1933 Act File No. 33-48933
1940 Act File No. 811-58437
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
X
Pre-Effective Amendment No.
Post-Effective Amendment No. ___12 X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF
1940 X
Amendment No. 13 X
THE SHAWMUT FUNDS
(Exact Name of Registrant as Specified in Charter)
Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779
(Address of Principal Executive Offices)
(412) 288-1900
(Registrant's Telephone Number)
John W. McGonigle, Esquire,
Federated Investors Tower,
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)
X on December 31, 1994 pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a)
on ______________ pursuant to paragraph (a) of Rule 485.
Registrant has filed with the Securities and Exchange
Commission a declaration pursuant to Rule 24f-2 under the
Investment Company Act of 1940, and:
X filed the Notice required by that Rule on December 21,
1994; or
intends to file the Notice required by that Rule on or
about ____________; or
during the most recent fiscal year did not sell any
securities pursuant to Rule 24f-2 under the Investment
Company Act of 1940, and, pursuant to Rule 24f-2(b)(2),
need not file the Notice.
Copies to:
Thomas J. Donnelly, Esquire Charles H. Morin, Esquire
Houston, Houston & Donnelly Dickstein, Shapiro & Morin
2510 Centre City Tower 2101 L Street, N.W.
650 Smithfield Street Washington, D.C. 20037
Pittsburgh, Pennsylvania 15222
CROSS-REFERENCE SHEET
This Amendment to the Registration Statement of THE
SHAWMUT FUNDS, which consists of twelve portfolios: (1)
Shawmut Prime Money Market Fund, (a) Trust Shares and (b)
Investment Shares; (2) Shawmut Intermediate Government Income
Fund, (a) Trust Shares and (b) Investment Shares; (3) Shawmut
Fixed Income Fund, (a) Trust Shares and (b) Investment Shares;
(4) Shawmut Limited Term Income Fund, (a) Trust Shares and (b)
Investment Shares; (5) Shawmut Growth Equity Fund, (a) Trust
Shares and (b) Investment Shares; (6) Shawmut Growth and
Income Equity Fund, (a) Trust Shares and (b) Investment
Shares; (7) Shawmut Small Capitalization Equity Fund, (a)
Trust Shares and (b) Investment Shares; (8) Shawmut
Connecticut Intermediate Municipal Income Fund; (9) Shawmut
Massachusetts Intermediate Municipal Income Fund; (10) Shawmut
Connecticut Municipal Money Market Fund, (a) Trust Shares and
(b) Investment Shares; (11) Shawmut Massachusetts Municipal
Money Market Fund; and (12) Shawmut Quantitative Equity Fund,
(a) Trust Shares and (b) Investment Shares, relates to all of
the portfolios and is comprised of the following:
PART A. INFORMATION REQUIRED IN A PROSPECTUS.
Prospectus Heading
(Rule 404(c) Cross Reference)
Item 1. Cover Page (1-12) Cover Page.
Item 2. Synopsis (1-12) Synopsis; (1-12) Summary
of Fund Expenses.
Item 3. Condensed Financial
Information (1-12) Financial Highlights; (1-
12) Performance Information.
Item 4. General Description of
Registrant (1-12) General Information;
(1-12) The Shawmut Funds;
(1-12) Objective and Policies
of Each Fund; (1,10,11) Money
Market Funds Investments,
Strategies and Risks;
(2,3,4,8,9) Income Funds
Investments, Strategies and
Risks; (5,6,7,12) Equity Funds
Investments, Strategies and
Risks; (1-12) Investment
Limitations; (1-7,10,12)
Other Classes of Shares;
(1,10,11) Regulatory
Compliance; (8,10) Connecticut
Municipal Securities; (8,10)
Connecticut Investment Risks;
(9,11) Massachusetts Municipal
Securities; (9,11)
Massachusetts Investment Risks;
(8-9) Municipal Bond Insurance;
(8,9,10,11) Non-
Diversification.
Item 5. Management of the Fund (1-12) The Shawmut Funds
Information; (1-12) Management
of The Shawmut Funds;
(2,3,4,8,9) Distribution of
Income Funds' Shares; (1a,10a)
Distribution of Money Market
Trust Shares (1b,10b,11)
Distribution of Money Market
Investment Shares; (5,6,7,12)
Distribution of Equity Funds'
Shares;
(1b,2b,3b,4b,5b,6b,7b,8,9,
10b,11,12b) Distribution Plan;
(1-12) Administration of the
Fund; (2a,3a,4a) Expenses of
the Income Funds and Trust
Shares; (2b,3b,4b,8,9) Expenses
of the Income Funds and
Investment Shares;
(5a,6a,7a,12a) Expenses of the
Equity Funds and Trust Shares;
(5b,6b,7b,12b) Expenses of the
Equity Funds and Investment
Shares; (1a,10a) Expenses of
the Money Market Funds and
Trust Shares; (1b,10b,11)
Expenses of the Money Market
Funds and Investment Shares;
Item 6. Capital Stock and Other
Securities (1-12) Dividends; (1-12)
Capital Gains; (1-12)
Shareholder Information; (1-12)
Voting Rights; (1-12)
Massachusetts Partnership Law;
(1-12) Effect of Banking Laws;
(1-12) Tax Information; (1-12)
Federal Income Tax.
Item 7. Purchase of Securities Being
Offered (1-12) Net Asset Value;
(1a,2a,3a, 4a,5a,6a,7a,10a,12a)
Investing in Trust Shares;
(1b,2b,3b,4b,
5b,6b,7b,8,9,10b,11,12b)
Investing in Investment Shares;
(1a,2a,3a,4a,5a,6a,7a,10a,12a)
Through Shawmut Bank;
(1b,2b,3b,4b,5b,6b.7b.8,9,10b,1
1, 12b) Through MDS;
(1a,2a,3a,4a,5a,6a,7a,10a,12a)
Directly From the Distributor;
(2b,3b,4b,8,9) Directly from
the Income Funds; (1b,10b,11)
Directly from the Money Market
Funds; (5b,6b,7b,12b) Directly
from the Equity Funds; (1-12)
Minimum Investment Required;
(1-12) What Shares Cost; (1-12)
Certificates and Confirmations;
(1-12) Exchange Privilege;
(1-12) Subaccounting Services;
(1b,2b,3b,4b,
5b,6b,7b,8,9,10b,11,12)
Systematic Investment Program;
(2b,3b,4b,5b,6b,7b,.8,9,12b)
Purchases at Net Asset Value;
(2b,3b,4b,5b,6b,7b,.8,9,12b)
Sales Charge Reallowance;
(2b,3b,4b,5b, 6b,7b,.8,9,12b)
Reducing the Sales Charge;
(2b,3b,4b,5b,6b,7b,.8,9,12b)
Quantity Discounts and
Accumulated Purchases;
(2b,3b,4b,5b, 6b,7b,.8,9,12b)
Letter of Intent;
(2b,3b,4b,5b,6b,7b,.8,9,12b)
Reinvestment Privilege;
(2b,3b,4b,5b,6b,7b,.8,9,12b)
Concurrent Purchases.
Item 8. Redemption or Repurchase (1-12) Redeeming (Trust or
Investment) Shares;
(1a,2a,3a,4a,5a,6a,7a,10a,12a)
Through Shawmut Bank;
(1b,2b,3b,4b,5b,6b,7b,8,9,12b)
Through MDS; (1-12) Directly
From the (Equity, Income, or
Money Market) Funds; (1-12)
Receiving Payment; (1-12)
Accounts with Low Balances;
(1-12) Systematic Withdrawal
Program; (1-12) Redemption in
Kind; (1b, 10b, 11)
Checkwriting.
Item 9. Pending Legal Proceedings None.
PART B. INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL
INFORMATION.
Item 10. Cover Page (1-12) Cover
Page.
Item 11. Table of Contents (1-12)
Table of Contents.
Item 12. General Information and
History (1-12) General Information
About the (Equity, Income, or
Money Market) Funds.
Item 13. Investment Objectives and
Policies (1-12) Investment Objectives
and Policies; (1-12) Investment
Limitations.
Item 14. Management of the Fund (1-12)
The Shawmut Funds Management.
Item 15. Control Persons and Principal
Holders of Securities Not Applicable.
Item 16. Investment Advisory and Other
Services (1-12) Investment Advisory
Services; (1-12) Administrative
Services.
Item 17. Brokerage Allocation (1-12)
Brokerage Transactions.
Item 18. Capital Stock and Other
Securities Not applicable.
Item 19. Purchase, Redemption and
Pricing
of Securities Being Offered (1-12) Purchasing Shares;
(1-12) Determining Net Asset
Value; (1-12) Redeeming Shares;
(1-12) Exchange Privilege.
Item 20. Tax Status (1-12) Tax
Status.
Item 21. Underwriters Not applicable.
Item 22. Calculation of Performance
Data (1-12) Yield; (1-12) Total
Return; (1-12) Performance
Comparisons; (1) Effective
Yield; (8-11) Tax-Equivalent
Yield.
Item 23. Financial Statements (1-12) Incorporated into
the Statement of Additional
Information by reference
to the Trust's Annual
Report dated October
31, 1994;
SHAWMUT
EQUITY FUNDS
PROSPECTUS
INVESTMENT SHARES
GROWTH AND INCOME EQUITY
GROWTH EQUITY
SMALL CAPITALIZATION EQUITY
QUANTITATIVE EQUITY
December 31, 1994
SHAWMUT GROWTH AND INCOME EQUITY FUND
SHAWMUT GROWTH EQUITY FUND
SHAWMUT SMALL CAPITALIZATION EQUITY FUND
The Shawmut Equity Funds SHAWMUT QUANTITATIVE EQUITY FUND
Investment Shares--Combined Prospectus
The shares offered by this prospectus represent interests in Investment Shares
of the equity portfolios (collectively, the "Equity Funds" or individually, as
appropriate in context, the "Fund") of The Shawmut Funds (the "Trust"), an
open-end management investment company (a mutual fund). In addition to the
Equity Funds, the Trust consists of the following separate investment
portfolios, each having distinct investment objectives and policies:
INCOME FUNDS MONEY MARKET FUNDS
Shawmut Limited Term
Income Fund Shawmut Prime Money Market Fund
Shawmut Intermediate
Government Income Fund Shawmut Connecticut Municipal Money Market Fund
Shawmut Fixed Income Fund Shawmut Massachusetts Municipal Money Market Fund
Shawmut Connecticut
Intermediate Municipal
Income Fund
Shawmut Massachusetts
Intermediate Municipal
Income Fund
[/TABLE]
This combined prospectus contains the information you should read and know
before you invest in the Equity Funds. Keep this prospectus for future
reference. The Equity Funds have also filed a Combined Statement of Additional
Information for Trust Shares and Investment Shares dated December 31, 1994,
with the Securities and Exchange Commission. The information contained in the
Combined Statement of Additional Information is incorporated by reference into
this prospectus. You may request a copy of the Combined Statement of Additional
Information free of charge, obtain other information, or make inquiries about
the Equity Funds by writing or calling the Trust.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF
SHAWMUT BANK, ARE NOT ENDORSED OR GUARANTEED BY SHAWMUT BANK, AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD
OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE SHARES INVOLVES INVESTMENT
RISKS, INCLUDING FLUCTUATIONS IN VALUE AND EARNINGS AND THE POSSIBLE LOSS OF
PRINCIPAL INVESTED.
INVESTMENT SHARES OF THE SHAWMUT FUNDS ARE AVAILABLE THROUGH REGISTERED
REPRESENTATIVES OF SHAWMUT BROKERAGE, INC. OR OTHER BROKERS, MEMBERS NASD/SIPC.
SHAWMUT BROKERAGE, INC. IS AN AFFILIATE OF SHAWMUT BANK.
Prospectus dated December 31, 1994
Table of Contents
- --------------------------------------------------------------------------------
SYNOPSIS..................................................................... 2
- --------------------------------------------------------------------------------
EXPENSE SUMMARY.............................................................. 3
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS......................................................... 4
- --------------------------------------------------------------------------------
GENERAL INFORMATION.......................................................... 6
- --------------------------------------------------------------------------------
THE SHAWMUT PORTFOLIOS....................................................... 6
- --------------------------------------------------------------------------------
OBJECTIVES AND POLICIES...................................................... 6
- --------------------------------------------------------------------------------
INVESTMENTS, STRATEGIES, AND RISKS........................................... 8
- --------------------------------------------------------------------------------
ADMINISTRATION............................................................... 12
- --------------------------------------------------------------------------------
NET ASSET VALUE.............................................................. 16
- --------------------------------------------------------------------------------
INVESTING IN SHARES.......................................................... 16
- --------------------------------------------------------------------------------
EXCHANGE PRIVILEGE........................................................... 19
- --------------------------------------------------------------------------------
REDEEMING SHARES............................................................. 20
- --------------------------------------------------------------------------------
SHAREHOLDER INFORMATION...................................................... 22
- --------------------------------------------------------------------------------
EFFECT OF BANKING LAWS....................................................... 23
- --------------------------------------------------------------------------------
TAX INFORMATION.............................................................. 23
- --------------------------------------------------------------------------------
OTHER CLASSES OF SHARES...................................................... 24
- --------------------------------------------------------------------------------
PERFORMANCE INFORMATION...................................................... 24
- --------------------------------------------------------------------------------
Synopsis
INVESTMENT OBJECTIVES
The Shawmut Funds offer you a convenient, affordable way to participate in
separate, professionally managed portfolios of securities. This prospectus
relates only to the Equity Funds of the Trust.
EQUITY FUNDS
SHAWMUT GROWTH AND INCOME EQUITY FUND
("Growth and Income Equity Fund") seeks a relatively high total return through
long-term capital appreciation and current income looking to achieve a current
dividend yield that exceeds the composite yield of securities included in the
Standard & Poor's 500 Composite Stock Index ("Standard & Poor's 500 Index").
While there is no assurance that the Growth and Income Equity Fund will achieve
its objectives, it attempts to do so by investing in a professionally managed,
diversified portfolio consisting primarily of common stocks that are selected
by the investment adviser based upon traditional research techniques.
SHAWMUT GROWTH EQUITY FUND
("Growth Equity Fund") seeks long-term capital appreciation by investing in a
diversified portfolio of growth-oriented equity securities. The Fund Growth
Equity defines growth-oriented equity securities as securities of companies
that are projected by the investment adviser, based upon traditional research
techniques, to show earnings growth superior to the Standard & Poor's 500
Index.
SHAWMUT SMALL CAPITALIZATION EQUITY FUND
("Small Capitalization Equity Fund") seeks long-term capital appreciation by
investing primarily in a portfolio of equity securities comprising the small
capitalization sector of the United States equity market (companies which have
a market value capitalization up to $1 billion).
SHAWMUT QUANTITATIVE EQUITY FUND
("Quantitative Equity Fund") seeks growth of capital by investing in a
diversified portfolio consisting of publicly-traded common stocks listed on
North American stock exchanges or traded in the over-the-counter market. The
selection of investment securities is made by use of a quantitative computer
valuation model, as described in this prospectus.
BUYING SHARES
A minimum initial investment of $1,000 may be required. Subsequent investments
must be in amounts of at least $100, as described in this prospectus in the
section entitled "Minimum Investment Required."
FUND MANAGEMENT
The Equity Funds' investment adviser is Shawmut Bank, N.A., which makes
investment decisions for the Equity Funds. The sub-adviser to the Quantitative
Equity Fund is Marque Millennium Group Limited.
SHAREHOLDER SERVICES
When you become a shareholder, you can easily obtain information about your
account by calling 1-800-SHAWMUT.
THE SHAWMUT EQUITY FUNDS
Expense Summary
Investment Shares
PORTFOLIOS
SMALL
GROWTH AND CAPITAL
INCOME GROWTH IZATION QUANTITATIVE
EQUITY EQUITY EQUITY EQUITY
FUND FUND FUND FUND
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) 4.00% 4.00% 4.00% 4.00%
Maximum Sales Load Imposed on
Reinvested Dividends
(as a percentage of offering price) None None None None
Contingent Deferred Sales Charge
(as a percentage of
original purchase price or redemption
proceeds, as applicable) None None None None
Redemption Fee (as a percentage of
amount redeemed, if applicable) None None None None
Exchange Fee None None None None
ANNUAL INVESTMENT SHARES OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waivers)(1) 0.80% 0.50% 0.75% 0.00%
12b-1 Fees(2) 0.25% 0.25% 0.25% 0.25%
Total Other Expenses(3) 0.24% 0.68% 0.31% 1.50%
Total Investment Shares Operating
Expenses (after waivers
and reimbursements)(4) 1.29% 1.43% 1.31% 1.75%
(1) The management fee has been reduced to reflect the voluntary waiver by the
investment adviser. The adviser can terminate this voluntary waiver at any
time at its sole discretion. The maximum management fee is 1.00%.
(2) The 12b-1 fee has been reduced to reflect the voluntary waiver by the
distributor. The Equity Funds can pay up to 0.50% of the average daily net
assets of Investment Shares as a 12b-1 fee to the distributor.
(3) Other expenses have been reduced to reflect the voluntary waiver by the
custodian for all Equity Funds; reimbursement by the adviser for the Growth
Equity Fund; and the voluntary waiver by the administrator and reimbursement
by the adviser for the Quantitative Equity Fund.
(4) Absent the voluntary waivers and reimbursements explained in the above
footnotes, the Investment Shares Operating Expenses are 1.74% for the Growth
and Income Equity Fund; 2.61% for the Growth Equity Fund; 1.84% for the
Small Capitalization Equity Fund; and 9.12% for the Quantitative Equity
Fund.
The purpose of this table is to assist an investor in understanding the various
costs and expenses that a shareholder of Investment Shares will bear, either
directly or indirectly. For more complete descriptions of the various costs and
expenses, see "Administration" and "Investing in Shares." Wire-transferred
redemptions of less than $5,000 may be subject to additional fees.
EXAMPLE
You would pay the following expenses on a $1,000 investment assuming (1) 5%
annual return and (2) redemption at the end of each time period. As noted in the
table above, the Equity Funds charge no contingent deferred sales charge.
1 Year 3 Years 5 Years 10 Years
Growth and Income
Equity Fund.................. $53 $79 $108 $189
Growth Equity Fund............ $54 $83 $115 $204
Small Capitalization
Equity Fund.................. $53 $80 $109 $192
Quantitative Equity Fund...... $57 $93 $131 $238
THE ABOVE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
The information set forth in the foregoing table and example relates only to
Investment Shares of the Equity Funds. The Equity Funds also offer another class
of shares called Trust Shares. Trust Shares and Investment Shares are subject to
certain of the same expenses; however, Investment Shares are subject to a 12b-1
fee of up to .50 of 1% of average net assets. See "Other Classes of Shares."
THE SHAWMUT EQUITY FUNDS
Financial Highlights
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
The following table has been audited by Price Waterhouse LLP, the Equity Funds'
independent accountants whose report thereon dated December 16, 1994, is
included in the Annual Report of The Shawmut Funds for the fiscal year ended
October 31, 1994, which is incorporated by reference into the Statement of
Additional Information. This table should be read in conjunction with the
Equity Funds' financial statements and notes thereto, which may be obtained
from the Equity Funds.
<TABLE>
<CAPTION>
DISTRIBUTIONS
TO
NET REALIZED DIVIDENDS TO SHAREHOLDERS
NET ASSET AND UNREALIZED TOTAL SHAREHOLDERS FROM NET
YEAR ENDED VALUE, NET GAIN/(LOSS) FROM FROM NET REALIZED GAIN
OCTOBER BEGINNING INVESTMENT ON INVESTMENT INVESTMENT ON INVESTMENT
31, OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME TRANSACTIONS
<S> <C> <C> <C> <C> <C> <C>
<CAPTION>
INVESTMENT SHARES
GROWTH AND INCOME EQUITY FUND
<S> <C> <C> <C> <C> <C> <C>
1993* $10.23 0.15 0.48 0.63 (0.17) --
1994 $10.69 0.22 0.72 0.94 (0.20) (0.28)
<CAPTION>
GROWTH EQUITY FUND
<S> <C> <C> <C> <C> <C> <C>
1993* $10.01 0.004 0.480 0.484 (0.004) --
1994 $10.49 0.010 0.390 0.400 (0.002) (0.196)
<CAPTION>
SMALL CAPITALIZATION EQUITY FUND
<S> <C> <C> <C> <C> <C> <C>
1993* $10.52 (0.008) 0.698 0.690 0.000 --
1994 $11.21 (0.01) 0.18 0.17 0.00 (0.32)
<CAPTION>
QUANTITATIVE EQUITY FUND
<S> <C> <C> <C> <C> <C> <C>
1994** $10.03 0.07 0.03 0.10 (0.07) --
<CAPTION>
TRUST SHARES
GROWTH AND INCOME EQUITY FUND
<S> <C> <C> <C> <C> <C> <C>
1993*** $10.00 0.18 0.69 0.87 (0.18) --
1994 $10.69 0.25 0.72 0.97 (0.23) (0.28)
<CAPTION>
GROWTH EQUITY FUND
<S> <C> <C> <C> <C> <C> <C>
1993*** $10.00 0.023 0.487 0.510 (0.019) --
1994 $10.49 0.037 0.390 0.427 (0.032) (0.196)
<CAPTION>
SMALL CAPITALIZATION EQUITY FUND
<S> <C> <C> <C> <C> <C> <C>
1993*** $10.00 0.002 1.210 1.212 (0.002) --
1994 $11.21 0.02 0.17 0.19 (0.01) (0.32)
<CAPTION>
QUANTITATIVE EQUITY FUND
<S> <C> <C> <C> <C> <C> <C>
1994** $10.03 0.07 0.03 0.10 (0.07) --
</TABLE>
* For the period from February 12, 1993 (date of initial public offering) to
October 31, 1993.
** For the period from August 4, 1994 (date of initial public investment) to
October 31, 1994.
*** For the period from December 14, 1992 (date of initial public investment)
to October 31, 1993.
+Based on net asset value which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
Further information about the Equity Funds' performance is contained in the
Trust's Combined Annual Report dated October 31, 1994, which can be obtained
free of charge.
<TABLE>
<CAPTION>
NET ASSET NET NET ASSETS, PORTFOLIO
TOTAL VALUE, END TOTAL INVESTMENT EXPENSE WAIVER/ END OF PERIOD TURNOVER
DISTRIBUTIONS OF PERIOD RETURN+ EXPENSES INCOME REIMBURSEMENT(B) (000 OMITTED) RATE
<S> <C> <C> <C> <C> <C> <C> <C>
(0.17) $ 10.69 6.20% 1.25%(a) 1.77%(a) 0.53%(a) $ 16,280 38%
(0.48) $ 11.15 9.12% 1.29% 2.06% 0.45% $ 22,244 73%
(0.004) $ 10.49 4.84% 1.37% (0.10%)(a) 0.72%(a) $ 4,631 71%
(0.198) $ 10.69 3.86% 1.43% 0.09% 1.18% $ 5,846 73%
0.000 $ 11.21 6.56% 1.33%(a) (0.19%)(a) 0.54%(a) $ 15,014 29%
(0.32) $ 11.06 1.64% 1.31% (0.10%) 0.53% $ 19,764 29%
(0.07) $ 10.06 0.94% 1.75%(a) 2.50%(a) 7.37%(a) $ 375 0%
(0.18) $ 10.69 8.80% 0.98%(a) 2.11%(a) 0.27%(a) $ 147,090 38%
(0.51) $ 11.15 9.45% 1.04% 2.31% 0.20% $ 156,827 73%
(0.019) $ 10.49 5.09% 1.06%(a) 0.26%(a) 0.47%(a) $ 20,787 71%
(0.228) $ 10.69 4.16% 1.18% 0.34% 0.93% $ 16,970 73%
(0.002) $ 11.21 12.12% 1.01%(a) 0.02%(a) 0.28%(a) $ 100,382 29%
(0.33) $ 11.07 1.86% 1.06% 0.15% 0.28% $ 101,905 29%
(0.07) $ 10.06 0.94% 1.50%(a) 2.75%(a) 7.12%(a) $ 3,161 0%
</TABLE>
GENERAL INFORMATION
The Trust was established as a Massachusetts business trust under a
Declaration of Trust dated July 16, 1992. The Declaration of Trust permits the
Trust to offer separate series of shares representing interests in separate
portfolios of securities. The shares in any one portfolio may be offered in
separate classes. As of the date of this prospectus, the Board of Trustees
(the "Trustees") has established two classes of shares of each of the Equity
Funds, known as Trust Shares and Investment Shares. This prospectus relates
only to Investment Shares of the Equity Funds. Investment Shares are sold
primarily to financial institutions that rely upon the distribution services
provided by the distributor in the marketing of Investment Shares, as well as
to retail customers of such institutions.
A minimum initial investment of $1,000 may be required. Subsequent investments
must be in amounts of at least $100, as described in this prospectus in the
section entitled "Minimum Investment Required," or $50 for participants in the
Systematic Investment Program. Investment Shares are currently sold at net
asset value with a sales load imposed by the Equity Funds, as described in
this prospectus.
THE SHAWMUT PORTFOLIOS
The shareholders of the Equity Funds are shareholders of The Shawmut Funds,
which currently consist of Shawmut Connecticut Intermediate Municipal Income
Fund, Shawmut Connecticut Municipal Money Market Fund, Shawmut Fixed Income
Fund, Shawmut Growth and Income Equity Fund, Shawmut Growth Equity Fund,
Shawmut Intermediate Government Income Fund, Shawmut Limited Term Income Fund,
Shawmut Massachusetts Intermediate Municipal Income Fund, Shawmut
Massachusetts Municipal Money Market Fund, Shawmut Prime Money Market Fund,
Shawmut Quantitative Equity Fund, and Shawmut Small Capitalization Equity
Fund. Shareholders in the Equity Funds have easy access to the other
portfolios of The Shawmut Funds through an exchange program. The Shawmut Funds
are advised by Shawmut Bank, N.A., and distributed by Federated Securities
Corp. The sub-adviser to the Quantitative Equity Fund is Marque Millennium
Group Limited.
OBJECTIVES AND POLICIES
GROWTH AND INCOME EQUITY FUND
INVESTMENT OBJECTIVE
The investment objective of the Growth and Income Equity Fund is to provide a
relatively high total return through long-term capital appreciation and current
income. The investment objective cannot be changed without approval of
shareholders. The Growth and Income Equity Fund generally looks to achieve a
yield that exceeds the composite dividend yield of securities included in the
Standard & Poor's 500 Index. While there is no assurance that the Fund will
achieve its investment objective, it endeavors to do so by following the
investment policies described in this prospectus.
INVESTMENT POLICIES
The investment policies may be changed by the Trustees without shareholder
approval. Shareholders will be notified before any material change in these
policies becomes effective.
ACCEPTABLE INVESTMENTS
UNDER NORMAL MARKET CIRCUMSTANCES, THE GROWTH AND INCOME EQUITY FUND WILL
INVEST AT LEAST 65% OF ITS ASSETS IN GROWTH AND INCOME EQUITY SECURITIES.
In addition, the Growth and Income Equity Fund may invest as described in this
prospectus.
GROWTH EQUITY FUND
INVESTMENT OBJECTIVE
The investment objective of the Growth Equity Fund is to provide long-term
capital appreciation. The investment objective cannot be changed without
approval of shareholders. While there is no assurance that the Fund will
achieve its investment objective, it endeavors to do so by following the
investment policies described in this prospectus.
INVESTMENT POLICIES
The investment policies may be changed by the Trustees without shareholder
approval. Shareholders will be notified before any material change in these
policies becomes effective.
ACCEPTABLE INVESTMENTS
UNDER NORMAL MARKET CIRCUMSTANCES, THE GROWTH EQUITY FUND WILL INVEST AT LEAST
65% OF ITS ASSETS IN GROWTH-ORIENTED EQUITY SECURITIES.
The Growth Equity Fund defines growth-oriented equity securities as securities
that are projected by the Growth Equity Fund's investment adviser to show
earnings growth superior to the Standard & Poor's 500 Index.
The Growth Equity Fund invests primarily in equity securities of companies
selected by the investment adviser on the basis of traditional research
techniques, including assessment of earnings and dividend growth prospects and
of the risk and volatility of each company's business. The fundamental changes
which the investment adviser will seek to identify in companies include, for
example, restructuring of basic businesses or reallocations of assets which
present opportunities for significant share price appreciation. At times, the
Growth Equity Fund will invest in securities of companies which are deemed by
the investment adviser to be candidates for acquisition by other entities as
indicated by changes in ownership, changes in standard price-to-value ratios,
and an examination of other standard analytical indices.
In addition, the Growth Equity Fund may invest as described in this prospectus.
SMALL CAPITALIZATION EQUITY FUND
INVESTMENT OBJECTIVE
The investment objective of the Small Capitalization Equity Fund is to provide
long-term capital appreciation. The investment objective of the Small
Capitalization Equity Fund cannot be changed without the approval of
shareholders. While there is no assurance that the Small Capitalization Equity
Fund will achieve its investment objective, it endeavors to do so by following
the investment policies described in this prospectus.
INVESTMENT POLICIES
The investment policies may be changed by the Trustees without shareholder
approval. Shareholders will be notified before any material change in these
policies becomes effective.
ACCEPTABLE INVESTMENTS
UNDER NORMAL CIRCUMSTANCES, THE SMALL CAPITALIZATION EQUITY FUND WILL INVEST AT
LEAST 65% OF ITS TOTAL ASSETS IN EQUITY SECURITIES OF COMPANIES THAT HAVE A
MARKET VALUE CAPITALIZATION OF UP TO $1 BILLION.
In addition, the Small Capitalization Equity Fund may invest as described in
this prospectus.
QUANTITATIVE EQUITY FUND
INVESTMENT OBJECTIVE
The investment objective of the Quantitative Equity Fund is to provide growth
of capital. The investment objective of the Quantitative Equity Fund cannot be
changed without the approval of shareholders. While there is no assurance that
the Quantitative Equity Fund will achieve its investment objective, it
endeavors to do so by following the investment policies described in this
prospectus.
INVESTMENT POLICIES
The investment policies described below may be changed by the Trustees without
shareholder approval. Shareholders will be notified before any material change
in these policies becomes effective.
ACCEPTABLE INVESTMENTS
UNDER NORMAL MARKET CIRCUMSTANCES, THE QUANTITATIVE EQUITY FUND WILL INVEST AT
LEAST 65% OF ITS ASSETS IN EQUITY SECURITIES.
The Quantitative Equity Fund will invest its assets in a diversified portfolio
of equity securities issued by companies with a market value capitalization in
excess of $250 million and a minimum daily average trading volume as
established by the Sub-Adviser from time to time. To select common stocks for
the Quantitative Equity Fund, the Sub-Adviser uses a quantitative computer
valuation model to evaluate the relative attractiveness of common stocks listed
on North American stock exchanges or traded in the over-the-counter market.
Stocks are selected based upon their price momentum, as measured by combining
four quantitative disciplines: price trend analysis, velocity of price
movements (the speed at which securities prices may change), analysis of price
compared to moving averages, and current price and volume activity (for
valuation judgments). Then, the selected stocks are reviewed based upon
fundamental characteristics, such as present and historical price-to-earnings
and market price-to-book ratios; changes in analysts' earnings forecasts; and
positive or negative earnings realized. Since the primary analysis is of price
momentum rather than these fundamentals, the Quantitative Equity Fund will
include stocks with not only capital growth potential, but also with prospects
for growth in earnings and dividends (value characteristics).
The Quantitative Equity Fund is comprised of stocks selected in accordance with
strict investment criteria. Stocks that are candidates for purchase may have
undergone persistent price deterioration and are deemed likely to reverse and
move up in price (a contrarian strategy). The Quantitative Equity Fund will
also purchase stocks that are in firmly established patterns of price
appreciation. Sales of portfolio securities also adhere to a strict discipline
based upon system analytics or price movement, similar to the selection
process.
In addition, the Quantitative Equity Fund may invest as described in this
prospectus.
INVESTMENTS, STRATEGIES, AND RISKS
COMMON STOCK. As described above, the Equity Funds invest primarily in equity
securities. As with other mutual funds that invest primarily in equity
securities, the Equity Funds are subject to market risks. That is, the
possibility exists that common stocks will decline over short or even extended
periods of time, and the United States equity market tends to be cyclical,
experiencing both periods when stock prices generally increase and periods when
stock prices generally decrease. However, because the Equity Funds, other than
the Quantitative Equity Fund, invest primarily in growth-oriented equity
securities (Growth Equity Fund and Growth and Income Equity Fund) or in small
capitalization stocks (Small Capitalization Equity Fund), there are some
additional risk factors associated with investments in the Equity Funds.
Growth-oriented stocks may include issuers with smaller capitalization. Small
capitalization stocks have historically been more volatile in price than larger
capitalization stocks, such as those included in the Standard & Poor's 500
Index. This is because, among other things, smaller companies have a lower
degree of liquidity in the equity market and tend to have a greater sensitivity
to changing economic conditions. Further, in addition to exhibiting greater
volatility, these stocks may, to some degree, fluctuate independently of the
stocks of large companies. That is, the stock of small capitalization companies
may decline in price as the price of large company stocks rises or vice versa.
Therefore, investors should expect that the Equity Funds will be more volatile
than, and may fluctuate independently of, broad stock market indices such as
the Standard & Poor's 500 Index.
In the case of the Quantitative Equity Fund, stocks that show growth or value
characteristics may be included in the investment portfolio, even though those
characteristics do not drive the stock selection process. Because of its price
and volume oriented selection method, the Quantitative Equity Fund tends to be
less volatile than the market. Of course, there can be no assurance that this
will occur.
CONVERTIBLE SECURITIES. Convertible securities are fixed income securities
which may be exchanged or converted into a predetermined number of the issuer's
underlying common stock at the option of the holder during a specified time
period. Convertible securities may take the form of convertible preferred
stock, convertible bonds or debentures, units consisting of "usable" bonds and
warrants or a combination of the features of several of these securities. The
Equity Funds invest in convertible bonds rated "BB" or higher by Standard &
Poor's Ratings Group or Fitch Investors Service, Inc., or "Ba" or higher by
Moody's Investors Service, Inc., at the time of investment. Securities rated
"BB" by Standard & Poor's Ratings Group or Fitch Investors Service, Inc., or
"Ba" by Moody's Investors Service, Inc., either have speculative
characteristics or are predominantly speculative with respect to capacity to
pay interest and repay principal in accordance with the terms of the
obligation. Debt obligations that are not determined to be investment grade are
high-yield, high-risk bonds, typically subject to greater market fluctuations,
and securities in the lowest rating category may be in danger of loss of income
and principal due to an issuer's default. To a greater extent than
investment-grade bonds, the value of lower-rated bonds tends to reflect
short-term corporate, economic, and market developments, as well as investor
perceptions of the issuer's credit quality. In addition, lower-rated bonds may
be more difficult to dispose of or to value than high-rated, lower-yielding
bonds. The investment adviser or sub-adviser, as appropriate, attempts to
reduce the risks described above through diversification of the portfolio and
by credit analysis of each issuer, as well as by monitoring broad economic
trends and corporate and legislative developments. If a convertible bond is
rated below "BB" or "Ba" according to the characteristics set forth here after
a Fund has purchased it, the Fund is not required to drop the convertible bond
from the portfolio, but will consider appropriate action. The investment
characteristics of each convertible security vary widely, which allows
convertible securities to be employed for different investment objectives. A
description of the rating categories is contained in the Appendix to the
Combined Statement of Additional Information.
Convertible bonds and convertible preferred stocks are fixed income securities
that generally retain the investment characteristics of fixed income securities
until they have been converted but also react to movements in the underlying
equity securities. The holder is entitled to receive the fixed income of a bond
or the dividend preference of a preferred stock until the holder elects to
exercise the conversion privilege. Usable bonds are corporate bonds that can be
used in whole or in part, customarily at full face value, in lieu of cash to
purchase the issuer's common stock. When owned as part of a unit along with
warrants, which are options to buy the common stock, they function as
convertible bonds, except that the warrants generally will expire before the
bond's maturity. Convertible securities are senior to equity securities, and
therefore, have a claim to assets of the corporation prior to the holders of
common stock in the case of liquidation. However, convertible securities are
generally subordinated to similar nonconvertible securities of the same
company. The interest income and dividends from convertible bonds and preferred
stocks provide a stable stream of income with generally higher yields than
common stocks, but lower than non-convertible securities of similar quality.
The Equity Funds will exchange or convert the convertible securities held in
their respective portfolios into shares of the underlying common stock in
instances in which, in the investment adviser's opinion, the investment
characteristics of the underlying common shares will assist the particular Fund
in achieving its investment objectives. Otherwise, the Fund will hold or trade
the convertible securities. In selecting convertible securities for a Fund, the
Fund's adviser evaluates the investment characteristics of the convertible
security as a fixed income instrument, and the investment potential of the
underlying equity security for capital appreciation. In evaluating these
matters with respect to a particular convertible security, the Fund's adviser
considers numerous factors, including the economic and political outlook, the
value of the security relative to other investment alternatives, trends in the
determinants of the issuer's profits, and the issuer's management capability
and practices.
SECURITIES OF FOREIGN ISSUERS. The Equity Funds may invest in the securities
of foreign issuers which are freely traded on United States securities
exchanges or in the over-the-counter market in the form of depository receipts.
Securities of a foreign issuer may present greater risks in the form of
nationalization, confiscation, domestic marketability, or other
national or international restrictions. As a matter of practice, the Equity
Funds will not invest in the securities of a foreign issuer if any such risk
appears to the investment adviser to be substantial.
OPTIONS AND FUTURES CONTRACTS. The Equity Funds may buy and sell options and
futures contracts to manage their respective individual exposure to changing
interest rates, security prices, and currency exchange rates. Some options and
futures strategies, including selling futures, buying puts, and writing calls,
tend to hedge the Equity Funds' respective investments against price
fluctuations. Other strategies, including buying futures, writing puts, and
buying calls, tend to increase market exposure. Options and futures may be
combined with each other or with forward contracts in order to adjust the risk
and return characteristics of the overall strategy. The Equity Funds may invest
in options and futures based on any type of security, index, or currency,
including options and futures traded on foreign exchanges and options not
traded on exchanges.
