the applicable sales charge. A shareholder may apply
for participation in this program through their financial institution or call
(800) 637-2548.
RETIREMENT PLANS
Shares of the Fund can be purchased as an investment for retirement plans or
for Individual Retirement Accounts. For further details, including prototype
retirement plans, contact your financial institution and consult a tax
adviser.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Fund, the Transfer Agent maintains a share account
for each shareholder of record. Share certificates are not issued by the
Fund.
Detailed confirmations of each purchase or redemption are sent to each
shareholder. Monthly statements are sent to report transactions and dividends
paid during the month.
DIVIDENDS AND CAPITAL GAINS
Dividends are declared and paid monthly. Capital gains realized by the Fund,
if any, will be distributed at least once every 12 months. Dividends and
capital gains will be automatically reinvested in additional shares of the
Fund on payment dates at the ex-dividend date's net asset value without a
sales charge, unless cash payments are requested by writing to the Fund.
Dividends and capital gains can also be reinvested in shares of any other
fund in the Trust or in the First American Family.
EXCHANGE PRIVILEGE
Shareholders may exchange shares of the Fund for shares of the other funds in
the Trust or in the First American Family with the same or lower sales load.
Shares of funds with a sales charge may be exchanged at net asset value for
shares of other funds with an equal sales charge or no sales charge. Shares
of funds with a sales charge may be exchanged for shares of funds with a
higher sales charge at net asset value, plus the additional sales charge.
Shares of funds with no sales charge, whether acquired by direct purchase,
reinvestment of dividends on such shares, or otherwise, may be exchanged for
shares of funds with a sales charge at net asset value, plus the applicable
sales charge.
When an exchange is made from a fund with a sales charge to a fund with no
sales charge, the shares exchanged and additional shares which have been
purchased by reinvesting dividends or capital gains on such shares retain the
character of the exchanged shares for purposes of exercising further exchange
privileges; thus, an exchange of such shares for shares of a fund with a
sales charge would be at net asset value.
Prior to any exchange, the shareholder must receive a copy of the current
prospectus of the fund into which an exchange is to be effected.
The exchange privilege is available to shareholders residing in any state in
which the fund shares being acquired may legally be sold. Upon receipt of
proper instructions and all necessary supporting documents, shares submitted
for exchange will be redeemed at the next-determined net asset value for the
applicable fund. Written exchange instructions may require a signature
guarantee. Exercise of this privilege is treated as a sale for federal income
tax purposes and, depending on the circumstances, a short or long-term
capital gain or loss may be realized.
The exchange privilege may be terminated at any time. Shareholders will be
notified of the termination of the exchange privilege.
BY TELEPHONE.
Instructions for exchanges between funds which are part of the Trust or
the First American Family may be given by telephone to the Transfer Agent.
Shares may be exchanged by telephone only between fund accounts having
identical shareholder registrations.
Any shares held in certificate form cannot be exchanged by telephone but
must be forwarded to the Transfer Agent and deposited to the shareholder's
mutual fund account before being exchanged. An authorization form
permitting the Fund to accept telephone exchanges must first be completed.
Telephone exchange instructions must be received before 3:00 p.m. (Central
time) for shares to be exchanged the same day. The telephone exchange
privilege may be modified or terminated at any time. Shareholders will be
notified of such modification or termination. Shareholders may have
difficulty in making exchanges by telephone through brokers and other
financial institutions during times of drastic economic or market changes.
If a shareholder cannot contact brokers and other financial institutions
by telephone, it is recommended that an exchange request be made in
writing and sent by overnight mail to Supervised Service Company, 811 Main
Street, Kansas City, Missouri 64105.
REDEEMING SHARES
Shares are redeemed at their net asset value next determined after the
Transfer Agent receives the redemption request. Redemptions will be made on
days on which the Fund computes its net asset value. Redemption requests
cannot be executed on days on which the New York Stock Exchange or the
Federal Reserve Wire System is closed. Requests for redemption can be made by
telephone or by mail.
THROUGH A FINANCIAL INSTITUTION
A shareholder may redeem shares of the Fund by calling their financial
institution to request the redemption. Shares will be redeemed at the net
asset value next determined after the Fund receives the redemption request
from the financial institution. Redemption requests must be received by the
financial institution by 2:00 P.M. (Central time) or as otherwise specified
by the institution, in order for shares to be redeemed at that day's net
asset value and redemption requests must be transmitted to and received by
the Fund by 3:00 P.M. Central time in order for shares to be redeemed at that
day's net asset value.