Options and futures can be volatile investments, and involve certain risks. If
the investment adviser applies a hedge at an inappropriate time or judges
market conditions incorrectly, options and futures may lower an Equity Fund's
individual return. An Equity Fund could also experience losses if the prices of
its options and futures positions were poorly correlated with its other
investments, or if it could not close out its positions because of an illiquid
secondary market.
Each of the Equity Funds will not hedge more than 20% of its respective total
assets by selling futures, buying puts, and writing calls under normal
conditions. In addition, each of the Equity Funds will not buy futures or write
puts whose underlying value exceeds 20% of their respective total assets, and
the Equity Funds will not buy calls with a value exceeding 5% of their
respective total assets.
STOCK INDEX FUTURES, SWAP AGREEMENTS, INDEXED SECURITIES, AND OPTIONS. The
Equity Funds may utilize stock index futures contracts, options, swap
agreements, indexed securities, and options on futures contracts, subject to
the limitation that the value of these futures contracts, swap agreements,
indexed securities, and options will not exceed 20% of each of the Equity
Funds' total assets. Also, each Equity Fund will not purchase options to the
extent that more than 5% of the value of the Equity Fund's total assets would
be invested in premiums on open put option positions. In addition, each Equity
Fund does not intend to invest more than 5% of the market value of its total
assets in each of the following: futures contracts, swap agreements, and
indexed securities. When an Equity Fund enters into a swap agreement, assets of
the Fund equal to the value of the swap agreement will be segregated by the
Equity Fund.
There are several risks accompanying the utilization of futures contracts.
First, positions in futures contracts may be closed only on an exchange or
board of trade that furnishes a secondary market for such contracts. While the
Equity Funds plan to utilize futures contracts only if there exists an active
market for such contracts, there is no guarantee that a liquid market will
exist for the contracts at a specified time. Furthermore, because, by
definition, futures contracts look to projected price levels in the future and
not to current levels of valuation, market circumstances may result in there
being a discrepancy between the price of the stock index future and the
movement in the corresponding stock index. The absence of a perfect price
correlation between the futures contract and its underlying stock index could
stem from investors choosing to close futures contracts by offsetting
transactions, rather than satisfying additional margin requirements. This could
result in a distortion of the relationship between the index and the futures
market. In addition, because the futures market imposes less burdensome margin
requirements than the securities market, an increased amount of participation
by speculators in the futures market could result in price fluctuations.
RESTRICTED AND ILLIQUID SECURITIES. The Equity Funds intend to invest in
restricted securities. Restricted securities are any securities in which each
Equity Fund may otherwise invest pursuant to its investment objective and
policies, but which are subject to restriction on resale under federal
securities law. However, each Equity Fund will limit investments in illiquid
securities, including certain restricted securities not determined by the
Trustees to be liquid, non-negotiable fixed time deposits with maturities over
seven days, over-the-counter options, and repurchase agreements providing for
settlement in more than seven days after notice, to 15% of its net assets.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS.__The Equity Funds may purchase
securities on a when-issued or delayed delivery basis. These transactions are
arrangements in which the Equity Funds purchase securities with payment
and delivery scheduled for a future time. The seller's failure to complete
these transactions may cause the Equity Funds to miss a price or yield
considered to be advantageous. Settlement dates may be a month or more after
entering into these transactions, and the market values of the securities
purchased may vary from the purchase prices. Accordingly, the Equity Funds may
pay more/less than the market value of the securities on the settlement date.
The Equity Funds may dispose of a commitment prior to settlement if the adviser
deems it appropriate to do so. In addition, the Equity Funds may enter into
transactions to sell its purchase commitments to third parties at current
market values and simultaneously acquire other commitments to purchase similar
securities at later dates. The Equity Funds may realize short-term profits or
losses upon the sale of such commitments.
LENDING OF PORTFOLIO SECURITIES. In order to generate additional income, each
Equity Fund may lend portfolio securities on a short-term or long-term basis,
or both, up to one-third of the value of its total assets to broker/dealers,
banks, or other institutional borrowers of securities. The Equity Funds will
only enter into loan arrangements with broker/dealers, banks, or other
institutions which the investment adviser has determined are creditworthy under
guidelines established by the Trustees and will receive collateral in the form
of cash or U.S. government securities equal to at least 100% of the value of
the securities loaned.
There is the risk that when lending portfolio securities, the securities may
not be available to the Equity Funds on a timely basis and the Equity Funds
may, therefore, lose the opportunity to sell the securities at a desirable
price. In addition, in the event that a borrower of securities would file for
bankruptcy or become insolvent, disposition of the securities may be delayed
pending court action.
TEMPORARY INVESTMENTS. In such proportions as, in the judgment of its
investment adviser, prevailing market conditions warrant, each Equity Fund may,
for temporary defensive purposes, invest in:
short-term money market instruments rated in one of the top two rating
categories by a nationally recognized statistical rating organization;
securities issued and/or guaranteed as to payment of principal and interest
by the U.S. government, its agencies, or instrumentalities; and
agreements.
REPURCHASE AGREEMENTS. The U.S. government securities and other securities
in which each Equity Fund invests may be purchased pursuant to repurchase
agreements. Repurchase agreements are arrangements in which banks,
broker/dealers, and other recognized financial institutions sell U.S.
government securities or other securities to an Equity Fund and agrees at
the time of sale to repurchase them at a mutually agreed upon time and
price. To the extent that the original seller does not repurchase the
securities from an Equity Fund, the Fund could receive less than the
repurchase price on any sale of such securities.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES. The Equity Funds may
invest in the securities of other investment companies, but they will not,
respectively, own more than 3% of the total outstanding voting stock of any
investment company, invest more than 5% of their respective total assets in
any one investment company, or invest more than 10% of their respective
total assets in investment companies in general. The Equity Funds will
invest in other investment companies primarily for the purpose of investing
their short-term cash which has not yet been invested in other portfolio
instruments. However, from time to time, on a temporary basis, each of the
Equity Funds may invest exclusively in one other investment company managed
similarly to the appropriate Fund. Shareholders should realize that, when
one of the Equity Funds invests in other investment companies, certain fund
expenses, such as custodian fees and administrative fees, may be duplicated.
The adviser will waive its investment advisory fee on assets invested in
securities of other investment companies.
INVESTMENT LIMITATIONS
THE EQUITY FUNDS FOLLOW A NUMBER OF GUIDELINES IN MANAGING THEIR PORTFOLIOS
IN ORDER TO LIMIT INVESTMENT RISKS.
Each Equity Fund will not:
borrow money directly or through reverse repurchase agreements
(arrangements in which an Equity Fund sells a portfolio instrument for a
percentage of its cash value with an arrangement to buy it back on a set
date) or pledge securities except, under certain circumstances, an Equity
Fund may borrow up to one-third of the value of its total assets and pledge
up to 10% of the value of its total assets to secure such borrowings; or
with respect to 75% of the value of its total assets, invest more than 5%
in securities of one issuer (other than cash, cash items, or securities
issued or guaranteed by the government of the United States or its
agencies or instrumentalities and repurchase agreements collateralized by
such securities), or acquire more than 10% of the outstanding voting
securities of any one issuer.
The above investment limitations cannot be changed without shareholder
approval. The following limitation, however, may be changed by the
Trustees without shareholder approval. Shareholders will be notified
before any material change in this limitation becomes effective.
Each Equity Fund will not:
invest more than 15% of its total assets in securities subject to
restrictions on resale under the Securities Act of 1933 (except for
commercial paper issued under Section 4(2) of the Securities Act of 1933
and certain other securities which meet the criteria for liquidity as
established by the Trustees).
ADMINISTRATION
MANAGEMENT OF THE SHAWMUT FUNDS
BOARD OF TRUSTEES
THE SHAWMUT FUNDS ARE MANAGED BY A BOARD OF TRUSTEES.
The Trustees are responsible for managing the Trust's business affairs and for
exercising all the Trust's powers except those reserved for the shareholders.
The Executive Committee of the Board of Trustees handles the Board's
responsibilities between meetings of the Board.
INVESTMENT ADVISER
PURSUANT TO AN INVESTMENT ADVISORY CONTRACT WITH THE TRUST, INVESTMENT
DECISIONS FOR THE EQUITY FUNDS ARE MADE BY SHAWMUT BANK, N.A. (THE "ADVISER"),
SUBJECT TO DIRECTION BY THE TRUSTEES.
The Adviser continually conducts investment research and supervision for the
Equity Funds and is responsible for the purchase or sale of portfolio
instruments, for which it receives an annual fee from the respective assets of
the Equity Funds.
ADVISORY FEES
The Adviser receives an annual investment advisory fee equal to 1.00% of each
of the Equity Funds' average daily net assets. The fee paid by the Equity
Funds, while higher than the advisory fee paid by other mutual funds in
general, is with the anticipated advisory fee waivers, comparable to fees paid
by mutual funds with similar objectives and policies. The Adviser has
undertaken to waive a portion of its advisory fee, up to the amount of the
advisory fee, to reimburse each of the Equity Funds for operating expenses in
excess of limitations established by certain states. The Adviser may further
voluntarily waive a portion of its fee or reimburse the Equity Funds for
certain operating expenses. The Adviser can terminate such voluntary waiver or
reimbursement policy with any of the Equity Funds at any time at its sole
discretion.
ADVISER'S BACKGROUND
SHAWMUT BANK, N.A., A NATIONAL BANKING ASSOCIATION, AND ITS AFFILIATES HAVE
MANAGED COMMINGLED FUNDS FOR OVER FIFTY YEARS. AS OF OCTOBER 31, 1994, SHAWMUT
NATIONAL CORPORATION, THROUGH ITS SUBSIDIARIES INCLUDING SHAWMUT
BANK, N.A., MANAGED MORE THAN $15 BILLION IN TOTAL ASSETS. SHAWMUT BANK, N.A.,
HAS SERVED AS AN ADVISER TO MUTUAL FUNDS SINCE THE INCEPTION OF THE SHAWMUT
FUNDS ON DECEMBER 1, 1992.
Shawmut Bank, N.A., a national banking association, along with Shawmut Bank
Connecticut, National Association, and Shawmut Bank NH, are the principal
subsidiaries of Shawmut National Corporation, a super-regional bank holding
company formed on February 29, 1988, and based in southern New England. Shawmut
National Corporation serves consumers through its network of banking offices
with a full range of deposit and lending products, as well as investment
services. As part of its regular banking operations, Shawmut Bank may make
loans to public companies. Thus, it may be possible, from time to time, for the
Equity Funds to hold or acquire the securities of issuers which are also
lending clients of Shawmut Bank. The lending relationship will not be a factor
in the selection of securities. The principal executive offices of the
investment adviser are located at One Federal Street, Boston, Massachusetts
02211.
Brendan J. Henebry has been the portfolio manager of the Growth and Income
Equity Fund since its inception in December 1992. Mr. Henebry has been with
Shawmut Bank, the Growth and Income Equity Fund's Adviser, and its predecessor
since 1965, and has been a Vice President of the Adviser since 1978. During the
past five years, Mr. Henebry has served as Manager of the Growth and Income
Equity Management Group. He is an honors graduate of St. Anselm's College,
where he concentrated in economics.
Philip Tasho has been responsible for managing the Growth Equity Fund since
November 1994. Mr. Tasho joined Shawmut Bank as a portfolio manager in June
1994. Prior to this, he had been employed as Managing Director--Equities with
the investment advisory subsidiary of a bank. Mr. Tasho received his B.A.
degree at Grinnell College, his M.B.A. at George Washington University, and is
also a Chartered Financial Analyst (C.F.A.).
Peter C. Larson has been the portfolio manager of the Small Capitalization
Equity Fund since its inception in December 1992. Mr. Larson joined Shawmut
Bank in 1963 as an investment officer and has been a Vice President in charge
of Shawmut's Small Cap Equity Management product since inception in 1980. He
holds a B.S. degree in finance from the University of Connecticut.
Kenneth J. Garvey is the portfolio manager of the Quantitative Equity Fund. Mr.
Garvey is a Managing Director and co-founder of Marque Millennium Group
Limited, which serves as the sub-adviser to the Quantitative Equity Fund. Mr.
Garvey has served as a senior investment executive at several major investment
firms.
SUB-ADVISER
PURSUANT TO THE TERMS OF AN INVESTMENT SUB-ADVISORY AGREEMENT BETWEEN THE
ADVISER AND MARQUE MILLENNIUM GROUP LIMITED ("MARQUE MILLENNIUM" OR THE
"SUB-ADVISER"), MARQUE MILLENNIUM FURNISHES CERTAIN INVESTMENT ADVISORY
SERVICES TO THE ADVISER ON BEHALF OF THE QUANTITATIVE EQUITY FUND.
Marque Millennium assists the Adviser in identifying securities for potential
purchase and/or sale through its quantitative analysis of common stocks, as
described in the "Acceptable Investments" section for the Quantitative Equity
Fund. For the services provided and the expenses incurred by the Sub-Adviser
pursuant to the sub-advisory agreement, Marque Millennium is entitled to
receive an annual fee of one-half of the total advisory fee being charged (up
to .50 of 1.00% of the Quantitative Equity Fund's average daily net assets
being paid to the Sub-Adviser), payable by the Adviser. Marque Millennium may
elect to waive some or all of its fee. In no event shall the Quantitative
Equity Fund be responsible for any fees due to the Sub-Adviser for its services
to the Adviser.
Marque Millennium, which is located at 126 East 56th Street, New York, New York
10022, provides investment counsel to both individuals and institutions. As of
October 31, 1994, Marque Millennium furnished services, substantially similar
to the services it provides to the Adviser, to other discretionary and
nondiscretionary investment accounts with assets of approximately $575 million.
Marque Millennium has acted as Sub-adviser to the Quantitative Equity Fund
since its inception on June 21, 1994. The Sub-Adviser is a limited partnership
founded and controlled by Wilfred J. Meckel II and Kenneth J. Garvey, Managing
Directors.
DISTRIBUTION OF EQUITY FUNDS' SHARES
FEDERATED SECURITIES CORP. IS THE PRINCIPAL DISTRIBUTOR FOR INVESTMENT SHARES.
Federated Securities Corp., Federated Investors Tower, Pittsburgh, Pennsylvania
15222-3779, is a Pennsylvania corporation organized on November 14, 1969, and
is the principal distributor for a number of investment companies. Federated
Securities Corp. is a subsidiary of Federated Investors.
DISTRIBUTION PLAN. Under the distribution plan adopted in accordance with
Investment Company Act Rule 12b-1 (the "Plan"), each of the Equity Funds will
pay to the distributor an amount computed at an annual rate of up to .50 of 1%
of the average daily net asset value of the Investment Shares of each of the
Equity Funds, to finance any activity which is principally intended to result
in the sale of Investment Shares subject to the Plan.
The distributor may, from time to time and for such periods as it deems
appropriate, voluntarily reduce its compensation under the Plan.
The distributor may select financial institutions such as banks, fiduciaries,
custodians for public funds, investment advisers, and broker/dealers
("brokers") to provide distribution and/or administrative services as agents
for their clients or customers who own Investment Shares of the Equity Funds.
Administrative services may include, but are not limited to, the following
functions: providing office space, equipment, telephone facilities, and various
clerical, supervisory, computer, and other personnel as necessary or beneficial
to establish and maintain shareholder accounts and records; processing purchase
and redemption transactions and automatic investments of client account cash
balances; answering routine client inquiries; assisting clients in changing
dividend options, account designations, and addresses; and providing such other
services as may reasonably be requested.
The distributor will pay financial institutions a fee based upon the Investment
Shares subject to the Plan and owned by their clients or customers. The
schedules of such fees and the basis upon which such fees will be paid will be
determined, from time to time, by the distributor.
The Plan is a "compensation" type plan. As such, the Equity Funds make no
payments to the distributor except as described above. Therefore, the Equity
Funds do not pay for unreimbursed expenses of the distributor, including
amounts expended by the distributor in excess of amounts received by it from
the Equity Funds, interest, carrying, or other financing charges in connection
with excess amounts expended, or the distributor's overhead expenses. However,
the distributor may be able to recover such amounts or may earn a profit from
future payments made by the Equity Funds under the Plan.
OTHER PAYMENTS TO FINANCIAL INSTITUTIONS. The distributor may also pay
financial institutions a fee based on the average net asset value of shares of
their customers invested in an Equity Fund for providing administrative
services. This fee is in addition to the amounts paid under the distribution
plan for administrative services, and, if paid, will be reimbursed by the
Adviser and not by an Equity Fund.
The Adviser or its affiliates may also offer to pay a fee from their own assets
to financial institutions as financial assistance for providing substantial
marketing and sales support. The support may include sponsoring sales,
educational and training seminars for their employees, providing sales
literature, and engineering computer software programs that emphasize the
attributes of an Equity Fund. Such assistance will be predicated upon the
amount of shares the dealer sells or may sell, and/or upon the type and nature
of sales or operational support furnished by the financial institution. These
payments will be made by the Adviser and will not be made from the assets of an
Equity Fund.
The Glass-Steagall Act prohibits a depository institution (such as a commercial
bank or a savings and loan association) from being an underwriter or
distributor of most securities. In the event the Glass-Steagall Act is deemed
to prohibit depository institutions from acting in the administrative
capacities described above or should Congress relax current restrictions on
depository institutions, the Trustees will consider appropriate changes in the
services.
State securities laws governing the ability of depository institutions to act
as underwriters or distributors of securities may differ from interpretations
given to the Glass-Steagall Act and, therefore, banks and financial
institutions may be required to register as dealers pursuant to state law.
ADMINISTRATION OF THE EQUITY FUNDS
ADMINISTRATIVE SERVICES. Federated Administrative Services ("FAS"), Federated
Investors Tower, Pittsburgh, Pennsylvania 15222-3779, a subsidiary of Federated
Investors, provides the Equity Funds with certain administrative personnel and
services necessary to operate the Equity Funds, such as legal and accounting
services. FAS provides these at an annual rate as specified below:
<TABLE>
<CAPTION>
MAXIMUM AVERAGE AGGREGATED DAILY
ADMINISTRATIVE FEE NET ASSETS OF THE TRUST
<S> <C>
.150 of 1% First $250 million
.125 of 1% Next $250 million
.100 of 1% Next $250 million
.075 of 1% Over $750 million
</TABLE>
The administrative fee received by FAS during any fiscal year shall be at
least $50,000 for each of the Equity Funds. FAS may voluntarily choose to
waive a portion of its fee.
CUSTODIAN. Shawmut Bank, N.A., One Federal Street, Boston, Massachusetts
02211, is custodian for the securities and cash of the Equity Funds. Under the
Custodian Agreement, Shawmut Bank, N.A., holds the Equity Funds' portfolio
securities in safekeeping and keeps all necessary records and documents
relating to its duties.
TRANSFER AGENT, DIVIDEND DISBURSING AGENT, AND PORTFOLIO ACCOUNTING
SERVICES. Federated Services Company,
Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779, is transfer
agent and dividend disbursing agent for the Equity Funds. It also provides
certain accounting and recordkeeping services with respect to each of the
Equity Funds' portfolio investments.
LEGAL COUNSEL. Legal counsel is provided by Houston, Houston & Donnelly, 2510
Centre City Tower, Pittsburgh, Pennsylvania 15222, and Dickstein, Shapiro &
Morin, L.L.P., 2101 L Street, N.W., Washington, DC 20037.
INDEPENDENT ACCOUNTANTS. The independent accountants for the Equity Funds are
Price Waterhouse LLP, 160 Federal Street, Boston, Massachusetts 02110.
EXPENSES OF THE EQUITY FUNDS AND INVESTMENT SHARES
Holders of Investment Shares pay their allocable portion of the Equity Funds'
and the Trust's expenses. The Trust expenses for which holders of Investment
Shares pay their allocable portion include, but are not limited to: the cost
of organizing the Trust and continuing its existence; registering the Trust
with federal and state securities authorities; Trustees' fees; auditors' fees;
the cost of meetings of Trustees; legal fees of the Trust; association
membership dues; and such non-recurring and extraordinary items as may arise.
The respective Equity Fund expenses for which holders of Investment Shares pay
their allocable portion include, but are not limited to: registering the
Equity Funds and shares of the Equity Funds; investment advisory services;
taxes and commissions; custodian fees; insurance premiums; auditors' fees; and
such non-recurring and extraordinary items as may arise.
At present, no expenses, other than distribution expenses, are allocated
exclusively to the Investment Shares as a class. However, the Trustees reserve
the right to allocate certain other expenses to holders of Investment Shares
as they deem appropriate ("Class Expenses"). In any case, Class Expenses would
be limited to: distribution fees; transfer agent fees as identified by the
transfer agent as attributable to holders of Investment Shares; printing and
postage expenses related to preparing and distributing materials such as
shareholder reports, prospectuses and proxies to current shareholders;
registration fees paid to the Securities and Exchange Commission and
registration fees paid to state securities commissions;
expenses related to administrative personnel and services as required to
support holders of Investment Shares; legal fees relating solely to Investment
Shares; and Trustees' fees incurred as a result of issues relating solely to
Investment Shares.
NET ASSET VALUE
THE TERM "NET ASSET VALUE" REFERS TO THE VALUE OF ONE EQUITY FUND SHARE.
Each Equity Fund's net asset value per Investment Share fluctuates. The net
asset value for Investment Shares is determined by adding the interest of the
Investment Shares in the market value of all securities and other assets of an
Equity Fund, subtracting the interest of the Investment Shares in the
liabilities of an Equity Fund and those attributable to Investment Shares, and
dividing the remainder by the total number of Investment Shares outstanding.
The net asset value for Investment Shares of an Equity Fund may differ from
that of Trust Shares 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.
INVESTING IN SHARES
YOU CAN BUY INVESTMENT SHARES BY FEDERAL RESERVE WIRE, MAIL, OR TRANSFER, AS
EXPLAINED BELOW.
Shares of the Equity Funds are sold by the distributor on days on which the New
York Stock Exchange and Federal Reserve Wire System are open for business.
Shares of the Equity Funds may also be purchased in branches of Shawmut Bank,
N.A., Shawmut Bank Connecticut, National Association, Shawmut Bank NH, and
their affiliates (collectively, "Shawmut Bank"), from certain brokers which
have offices located in branches of Shawmut Bank under lease agreements with
Shawmut Bank. Offices of the brokers located in branches of Shawmut Bank are
open on days on which each of Shawmut Bank, the New York Stock Exchange, and
the Federal Reserve Wire System are open for business. Call 1-800-SHAWMUT for
the name and telephone number of the broker located in the Shawmut Bank branch
nearest you. Texas residents must purchase, exchange, and redeem Investment
Shares through Federated Securities Corp. at 1-800-356-2805. The Equity Funds
reserve the right to reject any purchase request.
THROUGH A BROKER. An investor may call a broker to receive information and to
place an order to purchase Investment Shares. Call 1-800-SHAWMUT to speak with
a broker, or for referral to a broker servicing your area. Orders placed
through a broker are considered received when payment is converted to federal
funds and the applicable Equity Fund is notified of the purchase order. The
completion of the purchase transaction will generally occur within one business
day after a broker receives a purchase order. Purchase orders must be received
by a broker before 4:00 p.m. (Eastern time) and must be transmitted by a broker
to the applicable Equity Fund before 5:00 p.m. (Eastern time) in order for
Investment Shares to be purchased at that day's public offering price.
Payment must be made by either check, wire transfer of federal funds, or
federal funds deposited into a deposit account established by the shareholder
at Shawmut Bank. Payment is normally made through a debit to the deposit
account no later than the business day following the conversion of a check into
federal funds. In addition, Investment Shares may be purchased through other
brokers or dealers who have sales agreements with the Equity Funds'
distributor.
DIRECTLY FROM THE EQUITY FUNDS. An investor may place an order to purchase
Investment Shares directly from the Equity Funds. To do so call 1-800-SHAWMUT
to request a new account form. Once received, complete and sign the form;
enclose a check made payable to Shawmut Growth Equity Funds, Shawmut Growth and
Income Equity Fund, Shawmut Quantitative Equity Fund, or Shawmut Small
Capitalization Equity Fund--Investment Shares (as appropriate); and mail both
to The Shawmut Funds, c/o Transfer Agency, 1001 Liberty Avenue, Pittsburgh,
Pennsylvania 15222-3779. The order is considered received after the check is
converted into federal funds and the transfer agent establishes a shareholder
account for the investor. This is generally the next business day after the
Fund receives the check.
MINIMUM INVESTMENT REQUIRED
THE MINIMUM INITIAL INVESTMENT IS $1,000, OR $500 IN THE CASE OF RETIREMENT
PLAN ACCOUNTS.
The minimum initial investment in Investment Shares by an investor is $1,000,
or $500 in the case of retirement plan accounts. Subsequent investments by
participants in the Systematic Investment Program, as described in this
prospectus, or by retirement plan accounts, must be in amounts of at least $50.
Subsequent investments by all other investors must be in amounts of at least
$100. The Equity Funds may waive the initial minimum investment for employees
of Shawmut Bank and its affiliates, from time to time.
WHAT SHARES COST
INVESTMENT SHARES ARE SOLD AT THEIR NET ASSET VALUE NEXT DETERMINED AFTER AN
ORDER IS RECEIVED, PLUS A SALES LOAD.
The net asset value is determined at the close of the New York Stock Exchange,
normally 4:00 p.m. (Eastern time), Monday through Friday, except on: (i) days
on which there are not sufficient changes in the value of an Equity 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) on the following holidays: New Year's
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, and Christmas Day.
Investment Shares of the Equity Funds are sold at their net asset value next
determined after an order is received, plus a sales load, as follows:
<TABLE>
<CAPTION>
SALES LOAD AS A PERCENTAGE SALES LOAD AS A PERCENTAGE
OF PUBLIC OFFERING PRICE OF NET AMOUNT INVESTED
<S> <C> <C>
Less than $50,000...................................... 4.00% 4.17%
$50,000 but less than $100,000......................... 3.75% 3.90%
$100,000 but less than $250,000........................ 3.50% 3.63%
$250,000 but less than $500,000........................ 2.50% 2.56%
$500,000 but less than $1 million...................... 2.00% 2.04%
$1 million but less than $3 million.................... 1.00% 1.01%
$3 million or more..................................... 0.50% 0.50%
</TABLE>
PURCHASES AT NET ASSET VALUE. Investment Shares of the Equity Funds may be
purchased at net asset value, without a sales load, by Trustees, Directors, and
employees (and their spouses and children under age 21) of The Shawmut Funds,
Shawmut Bank, the brokers, Marque Millenium Group Limited, or Federated
Securities Corp., or their affiliates, or any bank, or investment dealer who
has a sales agreement with Federated Securities Corp. with regard to the Equity
Funds.
SALES CHARGE REALLOWANCE. For sales of Investment Shares of the Equity Funds,
a broker will normally receive up to 85% of the applicable sales load . Any
portion of the sales load which is not paid to a broker will be retained by the
distributor. Other brokers or dealers who sell Investment Shares, if any, will
also normally receive up to 85% of the applicable sales load , with the unpaid
portion being retained by the distributor.
The sales load for Investment Shares sold other than through Shawmut Bank will
be retained by the distributor. The distributor may pay fees to banks out of
the sales load in exchange for sales and/or administrative services performed
on behalf of the bank's customers in connection with the initiation of customer
accounts and purchases of the Equity Funds' Investment Shares.
From time to time, the distributor will conduct sales programs or contests that
compensate brokers with cash or non-cash items, such as merchandise and
attendance at sales seminars in resort locations. The cost of such compensation
is borne by the distributor and is not an Equity Fund expense.
REDUCING THE SALES LOAD
The sales load can be reduced on the purchase of Investment 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 load paid. The Equity Funds will combine
purchases made on the same day by the investor, his spouse, and his
children under age 21 when it calculates the sales load paid by an
individual investor.
If an additional purchase of Investment Shares is made, each Equity Fund
will consider the previous purchases still invested in any of the Shawmut
Funds, the purchase price of which includes a sales load. For example, if a
shareholder already owns Investment Shares having a current net asset value
of $30,000, and he purchases $20,000 or more of an Equity Fund at the
current net asset value, the sales load on the additional purchase of an
Equity Fund, according to the schedule now in effect, would be 3.75%
instead of 4.00%.
To receive this sales load reduction, the broker or the distributor must be
notified by the shareholder in writing, at the time the purchase is made,
that Investment Shares are already owned or that purchases are being
combined. Each Equity Fund will reduce the sales load after it confirms the
purchases.
LETTER OF INTENT. If a shareholder intends to purchase at least $50,000 of
Investment Shares in the Equity Funds over the next 13 months, the sales
load may be reduced by signing a letter of intent to that effect. This
letter of intent includes a provision for a sales load adjustment depending
on the amount actually purchased within the 13-month period and a provision
for the custodian to hold up to 4.00% of the total amount intended to be
purchased in escrow (in Investment 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 the
escrowed Investment Shares may be redeemed in order to realize the
difference in the sales load.
This letter of intent will not obligate the shareholder to purchase
Investment Shares, but if the shareholder does, each purchase during the
period will be at the sales load 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; however, these previous purchases
will not receive the reduced sales load.
REINVESTMENT PRIVILEGE. If Investment Shares in any of the Equity Funds
have been redeemed, the shareholder has a one-time right, within 30 days,
to reinvest the redemption proceeds at the next-determined net asset value
without any sales load. The broker or the distributor must be notified by
the shareholder in writing of the reinvestment in order to eliminate a
sales load. If the shareholder redeems Investment Shares, there may be tax
consequences, and exercise of the reinvestment privilege may result in
additional tax considerations. Shareholders contemplating such transactions
should consult their own tax advisers.
CONCURRENT PURCHASES. For purposes of qualifying for a sales load
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 load. For example, if a shareholder concurrently invests
$30,000 in one of the funds in the Trust with a sales load and $20,000 in
any of the Equity Funds, the sales load would be reduced as described in
the section entitled "What Shares Cost."
To receive this sales load reduction, the broker or the distributor must be
notified by the shareholder in writing at the time the concurrent purchases
are made. The sales load will be reduced after the purchases are confirmed.
SYSTEMATIC INVESTMENT PROGRAM
Once an account in an Equity Fund has been opened, shareholders may add to
their investment on a regular basis in a minimum amount of $50. Under this
program, funds may be automatically withdrawn periodically from the
shareholder's checking account and invested in Investment Shares at the net
asset value next determined after an order is received by
the Equity Fund, plus the applicable sales load. A shareholder may apply
for participation in this program through the broker or the distributor.
SUBACCOUNTING SERVICES
Institutions are encouraged to open single master accounts. However,
certain institutions may wish to use the transfer agent's subaccounting
system to minimize their internal recordkeeping requirements. The transfer
agent charges a fee based on the level of subaccounting services rendered.
Certain institutions holding Investment Shares in a fiduciary, agency,
custodial, or similar capacity may charge or pass through subaccounting
fees as part of or in addition to normal trust or agency account fees. They
may also charge fees for other services provided which may be related to
the ownership of Investment Shares. This prospectus should, therefore, be
read together with any agreement between the customer and the institution
with regard to the services provided, the fees charged for those services,
and any restrictions and limitations imposed.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Equity Funds, Federated Services Company
maintains a share account for each shareholder of record. Share
certificates are not issued unless requested by contacting the broker in
writing.
Detailed confirmations of each purchase or redemption are sent to each
shareholder of record. Monthly statements are sent to report account
activity during the previous month, including dividends paid during the
period.
DIVIDENDS
Dividends are declared and paid quarterly to all shareholders invested in
each Equity Fund on the record date.
CAPITAL GAINS
Capital gains realized by an Equity Fund, if any, will be distributed to
that Equity Fund's shareholders at least once every 12 months.
EXCHANGE PRIVILEGE
EXCHANGING SHARES. Shareholders may exchange Investment Shares, with a minimum
net asset value of $1,000, except retirement plan accounts, which must have a
minimum net asset value of $500, for shares of the same designated class of
other funds advised by Shawmut Bank. Shares of funds with a sales load may be
exchanged at net asset value for shares of other funds with an equal sales
load, a lower sales load or no sales load. Shares of funds with no sales load,
or a lower sales load, acquired by direct purchase or reinvestment of dividends
on such shares may be exchanged for shares of funds with a sales load, or a
higher sales load, at net asset value, plus the applicable sales load or
additional incremental sales load, as the case may be, imposed by the fund
shares being purchased.
When an exchange is made from a Fund with a sales load to a Fund with no sales
load, the shares exchanged, and additional shares which have been purchased by
reinvesting dividends 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 load would be at net
asset value.
Exchanges are subject to the minimum initial purchase requirements of such Fund
being acquired. Prior to any exchange, the shareholder must receive a copy of
the current prospectus of the class 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, Investment Shares
submitted for exchange will be redeemed at the next-determined net asset value.
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 modified or
terminated at any time. Shareholders will be notified of the modification or
termination of the exchange privilege. A shareholder may obtain further
information on the exchange privilege by calling the broker.
EXCHANGE-BY-TELEPHONE. Instructions for exchanges between participating funds
which are part of the Trust may be given by calling a broker or by calling the
Equity Funds. Call 1-800-SHAWMUT to speak with a broker, or for referral to a
broker serving your area. To utilize the exchange-by-telephone service, a
shareholder must complete an authorization form permitting a Shawmut Fund to
honor telephone instructions. The authorization is included in the shareholder
account application. Investment Shares may be exchanged by telephone only
between fund accounts having identical registrations. Exchange instructions
given by telephone may be electronically recorded.
Any Investment 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.
Telephone exchange instructions must be received before 4:00 p.m. (Eastern
time) for Investment 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 a broker or the Equity
Funds during times of drastic economic or market changes. If a shareholder
cannot contact a broker or the Equity Funds by telephone, it is recommended
that an exchange request be made in writing and sent by overnight mail to The
Shawmut Funds, c/o Transfer Agency, 1001 Liberty Avenue, Pittsburgh,
Pennsylvania 15222-3779.
If reasonable procedures are not followed by the Equity Funds, they may be
liable for losses due to unauthorized or fraudulent telephone instructions.
REDEEMING SHARES
YOU CAN REDEEM INVESTMENT SHARES BY MAIL OR TELEPHONE. TO ENSURE YOUR SHARES
ARE REDEEMED EXPEDITIOUSLY, PLEASE FOLLOW THE PROCEDURES EXPLAINED BELOW.
The Equity Funds redeem Investment Shares at their net asset value next
determined after Federated Services Company receives the redemption request.
Redemptions will be made on days on which the Equity Funds compute their net
asset value. Requests for redemptions can be made by telephone or in writing by
contacting your broker or directly from the Equity Funds. Redemption requests
received prior to 4:00 p.m. (Eastern time) will be effected on the same
business day.
THROUGH A BROKER
Shareholders may redeem Investment Shares by calling their broker to request
the redemption. Investment Shares will be redeemed at the net asset value next
determined after Federated Services Company receives the redemption request.
The broker is responsible for promptly submitting redemption requests and for
maintaining proper written records of redemption instructions received from the
Equity Funds' shareholders. In order to effect a redemption on the same
business day as a request, the broker is responsible for the timely
transmission of the redemption request to the appropriate Equity Fund.
Before the broker may request redemption by telephone on behalf of a
shareholder, an authorization form permitting the Equity Funds to accept
redemption requests by telephone must first be completed. This authorization is
included in the shareholder account application. Redemption instructions given
by telephone may be electronically recorded. In the event of drastic economic
or market changes, a shareholder may experience difficulty in redeeming by
telephone. If such a case should occur, it is recommended that a redemption
request be made in writing and sent by overnight mail to The Shawmut Funds, c/o
Transfer Agency, 1001 Liberty Avenue, Pittsburgh, Pennsylvania 15222-3779.
If reasonable procedures are not followed by the Equity Funds, they may be
liable for losses due to unauthorized or fraudulent telephone instructions.
DIRECTLY FROM THE EQUITY FUNDS
BY MAIL. A shareholder may redeem Investment Shares by sending a written
request to The Shawmut Funds, c/o Transfer Agency, 1001 Liberty Avenue,
Pittsburgh, Pennsylvania 15222-3779. The written request should include the
shareholder's name, the Equity Funds' name and class of shares name, the
account number, and the share or dollar amount requested. If share certificates
have been issued, they must be properly endorsed and should be sent by
registered or certified mail with the written request. Shareholders should call
the Equity Funds for assistance in redeeming by mail.
SIGNATURES. Shareholders requesting a redemption of $50,000 or more, a
redemption of any amount to be sent to an address other than that on record
with the Equity Funds, 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;
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 Equity Funds do not accept signatures guaranteed by a notary public.
The Equity Funds and their transfer agent have adopted standards for
accepting signature guarantees from the above institutions. The Equity
Funds may elect in the future to limit eligible signature guarantors to
institutions that are members of a signature guarantee program. The Equity
Funds and their transfer agent reserve the right to amend these standards
at any time without notice.
RECEIVING PAYMENT
Redemption payments will generally be made directly to the shareholder's
account with Shawmut Bank. This deposit is normally made within one
business day, but in no event more than seven days, after the redemption
request, provided the transfer agent has received payment from the
shareholder. The net asset value of Investment Shares redeemed is
determined, and dividends, if any, are paid up to and including, the day
prior to the day that a redemption request is processed. Pursuant to
instructions from a broker, redemption proceeds may be transferred from a
shareholder account by check or by wire.
BY CHECK. 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
redemption request provided the transfer agent has received payment for
Investment Shares from the shareholder.
BY WIRE. Requests to wire proceeds from redemptions received before 4:00
p.m. (Eastern time) will be honored the following business day after a
broker receives proper instructions. Applicable charges are imposed on a
shareholder's account maintained with Shawmut Bank.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Equity
Funds may redeem shares in any account and pay the proceeds to the
shareholder if the account balance falls below a required minimum of
$1,000, or $500 in the case of retirement plan accounts. This requirement
does not apply, however, if the balance falls below $1,000 or $500,
respectively, because of changes in an Equity Fund's net asset value.
Before shares are redeemed to close an account, the shareholder is notified
in writing and allowed 30 days to purchase additional shares to meet the
minimum requirement.
SYSTEMATIC WITHDRAWAL PROGRAM
Shareholders who desire to receive payments of a predetermined amount may
take advantage of the Systematic Withdrawal Program. Under this program,
Investment Shares are redeemed to provide for periodic withdrawal payments
in an
amount directed by the shareholder. Depending on the amount of the
withdrawal payments, the amount of dividends paid and capital gains
distributions with respect to Investment Shares, and the fluctuation of the
net asset value of Investment Shares redeemed under this program,
redemptions may reduce, and eventually deplete, the shareholder's
investment in the Equity Funds. For this reason, payments under this
program should not be considered as yield or income on the shareholder's
investment in the Equity Funds' Investment Shares. To be eligible to
participate in this program, a shareholder must have an account value of at
least $10,000. A shareholder may apply for participation in this program
through a broker. Because Investment Shares are sold with a sales load, it
is not advisable for shareholders to be purchasing Investment Shares of the
Equity Funds while participating in this program.
REDEMPTION IN KIND
The Equity Funds are obligated to redeem Investment Shares solely in cash
up to $250,000 or 1% of the net asset value of each Equity Fund, whichever
is less, for any one shareholder within a 90-day period.
Any redemption beyond this amount will also be in cash unless the Trustees
determine that further cash payments will have a material adverse effect on
remaining shareholders. In such a case, the Equity Funds will pay all or a
portion of the remainder of the redemption in portfolio instruments, valued
in the same way as an Equity Fund determines net asset value. The portfolio
instruments will be selected in a manner that the Trustees deem fair and
equitable.
Redemption in kind is not as liquid as a cash redemption. If redemption is
made in kind, shareholders receiving their securities and selling them
before their maturity could receive less than the redemption value of their
securities and could incur certain transaction costs.
SHAREHOLDER INFORMATION
VOTING RIGHTS
EACH INVESTMENT SHARE OF AN EQUITY FUND GIVES THE SHAREHOLDER ONE VOTE IN
TRUSTEE ELECTIONS AND OTHER MATTERS SUBMITTED TO SHAREHOLDERS OF THE TRUST FOR
VOTE.
All shares of each portfolio in the Trust have equal voting rights except that,
in matters affecting only a particular Fund or class, only shareholders of that
Fund or class are entitled to vote. As a Massachusetts business trust, the
Trust is not required to hold annual shareholder meetings. Shareholder approval
will be sought only for certain changes in the Trust or an Equity Fund's
operation and for the election of Trustees under certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a special
meeting. A special meeting of the shareholders shall be called by the Trustees
upon the written request of shareholders owning at least 10% of the outstanding
shares of the Trust.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for acts or obligations of the Trust on behalf
of an Equity Fund. To protect shareholders of an Equity Fund, the Trust has
filed legal documents with Massachusetts that expressly disclaim the liability
of shareholders of an Equity Fund for 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 on
behalf of an Equity Fund.
In the unlikely event a shareholder is held personally liable for the Trust's
obligations on behalf of an Equity Fund, the Trust is required to use the
property of that Equity Fund to protect or compensate the shareholder. On
request, the Trust will defend any claim made and pay any judgment against a
shareholder of the Equity Funds for any act or obligation of the Trust on
behalf of the Equity Funds. Therefore, financial loss resulting from liability
as a shareholder of the Equity Funds will occur only if the Trust cannot meet
its obligations to indemnify shareholders and pay judgments against them from
the assets of the Equity Funds.
EFFECT OF 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 investment company
continuously engaged in the issuance of its shares, and prohibit banks
generally from issuing, underwriting, selling, 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.
Shawmut Bank is subject to such banking laws and regulations.
Shawmut Bank believes, based upon the advice of its counsel, that it may
perform the services for the Equity Funds contemplated by its advisory
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 or future statutes and regulations, could
prevent Shawmut Bank from continuing to perform all or a part of the above
services for its customers and/or the Equity Funds. If it were prohibited from
engaging in these customer-related activities, the Trustees would consider
alternative advisers and means of continuing available investment services. In
such event, changes in the operation of the Equity Funds may occur, including
possible termination of any automatic or other Equity Fund share investment and
redemption services then being provided by Shawmut Bank. It is not expected
that existing shareholders would suffer any adverse financial consequences (if
another adviser with equivalent abilities to Shawmut Bank is found) as a result
of any of these occurrences.
State securities laws governing the ability of depository institutions to act
as underwriters or distributors of securities may differ from interpretations
given to the Glass-Steagall Act and, therefore, banks and financial
institutions may be required to register as dealers pursuant to state law.
TAX INFORMATION
FEDERAL INCOME TAX
The Equity Funds will pay no federal income tax because each Equity Fund
expects to meet requirements of the Internal Revenue Code, as amended,
applicable to regulated investment companies and to receive the special tax
treatment afforded to such companies.
Each Equity Fund will be treated as a single, separate entity for federal
income tax purposes so that income (including capital gains) and losses
realized by The Shawmut Funds' other portfolios will not be combined for tax
purposes with those realized by each Equity Fund.
Unless otherwise exempt, shareholders are required to pay federal income tax on
any dividends and other distributions received. This applies whether dividends
and distributions are received in cash or as additional Investment Shares.
Shareholders are urged to consult their own tax advisers regarding the status
of their accounts under state and local tax laws.
OTHER CLASSES OF SHARES
The Equity Funds offer a separate class of shares known as Trust Shares. Trust
Shares of each of the Equity Funds are sold primarily to accounts for which
Shawmut Bank, N.A., or its affiliates, act in a fiduciary or agency capacity,
and, with respect to the Quantitative Equity Fund, to customers of Marque
Millenium Group Limited. Trust Shares are sold at net asset value, without a
sales load, and without a Rule 12b-1 Plan. Investments in Trust Shares are
subject to a minimum initial investment of $1,000.
The amount of dividends payable to Trust Shares will exceed that of Investment
Shares by the difference between class expenses and distribution expenses borne
by shares of each respective class.
The stated advisory fee is the same for both classes of shares.
PERFORMANCE INFORMATION
FROM TIME TO TIME THE EQUITY FUNDS ADVERTISE THEIR TOTAL RETURN AND YIELD FOR
INVESTMENT SHARES.
Total return represents the change, over a specified period of time, in the
value of an investment in Investment Shares after reinvesting all income and
capital gains distributions. It is calculated by dividing that change by the
initial investment and is expressed as a percentage.
The yields of Investment Shares of the Equity Funds are calculated by dividing
the net investment income per Investment Share (as defined by the Securities
and Exchange Commission) earned by the Equity Funds over a thirty-day period by
the maximum offering price per Investment Share on the last day of the period.
This number is then annualized using semi-annual compounding. The yield does
not necessarily reflect income actually earned by Investment Shares and,
therefore, may not correlate to the dividends or other distributions paid to
shareholders.
Total return and yield will be calculated separately for Trust Shares and
Investment Shares. Because Investment Shares are subject to a sales load and a
12b-1 fee, the total return and yield for Trust Shares, for the same period,
will exceed that of Investment Shares.
The performance information for Investment Shares reflects the effect of the
maximum sales load which, if excluded, would increase the total return and
yield.
From time to time, the Equity Funds may advertise their performance using
certain financial publications and/or compare their performance to certain
indices.
Further information about the performance of the Equity Funds is contained in
the Trust's Combined Annual Report dated October 31, 1994, which can be
obtained free of charge.
INVESTMENT ADVISER
Shawmut Bank, N.A.
One Federal Street
Boston, MA 02211
ADMINISTRATOR
Federated Administrative Services
Federated Investors Tower
Pittsburgh, PA 15222-3779
CUSTODIAN
Shawmut Bank, N.A.
One Federal Street
Boston, MA 02211
TRANSFER AGENT
Federated Services Company
Federated Investors Tower
Pittsburgh, PA 15222-3779
DISTRIBUTOR
Federated Securities Corp.
Federated Investors Tower
Pittsburgh, PA 15222-3779
LEGAL COUNSEL
Dickstein, Shapiro & Morin, L.L.P.
2101 L Street, N.W.
Washington, D.C. 20037
Houston, Houston & Donnelly
2510 Centre City Tower
Pittsburgh, PA 15222
SHAWMUT
MONEY MARKET FUNDS
PRIME MONEY MARKET
CONNECTICUT MUNICIPAL MONEY MARKET
MASSACHUSETTS MUNICIPAL MONEY MARKET
SHAWMUT INCOME FUNDS
LIMITED TERM INCOME
INTERMEDIATE GOVERNMENT INCOME
FIXED INCOME
CONNECTICUT INTERMEDIATE MUNICIPAL INCOME
MASSACHUSETTS INTERMEDIATE MUNICIPAL INCOME
CALL 1-800-SHAWMUT FOR MORE INFORMATION
ON THE SHAWMUT FAMILY OF FUNDS
820482206
820482305
820482701
820482768
3120919AR (12/94)
SHAWMUT
EQUITY FUNDS
PROSPECTUS
TRUST SHARES
GROWTH AND INCOME EQUITY
GROWTH EQUITY
SMALL CAPITALIZATION EQUITY
QUANTITATIVE EQUITY
December 31, 1994
SHAWMUT GROWTH AND INCOME EQUITY FUND
SHAWMUT GROWTH EQUITY FUND
SHAWMUT SMALL CAPITALIZATION EQUITY FUND
The Shawmut Equity Funds SHAWMUT QUANTITATIVE EQUITY FUND
Trust Shares--Combined Prospectus
The shares offered by this prospectus represent interests in Trust Shares of
the equity portfolios (collectively, the "Equity Funds" or individually, as
appropriate in context, the "Fund") of The Shawmut Funds (the "Trust"), an
open-end management investment company (a mutual fund). In addition to the
Equity Funds, the Trust consists of the following separate investment
portfolios, each having distinct investment objectives and policies:
<TABLE>
<CAPTION>
<S> <C>
INCOME FUNDS MONEY MARKET FUNDS
Shawmut Limited Term
Income Fund Shawmut Prime Money Market Fund
Shawmut Intermediate
Government Income Fund Shawmut Connecticut Municipal Money Market Fund
Shawmut Fixed
Income Fund Shawmut Massachusetts Municipal Money Market Fund
Shawmut Connecticut Intermediate Municipal Income
Fund
Shawmut Massachusetts Intermediate Municipal
Income Fund
</TABLE>
This combined prospectus contains the information you should read and know
before you invest in the Equity Funds. Keep this prospectus for future
reference. The Equity Funds have also filed a Combined Statement of Additional
Information for Trust Shares and Investment Shares dated December 31, 1994,
with the Securities and Exchange Commission. The information contained in the
Combined Statement of Additional Information is incorporated by reference into
this prospectus. You may request a copy of the Combined Statement of Additional
Information free of charge, obtain other information, or make inquiries about
the Equity Funds by writing or calling the Trust.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF
SHAWMUT BANK, ARE NOT ENDORSED OR GUARANTEED BY SHAWMUT BANK, AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD
OR ANY OTHER GOVERNMENT AGENCY. INVESTMENTS IN THESE SHARES INVOLVES INVESTMENT
RISKS, INCLUDING FLUCTUATIONS IN VALUE AND EARNINGS AND THE POSSIBLE LOSS OF
PRINCIPAL INVESTED.
Prospectus dated December 31, 1994
Table of Contents
- --------------------------------------------------------------------------------
SYNOPSIS..................................................................... 2
- --------------------------------------------------------------------------------
EXPENSE SUMMARY.............................................................. 3
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS......................................................... 4
- --------------------------------------------------------------------------------
GENERAL INFORMATION.......................................................... 6
- --------------------------------------------------------------------------------
THE SHAWMUT PORTFOLIOS....................................................... 6
- --------------------------------------------------------------------------------
OBJECTIVES AND POLICIES...................................................... 6
- --------------------------------------------------------------------------------
INVESTMENTS, STRATEGIES, AND RISKS........................................... 8
- --------------------------------------------------------------------------------
ADMINISTRATION............................................................... 12
- --------------------------------------------------------------------------------
NET ASSET VALUE.............................................................. 16
- --------------------------------------------------------------------------------
INVESTING IN SHARES.......................................................... 16
- --------------------------------------------------------------------------------
EXCHANGE PRIVILEGE........................................................... 19
- --------------------------------------------------------------------------------
REDEEMING SHARES............................................................. 20
- --------------------------------------------------------------------------------
SHAREHOLDER INFORMATION...................................................... 22
- --------------------------------------------------------------------------------
EFFECT OF BANKING LAWS....................................................... 23
- --------------------------------------------------------------------------------
TAX INFORMATION.............................................................. 23
- --------------------------------------------------------------------------------
OTHER CLASSES OF SHARES...................................................... 24
- --------------------------------------------------------------------------------
PERFORMANCE INFORMATION...................................................... 24
- --------------------------------------------------------------------------------
Synopsis
INVESTMENT OBJECTIVE
The Shawmut Funds offer you a convenient, affordable way to participate in
separate, professionally managed portfolios of securities. This prospectus
relates only to the Equity Funds of the Trust.
EQUITY FUNDS
SHAWMUT GROWTH AND INCOME EQUITY FUND
("Growth and Income Equity Fund") seeks a relatively high total return through
long-term capital appreciation and current income looking to achieve a current
dividend yield that exceeds the composite yield of securities included in the
Standard & Poor's 500 Composite Stock Index ("Standard & Poor's 500 Index").
While there is no assurance that the Growth and Income Equity Fund will achieve
its objectives, it attempts to do so by investing in a professionally managed,
diversified portfolio consisting primarily of common stocks that are selected
by the investment adviser based upon traditional research techniques.
SHAWMUT GROWTH EQUITY FUND
("Growth Equity Fund") seeks long-term capital appreciation by investing in a
diversified portfolio of growth-oriented equity securities. The Growth Equity
Fund defines growth-oriented equity securities as securities of companies that
are projected by the investment adviser, based upon traditional research
techniques, to show earnings growth superior to the Standard & Poor's 500
Index.
SHAWMUT SMALL CAPITALIZATION EQUITY FUND
("Small Capitalization Equity Fund") seeks long-term capital appreciation by
investing primarily in a portfolio of equity securities comprising the small
capitalization sector of the United States equity market (companies which have
a market value capitalization up to $1 billion).
SHAWMUT QUANTITATIVE EQUITY FUND
("Quantitative Equity Fund") seeks growth of capital by investing in a
diversified portfolio consisting of publicly-traded common stocks listed on
North American stock exchanges or traded in the over-the-counter market. The
selection of investment securities is made by use of a quantitative computer
valuation model, as described in this prospectus.
BUYING SHARES
A minimum initial investment of $1,000 is required. Subsequent investments must
be in amounts of at least $100, as described in this prospectus in the section
entitled "Minimum Investment Required." Trust Shares are currently sold at net
asset value and are redeemed at net asset value without a sales load.
FUND MANAGEMENT
The Equity Funds' investment adviser is Shawmut Bank, N.A., which makes
investment decisions for the Equity Funds. The sub-adviser to the Quantitative
Equity Fund is Marque Millennium Group Limited.
SHAREHOLDER SERVICES
When you become a shareholder, you can easily obtain information about your
account by calling your Shawmut Bank trust officer.
THE SHAWMUT EQUITY FUNDS
Expense Summary
Trust Shares
<TABLE>
<S> <C> <C> <C> <C>
PORTFOLIOS
<CAPTION>
GROWTH AND SMALL
INCOME GROWTH CAPITALIZATION QUANTITATIVE
EQUITY EQUITY EQUITY EQUITY
FUND FUND FUND FUND
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) None None None None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price) None None None None
Contingent Deferred Sales Charge (as a percentage
of original purchase price or redemption
proceeds, as applicable) None None None None
Redemption Fee (as a percentage of amount
redeemed, if applicable) None None None None
Exchange Fee None None None None
ANNUAL TRUST SHARES OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waivers)(1) 0.80% 0.50% 0.75% 0.00%
12b-1 Fees None None None None
Total Other Expenses(2) 0.24% 0.68% 0.31% 1.50%
Total Trust Shares Operating Expenses (after
waivers and reimbursements)(3) 1.04% 1.18% 1.06% 1.50%
</TABLE>
(1) The management fee has been reduced to reflect the voluntary waiver by the
investment adviser. The adviser can terminate this voluntary waiver at any
time at its sole discretion. The maximum management fee is 1.00%.
(2) Other expenses have been reduced to reflect the voluntary waiver by the
custodian for all funds; reimbursement by the adviser for the Growth Equity
Fund; and the voluntary waiver by the administrator and reimbursement by the
adviser for the Quantitative Equity Fund.
(3) Absent the voluntary waivers and reimbursements explained in the above
footnotes, the Trust Shares Operating Expenses are 1.24% for the Growth and
Income Equity Fund; 2.11% for the Growth Equity Fund; 1.34% for the Small
Capitalization Equity Fund; and 8.62% for the Quantitative Equity Fund.
The purpose of this table is to assist an investor in understanding the various
costs and expenses that a shareholder of Trust Shares will bear, either directly
or indirectly. For more complete descriptions of the various costs and expenses,
see "Administration" and "Investing in Shares." Wire-transferred redemptions of
less than $5,000 may be subject to additional fees.
EXAMPLE
You would pay the following expenses on a $1,000 investment assuming (1) 5%
annual return and (2) redemption at the end of each time period. As noted in the
table above, the Equity Funds charge no contingent deferred sales charge.
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Growth and Income Equity Fund............................................. $11 $33 $57 $127
Growth Equity Fund........................................................ $12 $37 $65 $143
Small Capitalization Equity Fund.......................................... $11 $34 $58 $129
Quantitative Equity Fund.................................................. $15 $47 $82 $179
</TABLE>
THE ABOVE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
The information set forth in the foregoing table and example relates only to
Trust Shares of the Equity Funds. The Equity Funds also offer another class of
shares called Investment Shares. Trust Shares and Investment Shares are subject
to certain of the same expenses; however, Investment Shares are subject to a
12b-1 fee of up to .50 of 1% of average net assets. See "Other Classes of
Shares."
SHAWMUT EQUITY FUNDS
Financial Highlights
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
The following table has been audited by Price Waterhouse LLP, the Equity Funds'
independent accountants whose report thereon dated December 16, 1994, is
included in the Annual Report of The Shawmut Funds for the fiscal year ended
October 31, 1994, which is incorporated by reference into the Statement of
Additional Information. This table should be read in conjunction with the
Equity Funds' financial statements and notes thereof, which may be obtained
from the Equity Funds.
<TABLE>
<CAPTION>
DISTRIBUTIONS
NET REALIZED DIVIDENDS TO
AND TO SHAREHOLDERS
NET ASSET UNREALIZED TOTAL SHAREHOLDERS FROM NET
YEAR ENDED VALUE, NET GAIN/(LOSS) FROM FROM NET REALIZED GAIN
OCTOBER BEGINNING INVESTMENT ON INVESTMENT INVESTMENT ON INVESTMENT
31, OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME TRANSACTIONS
<S> <C> <C> <C> <C> <C> <C>
<CAPTION>
INVESTMENT SHARES
GROWTH AND INCOME EQUITY FUND
<S> <C> <C> <C> <C> <C> <C>
1993* $10.23 0.15 0.48 0.63 (0.17) --
1994 $10.69 0.22 0.72 0.94 (0.20) (0.28)
<CAPTION>
GROWTH EQUITY FUND
<S> <C> <C> <C> <C> <C> <C>
1993* $10.01 0.004 0.480 0.484 (0.004) --
1994 $10.49 0.010 0.390 0.400 (0.002) (0.196)
<CAPTION>
SMALL CAPITALIZATION EQUITY FUND
<S> <C> <C> <C> <C> <C> <C>
1993* $10.52 (0.008) 0.698 0.690 0.000 --
1994 $11.21 (0.01) 0.18 0.17 0.00 (0.32)
<CAPTION>
QUANTITATIVE EQUITY FUND
<S> <C> <C> <C> <C> <C> <C>
1994** $10.03 0.07 0.03 0.10 (0.07) --
<CAPTION>
TRUST SHARES
GROWTH AND INCOME EQUITY FUND
<S> <C> <C> <C> <C> <C> <C>
1993*** $10.00 0.18 0.69 0.87 (0.18) --
1994 $10.69 0.25 0.72 0.97 (0.23) (0.28)
<CAPTION>
GROWTH EQUITY FUND
<S> <C> <C> <C> <C> <C> <C>
1993*** $10.00 0.023 0.487 0.510 (0.019) --
1994 $10.49 0.037 0.390 0.427 (0.032) (0.196)
<CAPTION>
SMALL CAPITALIZATION EQUITY FUND
<S> <C> <C> <C> <C> <C> <C>
1993*** $10.00 0.002 1.210 1.212 (0.002) --
1994 $11.21 0.02 0.17 0.19 (0.01) (0.32)
<CAPTION>
QUANTITATIVE EQUITY FUND
<S> <C> <C> <C> <C> <C> <C>
1994** $10.03 0.07 0.03 0.10 (0.07) --
</TABLE>
* For the period from February 12, 1993 (date of initial public offering) to
October 31, 1993.
** For the period from August 4, 1994 (date of initial public investment) to
October 31, 1994.
*** For the period from December 14, 1992 (date of initial public investment)
to October 31, 1993.
+ Based on net asset value which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
Further information about the Equity Funds' performance is contained in the
Trust's combined annual report dated October 31, 1994, which can be obtained
free of charge.
<TABLE>
<CAPTION>
NET ASSET NET NET ASSETS, PORTFOLIO
TOTAL VALUE, END TOTAL INVESTMENT EXPENSE WAIVER/ END OF PERIOD TURNOVER
DISTRIBUTIONS OF PERIOD RETURN+ EXPENSES INCOME REIMBURSEMENT(B) (000 OMITTED) RATE
<S> <C> <C> <C> <C> <C> <C> <C>
(0.17) $ 10.69 6.20% 1.25%(a) 1.77%(a) 0.53%(a) $ 16,280 38%
(0.48) $ 11.15 9.12% 1.29% 2.06% 0.45% $ 22,244 73%
(0.004) $ 10.49 4.84% 1.37%(a) (0.10%)(a) 0.72%(a) $ 4,631 71%
(0.198) $ 10.69 3.86% 1.43% 0.09% 1.18% $ 5,846 73%
0.000 $ 11.21 6.56% 1.33%(a) (0.19%)(a) 0.54%(a) $ 15,014 29%
(0.32) $ 11.06 1.64% 1.31% (0.10%) 0.53% $ 19,764 29%
(0.07) $ 10.06 0.94% 1.75%(a) 2.50%(a) 7.37%(a) $ 375 0%
(0.18) $ 10.69 8.80% 0.98%(a) 2.11%(a) 0.27%(a) $ 147,090 38%
(0.51) $ 11.15 9.45% 1.04% 2.31% 0.20% $ 156,827 73%
(0.019) $ 10.49 5.09% 1.06%(a) 0.26%(a) 0.47%(a) $ 20,787 71%
(0.228) $ 10.69 4.16% 1.18% 0.34% 0.93% $ 16,970 73%
(0.002) $ 11.21 12.12% 1.01%(a) 0.02%(a) 0.28%(a) $ 100,382 29%
(0.33) $ 11.07 1.86% 1.06% 0.15% 0.28% $ 101,905 29%
(0.07) $ 10.06 0.94% 1.50%(a) 2.75%(a) 7.12%(a) $ 3,161 0%
</TABLE>
GENERAL INFORMATION
The Trust was established as a Massachusetts business trust under a
Declaration of Trust dated July 16, 1992. The Declaration of Trust permits the
Trust to offer separate series of shares representing interests in separate
portfolios of securities. The shares in any one portfolio may be offered in
separate classes. As of the date of this prospectus, the Board of Trustees
(the "Trustees") has established two classes of shares of each of the Equity
Funds, known as Trust Shares and Investment Shares. This prospectus relates
only to Trust Shares of the Equity Funds. Trust Shares of each of the Equity
Funds are sold primarily to accounts for which Shawmut Bank, N.A., or its
affiliates, act in a fiduciary or agency capacity and, with respect to the
Quantitative Equity Fund, to customers of Marque Millenium Group Limited.
A minimum initial investment of $1,000 is required. Subsequent investments
must be in amounts of at least $100, as described in this prospectus in the
section entitled "Minimum Investment Required." Trust Shares are currently
sold at net asset value and are redeemed at net asset value without a sales
load imposed by the Equity Funds.
THE SHAWMUT PORTFOLIOS
The shareholders of the Equity Funds are shareholders of The Shawmut Funds,
which currently consist of Shawmut Connecticut Intermediate Municipal Income
Fund, Shawmut Connecticut Municipal Money Market Fund, Shawmut Fixed Income
Fund, Shawmut Growth and Income Equity Fund, Shawmut Growth Equity Fund,
Shawmut Intermediate Government Income Fund, Shawmut Limited Term Income Fund,
Shawmut Massachusetts Intermediate Municipal Income Fund, Shawmut
Massachusetts Municipal Money Market Fund, Shawmut Prime Money Market Fund,
Shawmut Quantitative Equity Fund, and Shawmut Small Capitalization Equity
Fund. Shareholders in the Equity Funds have easy access to the other
portfolios of The Shawmut Funds through an exchange program. The Shawmut Funds
are advised by Shawmut Bank, N.A., and distributed by Federated Securities
Corp. The sub-adviser to the Quantitative Equity Fund is Marque Millennium
Group Limited.
OBJECTIVES AND POLICIES
GROWTH AND INCOME EQUITY FUND
INVESTMENT OBJECTIVE
The investment objective of the Growth and Income Equity Fund is to provide a
relatively high total return through long-term capital appreciation and current
income. The investment objective cannot be changed without approval of
shareholders. The Growth and Income Equity Fund generally looks to achieve a
yield that exceeds the composite dividend yield of securities included in the
Standard & Poor's 500 Index. While there is no assurance that the Growth and
Income Equity Fund will achieve its investment objective, it endeavors to do so
by following the investment policies described in this prospectus.
INVESTMENT POLICIES
The investment policies may be changed by the Trustees without shareholder
approval. Shareholders will be notified before any material change in these
policies becomes effective.
ACCEPTABLE INVESTMENTS
UNDER NORMAL MARKET CIRCUMSTANCES, THE GROWTH AND INCOME EQUITY FUND WILL
INVEST AT LEAST 65% OF ITS ASSETS IN GROWTH AND INCOME EQUITY SECURITIES.
In addition, the Growth and Income Equity Fund may invest as described in this
prospectus.
GROWTH EQUITY FUND
INVESTMENT OBJECTIVE
The investment objective of the Growth Equity Fund is to provide long-term
capital appreciation. The investment objective cannot be changed without
approval of shareholders. While there is no assurance that the Fund will
achieve its investment objective, it endeavors to do so by following the
investment policies described in this prospectus.
INVESTMENT POLICIES
The investment policies may be changed by the Trustees without shareholder
approval. Shareholders will be notified before any material change in these
policies becomes effective.
ACCEPTABLE INVESTMENTS
UNDER NORMAL MARKET CIRCUMSTANCES, THE GROWTH EQUITY FUND WILL INVEST AT LEAST
65% OF ITS ASSETS IN GROWTH-ORIENTED EQUITY SECURITIES.
The Growth Equity Fund defines growth-oriented equity securities as securities
that are projected by the Growth Equity Fund's investment adviser to show
earnings growth superior to the Standard & Poor's 500 Composite Stock Index.
The Growth Equity Fund invests primarily in equity securities of companies
selected by the investment adviser on the basis of traditional research
techniques, including assessment of earnings and dividend growth prospects and
of the risk and volatility of each company's business. The fundamental changes
which the investment adviser will seek to identify in companies include, for
example, restructuring of basic businesses or reallocations of assets which
present opportunities for significant share price appreciation. At times, the
Growth Equity Fund will invest in securities of companies which are deemed by
the investment adviser to be candidates for acquisition by other entities as
indicated by changes in ownership, changes in standard price-to-value ratios,
and an examination of other standard analytical indices.
In addition, the Growth Equity Fund may invest as described in this prospectus.
SMALL CAPITALIZATION EQUITY FUND
INVESTMENT OBJECTIVE
The investment objective of the Small Capitalization Equity Fund is to provide
long-term capital appreciation. The investment objective of the Small
Capitalization Equity Fund cannot be changed without the approval of
shareholders. While there is no assurance that the Small Capitalization Equity
Fund will achieve its investment objective, it endeavors to do so by following
the investment policies described in this prospectus.
INVESTMENT POLICIES
The investment policies may be changed by the Trustees without shareholder
approval. Shareholders will be notified before any material change in these
policies becomes effective.
ACCEPTABLE INVESTMENTS
UNDER NORMAL CIRCUMSTANCES, THE SMALL CAPITALIZATION EQUITY FUND WILL INVEST AT
LEAST 65% OF ITS TOTAL ASSETS IN EQUITY SECURITIES OF COMPANIES THAT HAVE A
MARKET VALUE CAPITALIZATION OF UP TO $1 BILLION.
In addition, the Small Capitalization Equity Fund may invest as described in
this prospectus.
QUANTITATIVE EQUITY FUND
INVESTMENT OBJECTIVE
The investment objective of the Quantitative Equity Fund is to provide growth
of capital. The investment objective of the Quantitative Equity Fund cannot be
changed without the approval of shareholders. While there is no assurance that
the Quantitative Equity Fund will achieve its investment objective, it
endeavors to do so by following the investment policies described in this
prospectus.
INVESTMENT POLICIES
The investment policies described below may be changed by the Trustees without
shareholder approval. Shareholders will be notified before any material change
in these policies becomes effective.
ACCEPTABLE INVESTMENTS
UNDER NORMAL MARKET CIRCUMSTANCES, THE QUANTITATIVE EQUITY FUND WILL INVEST AT
LEAST 65% OF ITS ASSETS IN EQUITY SECURITIES.
The Quantitative Equity Fund will invest its assets in a diversified portfolio
of equity securities issued by companies with a market value capitalization in
excess of $250 million and a minimum daily average trading volume as
established by the Sub-Adviser, from time to time. To select common stocks for
the Quantitative Equity Fund, the Sub-Adviser uses a quantitative computer
valuation model to evaluate the relative attractiveness of common stocks listed
on North American
stock exchanges or traded in the over-the-counter market. Stocks are selected
based upon their price momentum, as measured by combining four quantitative
disciplines: price trend analysis, velocity of price movements (the speed at
which securities prices may change), analysis of price compared to moving
averages, and current price and volume activity (for valuation judgments).
Then, the selected stocks are reviewed based upon fundamental characteristics,
such as present and historical price-to-earnings and market price-to-book
ratios; changes in analysts' earnings forecasts; and positive or negative
earnings realized. Since the primary analysis is of price momentum rather than
these fundamentals, the Quantitative Equity Fund will include stocks with not
only capital growth potential, but also with prospects for growth in earnings
and dividends (value characteristics).
The Quantitative Equity Fund is comprised of stocks selected in accordance with
strict investment criteria. Stocks that are candidates for purchase may have
undergone persistent price deterioration and are deemed likely to reverse and
move up in price (a contrarian strategy). The Quantitative Equity Fund will
also purchase stocks that are in firmly established patterns of price
appreciation. Sales of portfolio securities also adhere to a strict discipline
based upon system analytics or price movement, similar to the selection
process.
In addition, the Quantitative Equity Fund may invest as described in this
prospectus.
INVESTMENTS, STRATEGIES, AND RISKS
COMMON STOCK. As described above, the Equity Funds invest primarily in equity
securities. As with other mutual funds that invest primarily in equity
securities, the Equity Funds are subject to market risks. That is, the
possibility exists that common stocks will decline over short or even extended
periods of time, and the United States equity market tends to be cyclical,
experiencing both periods when stock prices generally increase and periods when
stock prices generally decrease. However, because the Equity Funds, other than
the Quantitative Equity Fund, invests primarily in growth-oriented equity
securities (Growth Equity Fund and Growth and Income Equity Fund) or in small
capitalization stocks (Small Capitalization Equity Fund), there are some
additional risk factors associated with investment in the Equity Funds.
Growth-oriented stocks may include issuers with smaller capitalization. Small
capitalization stocks have historically been more volatile in price than larger
capitalization stocks, such as those included in the Standard & Poor's 500
Index. This is because, among other things, smaller companies have a lower
degree of liquidity in the equity market and tend to have a greater sensitivity
to changing economic conditions. Further, in addition to exhibiting greater
volatility, these stocks may, to some degree, fluctuate independently of the
stocks of large companies. That is, the stock of small capitalization companies
may decline in price as the price of large company stocks rises or vice versa.
Therefore, investors should expect that the Equity Funds will be more volatile
than, and may fluctuate independently of, broad stock market indices such as
the Standard & Poor's 500 Index.
In the case of the Quantitative Equity Fund, stocks that show growth or value
characteristics may be included in the investment portfolio, even though those
characteristics do not drive the stock selection process. Because of its price
and volume oriented selection method, the Quantitative Equity Fund tends to be
less volatile than the market. Of course, there can be no assurance that this
will occur.
CONVERTIBLE SECURITIES. Convertible securities are fixed income securities
which may be exchanged or converted into a predetermined number of the issuer's
underlying common stock at the option of the holder during a specified time
period. Convertible securities may take the form of convertible preferred
stock, convertible bonds or debentures, units consisting of "usable" bonds and
warrants or a combination of the features of several of these securities. The
Equity Funds invest in convertible bonds rated "BB" or higher by Standard &
Poor's Ratings Group or Fitch Investors Service, Inc., or "Ba" or higher by
Moody's Investors Service, Inc., at the time of investment. Securities rated
"BB" by Standard & Poor's Ratings Group or Fitch Investors Service, Inc.,
or "Ba" by Moody's
Investors Service, Inc., either have speculative characteristics or are
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. Debt obligations that
are not determined to be investment grade are high-yield, high-risk bonds,
typically subject to greater market fluctuations, and securities in the lowest
rating category may be in danger of loss of income and principal due to an
issuer's default. To a greater extent than investment-grade bonds, the value of
lower-rated bonds tends to reflect short-term corporate, economic, and market
developments, as well as investor perceptions of the issuer's credit quality.
In addition, lower-rated bonds may be more difficult to dispose of or to value
than high-rated, lower-yielding bonds. The investment adviser or sub-adviser,
as appropriate, attempts to reduce the risks described above through
diversification of the portfolio and by credit analysis of each issuer, as well
as by monitoring broad economic trends and corporate and legislative
developments. If a convertible bond is rated below "BB" or "Ba" according to
the characteristics set forth here after a Fund has purchased it, the Fund is
not required to drop the convertible bond from the portfolio, but will consider
appropriate action. The investment characteristics of each convertible security
vary widely, which allows convertible securities to be employed for different
investment objectives. A description of the rating categories is contained in
the Appendix to the Combined Statement of Additional Information.
Convertible bonds and convertible preferred stocks are fixed income securities
that generally retain the investment characteristics of fixed income securities
until they have been converted but also react to movements in the underlying
equity securities. The holder is entitled to receive the fixed income of a bond
or the dividend preference of a preferred stock until the holder elects to
exercise the conversion privilege. Usable bonds are corporate bonds that can be
used in whole or in part, customarily at full face value, in lieu of cash to
purchase the issuer's common stock. When owned as part of a unit along with
warrants, which are options to buy the common stock, they function as
convertible bonds, except that the warrants generally will expire before the
bond's maturity. Convertible securities are senior to equity securities, and
therefore, have a claim to assets of the corporation prior to the holders of
common stock in the case of liquidation. However, convertible securities are
generally subordinated to similar nonconvertible securities of the same
company. The interest income and dividends from convertible bonds and preferred
stocks provide a stable stream of income with generally higher yields than
common stocks, but lower than non-convertible securities of similar quality.
The Equity Funds will exchange or convert the convertible securities held in
their respective portfolios into shares of the underlying common stock in
instances in which, in the investment adviser's opinion, the investment
characteristics of the underlying common shares will assist the particular Fund
in achieving its investment objectives. Otherwise, the Fund will hold or trade
the convertible securities. In selecting convertible securities for a Fund, the
Fund's adviser evaluates the investment characteristics of the convertible
security as a fixed income instrument, and the investment potential of the
underlying equity security for capital appreciation. In evaluating these
matters with respect to a particular convertible security, the Fund's adviser
considers numerous factors, including the economic and political outlook, the
value of the security relative to other investment alternatives, trends in the
determinants of the issuer's profits, and the issuer's management capability
and practices.
SECURITIES OF FOREIGN ISSUERS. The Equity Funds may invest in the securities
of foreign issuers which are freely traded on United States securities
exchanges or in the over-the-counter market in the form of depository receipts.
Securities of a foreign issuer may present greater risks in the form of
nationalization, confiscation, domestic marketability, or other national or
international restrictions. As a matter of practice, the Equity Funds will not
invest in the securities of a foreign issuer if any such risk appears to the
investment adviser to be substantial.
OPTIONS AND FUTURES CONTRACTS. The Equity Funds may buy and sell options and
futures contracts to manage their respective individual exposure to changing
interest rates, security prices, and currency exchange rates. Some options and
futures strategies, including selling futures, buying puts, and writing calls,
tend to hedge the Equity Funds' respective investments against price
fluctuations. Other strategies, including buying futures, writing puts, and
buying calls, tend to increase market exposure. Options and futures may be
combined with each other or with forward contracts in order to adjust the risk
and return characteristics of the overall strategy. The Equity Funds may invest
in options and futures based
on any type of security, index, or currency, including options and futures
traded on foreign exchanges and options not traded on exchanges.
Options and futures can be volatile investments, and involve certain risks. If
the investment adviser applies a hedge at an inappropriate time or judges
market conditions incorrectly, options and futures may lower an Equity Fund's
individual return. An Equity Fund could also experience losses if the prices of
its options and futures positions were poorly correlated with its other
investments, or if it could not close out its positions because of an illiquid
secondary market.