In the event of drastic economic or market changes, a shareholder may
experience difficulty in redeeming by telephone. If such a case should occur,
another method of redemption should be considered.
Neither the Transfer Agent nor the Fund will be responsible for the
authenticity of redemption instructions received by telephone if it
reasonably believes those instructions to be genuine. The Fund and its
Transfer Agent will each employ reasonable procedures to confirm that
telephone instructions are genuine, and may be liable for losses resulting
from unauthorized or fradulent telephone instructions if it does not employ
these procedures. Such procedures may include taping of telephone
conversations.
DIRECTLY FROM THE FUND
BY TELEPHONE.
Shareholders who have not purchased shares through a financial institution
may redeem their shares of a Fund by telephoning (800) 637-2548. The
proceeds will be mailed to the shareholder's address of record or wire
transferred to the shareholder's account at a domestic commercial bank
that is a member of the Federal Reserve System, normally within one
business day, but in no event longer than seven days after the request.
The minimum amount for a wire transfer is $1,000. If at any time the Fund
shall determine it necessary to terminate or modify this method of
redemption, shareholders would be promptly notified.
BY MAIL.
Any shareholder may redeem Fund shares by sending a written request to the
Transfer Agent, shareholder servicing agent, or financial institution. The
written request should include the shareholder's name, the Fund name, the
account number, and the share or dollar amount requested, and should be
signed exactly as the shares are registered. Shareholders should call the
Fund, shareholder servicing agent or financial institution for assistance
in redeeming by mail.
RECEIVING PAYMENT.
Normally, a check for the proceeds is mailed within one business day, but
in no event more than seven days, after receipt of a proper written
redemption request.
SIGNATURES.
Shareholders requesting a redemption of $5,000 or more, a redemption of
any amount to be sent to an address other than on record with the Fund, or
a redemption payable other than to the shareholder of record must have
signatures on written redemption requests guaranteed by:
* a trust company or commercial bank whose deposits are insured by the
Bank Insurance Fund, which is administered by the Federal Deposit
Insurance Corporation ("FDIC");
* a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchange or of the National Association of Securities Dealers;
* a savings bank or savings and loan association whose deposits are
insured by the Savings Association Insurance Fund, which is administered
by the FDIC; or
* any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.
The Fund does not accept signatures guaranteed by a notary public.
The Fund and the Transfer Agent have adopted standards for accepting
signature guarantees from the above institutions. The Fund may elect in
the future to limit eligible signature guarantors to institutions that are
members of a signature guarantee program. The Fund and the Transfer Agent
reserve the right to amend these standards at any time without notice.
REDEMPTION BEFORE PURCHASE INSTRUMENTS CLEAR
When shares of the Fund are purchased by check, or through the Automated
Clearing House, the proceeds from the redemption of those shares are not
available, and the shares may not be exchanged, until the Transfer Agent is
reasonably certain that the purchase check has cleared, which could take up
to 10 calendar days.
SYSTEMATIC WITHDRAWAL PROGRAM
Shareholders who desire to receive payments of a predetermined amount may
take advantage of the Systematic Withdrawal Program. Under this program, Fund
shares are redeemed to provide for periodic withdrawal payments in an amount
directed by the shareholder. Depending upon the amount of the withdrawal
payments and the amount of dividends paid and capital gains distributions
with respect to Fund shares, and the fluctuation of the Fund's net asset
value, redemptions may reduce, and eventually deplete, the shareholder's
investment in the Fund. For this reason, payments under this program should
not be considered as yield or income on the shareholder's investment in the
Fund. To be eligible to participate in this program, a shareholder must have
an account value of at least $5,000. A shareholder may obtain more
information about this program by calling his financial institution. Due to
the fact that shares are sold with a sales charge, it is not advisable for
shareholders to be purchasing shares while participating in this program.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem shares in any account, except retirement plans, and pay the proceeds
to the shareholder if the account balance falls below the required minimum
value of $500 due to shareholder redemptions.
Before shares are redeemed to close an account, the shareholder is notified
in writing and allowed 60 days to purchase additional shares to meet the
minimum requirement.