Each of the Equity Funds will not hedge more than 20% of its respective total
assets by selling futures, buying puts, and writing calls under normal
conditions. In addition, each of the Equity Funds will not buy futures or write
puts whose underlying value exceeds 20% of its respective total assets, and the
Equity Funds will not buy calls with a value exceeding 5% of its respective
total assets.
STOCK INDEX FUTURES, SWAP AGREEMENTS, INDEXED SECURITIES, AND OPTIONS. The
Equity Funds may utilize stock index futures contracts, options, swap
agreements, indexed securities, and options on futures contracts, subject to
the limitation that the value of these futures contracts, swap agreements,
indexed securities, and options will not exceed 20% of each of the Equity
Funds' total assets. Also, each Equity Fund will not purchase options to the
extent that more than 5% of the value of the Equity Fund's total assets would
be invested in premiums on open put option positions. In addition, each Fund
does not intend to invest more than 5% of the market value of its total assets
in each of the following: futures contracts, swap agreements, and indexed
securities. When an Equity Fund enters into a swap agreement, assets of the
Fund equal to the value of the swap agreement will be segregated by the Fund.
There are several risks accompanying the utilization of futures contracts.
First, positions in futures contracts may be closed only on an exchange or
board of trade that furnishes a secondary market for such contracts. While the
Equity Funds plan to utilize futures contracts only if there exists an active
market for such contracts, there is no guarantee that a liquid market will
exist for the contracts at a specified time. Furthermore, because, by
definition, futures contracts look to projected price levels in the future and
not to current levels of valuation, market circumstances may result in there
being a discrepancy between the price of the stock index future and the
movement in the corresponding stock index. The absence of a perfect price
correlation between the futures contract and its underlying stock index could
stem from investors choosing to close futures contracts by offsetting
transactions, rather than satisfying additional margin requirements. This could
result in a distortion of the relationship between the index and the futures
market. In addition, because the futures market imposes less burdensome margin
requirements than the securities market, an increased amount of participation
by speculators in the futures market could result in price fluctuations.
RESTRICTED AND ILLIQUID SECURITIES. The Equity Funds intend to invest in
restricted securities. Restricted securities are any securities in which each
Equity Fund may otherwise invest pursuant to its investment objective and
policies, but which are subject to restriction on resale under federal
securities law. However, each Equity Fund will limit investments in illiquid
securities, including certain restricted securities not determined by the
Trustees to be liquid, non-negotiable fixed time deposits with maturities over
seven days, over-the-counter options, and repurchase agreements providing for
settlement in more than seven days after notice, to 15% of its net assets.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Equity Funds may purchase
securities on a when-issued or delayed delivery basis. These transactions are
arrangements in which the Equity Funds purchase securities with payment and
delivery scheduled for a future time. The seller's failure to complete these
transactions may cause the Equity Funds to miss a price or yield considered to
be advantageous. Settlement dates may be a month or more after entering into
these transactions, and the market values of the securities purchased may vary
from the purchase prices. Accordingly, the Equity Funds may pay more/less than
the market value of the securities on the settlement date.
The Equity Funds may dispose of a commitment prior to settlement if the adviser
deems it appropriate to do so. In addition, the Equity Funds may enter into
transactions to sell its purchase commitments to third parties at current
market
values and simultaneously acquire other commitments to purchase similar
securities at later dates. The Equity Funds may realize short-term profits or
losses upon the sale of such commitments.
LENDING OF PORTFOLIO SECURITIES. In order to generate additional income, each
Equity Fund may lend portfolio securities on a short-term or long-term basis,
or both, up to one-third of the value of its total assets to broker/dealers,
banks, or other institutional borrowers of securities. The Equity Funds will
only enter into loan arrangements with broker/dealers, banks, or other
institutions which the investment adviser has determined are creditworthy under
guidelines established by the Trustees and will receive collateral in the form
of cash or U.S. government securities equal to at least 100% of the value of
the securities loaned.
There is the risk that when lending portfolio securities, the securities may
not be available to the Equity Funds on a timely basis and the Equity Funds
may, therefore, lose the opportunity to sell the securities at a desirable
price. In addition, in the event that a borrower of securities would file for
bankruptcy or become insolvent, disposition of the securities may be delayed
pending court action.
TEMPORARY INVESTMENTS. In such proportions as, in the judgment of its
investment adviser, prevailing market conditions warrant, each Equity Fund
may, for temporary defensive purposes, invest in:
short-term money market instruments rated in one of the top two rating
categories by a nationally recognized statistical rating organization;
securities issued and/or guaranteed as to payment of principal and interest
by the U.S. government, its agencies, or instrumentalities; and
repurchase agreements.
REPURCHASE AGREEMENTS. The U.S. government securities and other securities
in which each Equity Fund invests may be purchased pursuant to repurchase
agreements. Repurchase agreements are arrangements in which banks,
broker/dealers, and other recognized financial institutions sell U.S.
government securities or other securities to an Equity Fund and agree at the
time of sale to repurchase them at a mutually agreed upon time and price. To
the extent that the original seller does not repurchase the securities from
an Equity Fund, the Fund could receive less than the repurchase price on any
sale of such securities.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES. The Equity Funds may
invest in the securities of other investment companies, but they will not,
respectively, own more than 3% of the total outstanding voting stock of any
investment company, invest more than 5% of their respective total assets in
any one investment company, or invest more than 10% of their respective
total assets in investment companies in general. The Equity Funds will
invest in other investment companies primarily for the purpose of investing
their short-term cash which has not yet been invested in other portfolio
instruments. However, from time to time, on a temporary basis, each of the
Equity Funds may invest exclusively in one other investment company managed
similarly to the appropriate Fund. Shareholders should realize that, when
one of the Equity Funds invests in other investment companies, certain fund
expenses, such as custodian fees and administrative fees, may be duplicated.
The adviser will waive its investment advisory fee on assets invested in
securities of other investment companies.
INVESTMENT LIMITATIONS
THE EQUITY FUNDS FOLLOW A NUMBER OF GUIDELINES IN MANAGING THEIR PORTFOLIOS IN
ORDER TO LIMIT INVESTMENT RISKS.
Each Equity Fund will not:
borrow money directly or through reverse repurchase agreements (arrangements
in which an Equity Fund sells a portfolio instrument for a percentage of its
cash value with an arrangement to buy it back on a set date) or pledge
securities except, under certain circumstances, an Equity Fund may borrow up
to one-third of the value of its total assets and pledge up to 10% of the
value of its total assets to secure such borrowings; or
with respect to 75% of the value of its total assets, invest more than 5% in
securities of one issuer (other than cash, cash items, or securities issued
or guaranteed by the government of the United States or its agencies or
instrumentalities and repurchase agreements collateralized by such
securities), or acquire more than 10% of the outstanding voting securities of
any one issuer.
The above investment limitations cannot be changed without shareholder
approval. The following limitation, however, may be changed by the Trustees
without shareholder approval. Shareholders will be notified before any
material change in this limitation becomes effective.
Each Equity Fund will not:
invest more than 15% of its total assets in securities subject to
restrictions on resale under the Securities Act of 1933 (except for
commercial paper issued under Section 4(2) of the Securities Act of 1933 and
certain other securities which meet the criteria for liquidity as
established by the Trustees).
ADMINISTRATION
MANAGEMENT OF THE SHAWMUT FUNDS
BOARD OF TRUSTEES
THE SHAWMUT FUNDS ARE MANAGED BY A BOARD OF TRUSTEES.
The Trustees are responsible for managing the Trust's business affairs and for
exercising all the Trust's powers except those reserved for the shareholders.
The Executive Committee of the Board of Trustees handles the Board's
responsibilities between meetings of the Board.
INVESTMENT ADVISER
PURSUANT TO AN INVESTMENT ADVISORY CONTRACT WITH THE TRUST, INVESTMENT
DECISIONS FOR THE EQUITY FUNDS ARE MADE BY SHAWMUT BANK, N.A. (THE "ADVISER"),
SUBJECT TO DIRECTION BY THE TRUSTEES.
The Adviser continually conducts investment research and supervision for the
Equity Funds and is responsible for the purchase or sale of portfolio
instruments, for which it receives an annual fee from the respective assets of
the Equity Funds.
ADVISORY FEES
The Adviser receives an annual investment advisory fee equal to 1.00% of each
of the Equity Fund's average daily net assets. The fee paid by the Equity
Funds, while higher than the advisory fee paid by other mutual funds in
general, is with the anticipated advisory fee waivers, comparable to fees paid
by mutual funds with similar objectives and policies.
The Adviser has undertaken to waive a portion of its advisory fee, up to the
amount of the advisory fee, to reimburse each of the Equity Funds for operating
expenses in excess of limitations established by certain states. The Adviser
may further voluntarily waive a portion of its fee or reimburse the Equity
Funds for certain operating expenses. The Adviser can terminate such voluntary
waiver or reimbursement policy with any of the Equity Funds at any time at its
sole discretion.
ADVISER'S BACKGROUND
SHAWMUT BANK, N.A., A NATIONAL BANKING ASSOCIATION, AND ITS AFFILIATES HAVE
MANAGED COMMINGLED FUNDS FOR OVER FIFTY YEARS. AS OF OCTOBER 31, 1994, SHAWMUT
NATIONAL CORPORATION, THROUGH ITS SUBSIDIARIES INCLUDING SHAWMUT BANK, N.A.,
MANAGED MORE THAN $15 BILLION IN TOTAL ASSETS. SHAWMUT BANK, N.A., HAS SERVED
AS AN ADVISER TO MUTUAL FUNDS SINCE THE INCEPTION OF THE SHAWMUT FUNDS ON
DECEMBER 1, 1992.
Shawmut Bank, N.A., a national banking association, along with Shawmut Bank
Connecticut, National Association, and Shawmut Bank NH, are the principal
subsidiaries of Shawmut National Corporation, a super-regional bank holding
company formed on February 29, 1988, and based in southern New England. Shawmut
National Corporation serves consumers through its network of banking offices
with a full range of deposit and lending products, as well as investment
services. As part of their regular banking operations, Shawmut Bank may make
loans to public companies. Thus, it may be possible, from time to time, for the
Equity Funds to hold or acquire the securities of issuers which are also
lending clients of Shawmut Bank. The lending relationship will not be a factor
in the selection of securities. The principal executive offices of the
investment adviser are located at One Federal Street, Boston, Massachusetts
02211.
Brendan J. Henebry has been the portfolio manager of the Growth and Income
Equity Fund since its inception in December 1992. Mr. Henebry has been with
Shawmut Bank, the Growth and Income Equity Fund's Adviser, and its predecessor
since 1965, and has been a Vice President of the Adviser since 1978. During the
past five years, Mr. Henebry has served as Manager of the Growth and Income
Equity Management Group. He is an honors graduate of St. Anselm's College,
where he concentrated in economics.
Philip Tasho has been responsible for managing the Growth Equity Fund since
November 1994. Mr. Tasho joined Shawmut Bank as a portfolio manager in June
1994. Prior to this, he had been employed as Managing Director-Equities with
the investment advisory subsidiary of a bank. Mr. Tasho received his B.A.
degree at Grinnell College, his M.B.A. at George Washington University, and is
also a Chartered Financial Analyst (C.F.A.)
Peter C. Larson has been the portfolio manager of the Small Capitalization
Equity Fund since its inception in December 1992. Mr. Larson joined Shawmut
Bank in 1963 as an investment officer and has been a Vice President in charge
of Shawmut's Small Cap Equity Management product since inception in 1980. He
holds a B.S. degree in finance from the University of Connecticut.
Kenneth J. Garvey is the portfolio manager of the Quantitative Equity Fund. Mr.
Garvey is the Managing Director and co-founder of Marque Millennium Group
Limited, which serves as the sub-adviser to the Quantitative Equity Fund. Mr.
Garvey has served as a senior investment executive at several major investment
firms.
SUB-ADVISER
PURSUANT TO THE TERMS OF AN INVESTMENT SUB-ADVISORY AGREEMENT BETWEEN THE
ADVISER AND MARQUE MILLENNIUM GROUP LIMITED ("MARQUE MILLENNIUM" OR THE
"SUB-ADVISER"), MARQUE MILLENNIUM FURNISHES CERTAIN INVESTMENT ADVISORY
SERVICES TO THE ADVISER ON BEHALF OF THE QUANTITATIVE EQUITY FUND.
Marque Millennium assists the Adviser in identifying securities for potential
purchase and/or sale through its quantitative analysis of common stocks, as
described in the "Acceptable Investments" section for the Quantitative Equity
Fund. For the services provided and the expenses incurred by the Sub-Adviser
pursuant to the sub-advisory agreement, Marque Millennium is entitled to
receive an annual fee of one-half of the total advisory fee being charged (up
to .50 of 1.00% of the Quantitative Equity Fund's average daily net assets
being paid to the Sub-Adviser), payable by the Adviser. Marque Millennium may
elect to waive some or all of its fee. In no event shall the Quantitative
Equity Fund be responsible for any fees due to the Sub-Adviser for its services
to the Adviser.
Marque Millennium, which is located at 126 East 56th Street, New York, New York
10022, provides investment counsel to both individuals and institutions. As of
October 31, 1994, Marque Millennium furnished services, substantially similar
to the services it provides to the Adviser, to other discretionary and
nondiscretionary investment accounts with assets of approximately $575 million.
Marque Millennium has acted as Sub-adviser to the Quantitative Equity Fund
since its inception on June 21, 1994. The Sub-Adviser is a limited partnership
founded and controlled by Wilfred J. Meckel II and Kenneth J. Garvey, Managing
Directors.
DISTRIBUTION OF EQUITY FUNDS' SHARES
FEDERATED SECURITIES CORP. IS THE PRINCIPAL DISTRIBUTOR FOR TRUST SHARES.
Federated Securities Corp., Federated Investors Tower, Pittsburgh, Pennsylvania
15222-3779, is a Pennsylvania corporation organized on November 14, 1969, and
is the principal distributor for a number of investment companies. Federated
Securities Corp. is a subsidiary of Federated Investors.
PAYMENTS TO FINANCIAL INSTITUTIONS. The distributor may pay financial
institutions a fee based on the average net asset value of shares of their
customers invested in an Equity Fund for providing administrative services. If
paid, this fee will be reimbursed by the Adviser and not by an Equity Fund.
The Adviser or its affiliates may also offer to pay a fee from their own assets
to financial institutions as financial assistance for providing substantial
marketing and sales support. The support may include sponsoring sales,
educational and training seminars for their employees, providing sales
literature, and engineering compute software programs that emphasize the
attributes of an Equity Fund. Such assistance will be predicated upon the
amount of shares the dealer sells or may sell, and/or upon the type and nature
of sales or operational support furnished by the financial institution. These
payments will be made by the Adviser and will not be made from the assets of an
Equity Fund.
ADMINISTRATION OF THE EQUITY FUNDS
ADMINISTRATIVE SERVICES. Federated Administrative Services ("FAS"), Federated
Investors Tower, Pittsburgh, Pennsylvania 15222-3779, a subsidiary of Federated
Investors, provides the Equity Funds with certain administrative personnel and
services necessary to operate the Equity Funds, such as legal and accounting
services. FAS provides these at an annual rate as specified below:
<TABLE>
<CAPTION>
MAXIMUM
ADMINISTRATIVE AVERAGE AGGREGATED DAILY
FEE NET ASSETS OF THE TRUST
<S> <C>
.150 of 1% First $250 million
.125 of 1% Next $250 million
.100 of 1% Next $250 million
.075 of 1% Over $750 million
</TABLE>
The administrative fee received by FAS during any fiscal year shall be at
least $50,000 for each of the Equity Funds. FAS may voluntarily choose to
waive a portion of its fee.
CUSTODIAN. Shawmut Bank, N.A., One Federal Street, Boston, Massachusetts
02211, is custodian for the securities and cash of the Equity Funds. Under the
Custodian Agreement, Shawmut Bank, N.A., holds the Equity Funds' portfolio
securities in safekeeping and keeps all necessary records and documents
relating to its duties.
TRANSFER AGENT, DIVIDEND DISBURSING AGENT, AND PORTFOLIO ACCOUNTING
SERVICES. Federated Services Company, Federated Investors Tower, Pittsburgh,
Pennsylvania 15222-3779, is transfer agent and dividend disbursing agent for
the Equity Funds. It also provides certain accounting and recordkeeping
services with respect to each of the Equity Funds' portfolio investments.
LEGAL COUNSEL. Legal counsel is provided by Houston, Houston & Donnelly, 2510
Centre City Tower, Pittsburgh, Pennsylvania 15222, and Dickstein, Shapiro &
Morin, L.L.P., 2101 L Street, N.W., Washington, DC 20037.
INDEPENDENT ACCOUNTANTS. The independent accountants for the Equity Funds are
Price Waterhouse LLP, 160 Federal Street, Boston, Massachusetts 02110.
EXPENSES OF THE EQUITY FUNDS AND TRUST SHARES
Holders of Trust Shares pay their allocable portion of the Equity Funds' and
Trust's expenses. The Trust expenses for which holders of Trust Shares pay
their allocable portion include, but are not limited to: the cost of organizing
the Trust and continuing its existence; registering the Trust with federal and
state securities authorities; Trustees' fees; auditors' fees; the cost of
meetings of Trustees; legal fees of the Trust; association membership dues; and
such non-recurring and extraordinary items as may arise.
The respective Equity Fund expenses for which holders of Trust Shares pay their
allocable portion include, but are not limited to: registering the Equity Funds
and shares of the Equity Funds; investment advisory services; taxes and
commissions; custodian fees; insurance premiums; auditors' fees; and such
non-recurring and extraordinary items as may arise.
At present, no expenses are allocated exclusively to the Trust Shares as a
class. However, the Trustees reserve the right to allocate certain other
expenses to holders of Trust Shares as they deem appropriate ("Class
Expenses"). In any case, Class Expenses would be limited to: distribution fees;
transfer agent fees as identified by the transfer agent as attributable to
holders of Trust Shares; printing and postage expenses related to preparing and
distributing materials such as shareholder reports, prospectuses and proxies to
current shareholders; registration fees paid to the Securities and Exchange
Commission and registration fees paid to state securities commissions; expenses
related to administrative personnel and services as required to support holders
of Trust Shares; legal fees relating solely to Trust Shares; and Trustees' fees
incurred as a result of issues relating solely to Trust Shares.
Net Asset Value
THE TERM "NET ASSET VALUE" REFERS TO THE VALUE OF ONE EQUITY FUND SHARE.
Each Equity Fund's net asset value per Trust Share fluctuates. The net asset
value for Trust Shares is determined by adding the interest of the Trust Shares
in the market value of all securities and other assets of an Equity Fund,
subtracting the interest of the Trust Shares in the liabilities of an Equity
Fund and those attributable to Trust Shares, and dividing the remainder by the
total number of Trust Shares outstanding. The net asset value for Trust Shares
of an Equity Fund may differ from that of Investment Shares 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.
INVESTING IN SHARES
YOU CAN BUY TRUST SHARES BY FEDERAL RESERVE WIRE, MAIL, OR TRANSFER, AS
EXPLAINED BELOW.
Shares of the Equity Funds are sold by the distributor on days on which the New
York Stock Exchange and Federal Reserve Wire System are open for business.
Shares of the Equity Funds may also be purchased through Shawmut Bank, N.A.,
Shawmut Bank Connecticut, National Association, Shawmut Bank NH, or their
affiliates (collectively, "Shawmut Bank") on days on which both Shawmut Bank
and the New York Stock Exchange and Federal Reserve Wire System are open for
business. Texas residents must purchase, exchange, and redeem Trust Shares
through Federated Securities Corp. at 1-800-356-2805. The Equity Funds
reserve the right to reject any purchase request.
THROUGH SHAWMUT BANK. An investor may call their Shawmut Bank trust officer to
receive information and to place an order to purchase Trust Shares. Shawmut
Bank will purchase Trust Shares on behalf of investors and maintain all records
relating to the Trust Shares. Through its trust accounting systems, Shawmut
Bank provides shareholders of Trust Shares with detailed periodic statements
that integrate information regarding investments in the Equity Funds with other
Shawmut Bank investment services.
Orders placed through Shawmut Bank are considered received when payment is
converted to federal funds and the applicable Equity Fund is notified of the
purchase order. The completion of the purchase transaction will generally occur
within one business day after Shawmut Bank receives a purchase order. Purchase
orders must be received by Shawmut Bank before 4:00 p.m. (Eastern time) and
must be transmitted by Shawmut Bank to the applicable Equity Fund before 5:00
p.m. (Eastern time) in order for Trust Shares to be purchased at that day's
public offering price.
DIRECTLY FROM THE DISTRIBUTOR. An investor may place an order to purchase
Trust Shares directly from the distributor. To do so: complete and sign the new
account form available from the Equity Funds; complete an application for the
establishment of a trust account with Shawmut Bank; enclose a check made
payable to the full name of your desired portfolio (as appropriate) (see the
cover of the prospectus)--Trust Shares; and mail both to the Equity Funds,
Attention: Vice President, Securities Operations, OF0501, One Federal Street,
Boston, Massachusetts 02211. The order is considered received after a trust
account is established and the check is converted by Shawmut Bank into federal
funds. This is generally the next business day after Shawmut Bank receives the
check.
To purchase Trust Shares of the Equity Funds by wire, call 1-800-SHAWMUT. All
information needed will be taken over the telephone, and the order is
considered received when Shawmut Bank receives payment by wire. To request
additional information concerning purchases by wire, please contact Federated
Securities Corp., the Equity Funds' distributor, at
1-800-356-2805. Shares cannot be purchased by wire on any day which both
Shawmut Bank and the New York Stock Exchange and Federal Reserve Wire System
are not open for business.
MINIMUM INVESTMENT REQUIRED
THE MINIMUM INITIAL INVESTMENT IS $1,000.
The minimum initial investment in Trust Shares by an investor is $1,000.
Subsequent investments must be in amounts of at least $100. The Equity Funds
may waive the initial minimum investment for employees of Shawmut Bank and its
affiliates, from time to time.
WHAT SHARES COST
SHARES ARE SOLD AT THEIR NET ASSET VALUE NEXT DETERMINED AFTER AN ORDER IS
RECEIVED. THERE IS NO SALES LOAD IMPOSED BY THE EQUITY FUNDS UPON THE PURCHASE
OF TRUST SHARES.
The net asset value is determined at the close of the New York Stock Exchange,
normally 4:00 p.m. (Eastern time), Monday through Friday, except on: (i) days
on which there are not sufficient changes in the value of an Equity 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) on the following holidays: New Year's
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, and Christmas Day.
SUBACCOUNTING SERVICES
Institutions are encouraged to open single master accounts. However, certain
institutions may wish to use the transfer agent's subaccounting system to
minimize their internal recordkeeping requirements. The transfer agent charges
a fee based on the level of subaccounting services rendered. Certain
institutions holding Trust Shares in a fiduciary, agency, custodial, or similar
capacity may charge or pass through subaccounting fees as part of or in
addition to normal trust or agency account fees. They may also charge fees for
other services provided which may be related to the ownership of Trust Shares.
This prospectus should, therefore, be read together with any agreement between
the customer and the institution with regard to the services provided, the fees
charged for those services, and any restrictions and limitations imposed.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Equity Funds, Federated Services Company maintains a
share account for each shareholder of record. Share certificates are not issued
unless requested by contacting Shawmut Bank in writing.
Detailed confirmations of each purchase or redemption are sent to Shawmut Bank
or other shareholders of record. Monthly statements are sent by Shawmut Bank to
its trust customers to report account activity during the previous month,
including dividends paid during the period.
DIVIDENDS
Dividends are declared and paid quarterly to all shareholders invested in each
Equity Fund on the record date.
CAPITAL GAINS
Capital gains realized by an Equity Fund, if any, will be distributed to that
Equity Fund's shareholders at least once every 12 months.
EXCHANGE PRIVILEGE
EXCHANGING SHARES. Shareholders may exchange Trust Shares, with a minimum net
asset value of $1,000, for shares of the same designated class of other funds
advised by Shawmut Bank.
Exchanges are subject to the minimum initial purchase requirements of such Fund
being acquired. Prior to any exchange, the shareholder must receive a copy of
the current prospectus of the class 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, Trust Shares
submitted for exchange will be redeemed at the next-determined net asset value.
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 modified or terminated at any time.
Shareholders will be notified of the modification or termination of the
exchange privilege. A shareholder may obtain further information on the
exchange privilege by calling their trust officer at Shawmut Bank.
EXCHANGE-BY-TELEPHONE. Instructions for exchanges between participating funds
which are part of the Trust may be given by telephone to their trust officer at
Shawmut Bank. To utilize the exchange-by-telephone service, a shareholder must
complete an authorization form permitting Shawmut Bank to instruct the Equity
Funds to honor telephone instructions. The authorization is included in Shawmut
Bank's trust account documentation. Trust Shares may be exchanged by telephone
only between trust accounts having identical registrations. Exchange
instructions given by telephone may be electronically recorded.
Any Trust 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.
Telephone exchange instructions must be received before 4:00 p.m. (Eastern
time) for Trust 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 Shawmut Bank during times of drastic
economic or market changes. If a shareholder cannot contact Shawmut Bank by
telephone, it is recommended that an exchange request be made in writing and
sent by overnight mail to Shawmut Bank, Attention: Vice President, Securities
Operation, OF0501, One Federal Street, Boston, Massachusetts 02211.
If reasonable procedures are not followed by the Equity Funds, they may be
liable for losses due to unauthorized or fraudulent telephone instructions.
REDEEMING SHARES
YOU CAN REDEEM TRUST SHARES BY MAIL OR TELEPHONE. TO ENSURE YOUR SHARES ARE
REDEEMED EXPEDITIOUSLY, PLEASE FOLLOW THE PROCEDURES EXPLAINED BELOW.
The Equity Funds redeem Trust Shares at their net asset value next determined
after Federated Services Company receives the redemption request. Redemptions
will be made on days on which the Equity Funds compute their net asset value.
Requests for redemptions can be made by telephone or in writing by contacting a
Shawmut Bank trust officer. Redemption requests received prior to 4:00 p.m.
(Eastern time) will be effected on the same business day.
THROUGH SHAWMUT BANK
Shareholders may redeem Trust Shares by calling their Shawmut Bank trust
officer to request the redemption. Trust Shares will be redeemed at the net
asset value next determined after Federated Services Company receives the
redemption request. Shawmut Bank is responsible for promptly submitting
redemption requests and for maintaining proper
written records of redemption instructions received from the Equity Funds'
shareholders. In order to effect a redemption on the same business day as a
request, Shawmut Bank is responsible for the timely transmission of the
redemption request to the appropriate Equity Fund.
Before Shawmut Bank may request redemption by telephone on behalf of a
shareholder, an authorization form permitting the Equity Funds to accept
redemption requests by telephone must first be completed. This authorization is
included in Shawmut Bank's trust account documentation. Redemption instructions
given by telephone may be electronically recorded. In the event of drastic
economic or market changes, a shareholder may experience difficulty in
redeeming by telephone. If such a case should occur, it is recommended that a
redemption request be made in writing and sent by overnight mail to Shawmut
Bank, Attention: Vice President, Securities Operation, OF0501, One Federal
Street, Boston, Massachusetts 02211.
If reasonable procedures are not followed by the Equity Funds, they may be
liable for losses due to unauthorized or fraudulent telephone instructions.
DIRECTLY FROM THE EQUITY FUNDS
BY MAIL. A shareholder may redeem Trust Shares by sending a written request to
Federated Services Company. If Shares are purchased by Shawmut Bank on behalf
of a trust customer, only Shawmut Bank, as the shareholder of record, can
request a redemption from Federated Services Company. The written request
should include the shareholder's name, the Equity Funds' name and class of
shares name, the account number, and the share or dollar amount requested. If
share certificates have been issued, they must be properly endorsed and should
be sent by registered or certified mail with the written request. Shareholders
should call the Equity Funds for assistance in redeeming by mail.
SIGNATURES. Shareholders requesting a redemption of $50,000 or more, a
redemption of any amount to be sent to an address other than that on record
with the Equity Funds, 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;
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 Equity Funds do not accept signatures guaranteed by a notary public.
The Equity Funds and their transfer agent have adopted standards for accepting
signature guarantees from the above institutions. The Equity Funds may elect
in the future to limit eligible signature guarantors to institutions that are
members of a signature guarantee program. The Equity Funds and their transfer
agent reserve the right to amend these standards at any time without notice.
RECEIVING PAYMENT
Redemption payments will generally be made directly to the trust account
maintained by an investor with Shawmut Bank. This deposit is normally made
within one business day, but in no event more than seven days, after the
redemption request, provided the transfer agent has received payment from the
shareholder. The net asset value of Trust Shares
redeemed is determined, and dividends, if any, are paid up to and including,
the day prior to the day that a redemption request is processed. Pursuant to
instructions from Shawmut Bank, redemption proceeds may be transferred from a
shareholder account by check or by wire.
BY CHECK. 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 redemption
request, provided the transfer agent has received payment for Trust Shares from
the shareholder.
BY WIRE. Requests to wire proceeds from redemptions received before 4:00 p.m.
(Eastern time) will be honored the following business day after Shawmut Bank
receives proper instructions.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Equity
Funds may redeem shares in any account and pay the proceeds to the shareholder
if the account balance falls below a required minimum of $1,000. This
requirement does not apply, however, if the balance falls below $1,000 because
of changes in an Equity Fund's net asset value.
Before shares are redeemed to close an account, the shareholder is notified in
writing and allowed 30 days to purchase additional shares to meet the minimum
requirement.
REDEMPTION IN KIND
The Equity Funds are obligated to redeem Trust Shares solely in cash up to
$250,000 or 1% of the net asset value of Shares of each Equity Fund, whichever
is less, for any one shareholder within a 90-day period.
Any redemption beyond this amount will also be in cash unless the Trustees
determine that further cash payments will have a material adverse effect on
remaining shareholders. In such a case, the Equity Funds will pay all or a
portion of the remainder of the redemption in portfolio instruments, valued in
the same way as an Equity Fund determines net asset value. The portfolio
instruments will be selected in a manner that the Trustees deem fair and
equitable.
Redemption in kind is not as liquid as a cash redemption. If redemption is made
in kind, shareholders receiving their securities and selling them before their
maturity could receive less than the redemption value of their securities and
could incur certain transaction costs.
SHAREHOLDER INFORMATION
VOTING RIGHTS
EACH TRUST SHARE OF AN EQUITY FUND GIVES THE SHAREHOLDER ONE VOTE IN TRUSTEE
ELECTIONS AND OTHER MATTERS SUBMITTED TO SHAREHOLDERS OF THE TRUST FOR VOTE.
All shares of each portfolio in the Trust have equal voting rights except that,
in matters affecting only a particular fund or class, only shareholders of that
fund or class are entitled to vote. As a Massachusetts business trust, the
Trust is not required to hold annual shareholder meetings. Shareholder approval
will be sought only for certain changes in the Trust or an Equity Fund's
operation and for the election of Trustees under certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a special
meeting. A special meeting of the shareholders shall be called by the Trustees
upon the written request of shareholders owning at least 10% of the outstanding
shares of the Trust.
As of December 12, 1994, Olsen & Co., acting in various capacities for various
accounts, was the owner of record of 301,547 shares (95.20%) of Trust Shares of
Quantitative Equity Fund; 1,540,598 shares (100%) of Trust Shares of Growth
Equity Fund; 14,089,293 shares (100%) of Trust Shares of Growth & Income Equity
Fund; and 9,146,775 shares (100%) of Trust Shares of Small Capitalization
Equity Fund.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for acts or obligations of the Trust on behalf
of an Equity Fund. To protect shareholders of an Equity Fund, the Trust has
filed legal documents with Massachusetts that expressly disclaim the liability
of shareholders of an Equity Fund for 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 on
behalf of an Equity Fund.
In the unlikely event a shareholder is held personally liable for the Trust's
obligations on behalf of an Equity Fund, the Trust is required to use the
property of that Equity Fund to protect or compensate the shareholder. On
request, the Trust will defend any claim made and pay any judgment against a
shareholder of the Equity Funds for any act or obligation of the Trust on
behalf of the Equity Funds. Therefore, financial loss resulting from liability
as a shareholder of the Equity Funds will occur only if the Trust cannot meet
its obligations to indemnify shareholders and pay judgments against them from
the assets of the Equity Funds.
EFFECT OF 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 investment company
continuously engaged in the issuance of its shares, and prohibit banks
generally from issuing, underwriting, selling, 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.
Shawmut Bank is subject to such banking laws and regulations.
Shawmut Bank believes, based upon the advice of its counsel, that it may
perform the services for the Equity Funds contemplated by its advisory
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 or future statutes and
regulations, could prevent Shawmut Bank from continuing to perform all or a
part of the above services for its customers and/or the Equity Funds. If it
were prohibited from engaging in these customer-related activities, the
Trustees would consider alternative advisers and means of continuing available
investment services. In such event, changes in the operation of the Equity
Funds may occur, including possible termination of any automatic or other
Equity Fund share investment and redemption services then being provided by
Shawmut Bank. It is not expected that existing shareholders would suffer any
adverse financial consequences (if another adviser with equivalent abilities
to Shawmut Bank is found) as a result of any of these occurrences.
State securities laws governing the ability of depository institutions to act
as underwriters or distributors of securities may differ from interpretations
given to the Glass-Steagall Act and, therefore, banks and financial
institutions may be required to register as dealers pursuant to state law.
TAX INFORMATION
FEDERAL INCOME TAX
The Equity Funds will pay no federal income tax because each Equity Fund
expects to meet requirements of the Internal Revenue Code, as amended,
applicable to regulated investment companies and to receive the special tax
treatment afforded to such companies.
Each Equity Fund will be treated as a single, separate entity for federal
income tax purposes so that income (including capital gains) and losses
realized by The Shawmut Funds' other portfolios will not be combined for tax
purposes with those realized by each Equity Fund.
Unless otherwise exempt, shareholders are required to pay federal income tax on
any dividends and other distributions received. This applies whether dividends
and distributions are received in cash or as additional Trust Shares.
Shareholders are urged to consult their own tax advisers regarding the status
of their accounts under state and local tax laws.
OTHER CLASSES OF SHARES
The Equity Funds offer a separate class of shares known as Investment Shares.
Investment Shares are sold primarily to financial institutions that rely upon
the distribution services provided by the distributor in the marketing of
Investment Shares, as well as to retail customers of such institutions.
Investment Shares are sold at net asset value plus a sales load. Investments
in Investment Shares are subject to a minimum initial investment of $1,000.
Investment Shares are distributed pursuant to 12b-1 Plans adopted by the Trust
whereby the distributor is paid a fee of up to .50 of 1% of the Investment
Shares' average daily net assets.
The amount of dividends payable to Trust Shares will exceed that of Investment
Shares by the difference between class expenses and distribution expenses
borne by shares of each respective class.
The stated advisory fee is the same for both classes of shares.
PERFORMANCE INFORMATION
FROM TIME TO TIME THE EQUITY FUNDS ADVERTISE THEIR TOTAL RETURN AND YIELD FOR
TRUST SHARES.
Total return represents the change, over a specified period of time, in the
value of an investment in Trust Shares after reinvesting all income and capital
gains distributions. It is calculated by dividing that change by the initial
investment and is expressed as a percentage.
The yields of Trust Shares of the Equity Funds are calculated by dividing the
net investment income per Trust Share (as defined by the Securities and
Exchange Commission) earned by the Equity Funds over a thirty-day period by the
maximum offering price per Trust Share on the last day of the period. This
number is then annualized using semi-annual compounding. The yield does not
necessarily reflect income actually earned by Trust Shares and, therefore, may
not correlate to the dividends or other distributions paid to shareholders.
Total return and yield will be calculated separately for Trust Shares and
Investment Shares. Because Investment Shares are subject to a sales load and a
12b-1 fee, the total return and yield for Trust Shares, for the same period,
will exceed that of Investment Shares.
Trust Shares are sold without any sales load or other similar non-recurring
charges.
From time to time, the Equity Funds may advertise their performance using
certain financial publications and/or compare their performance to certain
indices.
Further information about the performance of the Equity Funds is contained in
the Trust's Combined Annual Report dated October 31, 1994, which can be
obtained free of charge.
INVESTMENT ADVISER
Shawmut Bank, N.A.
One Federal Street
Boston, MA 02211
ADMINISTRATOR
Federated Administrative Services
Federated Investors Tower
Pittsburgh, PA 15222-3779
CUSTODIAN
Shawmut Bank, N.A.
One Federal Street
Boston, MA 02211
TRANSFER AGENT
Federated Services Company
Federated Investors Tower
Pittsburgh, PA 15222-3779
DISTRIBUTOR
Federated Securities Corporation
Federated Investors Tower
Pittsburgh, PA 15222-3779
LEGAL COUNSEL
Dickstein, Shapiro & Morin, LLP
2101 L Street, N.W.
Washington, D.C. 20037
Houston, Houston & Donnelly
2510 Centre City Tower
Pittsburgh, PA 15222
SHAWMUT INCOME FUNDS
LIMITED TERM INCOME
INTERMEDIATE GOVERNMENT INCOME
FIXED INCOME
CONNECTICUT INTERMEDIATE MUNICIPAL INCOME
MASSACHUSETTS INTERMEDIATE MUNICIPAL INCOME
SHAWMUT
MONEY MARKET FUNDS
PRIME MONEY MARKET
CONNECTICUT MUNICIPAL MONEY MARKET
MASSACHUSETTS MUNICIPAL MONEY MARKET
CALL 1-800-SHAWMUT FOR MORE INFORMATION
ON THE SHAWMUT FAMILY OF FUNDS
820482883
820482875
820482834
820482750
3120919AI (12/94)
The Shawmut Equity Funds
(Portfolios of The Shawmut Funds)
Shawmut Growth Equity Fund
Trust Shares
Investment Shares
Shawmut Growth and Income Equity Fund
Trust Shares
Investment Shares
Shawmut Quantitative Equity Fund
Trust Shares
Investment Shares
Shawmut Small Capitalization Equity Fund
Trust Shares
Investment Shares
Combined Statement of Additional Information
Shawmut Growth Equity Fund ("Growth Equity Fund"),
Shawmut Growth and Income Equity Fund ("Growth and Income
Equity Fund"), Shawmut Quantitative Equity Fund
("Quantitative Equity Fund"), and Shawmut Small
Capitalization Equity Fund ("Small Capitalization Equity
Fund")(collectively referred to as the "Equity Funds")
represent interests in diversified investment portfolios
of The Shawmut Funds (the "Trust"). This Combined
Statement of Additional Information should be read with
the respective prospectuses for the Equity Funds, Trust
Shares and Investment Shares, dated December 31, 1994.
This Statement is not a prospectus itself. To receive a
copy of either prospectus, write or call the Equity
Funds.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE SHARES OFFERED BY THE PROSPECTUS ARE NOT DEPOSITS OR
OBLIGATIONS OF SHAWMUT BANK, ARE NOT ENDORSED OR
GUARANTEED BY SHAWMUT BANK, ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT
IN THESE SHARES INVOLVES INVESTMENT RISKS, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL.
INVESTMENT SHARES OF THE SHAWMUT FUNDS ARE AVAILABLE
THROUGH REGISTERED REPRESENTATIVES OF SHAWMUT BROKERAGE,
INC. OR OTHER BROKERS, MEMBERS NASD/SIPC. SHAWMUT
BROKERAGE, INC. IS AN AFFILIATE OF SHAWMUT BANK.
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Statement dated December 31, 1994.
FEDERATED SECURITIES
CORP.
Distributor
A subsidiary of Federated
Investors
General Information About
the Fund 1
Investment Objective and
Policies 1
Types of Investments 1
When-Issued and Delayed
Delivery Transactions 2
Restricted and Illiquid
Securities 2
Repurchase Agreements 3
Reverse Repurchase
Agreements 3
Lending of Portfolio
Securities 3
Portfolio Turnover 3
Derivative Securities 3
Investment Limitations 5
The Shawmut Funds Management 8
The Funds 11
Equity Funds Ownership 11
Trustee Liability 13
Investment Advisory Services 13
Adviser to the Equity
Funds 13
Advisory Fees 13
Sub-Adviser to the
Quantitative Equity Fund 13
Sub-Advisory Fees 13
Administrative Services 14
Brokerage Transactions 14
Distribution Plan
(Investment Shares) 15
Conversion to Federal
Funds 15
Determining Net Asset Value 15
Determining Market Value
of Securities 16
Exchange Privilege 16
Requirements for Exchange 16
Making an Exchange 16
Redeeming Shares 16
Redemption in Kind 16
Tax Status 16
The Equity Funds' Tax
Status 16
Shareholders' Tax Status 17
Capital Gains 17
Total Return 17
Yield 17
Performance Comparisons 18
Financial Statements 18
Appendix 19
General Information About the Fund
The Equity Funds are portfolios of The Shawmut Funds, which
was established as a Massachusetts business trust under a
Declaration of Trust dated on July 16, 1992.
Shares of the Equity Funds are offered in two classes, known
as Trust Shares and Investment Shares (individually and
collectively referred to as "Shares"). This Combined Statement
of Additional Information relates to the abovementioned Shares
of the Equity Fund.
Investment Objective and Policies
The Growth Equity Fund's and the Small Capitalization Equity
Fund's investment objectives are to provide long-term capital
appreciation. The Growth and Income Equity Fund's investment
objective is to provide a relatively high total return through
long-term capital appreciation and current income. The
Quantitative Equity Fund's investment objective is to provide
growth of capital. The investment objectives cannot be changed
without approval of shareholders.
The policies described below may be changed by the Board of
Trustees (the "Trustees") without shareholder approval.
Shareholders will be notified before any material change in
these policies becomes effective.
Types of Investments
The Growth and Income Equity Fund and the Growth Equity Fund
invest principally in a professionally-managed and diversified
portfolios of common stocks of companies with prospects for
above-average growth and dividends or of companies where
significant fundamental changes are taking place. The Growth
and Income Equity Fund and the Growth Equity Fund will seek to
invest in equity securities of companies that are projected to
show earnings growth superior to the Standard & Poor's 500
Composite Stock Index. Although the Growth and Income Equity
Fund and the Growth Equity Fund may invest in other securities
and in money market instruments, it is the Growth and Income
Equity Fund's and the Growth Equity Fund's policies, under
normal market conditions, to invest at least 65% of its assets
in equity securities. The securities in which the Growth and
Income Equity Fund and the Growth Equity Fund may invest
include foreign securities, as described in the prospectus.
The Quantitative Equity Fund invests primarily in a
diversified portfolio of publicly-traded common stocks listed
on North American stock exchanges. The selection of investment
securities is made by use of a quantitative computer valuation
model, as described in the prospectus. Under normal
circumstances, the Quantitative Equity Fund will invest at
least 65% of its total assets in equity securities. In
addition, the Quantitative Equity Fund may invest as described
below and as described in the prospectus.
The Small Capitalization Equity Fund invests primarily in a
diversified portfolio of equity securities of companies that
have a market value capitalization of up to $1 billion to
achieve long-term capital appreciation and current income.
Under normal circumstances, the Small Capitalization Equity
Fund will invest at least 65% of its total assets in growth
and income equity securities. In addition, the Small
Capitalization Equity Fund may invest as described below, and
as described in the prospectus.
The Equity Funds intend to limit their respective investments
in foreign securities which are not freely traded on United
States securities exchanges or the over-the-counter market in
the form of depository receipts to no more than 5% of its
total assets.
Money Market Instruments
The Equity Funds may invest in the following money market
instruments:
oinstruments of domestic banks and savings and loans if
they have capital, surplus, and undivided profits of
over $100,000,000, or if the principal amount of the
instrument is insured in full by the Federal Deposit
Insurance Corporation; and
oprime commercial paper (rated A-1 by Standard & Poor's
Ratings Group, Prime-1 by Moody's Investors Service,
Inc., or F-1 by Fitch Investors Service, Inc.).
U.S. Government Obligations
The types of U.S. government obligations in which the
Equity Funds may invest generally include direct
obligations of the U.S. Treasury (such as U.S. Treasury
bills, notes, and bonds) and obligations issued or
guaranteed by U.S. government agencies or
instrumentalities. These securities are backed by:
othe full faith and credit of the U.S. Treasury;
othe issuer's right to borrow an amount limited to a
specific line of credit from the U.S. Treasury;
othe discretionary authority of the U.S. government to
purchase certain obligations of agencies or
instrumentalities; or
othe credit of the agency or instrumentality issuing the
obligations.
Examples of agencies and instrumentalities which are
permissible investments which may not always receive
financial support from the U.S. government are:
oFederal Farm Credit Banks;
oFederal Home Loan Banks;
oFederal National Mortgage Association;
oStudent Loan Marketing Association; and
oFederal Home Loan Mortgage Corporation.
When-Issued and Delayed Delivery Transactions
These transactions are made to secure what is considered to be
an advantageous price or yield for the Equity Funds. No fees
or other expenses, other than normal transaction costs, are
incurred. However, liquid assets of the Equity Funds
sufficient to make payment for the securities to be purchased
are segregated on the Equity Funds' records at the trade date.
These assets are marked to market daily and are maintained
until the transaction has been settled. The Equity Funds do
not intend to engage in when-issued and delayed delivery
transactions to an extent that would cause the segregation of
more than 20% of the total value of its assets.
Restricted and Illiquid Securities
The Equity Funds may invest in commercial paper issued in
reliance on the exemption from registration afforded by
Section 4(2) of the Securities Act of 1933. Section 4(2)
commercial paper is restricted as to disposition under federal
securities law and is generally sold to institutional
investors, such as the Equity Funds, who agree that they are
purchasing the paper for investment purposes and not with a
view to public distribution. Any resale by the purchaser must
be in an exempt transaction. Section 4(2) commercial paper is
normally resold to other institutional investors like the
Equity Funds through or with the assistance of the issuer or
investment dealers who make a market in Section 4(2)
commercial paper, thus providing liquidity. The Equity Funds
believe that Section 4(2) commercial paper and possibly
certain other restricted securities which meet the criteria
for liquidity established by the Trustees are quite liquid.
The Equity Funds intend, therefore, to treat the restricted
securities which meet the criteria for liquidity established
by the Trustees, including Section 4(2) commercial paper (as
determined by the Equity Funds' adviser), as liquid and not
subject to the investment limitation applicable to illiquid
securities. In addition, because Section 4(2) commercial paper
is liquid, the Equity Funds do not intend to subject such
paper to the limitation applicable to restricted securities.
The ability of the Trustees to determine the liquidity of
certain restricted securities is permitted under a Securities
and Exchange Commission (the "SEC") Staff position set forth
in the adopting release for Rule 144A under the Securities Act
of 1933 (the "Rule"). The Rule is a non-exclusive, safe-harbor
for certain secondary market transactions involving securities
subject to restrictions on resale under federal securities
laws. The Rule provides an exemption from registration for
resales of otherwise restricted securities to qualified
institutional buyers. The Rule was expected to further enhance
the liquidity of the secondary market for securities eligible
for resale under the Rule. The Trust, on behalf of the Equity
Funds, believes that the Staff of the SEC has left the
question of determining the liquidity of all restricted
securities (eligible for resale under Rule 144A) for
determination to the Trustees. The Trustees consider the
following criteria in determining the liquidity of certain
restricted securities:
othe frequency of trades and quotes for the security;
othe number of dealers willing to purchase or sell the
security and the number of other potential buyers;
odealer undertakings to make a market in the security; and
othe nature of the security and the nature of the
marketplace trades.
Repurchase Agreements
Repurchase agreements are arrangements in which banks,
broker/dealers, and other recognized financial institutions
sell U.S. government securities or certificates of deposit to
the Equity Funds and agree at the time of sale to repurchase
them at a mutually agreed upon time and price within one year
from the date of acquisition. An Equity Fund requires its
custodian to take possession of the securities subject to
repurchase agreements and these securities are marked to
market daily. To the extent that the original seller does not
repurchase the securities from the Equity Fund, the Equity
Fund could receive less than the repurchase price on any sale
of such securities. In the event that such a defaulting seller
filed for bankruptcy or became insolvent, disposition of such
securities by an Equity Fund might be delayed pending court
action. The Equity Funds believe that, under the regular
procedures normally in effect for custody of an Equity Fund's
portfolio securities subject to repurchase agreements, a court
of competent jurisdiction would rule in favor of the Equity
Fund and allow retention or disposition of such securities.
The Equity Funds will only enter into repurchase agreements
with banks and other recognized financial institutions, such
as broker/dealers, which are deemed by the Equity Funds'
adviser to be creditworthy pursuant to guidelines established
by the Trustees.
Reverse Repurchase Agreements
The Equity Funds may also enter into reverse repurchase
agreements. These transactions are similar to borrowing cash.
In a reverse repurchase agreement, an Equity Fund transfers
possession of a portfolio instrument to another person, such
as a financial institution, broker, or dealer, in return for a
percentage of the instrument's market value in cash, and
agrees that on a stipulated date in the future the Equity Fund
will repurchase the portfolio instrument by remitting the
original consideration plus interest at an agreed upon rate.
The use of reverse repurchase agreements may enable an Equity
Fund to avoid selling portfolio instruments at a time when a
sale may be deemed to be disadvantageous, but the ability to
enter into reverse repurchase agreements does not ensure that
the Equity Fund will be able to avoid selling portfolio
instruments at a disadvantageous time.
When effecting reverse repurchase agreements, liquid assets of
an Equity Fund in a dollar amount sufficient to make payment
for the obligations to be purchased are segregated at the
trade date. These securities are marked to market daily and
are maintained until the transaction is settled.
Lending of Portfolio Securities
The collateral received when an Equity Fund lends portfolio
securities must be valued daily and, should the market value
of the loaned securities increase, the borrower must furnish
additional collateral to an Equity Fund. During the time
portfolio securities are on loan, the borrower pays the Equity
Fund any dividends or interest paid on such securities. Loans
are subject to termination at the option of the Equity Funds
or the borrower. The Equity Funds may pay reasonable
administrative and custodial fees in connection with a loan
and may pay a negotiated portion of the interest earned on the
cash or equivalent collateral to the borrower or placing
broker.
Portfolio Turnover
Although the Equity Funds do not intend to invest for the
purpose of seeking short-term profits, securities in a
portfolio will be sold whenever the investment adviser
believes it is appropriate to do so in light of the Equity
Funds' investment objectives without regard to the length of
time a particular security may have been held.
During the period from August 4, 1994 (date of initial public
investment) to October 31, 1994, the portfolio turnover rate
for the Quantitative Equity Fund was 0%.
During the fiscal year ended October 31, 1994, the portfolio
turnover rates for the Growth Equity Fund, Growth and Income
Equity Fund, and Small Capitalization Equity Fund were 73%,
73%, and 29%, respectively. During the period from December
14, 1992 (date of initial public investment), to October 31,
1993, the portfolio turnover rates for the Growth Equity Fund,
Growth and Income Equity Fund, and Small Capitalization Equity
Fund were 71%, 38%, and 29%, respectively.
Derivative Securities
Put and Call Options
An Equity Fund may purchase and sell put options on its
portfolio securities as described in the prospectus.
Stock Index Futures and Options
The Equity Funds may utilize stock index futures
contracts and options on stocks, stock indices and stock
index futures contracts for the purposes of managing cash
flows into and out of an Equity Fund's portfolio and
potentially reducing transactional costs. The Equity
Funds may not use stock index futures contracts and
options for speculative purposes.
As a means of reducing fluctuations in the net asset
value of shares of the Equity Funds, the Equity Funds may
attempt to hedge all or a portion of its portfolio
through the purchase of listed put options on stocks,
stock indices, and stock index futures contracts. These
options will be used as a form of forward pricing to
protect portfolio securities against decreases in value
resulting from market factors, such as an anticipated
increase in interest rates. A purchased put option gives
the Equity Funds, in return for a premium, the right to
sell the underlying security to the writer (seller) at a
specified price during the term of the option. Put
options on stock indices are similar to put options on
stocks except for the delivery requirements. Instead of
giving the Equity Funds the right to make delivery of
stock at a specified price, a put option on a stock index
gives the Equity Funds, as holders, the right to receive
an amount of cash upon exercise of the option.
An Equity Fund may also write covered call options. As
the writer of a call option, the Equity Funds have the
obligation upon exercise of the option during the option
period to deliver the underlying security upon payment of
the exercise price.
An Equity Fund may only: (1) buy listed put options on
stock indices and stock index futures contracts; (2) buy
listed put options on securities held in its portfolio;
and (3) sell listed call options either on securities
held in its portfolio or on securities which it has the
right to obtain without payment of further consideration
(or has segregated cash in the amount of any such
additional consideration). An Equity Fund will maintain
its positions in securities, option rights, and
segregated cash subject to puts and calls until the
options are exercised, closed, or expired. An Equity Fund
may also enter into stock index futures contracts. A
stock index futures contract is a bilateral agreement
which obligates the seller to deliver (and the purchaser
to take delivery of) an amount of cash equal to a
specific dollar amount times the difference between the
value of a specific stock index at the close of trading
of the contract and the price at which the agreement is
originally made. There is no physical delivery of the
stocks constituting the index, and no price is paid upon
entering into a futures contract.
In general, option contracts are closed out prior to
their expiration. An Equity Fund, when purchasing or
selling a futures contract, will initially be required to
deposit in a segregated account in the broker's name with
the Equity Fund's custodian an amount of cash or U.S.
government securities approximately equal to 5%-10% of
the contract value. This amount is known as "initial
margin," and it is subject to change by the exchange or
board of trade on which the contract is traded.
Subsequent payments to and from the broker are made on a
daily basis as the price of the index or the securities
underlying the futures contract fluctuates. These
payments are known as "variation margins," and the
fluctuation in value of the long and short positions in
the futures contract is a process referred to as "marking
to market." An Equity Fund may decide to close its
position on a contract at any time prior to the
contract's expiration. This is accomplished by the Equity
Fund taking an opposite position at the then-prevailing
price, thereby terminating its existing position in the
contract. Because the initial margin resembles a
performance bond or good-faith deposit on the contract,
it is returned to the Equity Fund upon the termination of
the contract, assuming that all contractual obligations
have been satisfied. Therefore, the margin utilized in
futures contracts is readily distinguishable from the
margin employed in security transactions, since the
margin employed in futures contracts does not involve the
borrowing of funds to finance the transaction.
Restrictions on the Use of Futures Contracts and Options
An Equity Fund will not enter into futures contracts to
the extent that, immediately thereafter, the sum of its
initial margin deposits on open contracts exceeds 5% of
the market value of the Equity Fund's total assets.
Further, an Equity Fund will enter into stock index
futures contracts only for bona fide hedging purposes or
such other purposes permitted under Part 4 of the
regulations promulgated by the Commodity Futures Trading
Commission. Also, an Equity Fund may not enter into stock
index futures contracts and options to the extent that
the value of such contracts would exceed 20% of the
Equity Fund's total net assets and may not purchase put
options to the extent that more than 5% of the value of
the Equity Fund's total assets would be invested in
premiums on open put option positions.
Indexed Securities
The Equity Funds may invest in indexed securities whose
value is linked to foreign currencies, interest rates,
commodities, indices, or other financial indicators. Most
indexed securities are short to intermediate term fixed-
income securities whose values at maturity or interest
rates rise or fall according to the change in one or more
specified underlying instruments. Indexed securities may
be positively or negatively indexed (i.e., their value
may increase or decrease if the underlying instrument
appreciates), and may have return characteristics similar
to direct investments in the underlying instrument or to
one or more options on the underlying instrument. Indexed
securities may be more volatile than the underlying
instrument itself.
Swap Agreements
As one way of managing its exposure to different types of
investments, the Equity Funds may enter into interest
rate swaps, currency swaps, and other types of swap
agreements such as caps, collars, and floors. In a
typical interest rate swap, one party agrees to make
regular payments equal to a floating interest rate times
a "notional principal amount," in return for payments
equal to a fixed rate times the same amount, for a
specified period of time. If a swap agreement provides
for payments in different currencies, the parties might
agree to exchange notional principal amount as well.
Swaps may also depend on other prices or rates, such as
the value of an index or mortgage prepayment rates.
In a typical cap or floor agreement, one party agrees to
make payments only under specified circumstances, usually
in return for payment of a fee by the other party. For
example, the buyer or an interest rate cap obtains the
right to receive payments to the extent that a specified
interest rate exceeds an agreed-upon level, while the
seller of an interest rate floor is obligated to make
payments to the extent that a specified interest rate
falls below an agreed-upon level. An interest rate collar
combines elements of buying a cap and selling a floor.
Swap agreements will tend to shift the Equity Funds'
investment exposure from one type of investment to
another. For example, if the Equity Funds agreed to
exchange payments in dollars for payments in foreign
currency, the swap agreement would tend to decrease the
Equity Funds' exposure to U.S. interest rates and
increase its exposure to foreign currency and interest
rates. Caps and floors have an effect similar to buying
or writing options. Depending on how they are used, swap
agreements may increase or decrease the overall
volatility of the Equity Funds' investments and its share
price and yield.
Swap agreements are sophisticated hedging instruments
that typically involve a small investment of cash
relative to the magnitude of risks assumed. As a result,
swaps can be highly volatile and may have a considerable
impact on the Equity Funds' performance. Swap agreements
are subject to risks related to the counterparty's
ability to perform, and may decline in value if the
counterparty's creditworthiness deteriorates. The Equity
Funds may also suffer losses if they are unable to
terminate outstanding swap agreements or reduce their
exposure through offsetting transactions.
Investment Limitations
Selling Short and Buying on Margin
The Equity Funds will not sell any securities short or
purchase any securities on margin, but may obtain such
short-term credits as may be necessary for clearance of
purchases and sales of portfolio securities. A deposit or
payment by the Equity Funds of initial or variation
margin in connection with futures contracts or related
options transactions is not considered the purchase of a
security on margin.
Issuing Senior Securities and Borrowing Money
The Equity Funds will not issue senior securities except
that the Equity Funds may borrow money directly or
through reverse repurchase agreements in amounts up to
one-third of the value of its total assets, including the
amounts borrowed; and except to the extent that the
Equity Funds will enter into futures contracts. The
Equity Funds will not borrow money or engage in reverse
repurchase agreements for investment leverage, but rather
as a temporary, extraordinary, or emergency measure to
facilitate management of the portfolio by enabling the
Equity Funds to meet redemption requests when the
liquidation of portfolio securities is deemed to be
inconvenient or disadvantageous. The Equity Funds will
not purchase any securities while borrowings in excess of
5% of their respective total assets are outstanding.
Pledging Assets
The Equity Funds will not mortgage, pledge, or
hypothecate any assets except to secure permitted
borrowings. In those cases, it may mortgage, pledge, or
hypothecate assets having a market value not exceeding
10% of the value of total assets at the time of the
pledge. For purposes of this limitation, the following
will not be deemed to be pledges of an Equity Fund's
assets: (a) the deposit of assets in escrow in connection
with the writing of covered put or call options and the
purchase of securities on a when-issued basis; and (b)
collateral arrangements with respect to (i) the purchase
and sale of stock options (and options on stock indices)
and (ii) initial or variation margin for futures
contracts. Margin deposits for the purchase and sale of
futures contracts and related options are not deemed to
be a pledge.
Investing in Real Estate
An Equity Fund will not purchase or sell real estate,
including limited partnership interests, although it may
invest in the securities of companies whose business
involves the purchase or sale of real estate or in
securities which are secured by real estate or interests
in real estate.
Investing in Commodities
The Equity Funds will not purchase or sell commodities,
commodity contracts, or commodity futures contracts
except to the extent that an Equity Fund may engage in
transactions involving financial futures contracts or
options on financial futures contracts.
Diversification of Investments
With respect to securities comprising 75% of the value of
its total assets, the Equity Funds will not purchase
securities issued by any one issuer (other than cash,
cash items, or securities issued or guaranteed by the
government of the United States or its agencies or
instrumentalities and repurchase agreements
collateralized by such securities) if, as a result, more
than 5% of the value of their respective total assets
would be invested in the securities of that issuer. An
Equity Fund will not acquire more than 10% of the
outstanding voting securities of any one issuer.
Concentration of Investments
The Equity Funds will not invest 25% or more of the value
of their respective total assets in any one industry
(other than securities issued by the U.S. government, its
agencies or instrumentalities). However, the Equity Funds
may invest as temporary investments more than 25% of the
value of their respective assets in cash or cash items,
securities issued or guaranteed by the U.S. government,
its agencies or instrumentalities, or instruments secured
by these money market instruments, such as repurchase
agreements.
Underwriting
An Equity Fund will not underwrite any issue of
securities, except as it may be deemed to be an
underwriter under the Securities Act of 1933 in
connection with the sale of securities in accordance with
its investment objective, policies, and limitations.
Lending Cash or Securities
An Equity Fund will not lend any of its assets, except
portfolio securities up to one-third of the value of its
total assets. This shall not prevent an Equity Fund from
purchasing or holding money market instruments,
repurchase agreements, obligations of the U.S.
government, its agencies or instrumentalities, variable
rate demand notes, bonds debentures, notes, certificates
of indebtedness, or certain debt instruments as permitted
by its investment objective, policies, and limitations or
the Trust's Declaration of Trust.
The above investment limitations cannot be changed without
shareholder approval. The following limitations, however, may
be changed by the Trustees without shareholder approval.
Shareholders will be notified before any material change in
these limitations becomes effective.
Investing in Restricted Securities
An Equity Fund will not invest more than 10% of its total
assets in securities subject to restrictions on resale
under the Securities Act of 1933, except for commercial
paper issued under Section 4(2) of the Securities Act of
1933 and certain other restricted securities which meet
the criteria for liquidity as established by the
Trustees.
Investing in Illiquid Securities
An Equity Fund will not invest more than 15% of the value
of its net assets in illiquid securities, including
repurchase agreements providing for settlement in more
than seven days after notice, non-negotiable fixed time
deposits with maturities over seven days, over-the-
counter options, and certain securities not determined by
the Trustees to be liquid.
Investing in Minerals
The Equity Funds will not purchase interests in oil, gas,
or other mineral exploration or development programs or
leases, except it may purchase the securities of issuers
which invest in or sponsor such programs.
Investing in New Issuers
The Equity Funds will not invest more than 5% of the
value of its total assets in securities of issuers which
have records of less than three years of continuous
operations, including the operation of any predecessor.
Investing in Issuers Whose Securities are Owned by Officers
and Trustees of the Trust
The Equity Funds will not purchase or retain the
securities of any issuer if the officers and Trustees of
the Trust or the Equity Funds' investment adviser, owning
individually more than 1/2 of 1% of the issuer's
securities, together own more than 5% of the issuer's
securities.
Purchasing Securities to Exercise Control
The Equity Funds will not purchase securities of a
company for purpose of exercising control or management.
Investing in Warrants
The Equity Funds will not invest more than 5% of its net
assets in warrants. No more than 2% of this 5% may be
warrants which are not listed on the New York or American
Stock Exchanges.
Investing in Put Options
An Equity Fund will not purchase put options on
securities, unless the securities are held in the Equity
Fund's portfolio and not more than 5% of the value of the
Equity Fund's total assets would be invested in premiums
on open put option positions.
Writing Covered Call Options
An Equity Fund will not write call options on securities
unless the securities are held in the Equity Fund's
portfolio or unless the Equity Fund is entitled to them
in deliverable form without further payment or after
segregating cash in the amount of any further payment. An
Equity Fund will not write call options in excess of 5%
of the value of its total assets.
Investing in Securities of Other Investment Companies
The Equity Funds will limit their investment in other
investment companies to no more than 3% of the total
outstanding voting stock of any investment company, will
invest no more than 5% of total assets in any one
investment company, and will invest no more than 10% of
its total assets in investment companies in general. The
Equity Funds will purchase securities only in open market
transactions involving only customary broker's
commissions. However, these limitations are not
applicable if the securities are acquired in a merger,
consolidation, reorganization, or acquisition of assets.
It should be noted that investment companies incur
certain expenses such as management fees, and therefore
any investment by the Equity Funds in shares of another
investment company would be subject to such duplicate
expenses.
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.
The Equity Funds did not borrow money or pledge securities in
excess of 5% of their respective net assets during the past
fiscal year, and do not intend to borrow money in excess of 5%
of the value of their respective net assets or invest more
than 5% of their respective total assets in securities of
foreign issuers during the coming fiscal year.
For purposes of their policies and limitations, the Equity
Funds consider 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."
To comply with registration requirements in certain states,
each Equity Fund: (1) will limit the aggregate value of the
assets underlying covered call options or put options written
by an Equity Fund to not more than 25% of its net assets, (2)
will limit the premiums paid for options purchased by an
Equity Fund to 5% of its net assets, (3) will limit the margin
deposits on futures contracts entered into by an Equity Fund
to 5% of its net assets, and (4) will limit investments in
warrants to 5% of its net assets. No more than 2% will be in
warrants which are listed on the New York or American Stock
Exchanges. Also, to comply with certain state restrictions,
each Equity Fund will limit its investment in restricted
securities to 5% of total assets. (If state requirements
change, these restrictions may be revised without shareholder
notification.)
The Shawmut Funds Management
Officers and Trustees are listed with their addresses, present
positions with The Shawmut Funds, and principal occupations.
John F. Donahue@*
Federated Investors Tower
Pittsburgh, Pennsylvania
Chairman and Trustee
Chairman and Trustee, Federated Investors, Federated Advisers,
Federated Management, and Federated Research; Chairman and
Director, Federated Research Corp.; Chairman, Passport
Research, Ltd.; Director, AEtna Life and Casualty Company;
Chief Executive Officer and Director, Trustee, or Managing
General Partner of the Funds. Mr. Donahue is the father of J.
Christopher Donahue , Vice President of the Trust.
Thomas G. Bigley
28th Floor
One Oxford Centre
Pittsburgh, Pennsylvania
Trustee
Director, Oberg Manufacturing Co.; Chairman of the Board,
Children's Hospital of Pittsburgh; Director, Trustee, or
Managing General Partner of the Funds; formerly, Senior
Partner, Ernst & Young LLP.
John T. Conroy, Jr.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, Florida
Trustee
President, Investment Properties Corporation; Senior Vice-
President, John R. Wood and Associates, Inc., Realtors;
President, Northgate Village Development Corporation; Partner
or Trustee in private real estate ventures in Southwest
Florida; Director, Trustee, or Managing General Partner of the
Funds; formerly, President, Naples Property Management, Inc.
William J. Copeland
One PNC Plaza - 23rd Floor
Pittsburgh, Pennsylvania
Trustee
Director and Member of the Executive Committee, Michael Baker,
Inc.; Director, Trustee, or Managing General Partner of the
Funds; formerly, Vice Chairman and Director, PNC Bank, N.A.,
and PNC Bank Corp. and Director, Ryan Homes, Inc.
James E. Dowd
571 Hayward Mill Road
Concord, Massachusetts
Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.;
Director, Trustee, or Managing General Partner of the Funds;
formerly, Director, Blue Cross of Massachusetts, Inc.
Lawrence D. Ellis, M.D.
3471 Fifth Avenue, Suite 1111
Pittsburgh, Pennsylvania
Trustee
Hematologist, Oncologist, and Internist, Presbyterian and
Montefiore Hospitals; Professor of Medicine and Trustee,
University of Pittsburgh; Director of Corporate Health,
University of Pittsburgh Medical Center; Director, Trustee, or
Managing General Partner of the Funds.
Edward L. Flaherty, Jr.@
Two Gateway Center-Suite 674
Pittsburgh, Pennsylvania
Trustee
Attorney-at-law; Partner, Henny, Koeheba, Meyer and Flaherty;
Director, Eat'N Park Restaurants, Inc., and Statewide
Settlement Agency, Inc.; Director, Trustee, or Managing
General Partner of the Funds; formerly, Counsel, Horizon
Financial, F.A., Western Region.
Edward C. Gonzales *
Federated Investors Tower
Pittsburgh, Pennsylvania
President, Treasurer and Trustee
Vice President, Treasurer, and Trustee, Federated Investors;
Vice President and Treasurer, Federated Advisers, Federated
Management, Federated Research, Federated Research Corp., and
Passport Research, Ltd.; Executive Vice President, Treasurer,
and Director, Federated Securities Corp.; Trustee, Federated
Services Company and Federated Shareholder Services; Chairman,
Treasurer, and Trustee, Federated Administrative Services;
Trustee or Director of some of the Funds; Vice President and
Treasurer of the Funds.
Peter E. Madden
225 Franklin Street
Boston, Massachusetts
Trustee
Consultant; State Representative, Commonwealth of
Massachusetts; Director, Trustee, or Managing General Partner
of the Funds; formerly, President, State Street Bank and Trust
Company and State Street Boston Corporation and Trustee, Lahey
Clinic Foundation, Inc.
Gregor F. Meyer
Two Gateway Center-Suite 674
Pittsburgh, Pennsylvania
Trustee
Attorney-at-law; Partner, Henny, Koeheba, Meyer and Flaherty;
Chairman, Meritcare, Inc.; Director, Eat'N Park Restaurants,
Inc.; Director, Trustee, or Managing General Partner of the
Funds; formerly, Vice Chairman, Horizon Financial, F.A.
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, Pennsylvania
Trustee
Professor, Foreign Policy and Management Consultant; Trustee,
Carnegie Endowment for International Peace, RAND Corporation,
Online Computer Library Center, Inc., and U.S. Space
Foundation; Chairman, Czecho Slovak Management Center;
Director, Trustee, or Managing General Partner of the Funds;
President Emeritus, University of Pittsburgh; formerly,
Chairman, National Advisory Council for Environmental Policy
and Technology.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, Pennsylvania
Trustee
Public relations/marketing consultant; Director, Trustee, or
Managing General Partner of the Funds.
J. Christopher Donahue
Federated Investors Tower
Pittsburgh, Pennsylvania
Vice President
President and Trustee, Federated Investors, Federated
Advisers, Federated Management, and Federated Research;
President and Director, Federated Research Corp.; President,
Passport Research, Ltd.; Trustee, Federated Administrative
Services, Federated Services Company, and Federated
Shareholder Services; President or Vice President of the
Funds; Director, Trustee, or Managing General Partner of some
of the Funds. Mr. Donahue is the son of John F. Donahue,
Chairman and Trustee of the Trust.
Richard B. Fisher
Federated Investors Tower
Pittsburgh, Pennsylvania
Vice President
Executive Vice President and Trustee, Federated Investors;
Director, Federated Research Corp.; Chairman and Director,
Federated Securities Corp.; President or Vice President of
some of the Funds; Director or Trustee of some of the Funds.
John W. McGonigle
Federated Investors Tower
Pittsburgh, Pennsylvania
Vice President and Secretary
Vice President, Secretary, General Counsel, and Trustee,
Federated Investors; Vice President, Secretary, and Trustee,
Federated Advisers, Federated Management, and Federated
Research; Vice President and Secretary, Federated Research
Corp. and Passport Research, Ltd.; Trustee, Federated Services
Company; Executive Vice President, Secretary, and Trustee,
Federated Administrative Services; Secretary and Trustee,
Federated Shareholder Services; Executive Vice President and
Director, Federated Securities Corp.; Vice President and
Secretary of the Funds.
Jeffrey W. Sterling
Federated Investors Tower
Pittsburgh, Pennsylvania
Vice President and Assistant Treasurer
Vice President, Federated Administrative Services; Vice
President and Assistant Treasurer of some of the Funds.
* This Trustee is deemed to be an "interested person" as
defined in the Investment Company Act of 1940, as amended.
@ Member of the Executive Committee. The Executive Committee
of the Board of Trustees handles the responsibilities of the
Board of Trustees between meetings of the Board.
The Funds
"The Funds" and "Funds" mean the following investment
companies: American Leaders Fund, Inc.; Annuity Management
Series; Arrow Funds; Automated Cash Management Trust;
Automated Government Money Trust; California Municipal Cash
Trust; Cash Trust Series II; Cash Trust Series, Inc.; DG
Investor Series; Edward D. Jones & Co. Daily Passport Cash
Trust; Federated ARMs Fund; Federated Exchange Fund, Ltd.;
Federated GNMA Trust; Federated Government Trust; Federated
Growth Trust; Federated High Yield Trust; Federated Income
Securities Trust; Federated Income Trust; Federated Index
Trust; Federated Institutional Trust; Federated Intermediate
Government Trust; Federated Master Trust; Federated Municipal
Trust; Federated Short-Intermediate Government Trust;
Federated Short-Term U.S. Government Trust; Federated Stock
Trust; Federated Tax-Free Trust; Federated U.S. Government
Bond Fund; First Priority Funds; Fixed Income Securities,
Inc.; Fortress Adjustable Rate U.S. Government Fund, Inc.;
Fortress Municipal Income Fund, Inc.; Fortress Utility Fund,
Inc.; Fund for U.S. Government Securities, Inc.; Government
Income Securities, Inc.; High Yield Cash Trust; Insight
Institutional Series, Inc.; Insurance Management Series;
Intermediate Municipal Trust; International Series, Inc.;
Investment Series Funds, Inc.; Investment Series Trust;
Liberty Equity Income Fund, Inc.; Liberty High Income Bond
Fund, Inc.; Liberty Municipal Securities Fund, Inc.; Liberty
U.S. Government Money Market Trust; Liberty Term Trust, Inc. -
1999; Liberty Utility Fund, Inc.; Liquid Cash Trust; Managed
Series Trust; The Medalist Funds: Money Market Management,
Inc.; Money Market Obligations Trust; Money Market Trust;
Municipal Securities Income Trust; New York Municipal Cash
Trust; 111 Corcoran Funds; Peachtree Funds; The Planters
Funds; Portage Funds; RIMCO Monument Funds; Short-Term
Municipal Trust; Star Funds; The Starburst Funds; The
Starburst Funds II; Stock and Bond Fund, Inc.; Sunburst Funds;
Targeted Duration Trust; Tax-Free Instruments Trust; Trademark
Funds; Trust for Financial Institutions; Trust For Government
Cash Reserves; Trust for Short-Term U.S. Government
Securities; Trust for U.S. Treasury Obligations; and World
Investment Series, Inc.
Equity Funds Ownership
Officers and Trustees own less than 1% of an Equity Funds'
outstanding shares.
As of December 12, 1994, the following shareholder of record
owned 5% or more of the Shares of an Equity Fund: Olsen & Co.
owned approximately 301,547 shares (95.20%) of the Trust
Shares of the Quantitative Equity Fund; J. Kyle Muller and Ann
C. Muller owned approximately 10,020 shares (15.02%), and
Science Center of Connecticut Inc. owned approximately 7,007
shares (10.51%) of the Investment Shares of the Quantitative
Equity Fund; Olsen & Co. owned approximately 1,540,598 shares
(100%) of the Trust Shares of the Growth Equity Fund; Olsen &
Co. owned approximately 14,089,293 shares (100%) of the Trust
Shares of the Growth and Income Equity Fund; and Olsen & Co.
owned approximately 9,146,775 shares (100%) of the Trust
Shares of the Small Capitalization Equity Fund.
Trustee Liability
The Trust's Declaration of Trust provides that the Trustees
will not be liable for errors of judgment or mistakes of fact
or law. However, they are not protected against any liability
to which they would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of their
office.
Investment Advisory Services
Adviser to the Equity Funds
The Equity Funds' investment adviser is Shawmut Bank, N.A.
(the "Adviser"). The Adviser shall not be liable to the Trust,
the Equity Funds, or any shareholder of the Equity 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.
Because of the internal controls maintained by Shawmut Bank,
N.A., to restrict the flow of non-public information, an
Equity Fund's investments are typically made without any
knowledge of Shawmut Bank, N.A.'s., or its affiliates' lending
relationships with an issuer.
Advisory Fees
For its advisory services, the Adviser receives an annual
investment advisory fee as described in the combined
prospectus.
During the fiscal year ended October 31, 1994, the Adviser
earned the following advisory fees: Growth Equity Fund,
$239,796, of which $119,898 was voluntarily waived; Growth and
Income Equity Fund, $1,720,866, of which $344,173 was
voluntarily waived; and Small Capitalization Equity Fund,
$1,180,502, of which $295,126 was voluntarily waived. For the
period from December 14, 1992 (date of initial public
investment), to October 31, 1993, the Adviser earned the
following advisory fees: Growth Equity Fund, $222,953, of
which $75,986 was voluntarily waived; Growth and Income Equity
Fund, $1,191,845, of which $319,550 was voluntarily waived;
and Small Capitalization Equity Fund, $817,430, of which
$230,774 was voluntarily waived.
During the period from August 4, 1994 (date of initial public
investment) to October 31, 1994, the Quantitative Equity
Fund's adviser earned $8,318 in investment advisory fees, all
of which was voluntarily waived.
Sub-Adviser to the Quantitative Equity Fund
The sub-adviser to the Quantitative Equity Fund is Marque
Millennium Group Limited (the "Sub-Adviser"). As is the case
with the Adviser, the Sub-Adviser shall not be liable to the
Trust, the Quantitative Equity Fund, or any shareholder of the
Quantitative Equity Fund 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
contact with the Adviser.
Sub-Advisory Fees
For its services, Marque Millennium Group Limited, as Sub-
Adviser to the Quantitative Equity Fund, receives an annual
fee, payable by the Adviser, as described in the prospectus.
During the period from August 4, 1994 (date of initial public
investment) to October 31, 1994, the Quantitative Equity
Fund's sub-adviser earned $4,159 in sub-advisory fees, all of
which was voluntarily waived.
State Expense Limitations
The Adviser has undertaken to comply with the expense
limitations established by certain states for investment
companies whose shares are registered for sale in those
states. If the Equity Funds' normal operating expenses
(including the investment advisory fee, but not including
brokerage commissions, interest, taxes, and extraordinary
expenses) exceed 2 1/2% per year of the first $30 million
of average net assets, 2% per year of the next $70
million of average net assets, and 1 1/2% per year of the
remaining average net assets, the Adviser will reimburse
the Equity Funds for its expenses over the limitation.
If the Equity Funds' monthly projected operating expenses
exceed this limitation, the investment advisory fee paid
will be reduced by the amount of the excess, subject to
an annual adjustment. If the expense limitation is
exceeded, the amount to be reimbursed by the Adviser will
be limited, in any single fiscal year, by the amount of
the investment advisory fee.
This arrangement is not part of the advisory contract and
may be amended or rescinded in the future.
Administrative Services
Federated Administrative Services, a subsidiary of Federated
Investors, provides administrative personnel and services to
the Equity Funds for the fee set forth in the prospectus. For
the fiscal year ended October 31, 1994, Federated
Administrative Services earned the following administrative
fees: Growth Equity Fund, $50,000; Growth and Income Equity
Fund, $184,829; Small Capitalization Equity Fund, $126,698.
For the period from December 14, 1992 (date of initial public
investment) to October 31, 1993, Federated Administrative
Services earned the following administrative fees: Growth
Equity Fund, $28,063; Growth and Income Equity Fund, $149,519;
Small Capitalization Equity Fund, $102,587.
During the period from August 4, 1994 (date of initial public
investment) to October 31, 1994, Federated Administrative
Services earned $17,808 in administrative fees from the
Quantitative Equity Fund.
Shawmut Bank, N.A., serves as custodian to the Equity Funds.
As compensation for its services, the custodian receives a fee
based upon a sliding scale ranging from a minimum of .011% to
a maximum of .02%, plus certain transaction costs. For the
fiscal year ended October 31, 1994, the Equity Funds'
custodian earned the following fees: Growth Equity Fund,
$12,000, all of which was voluntarily waived; Growth and
Income Equity Fund, $34,400, all of which was voluntarily
waived; Small Capitalization Equity Fund, $23,598, all of
which was voluntarily waived. For the period from December 14,
1992 (date of initial public investment) to October 31, 1993,
the Equity Funds' custodian earned the following fees: Growth
Equity Fund, $4,900, all of which was voluntarily waived;
Growth and Income Equity Fund, $10,719, all of which was
voluntarily waived; Small Capitalization Equity Fund, $7,827,
all of which was voluntarily waived.
During the period from August 4, 1994 (date of initial public
investment) to October 31, 1994, the custodian earned the
following fee: Quantitative Equity Fund, $5,000, all of which
was voluntarily waived.
Brokerage Transactions
It is the Equity Funds' policy with respect to the selection
of brokers and dealers in the purchase and sale of securities
to obtain the "best net realized price" on each transaction.
The Equity Funds conducts business only with financially sound
brokers or dealers on that basis. Brokerage commission is,
however, only one element in determining "best net realized
price." The Adviser may also select brokers and dealers who
offer research and other services. These services may be
furnished directly to the Equity Funds or to the Adviser and
may include:
oadvice as to the advisability of investing in securities;
osecurity analysis and reports;
oeconomic studies;
oindustry studies;
oreceipt of quotations for portfolio evaluations; and
osimilar 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 may be used by the
Adviser for 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 October 31, 1994, the Growth Equity
Fund, Growth and Income Equity Fund, and Small Capitalization
Equity Fund paid $57,244, $384,037, and $89,793, respectively,
in brokerage commissions on brokerage transactions.
For the period from August 4, 1994 (date of initial public
investment), to October 31, 1994, the Quantitative Equity Fund
paid $2,325 in brokerage commissions on brokerage
transactions.
Purchasing Shares
Shares are sold at their net asset value plus a sales load
(Investment Shares only) on days on which the New York Stock
Exchange and the Federal Reserve Wire System are open for
business. The procedure for purchasing Shares of the Equity
Funds is explained in the respective prospectuses under
"Investing in Trust Shares" or "Investing in Investment
Shares."
Distribution Plan (Investment Shares)
With respect to the Investment Shares class of the Equity
Funds, the Trust has adopted a Plan pursuant to Rule 12b-1
which was promulgated by the Securities and Exchange
Commission pursuant to the Investment Company Act of 1940. The
Plan permits the payment of fees to administrators (including
broker/dealers and depository institutions such as commercial
banks and savings and loan associations) for distribution and
administrative services. The Plan is designed to stimulate
administrators to provide distribution and administrative
support services to the Equity Funds and their shareholders.
The administrative services are provided by a representative
who has knowledge of the shareholder's particular
circumstances and goals, and include, but are not limited to:
communicating account openings; communicating account
closings; entering purchase transactions; entering redemption
transactions; providing or arranging to provide accounting
support for all transactions, wiring funds and receiving funds
for Share purchases and redemptions, confirming and
reconciling all transactions, reviewing the activity in Equity
Funds accounts, and providing training and supervision of
broker personnel; posting and reinvesting dividends to Equity
Funds accounts or arranging for this service to be performed
by the Equity Funds' transfer agent; and maintaining and
distributing current copies of prospectuses and shareholder
reports to the beneficial owners of shares of the Equity Funds
and prospective shareholders.
By adopting the Plan, the Trustees expect that the Equity
Funds will be able to achieve a more predictable flow of cash
for investment purposes and to meet redemptions. This will
facilitate more efficient portfolio management and assist the
Equity Funds in seeking to achieve its investment objectives.
By identifying potential investors whose needs are served by
the Equity Funds' objective, and properly servicing these
accounts, the Equity Funds may be able to curb sharp
fluctuations in rates of redemptions and sales.
Other benefits which the Equity Funds hopes to achieve through
the Plan include, but are not limited to, the following: (1)
an efficient and effective administrative system; (2) a more
efficient use of shareholder assets by having them rapidly
invested in the Equity Funds, through an automatic transfer of
funds from a demand deposit account to an investment account,
with a minimum of delay and administrative detail; and (3) an
efficient and reliable shareholder records system and prompt
responses to shareholder requests and inquiries concerning
their accounts.
For the fiscal year ended October 31, 1994, brokers earned the
following fees pursuant to the Plan: Growth Equity Fund,
$26,500, of which $13,250 was voluntarily waived; Growth and
Income Equity Fund, $96,587, of which $48,294 was voluntarily
waived; and Small Capitalization Equity Fund, $89,974, of
which $44,987 was voluntarily waived. For the period from
December 14, 1992 (date of initial public investment) to
October 31, 1993, brokers earned the following fees pursuant
to the Plan: Growth Equity Fund, $8,860, of which $4,431 was
voluntarily waived; Growth and Income Equity Fund, $33,658, of
which $16,829 was voluntarily waived; and Small Capitalization
Equity Fund, $29,532, of which $14,766 was voluntarily waived.
During the period from August 4, 1994 (date of initial public
investment) to October 31, 1994, brokers earned $241, of which
$125 was voluntarily waived, pursuant to the Plan for
Quantitative Equity Fund.
Conversion to Federal Funds
It is the Equity Funds' policy to be as fully invested as
possible so that maximum interest may be earned. To this end,
all payments from shareholders must be in federal funds or be
converted into federal funds. Shawmut Bank, N.A., on behalf of
its customers, acts as the shareholder's agent in depositing
checks and converting them to federal funds. Purchases through
the distributor are converted to federal funds by the Equity
Funds' transfer agent who, in turn, purchases the Shares of
the appropriate Equity Fund on behalf of the shareholder.
Determining Net Asset Value
The net asset value generally changes each day. The days on
which net asset value is calculated by the Equity Funds are
described in the respective prospectuses for Trust Shares and
Investment Shares.
Determining Market Value of Securities
Market values of the Equity Funds' portfolio securities are
determined as follows:
ofor equity securities, according to the last sale price
on a national securities exchange, if available;
oin the absence of recorded sales for equity securities,
according to the mean between the last closing bid and
asked prices;
ofor 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;
ofor short-term obligations, according to the mean between
bid and asked prices as furnished by an independent
pricing service or for short-term obligations with
maturities of 60 days or less at the time of purchase, at
amortized cost; or
ofor all other securities, at fair value as determined in
good faith by the Trustees.
Prices provided by independent pricing services may be
determined without relying exclusively on quoted prices and
may reflect: institutional trading in similar groups of
securities, yield, quality, coupon rate, maturity, type of
issue, trading characteristics, and other market data.
The Equity Funds will value stock index futures contracts,
options on stock and stock indices, and put options on stock
index futures and financial futures at their market values
established by the exchanges at the close of option trading on
such exchanges unless the Trustees determines in good faith
that another method of valuing option positions is necessary.
Exchange Privilege
Requirements for Exchange
Shareholders using the exchange privilege must exchange Shares
having a net asset value of at least $1,000. Before the
exchange, the shareholder must receive a prospectus of the
fund for which the exchange is being made. Further information
on the exchange privilege and prospectuses may be obtained by
calling Shawmut Bank, N.A.
Making an Exchange
Instructions for exchanges may be given in writing or by
telephone. Written instructions may require a signature
guarantee.
Redeeming Shares
The Equity Funds redeems Shares at the next computed net asset
value after the redemption requests are received. Redemption
procedures are explained in the respective prospectuses under
"Redeeming Trust Shares" or "Redeeming Investment Shares."
Redemption in Kind
Although the Trust intends to redeem shares in cash, it
reserves the right under certain circumstances to pay the
redemption price in whole or in part by a distribution of
securities from the Equity Funds' portfolio. Redemption in
kind will be made in conformity with applicable Securities and
Exchange Commission rules, taking such securities at the same
value employed in determining net asset value and selecting
the securities in a manner the Trustees determine to be fair
and equitable.
The Trust has elected to be governed by Rule 18f-1 of the
Investment Company Act of 1940 under which the Trust is
obligated to redeem shares for any one shareholder in cash
only up to the lesser of $250,000 or 1% of the respective
class's net asset value during any 90-day period.
Tax Status
The Equity Funds' Tax Status
The Equity Funds will pay no federal income tax because the
Equity Funds expect to meet the requirements of Subchapter M
of the Internal Revenue Code applicable to regulated
investment companies and to receive the special tax treatment
afforded to such companies. To qualify for this treatment, the
Equity Funds must, among other requirements:
oderive at least 90% of its gross income from dividends,
interest, and gains from the sale of securities;
oderive less than 30% of its gross income from the sale of
securities held less than three months;
oinvest in securities within certain statutory limits; and
odistribute to its shareholders at least 90% of its net
income earned during the year.
Shareholders' Tax Status
Shareholders are subject to federal income tax on dividends
received as cash or additional Shares.
Capital Gains
Capital gains experienced by the Equity Funds could result in
an increase in dividends. Capital losses could result in a
decrease in dividends. The Equity Funds will distribute net
long-term capital gains at least once every 12 months.
Total Return
The average annual total return for Investment Shares of the
Growth Equity Fund, Growth and Income Equity Fund, and Small
Capitalization Equity Fund for the fiscal year ended October
31, 1994 were (0.33%), 4.71%, and (2.45%), respectively. The
average annual total return for Investment Shares of the
Growth Equity Fund, Growth and Income Equity Fund, and Small
Capitalization Equity Fund for the period from February 12,
1993 (date of initial public investment) to October 31, 1994
were 2.60%, 6.39%, and 2.29%, respectively.
The average annual total return for the Trust Shares of the
Growth Equity Fund, Growth and Income Equity Fund, and Small
Capitalization Equity Fund for the fiscal year ended October
31, 1994 were 4.16%, 9.45%, and 1.86%, respectively. The
average annual total return for the Trust Shares of the Growth
Equity Fund, Growth and Income Equity Fund, and Small
Capitalization Equity Fund for the period from December 14,
1992 (date of initial public investment) to October 31, 1994
were 4.89%, 9.67%, and 7.27%.
The average annual total return for both classes of Shares of
the Equity Funds 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 offering price
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
applicable sales load (Investment Shares only), adjusted over
the period by any additional Shares, assuming the quarterly
reinvestment of all dividends and distributions.
The cumulative total return for Investment Shares of the
Quantitative Equity Fund for the period from August 4, 1994
(date of initial public investment) to October 31, 1994, was
(3.11)%. The cumulative total return for Trust Shares of the
Quantitative Equity Fund for the period from August 4, 1994
(date of initial public investment) to October 31, 1994, was
0.94%. Cumulative total return reflects the Quantitative
Equity Fund's total performance over a specific period of
time. This total return assumes and is reduced by the payment
of a maximum sales load (Investment Shares only). The
Quantitative Equity Fund's total returns are representative of
approximately three months of activity since the Quantitative
Equity Fund's date of initial public investment.
Yield
The thirty-day yield for Investment Shares of the Growth
Equity Fund, Growth and Income Equity Fund, Small
Capitalization Equity Fund, and Quantitative Equity Fund for
the period ending October 31, 1994, were 0.20%, 1.88%,
(0.16)%, and 2.19%, respectively. The thirty-day yield for
Trust Shares of the Growth Equity Fund, Growth and Income
Equity Fund, Small Capitalization Equity Fund, and
Quantitative Equity Fund for the same period were 0.45%,
2.20%, 0.08%, and 2.44%, respectively.
The yield for both classes of Shares of the Equity Funds is
determined by dividing the net investment income per share (as
defined by the Securities and Exchange Commission) earned by
the Equity Funds over a thirty-day period by the maximum
offering price per Share on the last day of the period. This
value is 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 twelve-
month period and is reinvested every six months. The yield
does not necessarily reflect income actually earned by the
Shares because of certain adjustments required by the
Securities and Exchange Commission and, therefore, may not
correlate to the dividends or other distributions paid to
shareholders.
To the extent that financial institutions and broker/dealers
charge fees in connection with services provided in
conjunction with an investment in the Equity Funds,
performance will be reduced for those shareholders paying
those fees.
Performance Comparisons
The performance of both classes of Shares depends upon such
variables as:
oportfolio quality;
oaverage portfolio maturity;
otype of instruments in which the portfolio is invested;
ochanges in interest rates and market value of portfolio
securities;
ochanges in an Equity Fund's or either class of Shares'
expenses;
othe relative amount of cash flow; and
ovarious other factors.
Either class of shares' 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.
Investors may use financial publications and/or indices to
obtain a more complete view of an Equity Fund's performance.
When comparing performance, investors should consider all
relevant factors, such as the composition of any 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 Equity Funds use in advertising may include:
oLipper 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
specified period of time. From time to time, the Equity
Funds will quote its Lipper ranking in the "growth funds"
category in advertising and sales literature.
oDow Jones Industrial Average ("DJIA") represents share
prices of selected blue chip industrial corporations as
well as public utility and transportation companies. The
DJIA indicates daily changes in the average price of
stocks in any of its categories. It also reports total
sales for each group of industries. Because it represents
the top corporations of America, the DJIA's index
movement are leading economic indicators for the stock
market as a whole.
oStandard & 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
its index. Taxes due on any of these distributions are
not included, nor are brokerage or other fees calculated
in the Standard & Poor's figures.
The Equity Funds may also advertise the performance of such
indices and the types of securities in which it invests as
compared to the rate of inflation.
Advertisements and other sales literature for both classes of
Shares 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.
Financial Statements
The financial statements for the fiscal year ended October 31,
1994, are incorporated herein by reference to the Annual
Report of the Trust dated October 31, 1994 (File Nos. 33-48933
and 811-58437). A copy of the Annual Report may be obtained
without charge by contacting the Trust at the address listed
on the back cover of the respective prospectus.
Appendix
Standard & Poor's Ratings Group Long Term Debt Rating
Definitions
AAA-Debt rated "AAA" has the highest rating assigned by
Standard & Poor's Ratings Group. 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.
BBB-Debt rated "BBB" is regarded as having an adequate
capacity to pay interest and repay principal. Whereas it
normally exhibits adequate protection parameters, adverse
economic conditions or changing circumstances are more likely
to lead to a weakened capacity to pay interest and repay
principal for debt in this category than in higher rated
categories.
BB-Debt rated "BB" has less near-term vulnerability to default
than other speculative issues. However, it faces major ongoing
uncertainties or exposure to adverse business, financial, or
economic conditions which could lead to inadequate capacity to
meet timely interest and principal payments. The "BB" rating
category is also used for debt subordinated to senior debt
that is assigned an actual or implied "BBB" rating.
B-Debt rated "B" has a greater vulnerability to default but
currently has the capacity to meet interest payments and
principal repayments. Adverse business, financial, or economic
conditions will likely impair capacity or willingness to pay
interest and repay principal. The "B" rating category is also
used for debt subordinated to senior debt that is assigned an
actual or implied "BB" rating.
Moody's Investors Service, Inc., Corporate Bond Rating
Definitions
Aaa-Bonds which are rated "Aaa" are judged to be of the best
quality. They carry the smallest degree of investment risk and
are generally referred to as "gilt edged." Interest payments
are protected by a large or by an exceptionally stable margin
and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of
such issues.
Aa-Bonds which are rated "Aa" are judged to be of high quality
by all standards. Together with the "Aaa" group, they comprise
what are generally known as high-grade bonds. They are rated
lower than the best bonds because margins of protection may
not be as large as in "Aaa" securities or fluctuation of
protective elements may be of greater amplitude or there may
be other elements present which make the long-term risks
appear somewhat larger than 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 some time in the
future.
Baa-Bonds which are rated "Baa" are considered as medium-grade
obligations, i.e., they are neither highly protected nor
poorly secured. Interest payments and principal security
appear adequate for the present but certain protective
elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack
outstanding investment characteristics and in fact have
speculative characteristics as well.
Ba-Bonds which are "Ba" are judged to have speculative
elements; their future cannot be considered as well-assured.
Often the protection of interest and principal payments may be
very moderate and thereby not well safeguarded during both
good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B-Bonds which are rated "B" generally lack characteristics of
the desirable investment. Assurance of interest and principal
payments or of maintenance of other terms of the contract over
any long period of time may be small.
Fitch Investors Service, Inc., Investment Grade Bond Rating
Definitions
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.
BBB-Bonds considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay
interest and repay principal is considered to be adequate.
Adverse changes in economic conditions and circumstances,
however, are more likely to have adverse impact on these
bonds, and therefore impair timely payment. The likelihood
that the ratings of these bonds will fall below investment
grade is higher than for bonds with higher ratings.
BB-Bonds are considered speculative. The obligor's ability to
pay interest and repay principal may be affected over time by
adverse economic changes. However, business and financial
alternatives can be identified which could assist the obligor
in satisfying its debt service requirements.
B-Bonds are considered highly speculative. While bonds in this
class are currently meeting debt service requirements, the
probability of continued timely payment of principal and
interest reflects the obligor's limited margin of safety and
the need for reasonable business and economic activity
throughout the life of the issue.
Standard & Poor's Ratings Group Commercial Paper Rating
Definitions
A-1-This designation indicates that the degree of safety
regarding timely payment is strong. Those issues determined to
possess extremely strong 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.
Moody's Investors Service, Inc., Commercial Paper Rating
Definitions
P-1-Issuers rated Prime-1 (or 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:
Leading market positions in well established industries; High
rates of return on funds employed; Conservative capitalization
structures with moderate reliance on debt and ample asset
protection; Broad margins in 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 (or related supporting institutions)
have a strong capacity for repayment of short-term promissory
obligations. This will normally be evidenced by many of the
characteristics cited above but to a lesser degree. Earnings
trends and coverage ratios, while sound, will be more subject
to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions.
Ample alternate liquidity is maintained.
Fitch Investors Service, Inc., Short-Term Debt Rating
Definitions
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 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 for issues assigned F-1+
and F-1 ratings.
820482206
820482883
820482305
820482875
820482701
820482834
820482750
820482768
3120919B (12/94)
SHAWMUT
INCOME FUNDS
PROSPECTUS
INVESTMENT SHARES
LIMITED TERM INCOME
INTERMEDIATE GOVERNMENT INCOME
FIXED INCOME
CONNECTICUT INTERMEDIATE
MUNICIPAL INCOME
MASSACHUSETTS INTERMEDIATE
MUNICIPAL INCOME
December 31, 1994
SHAWMUT LIMITED TERM INCOME FUND
SHAWMUT INTERMEDIATE GOVERNMENT
INCOME FUND
SHAWMUT FIXED INCOME FUND
SHAWMUT CONNECTICUT INTERMEDIATE
MUNICIPAL INCOME FUND
SHAWMUT MASSACHUSETTS INTERMEDIATE
The Shawmut Income Funds MUNICIPAL INCOME FUND
Investment Shares--Combined Prospectus
The shares offered by this prospectus represent interests in Investment Shares
of the income portfolios (collectively, the "Income Funds" or individually, as
appropriate in context, the "Fund") of The Shawmut Funds (the "Trust"), an
open-end management investment company (a mutual fund). In addition to the
Income Funds, the Trust consists of the following separate investment
portfolios, each having distinct investment objectives and policies:
<TABLE>
<S> <C>
EQUITY FUNDS MONEY MARKET FUNDS
Shawmut Growth and Income Equity Fund Shawmut Prime Money Market Fund
Shawmut Growth Equity Fund Shawmut Connecticut Municipal Money
Shawmut Small Capitalization Equity Fund Market Fund
Shawmut Quantitative Equity Fund Shawmut Massachusetts Municipal Money
Market Fund
</TABLE>
This combined prospectus contains the information you should read and know
before you invest in the Income Funds. Keep this prospectus for future
reference. The Income Funds have also filed a Combined Statement of Additional
Information for Trust Shares and Investment Shares dated December 31, 1994,
with the Securities and Exchange Commission. The information contained in the
Combined Statement of Additional Information is incorporated by reference into
this prospectus. You may request a copy of the Combined Statement of Additional
Information free of charge, obtain other information, or make inquiries about
the Income Funds by writing or calling the Trust.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
ALTHOUGH INCOME FUNDS MAY PAY HIGHER RATES THAN BANK DEPOSITS, THEIR NET ASSET
VALUES ARE SENSITIVE TO INTEREST RATE MOVEMENT AND A RISE IN INTEREST RATES CAN
RESULT IN A DECLINE IN THE VALUE OF YOUR INVESTMENT.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF
SHAWMUT BANK, ARE NOT ENDORSED OR GUARANTEED BY SHAWMUT BANK, AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, AND THE FEDERAL RESERVE
BOARD OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE SHARES INVOLVES
INVESTMENT RISKS, INCLUDING FLUCTUATIONS IN VALUE AND EARNINGS AND THE POSSIBLE
LOSS OF PRINCIPAL INVESTED.
INVESTMENT SHARES OF THE SHAWMUT FUNDS ARE AVAILABLE THROUGH REGISTERED
REPRESENTATIVES OF SHAWMUT BROKERAGE, INC., OR OTHER BROKERS, MEMBER NASD/SIPC,
SHAWMUT BROKERAGE, INC. IS AN AFFILIATE OF SHAWMUT BANK.
Prospectus dated December 31, 1994
Table of Contents
- --------------------------------------------------------------------------------
SYNOPSIS..................................................................... 2
- --------------------------------------------------------------------------------
EXPENSE SUMMARY.............................................................. 3
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS......................................................... 4
- --------------------------------------------------------------------------------
GENERAL INFORMATION.......................................................... 6
- --------------------------------------------------------------------------------
THE SHAWMUT PORTFOLIOS....................................................... 6
- --------------------------------------------------------------------------------
OBJECTIVES AND POLICIES...................................................... 6
- --------------------------------------------------------------------------------
INVESTMENTS, STRATEGIES, AND RISKS........................................... 11
- --------------------------------------------------------------------------------
ADMINISTRATION............................................................... 19
- --------------------------------------------------------------------------------
NET ASSET VALUE.............................................................. 22
- --------------------------------------------------------------------------------
INVESTING IN SHARES.......................................................... 22
- --------------------------------------------------------------------------------
EXCHANGE PRIVILEGE........................................................... 26
- --------------------------------------------------------------------------------
REDEEMING SHARES............................................................. 27
- --------------------------------------------------------------------------------
SHAREHOLDER INFORMATION...................................................... 29
- --------------------------------------------------------------------------------
EFFECT OF BANKING LAWS....................................................... 30
- --------------------------------------------------------------------------------
TAX INFORMATION.............................................................. 31
- --------------------------------------------------------------------------------
OTHER CLASSES OF SHARES...................................................... 31
- --------------------------------------------------------------------------------
PERFORMANCE INFORMATION...................................................... 32
- --------------------------------------------------------------------------------
Synopsis
INVESTMENT OBJECTIVES
The Shawmut Funds offer you a convenient, affordable way to participate in
separate, professionally managed portfolios of securities. This prospectus
relates only to the Income Funds of the Trust.
INCOME FUNDS
SHAWMUT LIMITED TERM INCOME FUND
("Limited Term Income Fund") seeks current income consistent with low principal
volatility and total return by investing in a portfolio of income-producing
securities with a term limited to a dollar-weighted average maturity of three
years or less.
SHAWMUT INTERMEDIATE GOVERNMENT INCOME FUND
("Intermediate Government Income Fund") seeks current income consistent with
total return by investing in a portfolio consisting primarily of U.S.
government securities with a dollar-weighted average maturity of between three
and ten years.
SHAWMUT FIXED INCOME FUND
("Fixed Income Fund") seeks current income consistent with total return by
investing in income-producing securities consisting primarily of
investment-grade notes and bonds and U.S. government securities.
SHAWMUT CONNECTICUT INTERMEDIATE MUNICIPAL INCOME FUND
("Connecticut Intermediate Municipal Income Fund") seeks current income which
is exempt from federal regular income tax and Connecticut state income tax by
investing primarily in Connecticut municipal securities, including securities
of states, territories, and possessions of the United States which are not
issued by or on behalf of Connecticut or its political subdivisions and
financing authorities, but which are exempt from Connecticut state income tax.
SHAWMUT MASSACHUSETTS INTERMEDIATE MUNICIPAL INCOME FUND
("Massachusetts Intermediate Municipal Income Fund") seeks current income which
is exempt from federal regular income tax and income taxes imposed by the
Commonwealth of Massachusetts by investing primarily in Massachusetts municipal
securities, including securities of states, territories, and possessions of the
United States which are not issued by or on behalf of Massachusetts or its
political subdivisions and financing authorities, but which are exempt from
Massachusetts state income tax.
BUYING SHARES
A minimum initial investment of $1,000 may be required. Subsequent investments
must be in amounts of at least $100, as described in this prospectus in the
section entitled "Minimum Investment Required."
FUND MANAGEMENT
The Income Funds' investment adviser is Shawmut Bank, N.A., which makes
investment decisions for the Income Funds.
SHAREHOLDER SERVICES
When you become a shareholder, you can easily obtain information about your
account by calling 1-800-SHAWMUT.
THE SHAWMUT INCOME FUNDS
Expense Summary
Investment Shares
<TABLE>
<CAPTION>
PORTFOLIOS
CONNECTICUT
LIMITED INTERMEDIATE INTERMEDIATE
TERM GOVERNMENT FIXED MUNICIPAL
INCOME INCOME INCOME INCOME
FUND FUND FUND FUND*
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) 2.00% 2.00% 2.00% 2.00%
Maximum Sales Load Imposed on Reinvested
Dividends
(as a percentage of offering price) None None None None
Contingent Deferred Sales Charge (as a percentage
of original
purchase price or redemption proceeds as
applicable) None None None None
Redemption Fee (as a percentage of amount
redeemed, if applicable) None None None None
Exchange Fee None None None None
ANNUAL INVESTMENT SHARES OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waivers)(1) 0.60% 0.60% 0.60% 0.00%
12b-1 Fees(2) 0.25% 0.25% 0.25% 0.00%
Total Other Expenses (after waivers
and reimbursements)(3) 0.43% 0.41% 0.34% 0.48%
Total Investment Shares Operating Expenses (after
waivers
and reimbursements)(4) 1.28% 1.26% 1.19% 0.48%
<CAPTION>
MASSACHUSETTS
INTERMEDIATE
MUNICIPAL
INCOME
FUND*
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) 2.00%
Maximum Sales Load Imposed on Reinvested
Dividends
(as a percentage of offering price) None
Contingent Deferred Sales Charge (as a percentage
of original
purchase price or redemption proceeds as
applicable) None
Redemption Fee (as a percentage of amount
redeemed, if applicable) None
Exchange Fee None
ANNUAL INVESTMENT SHARES OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waivers)(1) 0.00%
12b-1 Fees(2) 0.00%
Total Other Expenses (after waivers
and reimbursements)(3) 0.51%
Total Investment Shares Operating Expenses (after
waivers
and reimbursements)(4) 0.51%
</TABLE>
(1) The management fee has been reduced to reflect the voluntary waiver by the
investment adviser. The adviser can terminate this voluntary waiver at any
time at its sole discretion. The maximum management fee is 0.70% for
Connecticut Intermediate Municipal Income Fund and Massachusetts
Intermediate Municipal Income Fund; and 0.80% for Fixed Income Fund,
Intermediate Government Income Fund, and Limited Term Income Fund.
(2) The 12b-1 fee has been reduced to reflect the voluntary waiver by the
distributor. As of the date of this prospectus, neither the Connecticut
Intermediate Municipal Income Fund nor the Massachusetts Intermediate
Municipal Income Fund intend to accrue or pay 12b-1 fees until either a
separate class of shares has been created for certain fiduciary investors
for these portfolios or a determination is made that such investors will be
subject to the 12b-1 fees. The Income Funds can pay up to 0.50% as a 12b-1
fee to the distributor.
(3) Other expenses have been reduced to reflect the voluntary waiver by the
custodian for all funds; and reimbursement by the adviser for the
Connecticut Intermediate Municipal Income Fund and the Massachusetts
Municipal Income Fund.
(4) Absent the voluntary waivers and reimbursements explained in the above
footnotes, the Investment Shares Operating Expenses are 3.09% for the
Connecticut Intermediate Municipal Income Fund; 4.21% for the Massachusetts
Intermediate Municipal Income Fund; 1.68% for the Fixed Income Fund; 1.74%
for the Intermediate Government Income Fund; and 1.76% for the Limited Term
Income Fund.
*Connecticut Intermediate Municipal Income Fund and Massachusetts Intermediate
Municipal Income Fund currently sell their shares without class designation.
Purchasers of either the Trust Shares or Investment Shares of the other
Shawmut Funds may purchase shares of Connecticut Intermediate Municipal Income
Fund and Massachusetts Intermediate Municipal Income Fund.
The purpose of this table is to assist an investor in understanding the various
costs and expenses that a shareholder of Investment Shares will bear, either
directly or indirectly. For more complete descriptions of the various costs and
expenses, see "Administration" and "Investing in Shares." Wire-transferred
redemptions of less than $5,000 may be subject to additional fees.
EXAMPLE
You would pay the following expenses on a $1,000 investment assuming (1) 5%
annual return and (2) redemption at the end of each time period. As noted in the
table above, the Income Funds charge no contingent deferred sales charge.
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
Limited Term Income Fund........................................................ $33 $60 $89 $171
Intermediate Government Income Fund............................................. $33 $59 $88 $169
Fixed Income Fund............................................................... $32 $57 $84 $161
Connecticut Intermediate Municipal Income Fund.................................. $25 $35 $46 $ 79
Massachusetts Intermediate Municipal Income Fund................................ $25 $36 $48 $ 83
</TABLE>
THE ABOVE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
The information set forth in the foregoing table and example relates only to
Investment Shares of the Income Funds. Fixed Income Fund, Intermediate
Government Income Fund, and Limited Term Income Fund also offer another class of
shares called Trust Shares. Trust Shares and Investment Shares are subject to
certain of the same expenses; however, Investment Shares are subject to a 12b-1
fee of up to .50 of 1% of average net assets. See "Other Classes of Shares."
SHAWMUT INCOME FUNDS
Financial Highlights
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
The following table has been audited by Price Waterhouse LLP, the Income Funds'
independent accountants whose report thereon dated December 16, 1994, is
included in the Annual Report of the Shawmut Funds for the fiscal year ended
October 31, 1994, which is incorporated by reference into the Statement of
Additional Information. This table should be read in conjunction with the
Income Funds' financial statements and notes thereto, which may be obtained
from the Income Funds.
<TABLE>
<CAPTION>
DISTRIBUTIONS
NET REALIZED DIVIDENDS TO
AND TO SHAREHOLDERS
NET ASSET UNREALIZED TOTAL SHAREHOLDERS FROM NET
YEAR ENDED VALUE, NET GAIN/(LOSS) FROM FROM NET REALIZED GAIN
OCTOBER BEGINNING INVESTMENT ON INVESTMENT INVESTMENT ON INVESTMENT
31, OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME TRANSACTIONS
<S> <C> <C> <C> <C> <C> <C>
<CAPTION>
INVESTMENT SHARES
LIMITED TERM INCOME FUND
<S> <C> <C> <C> <C> <C> <C>
1993* $10.09 0.34 (0.09) 0.25 (0.34) --
1994 $10.00 0.49 (0.58) (0.09) (0.46) --
<CAPTION>
INTERMEDIATE GOVERNMENT INCOME FUND
<S> <C> <C> <C> <C> <C> <C>
1993* $10.18 0.37 0.08 0.45 (0.37) --
1994 $10.26 0.52 (0.92) (0.40) (0.49) --
<CAPTION>
FIXED INCOME FUND
<S> <C> <C> <C> <C> <C> <C>
1993* $10.23 0.40 0.31 0.71 (0.39) --
1994 $10.55 0.59 (1.21) (0.62) (0.56) (0.05)
<CAPTION>
CONNECTICUT INTERMEDIATE MUNICIPAL INCOME FUND++
<S> <C> <C> <C> <C> <C> <C>
1993** $10.00 0.13 0.24 0.37 (0.13) --
1994 $10.24 0.42 (0.93) (0.51) (0.40) (0.01)
<CAPTION>
MASSACHUSETTS INTERMEDIATE MUNICIPAL INCOME FUND++
<S> <C> <C> <C> <C> <C> <C>
1993** $10.00 0.14 0.29 0.43 (0.13) --
1994 $10.30 0.42 (0.99) (0.57) (0.42) --
<CAPTION>
TRUST SHARES
<S> <C> <C> <C> <C> <C> <C>
LIMITED TERM INCOME FUND
1993*** $10.00 0.49 -- 0.49 (0.49) --
1994 $10.00 0.52 (0.59) (0.07) (0.48) --
INTERMEDIATE GOVERNMENT INCOME FUND
1993*** $10.00 0.52 0.26 0.78 (0.52) --
1994 $10.26 0.54 (0.92) (0.38) (0.51) --
FIXED INCOME FUND
1993*** $10.00 0.55 0.55 1.10 (0.55) --
1994 $10.55 0.62 (1.22) (0.60) (0.58) (0.05)
CONNECTICUT INTERMEDIATE MUNICIPAL INCOME FUND++
1993** $10.00 0.13 0.24 0.37 (0.13) --
1994 $10.24 0.42 (0.93) (0.51) (0.40) (0.01)
MASSACHUSETTS INTERMEDIATE MUNICIPAL INCOME FUND++
1993** $10.00 0.14 0.29 0.43 (0.13) --
1994 $10.30 0.42 (0.99) (0.57) (0.42) --
</TABLE>
* For the period from February 12, 1993 (date of initial public offering) to
October 31, 1993.
** For the period from June 17, 1993 (date of initial public investment) to
October 31, 1993.
*** For the period from December 14, 1992 (date of initial public investment)
to October 31, 1993.
+ Based on net asset value which does not reflect the sales load
or contingent deferred sales charge, if applicable.
++ Connecticut Intermediate Municipal Income Fund and Massachusetts
Intermediate
Municipal Income Fund sell their shares without class designation.
<TABLE>
<CAPTION>
NET ASSET NET NET ASSETS, PORTFOLIO
TOTAL VALUE, END TOTAL INVESTMENT EXPENSE WAIVER/ END OF PERIOD TURNOVER
DISTRIBUTIONS OF PERIOD RETURN+ EXPENSES INCOME REIMBURSEMENT(B) (000 OMITTED) RATE
<S> <C> <C> <C> <C> <C> <C> <C>
(0.34) $ 10.00 2.57% 1.13%(a) 5.07%(a) 0.48%(a) $ 3,859 53%
(0.46) $ 9.45 (0.96%) 1.28% 5.01% 0.48% $ 7,219 144%
(0.37) $ 10.26 4.45% 1.15%(a) 5.41%(a) 0.50%(a) $ 13,812 30%
(0.49) $ 9.37 (3.99%) 1.26% 5.29% 0.48% $ 11,032 84%
(0.39) $ 10.55 7.02% 1.12%(a) 5.61%(a) 0.48%(a) $ 9,550 33%
(0.61) $ 9.32 (6.08%) 1.19% 5.95% 0.49% $ 8,414 73%
(0.13) $ 10.24 3.75% 0.50%(a) 3.80%(a) 2.33%(a) $ 7,288 8%
(0.41) $ 9.32 (5.17%) 0.48% 4.23% 2.61% $ 8,002 59%
(0.13) $ 10.30 4.35% 0.50%(a) 4.07%(a) 3.57%(a) $ 4,009 0%
(0.42) $ 9.31 (5.71%) 0.51% 4.35% 3.70% $ 6,568 41%
(0.49) $ 10.00 5.02% 0.88%(a) 5.54%(a) 0.23%(a) $ 66,998 53%
(0.48) $ 9.45 (0.69%) 1.03% 5.26% 0.23% $ 55,187 144%
(0.52) $ 10.26 7.97% 0.88%(a) 5.83%(a) 0.26%(a) $ 62,399 30%
(0.51) $ 9.37 (3.75%) 1.01% 5.54% 0.23% $ 57,551 84%
(0.55) $ 10.55 11.26% 0.85%(a) 6.06%(a) 0.22%(a) $ 92,485 33%
(0.63) $ 9.32 (5.85%) 0.94% 6.20% 0.24% $ 82,468 73%
(0.13) $ 10.24 3.75% 0.50%(a) 3.80%(a) 2.33%(a) $ 7,288 8%
(0.41) $ 9.32 (5.17%) 0.48% 4.23% 2.61% $ 8,002 59%
(0.13) $ 10.30 4.35% 0.50%(a) 4.07%(a) 3.57%(a) $ 4,009 0%
(0.42) $ 9.31 (5.71%) 0.51% 4.35% 3.70% $ 6,568 41%
</TABLE>
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
Further information about the Income Funds is contained in the Trust's
Combined Annual Report dated October 31, 1994, which can be obtained free of
charge.
GENERAL INFORMATION
The Trust was established as a Massachusetts business trust under a
Declaration of Trust dated July 16, 1992. The Declaration of Trust permits the
Trust to offer separate series of shares representing interests in separate
portfolios of securities. The shares in any one portfolio may be offered in
separate classes. As of the date of this prospectus, the Board of Trustees
(the "Trustees") has established two classes of shares of several of the
Income Funds, known as Trust Shares and Investment Shares. This prospectus
relates only to Investment Shares of the Income Funds that offer separate
classes of shares. Investment Shares are sold primarily to financial
institutions that rely upon the distribution services provided by the
distributor in the marketing of Investment Shares, as well as to retail
customers of such institutions.
A minimum initial investment of $1,000 may be required. Subsequent investments
must be in amounts of at least $100, as described in this prospectus in the
section entitled "Minimum Investment Required," or $50 for participants in the
Systematic Investment Program. Investment Shares are currently sold at net
asset value with a sales charge imposed by the Income Funds, as described in
this prospectus.
THE SHAWMUT PORTFOLIOS
The shareholders of the Income Funds are shareholders of The Shawmut Funds,
which currently consist of Shawmut Connecticut Intermediate Municipal Income
Fund, Shawmut Connecticut Municipal Money Market Fund, Shawmut Fixed Income
Fund, Shawmut Growth and Income Equity Fund, Shawmut Growth Equity Fund,
Shawmut Intermediate Government Income Fund, Shawmut Limited Term Income Fund,
Shawmut Massachusetts Intermediate Municipal Income Fund, Shawmut
Massachusetts Municipal Money Market Fund, Shawmut Prime Money Market Fund,
Shawmut Quantitative Equity Fund, and Shawmut Small Capitalization Equity
Fund. Shareholders in the Income Funds have easy access to the other
portfolios of The Shawmut Funds through an exchange program. The Shawmut Funds
are advised by Shawmut Bank, N.A., and distributed by Federated Securities
Corp.
OBJECTIVES AND POLICIES
LIMITED TERM INCOME FUND
INVESTMENT OBJECTIVE
The investment objective of the Limited Term Income Fund is current income
consistent with low principal volatility and total return. The investment
objective cannot be changed without approval of shareholders. While there is no
assurance that the Limited Term Income Fund will achieve its investment
objective, it endeavors to do so by following the investment policies described
in this prospectus.
INVESTMENT POLICIES
THE LIMITED TERM INCOME FUND PURSUES ITS INVESTMENT OBJECTIVE BY INVESTING
PRIMARILY IN A PORTFOLIO OF INVESTMENT GRADE BONDS AND NOTES AND U.S.
GOVERNMENT SECURITIES.
The Limited Term Income Fund will maintain a dollar-weighted average maturity
of three years or less. For purposes of computing average maturity, the Limited
Term Income Fund considers the market accepted average life of the assets of
the Limited Term Income Fund. Market accepted average life considers the
anticipated prepayment or call of underlying securities that might influence
stated maturity. The investment policies described above may be changed by the
Trustees
without shareholder approval. Shareholders will be notified before any material
change in these investment policies becomes effective.
ACCEPTABLE INVESTMENTS
Under normal circumstances, the Limited Term Income Fund will invest at least
65% of the total value of its assets in income producing securities. The
securities in which the Limited Term Income Fund invests include, but are not
limited to:
direct obligations of the U.S. Treasury, such as U.S. Treasury bills, notes,
and bonds;
obligations of U.S. government agencies or instrumentalities such as Federal
Home Loan Banks, Federal National Mortgage Association, Government National
Mortgage Association, Federal Farm Credit Banks, Student Loan Marketing
Association, or Federal Home Loan Mortgage Corporation;
domestic issues of corporate debt obligations having floating or fixed rates
of interest and rated in one of the five highest categories by a nationally
recognized statistical rating organization rated Aaa, Aa, A, Baa, or Ba by
Moody's Investors Service, Inc. ("Moody's") or AAA, AA, A, BBB, or BB by
Standard & Poor's Ratings Group ("Standard & Poor's") or Fitch's Investors
Service, Inc. ("Fitch"), or which are of comparable quality in the judgment
of the adviser;
commercial paper rated Prime-1 or Prime-2 by Moody's, A-1 or A-2 by
Standard & Poor's, or F-1 or F-2 by Fitch;
asset-backed securities rated BBB or higher by a nationally recognized
statistical rating organization, which may include, but are not limited
to, interests in pools of receivables such as motor vehicle installment
purchase obligations and credit card receivables, and mortgage-related
asset-backed securities;
repurchase agreements collateralized by eligible investments; and
certain derivative securities.
INTERMEDIATE GOVERNMENT INCOME FUND
INVESTMENT OBJECTIVE
The investment objective of the Intermediate Government Income Fund is current
income consistent with total return. The investment objective cannot be changed
without approval of shareholders. While there is no assurance that the
Intermediate Government Income Fund will achieve its investment objective, it
endeavors to do so by following the investment policies described in this
prospectus.
INVESTMENT POLICIES
THE INTERMEDIATE GOVERNMENT INCOME FUND PURSUES ITS INVESTMENT OBJECTIVE BY
INVESTING IN A PORTFOLIO OF INVESTMENT GRADE BONDS AND NOTES AND U.S.
GOVERNMENT SECURITIES.
The Intermediate Government Income Fund will maintain a dollar-weighted average
maturity of between three to ten years. For purposes of computing average
maturity, the Intermediate Government Income Fund considers the market accepted
average life of the assets of the Intermediate Government Income Fund. Market
accepted average life considers the anticipated prepayment or call of
underlying securities that might influence stated maturity. The investment
policies described above may be changed by the Trustees without the approval of
shareholders. Shareholders will be notified before any material change in these
investment policies becomes effective.
ACCEPTABLE INVESTMENTS
Under normal circumstances, the Intermediate Government Income Fund will invest
at least 65% of the total value of its assets in U.S. government securities.
The securities in which the Intermediate Government Income Fund invests
include, but are not limited to:
direct obligations of the U.S. Treasury, such as U.S. Treasury bills, notes,
and bonds;
obligations of U.S. government agencies or instrumentalities such as Federal
Home Loan Banks, Federal National Mortgage Association, Government National
Mortgage Association, Federal Farm Credit Banks, Student Loan Marketing
Association, or Federal Home Loan Mortgage Corporation;
domestic issues of corporate debt obligations having floating or fixed rates
of interest and rated in one of the five highest categories by a nationally
recognized statistical rating organization rated Aaa, Aa, A, Baa, or Ba by
Moody's or AAA, AA, A, BBB, or BB by Standard & Poor's or Fitch, or which
are of comparable quality in the judgment of the adviser;
asset-backed securities rated BBB or higher by a nationally recognized
statistical rating organization, which may include, but are not limited to,
interests in pools of receivables such as motor vehicle installment
purchase obligations and credit card receivables, and mortgage-related
asset-backed securities;
repurchase agreements collateralized by eligible investments; and
certain derivative securities.
FIXED INCOME FUND
INVESTMENT OBJECTIVE
The investment objective of the Fixed Income Fund is current income consistent
with total return. The investment objective cannot be changed without approval
of shareholders. While there is no assurance that the Fixed Income Fund will
achieve its investment objective, it endeavors to do so by following the
investment policies described in this prospectus.
INVESTMENT POLICIES
THE FIXED INCOME FUND PURSUES ITS INVESTMENT OBJECTIVE BY INVESTING PRIMARILY
IN A PORTFOLIO OF INVESTMENT GRADE NOTES AND BONDS AND U.S. GOVERNMENT
SECURITIES.
The investment policies described above may be changed by the Trustees without
shareholder approval. Shareholders will be notified before any material change
in these policies becomes effective.
ACCEPTABLE INVESTMENTS
Under normal circumstances, the Fixed Income Fund will invest at least 65% of
the total value of its assets in fixed income securities. The securities in
which the Fixed Income Fund invests include, but are not limited to:
direct obligations of the U.S. Treasury, such as U.S. Treasury bills, notes,
and bonds;
obligations of U.S. government agencies or instrumentalities such as Federal
Home Loan Banks, Federal National Mortgage Association, Government National
Mortgage Association, Federal Farm Credit Land Banks, Student Loan Marketing
Association, or Federal Home Loan Mortgage Corporation;
domestic issues of corporate debt obligations having floating or fixed rates
of interest and rated in one of the five highest categories by a nationally
recognized statistical rating organization rated Aaa, Aa, A, Baa, or Ba by
Moody's or
AAA, AA, A, BBB, or BB by Standard & Poor's or Fitch, or which are of
comparable quality in the judgment of the adviser;
commercial paper rated Prime-1 or Prime-2 by Moody's, A-1 or A-2 by
Standard & Poor's, or F-1 or F-2 by Fitch;
asset-backed securities rated BBB or higher by a nationally recognized
statistical rating organization, which may include, but are not limited
to, interests in pools of receivables such as motor vehicle installment
purchase obligations and credit card receivables, and mortgage-related
asset-backed securities;
repurchase agreements collateralized by eligible investments; and
certain derivative securities.
CONNECTICUT INTERMEDIATE MUNICIPAL INCOME FUND
INVESTMENT OBJECTIVE
The investment objective of the Connecticut Intermediate Municipal Income Fund
is current income which is exempt from federal regular income tax and
Connecticut state income tax. The investment objective cannot be changed
without approval of shareholders. While there is no assurance that the
Connecticut Intermediate Municipal Income Fund will achieve its investment
objective, it endeavors to do so by following the investment policies described
in this prospectus.
INVESTMENT POLICIES
THE CONNECTICUT INTERMEDIATE MUNICIPAL INCOME FUND PURSUES ITS INVESTMENT
OBJECTIVE BY INVESTING PRIMARILY IN A PORTFOLIO OF CONNECTICUT MUNICIPAL
SECURITIES.
The investment policies may be changed by the Trustees without the approval of
shareholders.
Shareholders will be notified before any material change in these investment
policies becomes effective. As a matter of investment policy, which may not be
changed without shareholder approval, the Connecticut Intermediate Municipal
Income Fund will invest its assets so that, under normal circumstances, at
least 80% of its annual interest income is exempt from federal regular income
tax or that at least 80% of the total value of its assets are invested in
obligations the interest income from which is exempt from federal regular
income tax.
ACCEPTABLE INVESTMENTS
Under normal circumstances, the Connecticut Intermediate Municipal Income Fund
will invest its assets so that at least 65% of the value of its total assets
will be invested in debt obligations issued by or on behalf of the State of
Connecticut and its political subdivisions and financing authorities, and
obligations of other states, territories and possessions of the United States,
including the District of Columbia, and any political subdivision or financing
authority of any of these, the income from which is, in the opinion of
qualified legal counsel, exempt from federal regular income tax and Connecticut
state income tax imposed upon non-corporate taxpayers ("Connecticut Municipal
Securities"). The Connecticut Intermediate Municipal Income Fund will maintain
a dollar-weighted average maturity of between three to ten years. The
Connecticut Municipal Securities in which the Connecticut Intermediate
Municipal Income Fund invests are subject to the following quality standards:
rated Baa or above by Moody's or BBB or above by Standard & Poor's or Fitch. A
description of the rating categories is contained in the Appendix to the
Combined Statement of Additional Information; or
insured by a municipal bond insurance company which is rated Aaa by Moody's
or AAA by Standard & Poor's or Fitch; or
guaranteed at the time of purchase by the U.S. government as to the payment
of principal and interest; or
fully collateralized by an escrow of U.S. government securities; or
unrated if determined to be of comparable quality to one of the foregoing
rating categories by the Connecticut Intermediate Municipal Income Fund's
investment adviser; or
are appropriately rated derivative securities.
MASSACHUSETTS INTERMEDIATE MUNICIPAL INCOME FUND
INVESTMENT OBJECTIVE
The investment objective of the Massachusetts Intermediate Municipal Income
Fund is current income which is exempt from federal regular income tax and
income taxes imposed by the Commonwealth of Massachusetts. The investment
objective cannot be changed without approval of shareholders. While there is no
assurance that the Massachusetts Intermediate Municipal Income Fund will
achieve its investment objective, it endeavors to do so by following the
investment policies described in this prospectus.
INVESTMENT POLICIES
THE MASSACHUSETTS INTERMEDIATE MUNICIPAL INCOME FUND PURSUES ITS INVESTMENT
OBJECTIVE BY INVESTING PRIMARILY IN A PORTFOLIO OF MASSACHUSETTS MUNICIPAL
SECURITIES.
The investment policies described above may be changed by the Trustees without
the approval of shareholders. Shareholders will be notified before any material
change in these investment policies becomes effective. As a matter of
investment policy, which may not be changed without shareholder approval, the
Massachusetts Intermediate Municipal Income Fund will invest its assets so
that, under normal circumstances, at least 80% of its annual interest income is
exempt from federal regular income tax or that at least 80% of the total value
of its assets are invested in obligations the interest income from which is
exempt from federal regular income tax.
ACCEPTABLE INVESTMENTS
Under normal circumstances, the Massachusetts Intermediate Municipal Income
Fund will invest its assets so that at least 65% of the value of its total
assets will be invested in debt obligations issued by or on behalf of the
Commonwealth of Massachusetts and its political subdivisions and financing
authorities, and obligations of other states, territories and possessions of
the United States, including the District of Columbia, and any political
subdivision or financing authority of any of these, the income from which is,
in the opinion of qualified legal counsel, exempt from federal regular income
tax and Massachusetts state income tax imposed upon non-corporate taxpayers
("Massachusetts Municipal Securities"). The Massachusetts Intermediate
Municipal Income Fund will maintain a dollar-weighted average maturity of
between three to ten years. The Massachusetts Municipal Securities in which the
Massachusetts Intermediate Municipal Income Fund invests are subject to the
following quality standards:
rated Baa or above by Moody's or BBB or above by Standard & Poor's or Fitch. A
description of the rating categories is contained in the Appendix to the
Statement of Additional Information; or
insured by a municipal bond insurance company which is rated Aaa by Moody's
or AAA by Standard & Poor's or Fitch; or
guaranteed at the time of purchase by the U.S. government as to the payment
of principal and interest; or
fully collateralized by an escrow of U.S. government securities; or
unrated if determined to be of comparable quality to one of the foregoing
rating categories by the Fund's investment adviser; or
are appropriately rated derivative securities.
INVESTMENTS, STRATEGIES, AND RISKS
U.S. GOVERNMENT SECURITIES. Some obligations issued or guaranteed by agencies
or instrumentalities of the U.S. government, such as Government National
Mortgage Association participation certificates, are backed by the full faith
and credit of the U.S. Treasury. No assurances can be given that the U.S.
government will provide financial support to other agencies or
instrumentalities, since it is not obligated to do so. These instrumentalities
are supported by:
the issuer's right to borrow an amount limited to a specific line of credit
from the U.S. Treasury;
discretionary authority of the U.S. government to purchase certain
obligations of an agency or instrumentality; or
the credit of the agency or instrumentality.
CORPORATE DEBT OBLIGATIONS. The Fixed Income Fund, Intermediate Government
Income Fund, and Limited Term Income Fund may invest in corporate debt
obligations, including corporate bonds, notes, and debentures, which may
have floating or fixed rates of interest. Fixed Income Fund, Intermediate
Government Income Fund, and Limited Term Income Fund will not invest in
corporate debt obligations that are rated lower than Baa by Moody's or BBB
by Standard & Poor's or Fitch, except that each of these Funds may invest up
to 10% of the value of their respective total assets in corporate debt
obligations rated "Ba" or "BB" so long as not more than 1% of each
respective Fund's total assets is invested in the Ba-rated or BB-rated
obligations of a single issuer. Bonds rated Baa by Moody's or BBB by
Standard & Poor's or Fitch are considered medium grade obligations and are
regarded as having an adequate capacity to pay interest and repay principal.
They are neither highly protected nor poorly secured, but lack outstanding
investment characteristics and in fact have speculative characteristics as
well. Debt rated Ba by Moody's or BB by Standard & Poor's or Fitch are
judged to have speculative elements; their future can not be considered as
well assured. They face major ongoing uncertainties or exposure to adverse
business, financial, or economic conditions which could lead to inadequate
capacity to meet timely interest and principal payments. The rating may also
be used for debt subordinated to senior debt that is assigned an actual or
implied "Baa" or "BBB" rating, and may include obligations convertible into
equity investments. If a security loses its rating or has its rating reduced
after the Fund has purchased it, the Fund is not required to sell or
otherwise dispose of the security, but may consider doing so. If ratings
made by Moody's or Standard & Poor's change because of changes in those
organizations or in their ratings systems, the Fund will attempt to obtain
comparable ratings as substitute standards in accordance with the investment
policies of the Fund.
FLOATING RATE CORPORATE DEBT OBLIGATIONS. Fixed Income Fund, Intermediate
Government Income Fund, and Limited Term Income Fund expect to invest in
floating rate corporate debt obligations. Floating rate securities are
generally offered at an initial interest rate which is at or above
prevailing market rates. The interest rate paid on these securities is then
reset periodically (commonly every 90 days) to an increment over some
predetermined interest rate index. Commonly utilized indices include the
three-month Treasury bill rate, the 180-day Treasury bill rate, the one-
month or three-month London Interbank Offered Rate (LIBOR), the prime rate
of a bank, the commercial paper rates, or the longer-term rates on U.S.
Treasury securities.
FIXED RATE CORPORATE DEBT OBLIGATIONS. Fixed Income Fund, Intermediate
Government Income Fund, and Limited Term Income Fund may also invest in
fixed rate securities, including fixed rate securities with short-term
characteristics. Fixed rate securities with short-term characteristics are
long-term debt obligations, but are treated in the market as having short
maturities because call features of the securities may make them callable
within a short period of time. A fixed rate security with short-term
characteristics would include a fixed
income security priced close to call or redemption price or a fixed income
security approaching maturity, where the expectation of call or redemption
is high.
ASSET-BACKED SECURITIES. Fixed Income Fund, Intermediate Government Income
Fund, and Limited Term Income Fund may also invest in asset-backed
securities which are created by the grouping of certain governmental,
government related, and private loans, receivables and other lender assets,
including vehicle installment purchase obligations and credit card
receivables, into pools. Interests in these pools are sold as individual
securities and are not backed or guaranteed by the U.S. government. These
securities differ from other forms of debt securities, which normally
provide for periodic payment of interest in fixed amounts with principal
paid at maturity or specified call dates. Asset-backed securities, however,
provide periodic payments which generally consist of both interest and
principal payments. The estimated average life of an asset-backed security
and the average maturity of a portfolio including such assets varies with
the prepayment experience with respect to the underlying debt instruments.
The credit characteristics of asset-backed securities also differ in a
number of respects from those of traditional debt securities.
The credit quality of most asset-backed securities depends primarily upon
the credit quality of the assets underlying such securities, how well the
entity issuing the securities is insulated from the credit risk of the
originator or any other affiliated entities, and the amount and quality of
any credit support provided to such securities. Fixed Income Fund,
Intermediate Government Income Fund, and Limited Term Income Fund will not
invest in asset-backed securities that are rated lower than Baa by Moody's
or BBB by Standard & Poor's or Fitch.
Fixed Income Fund, Intermediate Government Income Fund, and Limited Term
Income Fund may also invest in mortgage-related asset-backed securities
which are issued by private entities such as investment banking firms and
companies related to the construction industry. The mortgage-related
securities in which Fixed Income Fund, Intermediate Government Income Fund,
and Limited Term Income Fund may invest may be: (i) privately issued
securities which are collateralized by pools of mortgages in which each
mortgage is guaranteed as to payment of principal and interest by an agency
or instrumentality of the U.S. government; (ii) privately issued securities
which are collateralized by pools of mortgages in which payment of principal
and interest are guaranteed by the issuer and such guarantee is
collateralized by U.S. government securities; (iii) privately issued
securities in which the proceeds of the issuance are invested in mortgage-
backed securities and payment of the principal and interest is supported by
the credit of any agency or instrumentality of the U.S. government; or (iv)
other privately issued securities in which the proceeds of the issuance are
invested in mortgage-backed securities and payment of the principal and
interest is guaranteed or supported by the credit of a non-governmental
entity, including corporations. The mortgage-related securities provide for
a periodic payment consisting of both interest and principal. The interest
portion of these payments will be distributed by Fixed Income Fund,
Intermediate Government Income Fund, and Limited Term Income Fund as income,
and the capital portion will be reinvested.
While mortgage-related securities generally entail less risk of a decline
during periods of rapidly rising interest rates, mortgage-related securities
may also have less potential for capital appreciation than other similar
investments (e.g., investments with comparable maturities) because as
interest rates decline, the likelihood increases that mortgages will be
prepaid. Furthermore, if mortgage-related securities are purchased at a
premium, mortgage foreclosures and unscheduled principal payments may result
in some loss of a holder's investment to the extent of the premium paid.
Conversely, if mortgage-related securities are purchased at a discount, both
a scheduled payment of principal and an unscheduled prepayment of principal
would increase current and total returns and would accelerate the
recognition of income, which would be taxed as ordinary income when
distributed to shareholders.
TEMPORARY INVESTMENTS. In such proportions as, in the judgment of its
investment adviser, prevailing market conditions warrant, Fixed Income Fund,
Intermediate Government Income Fund, and Limited Term Income Fund may, for
temporary defensive purposes, invest in:
short-term money market instruments rated in one of the top two rating
categories by a nationally recognized statistical rating organization;
securities issued and/or guaranteed as to payment of principal and
interest by the U.S. government, its agencies, or instrumentalities; and
repurchase agreements.
LENDING OF PORTFOLIO SECURITIES. In order to generate additional income,
the Income Funds may lend portfolio securities, on a short-term or
long-term basis or both, up to one-third of the value of its total assets
to broker/dealers, banks, or other institutional borrowers of securities.
The Income Funds will only enter into loan arrangements with
broker/dealers, banks, or other institutions which the investment adviser
has determined are creditworthy under guidelines established by the
Trustees and will receive collateral in the form of cash or U.S.
government securities equal to at least 100% of the value of the
securities loaned.
There is the risk that when lending portfolio securities, the securities
may not be available to the Income Funds on a timely basis and the Income
Funds may, therefore, lose the opportunity to sell the securities at a
desirable price. In addition, in the event that a borrower of securities
would file for bankruptcy or become insolvent, disposition of the
securities may be delayed pending court action.
DERIVATIVE SECURITIES. Each of the Income Funds may invest up to 20% of
the market value of each Income Fund's total assets in the derivative
securities described below.
OPTIONS AND FUTURES CONTRACTS. The Income Funds may buy and sell options
and futures contracts to manage their respective individual exposure to
changing interest rates, security prices, and currency exchange rates.
Some options and futures strategies, including selling futures, buying
puts, and writing calls, tend to hedge the Income Funds' respective
investments against price fluctuations. Other strategies, including
buying futures, writing puts, and buying calls, tend to increase market
exposure. Options and futures may be combined with each other or with
forward contracts in order to adjust the risk and return characteristics
of the overall strategy. The Income Funds may invest in options and
futures based on any type of security, index, or currency, including
options and futures traded on foreign exchanges and options not traded on
exchanges.
Options and futures can be volatile investments, and involve certain
risks. If the investment adviser applies a hedge at an inappropriate time
or judges market conditions incorrectly, options and futures may lower an
Income Fund's individual return. An Income Fund could also experience
losses if the prices of its options and futures positions were poorly
correlated with its other investments, or if it could not close out its
positions because of an illiquid secondary market.
Each of the Income Funds will not hedge more than 20% of their respective
total assets by selling futures, buying puts, and writing calls under
normal conditions. In addition, each of the Income Funds will not buy
futures or write puts whose underlying value exceeds 20% of their
respective total assets, and the Income Funds will not buy calls with a
value exceeding 5% of their respective total assets.
INDEXED SECURITIES. The Income Funds may invest in indexed securities,
sold by brokers or dealers or other financial institutions (such as
commercial banks) deemed creditworthy by the Income Fund's adviser, whose
value is linked to foreign currencies, interest rates, commodities,
indices, or other financial indicators. Most indexed securities are short
to intermediate term fixed-income securities whose values at maturity or
whose interest rates rise or fall according to the change in one or more
specified underlying instruments. Indexed securities may be positively or
negatively indexed
(i.e., their value may increase or decrease if the underlying instrument
appreciates), and may have return characteristics similar to direct
investments in the underlying instrument or to one or more options on the
underlying instrument. Indexed securities may be more volatile than the
underlying instrument itself. Each of the Income Funds intends to invest
not more than 5% of the market value of total assets in indexed
securities.
SWAP AGREEMENTS. As one way of managing its exposure to different types
of investments, each of the Income Funds may enter into interest rate
swaps, currency swaps, and other types of swap agreements such as caps,
collars, and floors. Depending on how they are used, swap agreements
may increase
or decrease the overall volatility of the Income Fund's investments, its
share price and yield.
Swap agreements are sophisticated hedging instruments that typically
involve a small investment of cash relative to the magnitude of risks
assumed. As a result, swaps can be highly volatile and may have a
considerable impact on an Income Fund's performance. Swap agreements are
subject to risks related to the counterparty's ability to perform, and
may decline in value if the counterparty's creditworthiness deteriorates.
An Income Fund may also suffer losses if it is unable to terminate
outstanding swap agreements to reduce its exposure through offsetting
transactions. When an Income Fund enters into a swap agreement, assets of
the Income Funds equal to the value of the swap agreement will be
segregated by the Income Funds. Each of the Income Funds intends to
invest not more than 5% of the market value of the Income Funds' total
assets in swap agreements.
REPURCHASE AGREEMENTS. The U.S. government securities and other
securities in which each Income Fund invests may be purchased pursuant to
repurchase agreements. Repurchase agreements are arrangements in which
banks, broker/dealers, and other recognized financial institutions sell
U.S. government securities or other securities to an Income Fund and
agree at the time of sale to repurchase them at a mutually agreed upon
time and price. To the extent that the original seller does not
repurchase the securities from an Income Fund, the Income Fund could
receive less than the repurchase price on any sale of such securities.
RESTRICTED AND ILLIQUID SECURITIES. The Income Funds intend to invest in
restricted securities. Restricted securities are any securities in which
each Income Fund may otherwise invest pursuant to its investment
objective and policies but which are subject to restriction on resale
under federal securities law. However, each Income Fund will limit
investments in illiquid securities, including certain restricted
securities not determined by the Trustees to be liquid, non-negotiable
fixed time deposits with maturities over seven days, over-the-counter
options, and repurchase agreements providing for settlement in more than
seven days after notice, to 15% of its net assets.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Income Funds may
purchase securities on a when-issued or delayed delivery basis. These
transactions are arrangements in which the Income Funds purchase
securities with payment and delivery scheduled for a future time. The
seller's failure to complete these transactions may cause the Income
Funds to miss a price or yield considered to be advantageous. Settlement
dates may be a month or more after entering into these transactions, and
the market values of the securities purchased may vary from the purchase
prices. Accordingly, the Income Funds may pay more/less than the market
value of the securities on the settlement date.
The Income Funds may dispose of a commitment prior to settlement if the
adviser deems it appropriate to do so. In addition, the Income Funds may
enter into transactions to sell its purchase commitments to third parties
at current market values and simultaneously acquire other commitments to
purchase similar securities at later dates. The Income Funds may realize
short-term profits or losses upon the sale of such commitments.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES. The Income Funds
may invest in the securities of other investment companies, but they will
not, respectively, own more than 3% of the total outstanding voting stock
of any investment company, invest more than 5% of their respective assets
in any one investment company, or invest more than 10% of their
respective total assets in investment companies in general. The Income
Funds will invest in other investment companies primarily for the purpose
of investing its short-term cash which has not yet been invested in other
portfolio instruments. However, from time to time, on a temporary basis,
each of the Income Funds may invest exclusively in one other investment
company managed similarly to the appropriate Fund. Shareholders should
realize that, when one of the Income Funds invests in other investment
companies, certain fund expenses, such as custodian fees and
administrative fees, may be duplicated. The adviser will waive its
investment advisory fee on assets invested in securities of other
investment companies.
The following acceptable investments apply only to the CONNECTICUT
INTERMEDIATE MUNICIPAL INCOME FUND and MASSACHUSETTS INTERMEDIATE
MUNICIPAL INCOME FUND (referred to jointly as the
"Connecticut/Massachusetts Intermediate Municipal Income Funds"):
PARTICIPATION INTERESTS. The Connecticut/Massachusetts Intermediate
Municipal Income Funds may purchase interests in Connecticut and
Massachusetts Municipal Securities, (collectively referred to as
"Municipal Securities"), respectively, from financial institutions such
as commercial and investment banks, savings and loan associations and
insurance companies. These interests may take the form of participations,
beneficial interests in a trust, partnership interests or any other form
of indirect ownership that allows the Connecticut/Massachusetts
Intermediate Municipal Income Funds to treat the income from the
investment as exempt from federal regular income tax. The
Connecticut/Massachusetts Intermediate Municipal Income Funds invest in
these participation interests in order to obtain credit enhancement or
demand features that would not be available through direct ownership of
the underlying Municipal Securities.
MUNICIPAL LEASES. The Connecticut/Massachusetts Intermediate Municipal
Income Funds may invest in municipal leases. Municipal leases are
obligations issued by state and local governments or authorities to
finance the acquisition of equipment and facilities and may be considered
to be illiquid. They may take the form of a lease, an installment
purchase contract, a conditional sales contract, or a participation
certificate in any of the above.
VARIABLE RATE DEMAND NOTES. Variable rate demand notes are long-term
Municipal Securities that have variable or floating interest rates and
provide the Connecticut/Massachusetts Intermediate Municipal Income Funds
with the right to tender the security for repurchase at its stated
principal amount plus accrued interest. The interest rate may float or be
adjusted at regular intervals (ranging from daily to annually) and is
normally based on a municipal interest index or another published
interest rate or interest rate index. Most variable rate demand notes
allow the Connecticut/Massachusetts Intermediate Municipal Income Funds
to demand the repurchase of the security on not more than seven days
prior notice. Other notes only permit the Connecticut/Massachusetts
Intermediate Municipal Income Funds to tender the security at the time of
each interest rate adjustment or at other fixed intervals. The
Connecticut/Massachusetts Intermediate Municipal Income Funds treat
variable rate demand notes as maturing on the later of the date of the
next interest adjustment or the date on which the
Connecticut/Massachusetts Intermediate Municipal Income Funds may next
tender the security for repurchase.
TENDER OPTION BONDS AND ZERO COUPON SECURITIES. The
Connecticut/Massachusetts Intermediate Municipal Income Funds may
purchase tender option bonds and similar securities. A tender option bond
generally has a long maturity and bears interest at a fixed rate
substantially higher than prevailing short-term tax-exempt rates, and is
coupled with an agreement by a third party, such as a bank,
broker/dealer, or other financial institution, pursuant to which such
institution grants the security holders the option, usually upon not more
than seven days notice or at periodic intervals, to tender their
securities to the institution and receive the face value of the security.
In providing the option, the financial institution receives a fee that
reduces the fixed rate of the underlying bond and results in the
Connecticut/Massachusetts Intermediate Municipal Income Funds effectively
receiving a demand obligation that bears interest at the prevailing
short-term tax exempt rate. The Connecticut/Massachusetts Intermediate
Municipal Income Funds' adviser will monitor, on an ongoing basis, the
creditworthiness of the issuer of the tender option bond, the financial
institution providing the option, and any custodian holding the
underlying long-term bond. The bankruptcy, receivership, or default of
any of the parties to the tender option bond will adversely affect the
quality and marketability of the security.
The Connecticut/Massachusetts Intermediate Municipal Income Funds may
also invest in zero coupon securities, which are debt securities issued
or sold at a discount from their face value. These securities do not
entitle the holder to any periodic payments of interest prior to
maturity. The discount from face value of these securities depends upon
various factors, including: the time remaining until maturity or cash
payment date, prevailing interest rates, the liquidity of the security,
and the perceived credit quality of the issuer. Zero coupon securities
may also take the form of debt securities that have been stripped of
their unmatured interest coupons. The market value of zero coupon
securities is generally
more volatile, and is more likely to react to changes in interest rates,
than the market value of interest-bearing securities with similar
maturities and credit qualities.
SYNTHETIC BOND DERIVATIVES. The Connecticut/Massachusetts Intermediate
Municipal Income Funds may invest its assets in derivative securities
that provide the Connecticut/Massachusetts Intermediate Municipal Income
Funds with tax-exempt income. These securities are formed when an
investment bank acquires all or part of a fixed rate municipal bond and
divides it into two classes of variable rate securities. One of these
classes of securities provides investors with a source of short-term,
variable rate, tax-exempt income that is determined through an auction
mechanism. The other class of security is sold as a residual rate
security, which has a long duration and also offers a source of
tax-exempt income. There is an inverse relationship between the rate of
interest income paid between the two classes of securities. This means
that the holder of the short-term security may receive interest income
that is greater than, or less than, the coupon rate of the underlying
fixed rate bond, and that the holder of the residual security would, for
the same period, receive a rate of return that is less than, or greater
than, as the case may be, the bond's coupon rate.
TEMPORARY INVESTMENTS. The Connecticut/Massachusetts Intermediate
Municipal Income Funds normally invest their assets so that at least 80%
of their annual interest income is exempt from federal regular income tax
or that at least 80% of the total value of their assets is invested in
obligations the interest income from which is exempt from federal regular
income tax. At least 65% of the value of the Connecticut Intermediate
Municipal Income Fund's total assets will be invested in Connecticut
Municipal Securities. At least 65% of the value of Massachusetts
Intermediate Municipal Income Fund's total assets will be invested in
Massachusetts Municipal Securities.
However, from time to time on a temporary basis, when the investment
adviser determines that market conditions call for a temporary defensive
posture, the Connecticut/Massachusetts Intermediate Municipal Income
Funds may invest in short-term tax-exempt or taxable temporary
investments. These temporary investments include: shares of similarly
managed mutual funds; notes issued by or on behalf of municipal or
corporate issuers; obligations issued or guaranteed by the U.S.
government, its agencies, or instrumentalities; other debt securities;
commercial paper; certificates of deposit of banks; and repurchase
agreements (arrangements in which the organization selling the
Connecticut/Massachusetts Intermediate Municipal Income Funds a bond or
temporary investment agrees at the time of sale to repurchase it at a
mutually agreed upon time and price).
There are no rating requirements applicable to temporary investments.
However, the investment adviser will limit temporary investments to those
it considers to be of good quality.
Although the Connecticut/Massachusetts Intermediate Municipal Income
Funds are permitted to make taxable, temporary investments, there is no
current intention of generating income that is not predominantly exempt
from federal regular income tax or state income tax.
CONNECTICUT AND MASSACHUSETTS MUNICIPAL SECURITIES. Connecticut and
Massachusetts Municipal Securities are generally issued to finance public
works, such as airports, bridges, highways, housing, health-related
entities, transportation-related projects, educational programs, water
and pollution control, and sewer works. They are also issued to repay
outstanding obligations, to raise funds for general operating expenses,
and to make loans to other public institutions and facilities.
Connecticut and Massachusetts Municipal Securities include industrial
development bonds issued by or on behalf of public authorities to provide
financing aid to acquire sites or construct and equip facilities for
privately or publicly owned corporations. The availability of this
financing encourages these corporations to locate within the sponsoring
communities and thereby increases local employment.
The two principal classifications of Municipal Securities are "general
obligation" and "revenue" bonds. General obligation bonds are secured by
the issuer's pledge of its full faith and credit and taxing power for the
payment of principal and interest. Interest on and principal of revenue
bonds, however, are payable only from the revenue generated by the
facility
financed by the bond or other specified sources of revenue. Revenue bonds
do not represent a pledge of credit or create any debt of or charge
against the general revenues of a municipality or public authority.
Industrial development bonds are typically classified as revenue bonds.
MUNICIPAL BOND INSURANCE. The Connecticut/Massachusetts Intermediate
Municipal Income Funds may purchase Connecticut and Massachusetts
Municipal Securities covered by insurance which guarantees the timely
payment of principal at maturity and interest on such securities. These
insured Connecticut and Massachusetts Municipal Securities are either
(1) covered by an insurance policy applicable to a particular security,
whether obtained by the issuer of the security or by a third party
("Issuer-Obtained Insurance") or (2) insured under master insurance
policies issued by municipal bond insurers, which may be purchased by the
Connecticut/Massachusetts Intermediate Municipal Income Funds.
The Connecticut/Massachusetts Intermediate Municipal Income Funds may
require or obtain municipal bond insurance when purchasing or holding
specific Connecticut and Massachusetts Municipal Securities when, in the
opinion of the Connecticut/Massachusetts Intermediate Municipal Income
Funds' investment adviser, such insurance would benefit the Connecticut/
Massachusetts Intermediate Municipal Income Funds, for example, through
improvement of portfolio quality or increased liquidity of certain
securities.
Issuer-Obtained Insurance policies are noncancellable and continue in
force as long as the Connecticut and Massachusetts Municipal Securities
are outstanding and their respective insurers remain in business. If a
Connecticut or Massachusetts Municipal Security is covered by
Issuer-Obtained Insurance, then such security need not be insured by the
policies purchased by the Connecticut/Massachusetts Intermediate
Municipal Income Funds.
The Connecticut/Massachusetts Intermediate Municipal Income Funds may
purchase two types of policies issued by municipal bond insurers. One
type of policy covers certain Connecticut and Massachusetts Municipal
Securities only during the period in which they are in the
Connecticut/Massachusetts Intermediate Municipal Income Funds'
portfolios. In the event that a Connecticut or Massachusetts Municipal
Security covered by such a policy is sold from the
Connecticut/Massachusetts Intermediate Municipal Income Funds, the
insurer of the relevant policy will be liable only for those payments of
interest and principal which are due and owing at the time of sale.
The other type of policy covers Connecticut and Massachusetts Municipal
Securities not only while they remain in the Connecticut/Massachusetts
Intermediate Municipal Income Funds' portfolios, but also until their
final maturity even if they are sold out of the Connecticut/Massachusetts
Intermediate Municipal Income Funds' portfolios, so that the coverage may
benefit all subsequent holders of those Connecticut and Massachusetts
Municipal Securities. The Connecticut/ Massachusetts Intermediate
Municipal Income Funds will obtain insurance which covers Connecticut and
Massachusetts Municipal Securities until final maturity even after they
are sold out of the Connecticut/Massachusetts Intermediate Municipal
Income Funds' portfolios only if, in the judgment of the investment
adviser, the Connecticut/Massachusetts Intermediate Municipal Income
Funds would receive net proceeds from the sale of those securities, after
deducting the cost of such permanent insurance and related fees,
significantly in excess of the proceeds it would receive if such
Connecticut and Massachusetts Municipal Securities were sold without
insurance. Payments received from municipal bond insurers may not be
tax-exempt income to shareholders of the Connecticut/Massachusetts
Intermediate Municipal Income Funds.
The premiums for the policies are paid by the Connecticut/Massachusetts
Intermediate Municipal Income Funds and the yield on the
Connecticut/Massachusetts Intermediate Municipal Income Funds' portfolios
are reduced thereby. Premiums for the policies are paid by the
Connecticut/Massachusetts Intermediate Municipal Income Funds monthly,
and are adjusted for purchases and sales of Connecticut and Massachusetts
Municipal Securities during the month.
CONNECTICUT AND MASSACHUSETTS INVESTMENT RISKS. Yields on Connecticut
and Massachusetts Municipal Securities depend on a variety of factors,
including: the general conditions of the short-term municipal note market
and of the municipal bond market; the size and maturity of the particular
offering; the maturity of the obligations; and the rating of the issue.
Further, any adverse economic conditions or developments affecting the
State of Connecticut and the Commonwealth of Massachusetts or their
municipalities could impact the Connecticut/Massachusetts Intermediate
Municipal Income Funds' portfolios. The ability of the
Connecticut/Massachusetts Intermediate Municipal Income Funds to achieve
their investment objectives also depends on the continuing ability of the
issuers of Connecticut and Massachusetts Municipal Securities and demand
features, or the credit enhancers of either, to meet their obligations
for the payment of interest and principal when due.
Investing in Connecticut and Massachusetts Municipal Securities which
meet the Connecticut/Massachusetts Intermediate Municipal Income Funds'
quality standards may not be possible if the State of Connecticut and the
Commonwealth of Massachusetts or their municipalities do not maintain
their current credit ratings. An expanded discussion of the current
economic risks associated with the purchase of Connecticut or
Massachusetts Municipal Securities is contained in the Combined Statement
of Additional Information.
NON-DIVERSIFICATION. The Connecticut/Massachusetts Intermediate
Municipal Income Funds are non-diversified investment portfolios. As
such, there is no limit on the percentage of assets which can be invested
in any single issuer. An investment in the Connecticut/Massachusetts
Intermediate Municipal Income Funds, therefore, will entail greater risk
than would exist in a diversified investment portfolio because the higher
percentage of investments among fewer issuers may result in greater
fluctuation in the total market value of the Connecticut/Massachusetts
Intermediate Municipal Income Funds' portfolios. Any economic, political,
or regulatory developments affecting the value of the securities in the
Connecticut/Massachusetts Intermediate Municipal Income Funds' portfolios
will have a greater impact on the total value of the portfolios than
would be the case if the portfolios were diversified among more issuers.
The Connecticut/Massachusetts Intermediate Municipal Income Funds intend
to comply with Subchapter M of the Internal Revenue Code. This
undertaking requires that at the end of each quarter of the taxable year,
with regard to at least 50% of their respective total assets, no more
than 5% of their respective total assets are invested in the securities
of a single issuer; beyond that, no more than 25% of their respective
total assets are invested in the securities of a single issuer.
INVESTMENT LIMITATIONS
THE INCOME FUNDS FOLLOW A NUMBER OF GUIDELINES IN MANAGING THEIR
PORTFOLIOS IN ORDER TO LIMIT INVESTMENT RISKS.
FIXED INCOME FUND, INTERMEDIATE GOVERNMENT INCOME FUND, AND LIMITED TERM
INCOME FUND WILL NOT:
borrow money directly or through reverse repurchase agreements
(arrangements in which the Income Funds sell a portfolio instrument for
a percentage of its cash value with an arrangement to buy it back on a
set date) or pledge securities except, under certain circumstances,
Fixed Income Fund, Intermediate Government Income Fund, and Limited Term
Income Fund may borrow up to one-third of the value of their total
individual fund assets and pledge up to 10% of the value of their total
individual fund assets to secure such borrowings;
with respect to 75% of the value of their respective total assets,
invest more than 5% in securities of one issuer other than cash, cash
items or securities issued or guaranteed by the government of the
United States, its agencies, or instrumentalities and repurchase
agreements collateralized by such securities, or acquire more than 10%
of the outstanding voting securities of any one issuer; or
invest more than 10% of their respective total assets in securities
subject to restrictions on resale under the Securities Act of 1933
(except for commercial paper issued under Section 4(2) of the
Securities Act of 1933 and certain other securities which meet the
criteria for liquidity as established by the Trustees).
THE CONNECTICUT/MASSACHUSETTS INTERMEDIATE MUNICIPAL INCOME FUNDS WILL
NOT:
borrow money directly or through reverse repurchase agreements
(arrangements in which a fund sells a portfolio instrument for a
percentage of its cash value with an arrangement to buy it back on a
set date) or pledge securities except, under certain circumstances,
the Connecticut/Massachusetts Intermediate Municipal Income Funds may
borrow up to one-third of the value of their respective total assets
and pledge up to 10% of the value of those assets to secure such
borrowings; or
invest more than 5% of their respective total assets in industrial
development bonds when the payment of principal and interest is the
responsibility of companies (or guarantors, where applicable) with
less than three years of continuous operations, including the
operation of any predecessor.
ADMINISTRATION
MANAGEMENT OF THE SHAWMUT FUNDS
BOARD OF TRUSTEES
THE SHAWMUT FUNDS ARE MANAGED BY A BOARD OF TRUSTEES.
The Trustees are responsible for managing the Trust's business affairs and for
exercising all the Trust's powers except those reserved for the shareholders.
The Executive Committee of the Board of Trustees handles the Board's
responsibilities between meetings of the Board.
INVESTMENT ADVISER
PURSUANT TO AN INVESTMENT ADVISORY CONTRACT WITH THE TRUST, INVESTMENT
DECISIONS FOR THE INCOME FUNDS ARE MADE BY SHAWMUT BANK, N.A. (THE "ADVISER"),
SUBJECT TO DIRECTION BY THE TRUSTEES.
The Adviser continually conducts investment research and supervision for the
Income Funds and is responsible for the purchase or sale of portfolio
instruments, for which it receives an annual fee from the respective assets of
the Income Funds.
ADVISORY FEES
The Adviser receives an annual investment advisory fee equal to .80 of 1% of
Shawmut Fixed Income Fund's, Shawmut Intermediate Government Income Fund's, and
Shawmut Limited Term Income Fund's average daily net assets and .70 of 1% of
Shawmut Connecticut Intermediate Municipal Income Fund's and Shawmut
Massachusetts Intermediate Municipal Income Fund's average daily net assets.
The fee paid by the Income Funds, while higher than the advisory fee paid by
other mutual funds in general, is comparable to fees paid by mutual funds with
similar objectives and policies. The Adviser has undertaken to waive a portion
of its advisory fee, up to the amount of the advisory fee, to reimburse each of
the Income Funds for operating expenses in excess of limitations established by
certain states. The Adviser may further voluntarily waive a portion of its fee
or reimburse the Income Funds for certain operating expenses. The Adviser can
terminate such voluntary waiver or reimbursement policy with any of the Income
Funds at any time at its sole discretion.
ADVISER'S BACKGROUND
SHAWMUT BANK, N.A., A NATIONAL BANKING ASSOCIATION, AND ITS AFFILIATES HAVE
MANAGED COMMINGLED FUNDS FOR OVER FIFTY YEARS. AS OF OCTOBER 31, 1994, SHAWMUT
NATIONAL CORPORATION, THROUGH ITS SUBSIDIARIES INCLUDING SHAWMUT BANK, N.A.,
MANAGED MORE THAN $15 BILLION IN TOTAL ASSETS. SHAWMUT BANK, N.A. HAS SERVED AS
AN ADVISER TO MUTUAL FUNDS SINCE THE INCEPTION OF THE SHAWMUT FUNDS ON DECEMBER
1, 1992.
Shawmut Bank, N.A., a national banking association, along with Shawmut Bank
Connecticut, National Association and Shawmut Bank NH, are the principal
subsidiaries of Shawmut National Corporation, a super-regional bank holding
company formed on February 29, 1988, and based in southern New England. Shawmut
National Corporation serves consumers through its network of banking offices
with a full range of deposit and lending products, as well as investment
services. As part of their regular banking operations, Shawmut Bank may make
loans to public companies. Thus, it may be possible, from time to time, for the
Income Funds to hold or acquire the securities of issuers which are also
lending clients of Shawmut Bank. The lending relationship will not be a factor
in the selection of securities. The principal executive offices of the
investment adviser are located at One Federal Street, Boston, Massachusetts
02211.
Robert W. Gleason Jr. has been the portfolio manager of Connecticut
Intermediate Municipal Income Fund and Massachusetts Intermediate Municipal
Income Fund since their inception in June 1993. Mr. Gleason joined a
predecessor to Shawmut Bank, in July 1976 and has been a Vice President and
portfolio manager since 1985. Mr. Gleason received his B.A. degree in Business
Administration from Colby College, followed by studies at New York University
and Columbia University Graduate Schools of Business Administration. Mr.
Gleason has been participating in investment portfolio management for over 38
years.
Maximiliaan J. Brenninkmeyer has been the portfolio manager of Fixed Income
Fund since its inception in December 1992. Mr. Brenninkmeyer is a Vice
President of Shawmut Bank, the Fixed Income Fund's Adviser. Mr. Brenninkmeyer
has been with Shawmut Bank for 22 years. He is a Chartered Financial Analyst
and holds a M.S. from Bentley College and a B.A. from the College of the Holy
Cross.
Michael M. Spencer has been the portfolio manager of Intermediate Government
Income Fund since April 1993. Mr. Spencer joined Shawmut Bank in 1985 as an
investment officer and has been a Vice President of the Intermediate Government
Income Fund's Adviser since 1989. Mr. Spencer is a Chartered Financial Analyst
and received his B.A. from the University of Notre Dame.
Perry J. Vieth has been the portfolio manager of Limited Term Income Fund since
April, 1994. Mr. Vieth is a Vice President of Shawmut Bank. His
responsibilities include the management of investment accounts and providing
expertise on derivative securities. Mr. Vieth received his J.D. from the
University of Notre Dame and his undergraduate degree from Marquette
University. Prior to joining Shawmut Bank, Mr. Vieth was a Vice President and
Interest Rate Risk Manager for Fuji Securities, Inc. and Chicago Research &
Trading Group, a global derivatives specialist. He also practiced securities
and corporate law for nearly five years prior to becoming actively involved in
the financial market.
DISTRIBUTION OF INCOME FUNDS' SHARES
FEDERATED SECURITIES CORP. IS THE PRINCIPAL DISTRIBUTOR FOR INVESTMENT SHARES.
Federated Securities Corp., Federated Investors Tower, Pittsburgh, Pennsylvania
15222-3779, is a Pennsylvania corporation organized on November 14, 1969, and
is the principal distributor for a number of investment companies. Federated
Securities Corp. is a subsidiary of Federated Investors.
DISTRIBUTION PLAN. Under the distribution plan adopted in accordance with
Investment Company Act Rule 12b-1 (the "Plan"), each of the Income Funds will
pay to the distributor an amount computed at an annual rate of up to .50 of 1%
of the average daily net asset value of the Investment Shares of each of the
Income Funds, to finance any activity which is principally intended to result
in the sale of Investment Shares subject to the Plan.
The distributor may, from time to time and for such periods as it deems
appropriate, voluntarily reduce its compensation under the Plan.
The distributor may select financial institutions such as banks, fiduciaries,
custodians for public funds, investment advisers, and broker/dealers
("brokers") to provide distribution and/or administrative services as agents
for their clients or customers who own Investment Shares of the Income Funds.
Administrative services may include, but are not limited to, the following
functions: providing office space, equipment, telephone facilities, and various
clerical, supervisory, computer, and other personnel as necessary or beneficial
to establish and maintain shareholder accounts and records; processing purchase
and redemption transactions and automatic investments of client account cash
balances; answering routine client inquiries;
assisting clients in changing dividend options, account designations, and
addresses; and providing such other services as may reasonably be requested.
The distributor will pay financial institutions a fee based upon the Investment
Shares subject to the Plan and owned by their clients or customers. The
schedules of such fees and the basis upon which such fees will be paid will be
determined, from time to time, by the distributor.
The Plan is a "compensation" type plan. As such, the Income Funds make no
payments to the distributor except as described above. Therefore, the Income
Funds do not pay for unreimbursed expenses of the distributor, including
amounts expended by the distributor in excess of amounts received by it from
the Income Funds, interest, carrying, or other financing charges in connection
with excess amounts expended, or the distributor's overhead expenses. However,
the distributor may be able to recover such amounts or may earn a profit from
future payments made by the Income Funds under the Plan.
OTHER PAYMENTS TO FINANCIAL INSTITUTIONS. The distributor may also pay
financial institutions a fee based on the average net asset value of shares of
their customers invested in an Income Fund for providing administrative
services. This fee is in addition to the amounts paid under the distribution
plan for administrative services, and, if paid, will be reimbursed by the
Adviser and not an Income Fund.
An Income Fund's investment adviser or its affiliates may also offer to pay a
fee from their own assets to financial institutions as financial assistance for
providing substantial marketing and sales support The support may include
sponsoring sales, educational and training seminars for their employees,
providing sales literature, and engineering computer software programs that
emphasize the attributes of an Income Fund. Such assistance will be predicated
upon the amount of shares the dealer sells or may sell, and/or upon the type
and nature of sales or operational support furnished by the financial
institution. These payments will be made by an Income Fund's investment adviser
and will not be made from the assets of an Income Fund.
The Glass-Steagall Act prohibits a depository institution (such as a commercial
bank or a savings and loan association) from being an underwriter or
distributor of most securities. In the event the Glass-Steagall Act is deemed
to prohibit depository institutions from acting in the administrative
capacities described above or should Congress relax current restrictions on
depository institutions, the Trustees will consider appropriate changes in the
services.
State securities laws governing the ability of depository institutions to act
as underwriters or distributors of securities may differ from interpretations
given to the Glass-Steagall Act and, therefore, banks and financial
institutions may be required to register as dealers pursuant to state law.
ADMINISTRATION OF THE INCOME FUNDS
ADMINISTRATIVE SERVICES. Federated Administrative Services ("FAS"), Federated
Investors Tower, Pittsburgh, Pennsylvania 15222-3779, a subsidiary of Federated
Investors, provides the Income Funds with certain administrative personnel and
services necessary to operate the Income Funds, such as legal and accounting
services. FAS provides these at an annual rate as specified below:
<TABLE>
<CAPTION>
MAXIMUM AVERAGE AGGREGATED DAILY
ADMINISTRATIVE FEE NET ASSETS OF THE TRUST
<S> <C>
.150 of 1% First $250 million
.125 of 1% Next $250 million
.100 of 1% Next $250 million
.075 of 1% Over $750 million
</TABLE>
The administrative fee received by FAS during any fiscal year shall be at
least $50,000 for each of the Income Funds. FAS may voluntarily choose to
waive a portion of its fee.
CUSTODIAN. Shawmut Bank, N.A., One Federal Street, Boston, Massachusetts,
02211 is custodian for the securities and cash of the Income Funds. Under the
Custodian Agreement, Shawmut Bank, N.A., holds the Income Funds' portfolio
securities in safekeeping and keeps all necessary records and documents
relating to its duties.
TRANSFER AGENT, DIVIDEND DISBURSING AGENT, AND PORTFOLIO ACCOUNTING
SERVICES. Federated Services Company, Federated Investors Tower, Pittsburgh,
Pennsylvania 15222-3779 is transfer agent and dividend disbursing agent for
the Income Funds. It also provides certain accounting and recordkeeping
services with respect to each of the Income Funds' portfolio investments.
LEGAL COUNSEL. Legal counsel is provided by Houston, Houston & Donnelly, 2510
Centre City Tower, Pittsburgh, Pennsylvania 15222 and Dickstein, Shapiro &
Morin, L.L.P., 2101 L Street, N.W., Washington, DC 20037.
INDEPENDENT ACCOUNTANTS. The independent accountants for the Income Funds are
Price Waterhouse LLP, 160 Federal Street, Boston, Massachusetts 02110.
NET ASSET VALUE
THE TERM "NET ASSET VALUE" REFERS TO THE VALUE OF ONE INCOME FUND SHARE.
Each Income Fund's net asset value per Investment Share fluctuates. The net
asset value for Investment Shares is determined by adding the interest of the
Investment Shares in the market value of all securities and other assets of an
Income Fund, subtracting the interest of the Investment Shares in the
liabilities of an Income Fund and those attributable to Investment Shares, and
dividing the remainder by the total number of Investment Shares outstanding.
The net asset value for Investment Shares of an Income Fund may differ from
that of Trust Shares 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.
INVESTING IN SHARES
YOU CAN BUY INVESTMENT SHARES BY FEDERAL RESERVE WIRE, MAIL, OR TRANSFER, AS
EXPLAINED BELOW.
Investment Shares of the Income Funds are sold by the distributor on days on
which the New York Stock Exchange and Federal Reserve Wire System are open for
business. Shares of the Income Funds may also be purchased in branches of
Shawmut Bank, N.A., Shawmut Bank Connecticut, National Association, Shawmut
Bank NH, and their affiliates (collectively, "Shawmut Bank"), from certain
brokers which have offices located in branches of Shawmut Bank under lease
agreements with Shawmut Bank. Offices of the brokers located in branches of
Shawmut Bank are open on days on which each of Shawmut Bank and the New York
Stock Exchange and Federal Reserve Wire System are open for business. Call
1-800-SHAWMUT for the name and telephone number of the broker located in the
Shawmut Bank branch nearest you. Texas residents must purchase, exchange, and
redeem Investment Shares through Federated Securities Corp. at 1-800-356-2805.
The Income Funds reserve the right to reject any purchase request.
THROUGH A BROKER. An investor may call a broker to receive information and to
place an order to purchase Investment Shares. Call 1-800-SHAWMUT to speak with
a broker, or for referral to a broker serving your area. Orders placed through
a broker are considered received when payment is converted to federal funds and
the applicable Income Fund is notified of the purchase order. The completion of
the purchase transaction will generally occur within one business day after a
broker receives a purchase order. Purchase orders must be received by a broker
before 4:00 p.m. (Eastern time) and must be transmitted by a broker to the
applicable Income Fund before 5:00 p.m. (Eastern time) in order for Investment
Shares to be purchased at that day's public offering price.
Payment may be made by either check, wire transfer of federal funds, or federal
funds deposited into a deposit account established by the shareholder at
Shawmut Bank. Payment is normally made through debit to the deposit account no
later than the business day following the conversion of a check into federal
funds. In addition, Investment Shares may be purchased through other brokers or
dealers who have sales agreements with the Income Funds' distributor.
DIRECTLY FROM THE INCOME FUNDS. An investor may place an order to purchase
Investment Shares directly from the Income Funds. To do so call 1-800-SHAWMUT
to request a new account form. Once received complete and sign the form;
enclose a check made payable to Shawmut Connecticut Intermediate Municipal
Income Fund, Shawmut Fixed Income Fund, Shawmut Intermediate Government Income
Fund, Shawmut Limited Term Income Fund, or Shawmut Massachusetts Intermediate
Municipal Income Fund--Investment Shares (as appropriate); and mail both to The
Shawmut Funds, c/o Transfer Agency, 1001 Liberty Avenue, Pittsburgh,
Pennsylvania 15222-3779. The order is considered received after the check is
converted into federal funds and the transfer agent establishes a shareholder
account for the investor. This is generally the next business day after the
Fund receives the check.
MINIMUM INVESTMENT REQUIRED
THE MINIMUM INITIAL INVESTMENT IS $1,000, OR $500 IN THE CASE OF RETIREMENT
PLAN ACCOUNTS.
The minimum initial investment in Investment Shares by an investor is $1,000,
or $500 in the case of retirement plan accounts. Subsequent investments by
participants in the Systematic Investment Program, as described this
prospectus, or by retirement plan accounts, must be in amounts of at least $50.
Subsequent investments by all other investors must be in amounts of at least
$100. The Income Funds may waive the initial minimum investment for employees
of Shawmut Bank and its affiliates, from time to time.
WHAT SHARES COST
INVESTMENT SHARES ARE SOLD AT THEIR NET ASSET VALUE NEXT DETERMINED AFTER AN
ORDER IS RECEIVED, PLUS A SALES LOAD.
The net asset value is determined at the close of the New York Stock Exchange,
normally 4:00 p.m. (Eastern time), Monday through Friday, except on: (i) days
on which there are not sufficient changes in the value of an Income 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) on the following holidays: New Year's
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, and Christmas Day.
Investment Shares of the Income Funds are sold at their net asset value next
determined after an order is received, plus a sales load, as follows:
SALES
LOAD AS A SALES
PERCENTAGE LOAD AS A
OF PUBLIC PERCENTAGE OF
OFFERING NET AMOUNT
Less than $50,000......................... 2.00% 2.04%
$50,000 but less than $100,000.......... 1.75% 1.78%
$100,000 but less than $250,000.......... 1.50% 1.52%
$250,000 but less than $500,000.......... 1.25% 1.27%
$500,000 but less than $1 million....... 1.00% 1.01%
$1 million but less than $3 million...... 0.75% 0.76%
$3 million or more........................ 0.50% 0.50%
PURCHASES AT NET ASSET VALUE. Investment Shares of the Income Funds may be
purchased at net asset value, without a sales load, by Trustees, Directors, and
employees (and their spouses and children under age 21) of The Shawmut Funds,
Shawmut Bank, the brokers, Marque Millenium Group Limited, or Federated
Securities Corp., or their affiliates, or any bank or investment dealer who has
a sales agreement with Federated Securities Corp. with regard to the Income
Funds.
SALES CHARGE REALLOWANCE. For sales of Investment Shares of the Income Funds,
a broker will normally receive up to 85% of the applicable sales load. Any
portion of the sales load which is not paid to a broker will be retained by the
distributor. Other brokers or dealers who sell Investment Shares, if any, will
also normally receive up to 85% of the applicable sales load, with the unpaid
portion being retained by the distributor.
The sales load for Investment Shares sold other than through Shawmut Bank will
be retained by the distributor. The distributor may pay fees to banks out of
the sales load in exchange for sales and/or administrative services performed
on behalf of the bank's customers in connection with the initiation of customer
accounts and purchases of the Income Funds' Investment Shares.
From time to time, the distributor will conduct sales programs or contests that
compensate brokers with cash or non-cash items, such as merchandise and
attendance at sales seminars in resort locations. The cost of such compensation
is borne by the distributor and is not an Income Fund expense.
REDUCING THE SALES LOAD
The sales load can be reduced on the purchase of Investment 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 load paid. The Income Funds will combine
purchases made on the same day by the investor, his spouse, and his
children under age 21 when it calculates the sales load paid by an
individual investor.
If an additional purchase of Investment Shares is made, each Income Fund
will consider the previous purchases still invested in any of The Shawmut
Funds, the purchase price of which includes a sales load. For example, if a
shareholder already owns Investment Shares having a current net asset value
of $30,000, and he purchases $20,000 or more of an Income Fund at the
current net asset value, the sales load on the additional purchase of an
Income Fund according to the schedule now in effect, would be 1.75% instead
of 2.00%.
To receive this sales load reduction, a broker or the distributor must be
notified by the shareholder in writing at the time the purchase is made
that Investment Shares are already owned or that purchases are being
combined. Each Income Fund will reduce the sales load after it confirms the
purchases.
LETTER OF INTENT. If a shareholder intends to purchase at least $50,000 of
Investment Shares in the Income Funds over the next 13 months, the sales
load may be reduced by signing a letter of intent to that effect. This
letter of intent includes a provision for a sales load adjustment depending
on the amount actually purchased within the 13-month period and a provision
for the custodian to hold up to 2.00% of the total amount intended to be
purchased in escrow (in Investment 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 the
escrowed Investment Shares may be redeemed in order to realize the
difference in the sales load.
This letter of intent will not obligate the shareholder to purchase
Investment Shares, but if the shareholder does, each purchase during the
period will be at the sales load 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; however, these previous purchases
will not receive the reduced sales load.
REINVESTMENT PRIVILEGE. If Investment Shares in any of the Income Funds
have been redeemed, the shareholder has a one-time right, within 30 days,
to reinvest the redemption proceeds at the next-determined net asset value
without any sales load. A broker or the distributor must be notified by the
shareholder in writing of the reinvestment in order to eliminate a sales
load. If the shareholder redeems Investment Shares, there may be tax
consequences, and exercise of the reinvestment privilege may result in
additional tax considerations. Shareholders contemplating such transactions
should consult their own tax advisers.
CONCURRENT PURCHASES. For purposes of qualifying for a sales load
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 load. For example, if a shareholder concurrently invests
$30,000 in one of the funds in the Trust with a sales load and $20,000 in
any of the Income Funds, the sales load would be reduced as described in
the section entitled "What Shares Cost."
To receive this sales load reduction, the broker or the distributor must be
notified by the shareholder in writing at the time the concurrent purchases
are made. The sales load will be reduced after the purchases are confirmed.
SYSTEMATIC INVESTMENT PROGRAM
Once an account in an Income Fund has been opened, shareholders may add to
their investment on a regular basis in a minimum amount of $50. Under this
program, funds may be automatically withdrawn periodically from the
shareholder's checking account and invested in Investment Shares at the net
asset value next determined after an order is received by the Income Fund,
plus the applicable sales load. A shareholder may apply for participation
in this program through a broker or the distributor.
SUBACCOUNTING SERVICES
Institutions are encouraged to open single master accounts. However,
certain institutions may wish to use the transfer agent's subaccounting
system to minimize their internal recordkeeping requirements. The transfer
agent charges a fee based on the level of subaccounting services rendered.
Certain institutions holding Investment Shares in a fiduciary, agency,
custodial, or similar capacity may charge or pass through subaccounting
fees as part of or in addition to normal trust or agency account fees. They
may also charge fees for other services provided which may be related to
the ownership of Investment Shares. This prospectus should, therefore, be
read together with any agreement between the customer and the institution
with regard to the services provided, the fees charged for those services,
and any restrictions and limitations imposed.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Income Funds, Federated Services Company
maintains a Share account for each shareholder of record. Share
certificates are not issued unless requested by contacting a broker in
writing.
Detailed confirmations of each purchase or redemption are sent to each
shareholder of record. Monthly statements are sent to report account
activity during the previous month, including dividends paid during the
period.
DIVIDENDS
Dividends are declared and paid monthly to all shareholders invested in
each Income Fund on the record date.
CAPITAL GAINS
Capital gains realized by an Income Fund, if any, will be distributed to
that Income Fund's shareholders at least once every 12 months.
EXCHANGE PRIVILEGE
EXCHANGING SHARES. Shareholders may exchange Investment Shares, with a minimum
net asset value of $1,000, except retirement plan accounts, which must have a
minimum net asset value of $500, for shares of the same designated class of
other funds advised by Shawmut Bank. Shares of funds with a sales load may be
exchanged at net asset value for shares of other funds with an equal sales
load, a lower sales load, or no sales load. Shares of funds with no sales load,
or a lower sales load, acquired by direct purchase or reinvestment of dividends
on such shares may be exchanged for shares of funds with a sales load, or a
higher sales load, at net asset value, plus the applicable sales load or
additional incremental sales load, as the case may be, imposed by the fund
shares being purchased.
When an exchange is made from a fund with a sales load to a fund with no sales
load, the shares exchanged and additional shares which have been purchased by
reinvesting dividends 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 load would be a net
asset value.
Exchanges are subject to the minimum initial purchase requirements of such fund
being acquired. Prior to any exchange, the shareholder must receive a copy of
the current prospectus of the class 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, Investment Shares
submitted for exchange will be redeemed at the next-determined net asset value.
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 modified or terminated at any time.
Shareholders will be notified of the modification or termination of the
exchange privilege. A shareholder may obtain further information on the
exchange privilege by calling a broker.
EXCHANGE-BY-TELEPHONE. Instructions for exchanges between participating funds
which are part of the Trust may be given by calling a broker or by calling the
Income Funds. Call 1-800-SHAWMUT to speak with a broker, or for referral to a
broker serving your area. To utilize the exchange-by-telephone service, a
shareholder must complete an authorization form permitting a Shawmut Fund to
honor telephone instructions. The authorization is included in the shareholder
account application. Investment Shares may be exchanged by telephone only
between fund accounts having identical shareholder registrations. Exchange
instructions given by telephone may be electronically recorded.
Any Investment 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.
Telephone exchange instructions must be received before 4:00 p.m. (Eastern
time) for Investment 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 a broker or the Income
Funds during times of drastic economic or market changes. If a shareholder
cannot contact a broker or the Income Funds by telephone, it is recommended
that an exchange request be made in writing and sent by overnight mail to The
Shawmut Funds, c/o Transfer Agency, 1001 Liberty Avenue, Pittsburgh,
Pennsylvania 15222-3779.
If reasonable procedures are not followed by the Income Funds, they may be
liable for losses due to unauthorized or fraudulent telephone instructions.
REDEEMING SHARES
YOU CAN REDEEM INVESTMENT SHARES BY MAIL OR TELEPHONE. TO ENSURE YOUR SHARES
ARE REDEEMED EXPEDITIOUSLY, PLEASE FOLLOW THE PROCEDURES EXPLAINED BELOW.
The Income Funds redeem Investment Shares at their net asset value next
determined after Federated Services Company receives the redemption request.
Redemptions will be made on days on which the Income Funds compute their net
asset value. Requests for redemptions can be made by telephone or in writing by
contacting your broker or directly from the Income Funds. Redemption requests
received prior to 4:00 p.m. (Eastern time) will be effected on the same
business day.
THROUGH A BROKER
Shareholders may redeem Investment Shares by calling their broker to request
the redemption. Investment Shares will be redeemed at the net asset value next
determined after Federated Services Company receives the redemption request. A
broker is responsible for promptly submitting redemption requests and for
maintaining proper written records of redemption instructions received from the
Income Funds' shareholders. In order to effect a redemption on the same
business day as a request, a broker is responsible for the timely transmission
of the redemption request to the appropriate Income Fund.
Before a broker may request redemption by telephone on behalf of a shareholder,
an authorization form permitting the Income Funds to accept redemption requests
by telephone must first be completed. This authorization is included in
shareholder account application. Redemption instructions given by telephone may
be electronically recorded. In the event of drastic economic or market changes,
a shareholder may experience difficulty in redeeming by telephone. If such a
case should occur, it is recommended that a redemption request be made in
writing and sent by overnight mail to The Shawmut Funds, c/o Transfer Agency,
1001 Liberty Avenue, Pittsburgh, Pennsylvania 15222-3779.
If reasonable procedures are not followed by the Income Funds, they may be
liable for losses due to unauthorized or fraudulent telephone instructions.
DIRECTLY FROM THE INCOME FUNDS
BY MAIL. A shareholder may redeem Investment Shares by sending a written
request to The Shawmut Funds, c/o Transfer Agency, 1001 Liberty Avenue,
Pittsburgh, Pennsylvania 15222-3779. The written request should include the
shareholder's name, the Income Funds' name and class of shares name, the
account number, and the share or dollar amount requested. If share certificates
have been issued, they must be properly endorsed and should be sent by
registered or certified mail with the written request. Shareholders should call
the Income Funds for assistance in redeeming by mail.
SIGNATURES. Shareholders requesting a redemption of $50,000 or more, a
redemption of any amount to be sent to an address other than that on record
with the Income Funds, 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;
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 Income Funds do not accept signatures guaranteed by a notary public.
The Income Funds and their transfer agent have adopted standards for
accepting signature guarantees from the above institutions. The Income
Funds may elect in the future to limit eligible signature guarantors to
institutions that are members of a signature guarantee program. The Income
Funds and their transfer agent reserve the right to amend these standards
at any time without notice.
RECEIVING PAYMENT
Redemption payments will generally be made directly to the shareholder's
account maintained by an investor with Shawmut Bank. This deposit is
normally made within one business day, but in no event more than seven
days, after the redemption request, provided the transfer agent has
received payment from the shareholder. The net asset value of Investment
Shares redeemed is determined, and dividends, if any, are paid up to and
including, the day prior to the day that a redemption request is processed.
Pursuant to instructions from a broker, redemption proceeds may be
transferred from a shareholder account by check or by wire.
BY CHECK. 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
redemption request, provided the transfer agent has received payment for
Investment Shares from the shareholder.
BY WIRE. Requests to wire proceeds from redemptions received before 4:00
p.m. (Eastern time) will be honored the following business day after a
broker receives proper instructions. Applicable charges are imposed on a
shareholder's account maintained with Shawmut Bank.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Income
Funds may redeem shares in any account and pay the proceeds to the
shareholder if the account balance falls below a required minimum of
$1,000, or $500 in the case of retirement plan accounts. This requirement
does not apply, however, if the balance falls below $1,000 or $500,
respectively, because of changes in an Income Fund's net asset value.
Before shares are redeemed to close an account, the shareholder is notified
in writing and allowed 30 days to purchase additional shares to meet the
minimum requirement.
SYSTEMATIC WITHDRAWAL PROGRAM
Shareholders who desire to receive payments of a predetermined amount may
take advantage of the Systematic Withdrawal Program. Under this program,
Investment Shares are redeemed to provide for periodic withdrawal payments
in an amount directed by the shareholder. Depending on the amount of the
withdrawal payments, the amount of dividends paid and capital gains
distributions with respect to Investment Shares, and the fluctuation of the
net asset value of Investment Shares redeemed under this program,
redemptions may reduce, and eventually deplete, the shareholder's
investment in the Income Funds. For this reason, payments under this
program should not be considered as yield or income on the shareholder's
investment in the Income Funds' Investment Shares. To be eligible to
participate in this program, a shareholder must have an account value of at
least $10,000. A shareholder may apply for participation in this program
through a broker. Because Investment Shares are sold with a sales load, it
is not advisable for shareholders to be purchasing Investment Shares of the
Income Funds while participating in this program.
REDEMPTION IN KIND
The Income Funds are obligated to redeem Investment Shares solely in cash
up to $250,000 or 1% of the net asset value of shares of each Income Fund,
whichever is less, for any one shareholder within a 90-day period.
Any redemption beyond this amount will also be in cash unless the Trustees
determine that further cash payments will have a material adverse effect on
remaining shareholders. In such a case, the Income Funds will pay all or a
portion of the remainder of the redemption in portfolio instruments, valued
in the same way as an Income Fund determines net asset value. The portfolio
instruments will be selected in a manner that the Trustees deem fair and
equitable.
Redemption in kind is not as liquid as a cash redemption. If redemption is
made in kind, shareholders receiving their securities and selling them
before their maturity could receive less than the redemption value of their
securities and could incur certain transaction costs.
SHAREHOLDER INFORMATION
VOTING RIGHTS
EACH INVESTMENT SHARE OF AN INCOME FUND GIVES THE SHAREHOLDER ONE VOTE IN
TRUSTEE ELECTIONS AND OTHER MATTERS SUBMITTED TO SHAREHOLDERS OF THE TRUST FOR
VOTE.
All shares of each portfolio in the Trust have equal voting rights except that,
in matters affecting only a particular fund or class, only shareholders of that
fund or class are entitled to vote. As a Massachusetts business trust, the
Trust is not required to hold annual shareholder meetings. Shareholder approval
will be sought only for certain changes in the Trust or an Income Fund's
operation and for the election of Trustees under certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a special
meeting. A special meeting of the shareholders shall be called by the Trustees
upon the written request of shareholders owning at least 10% of the outstanding
shares of the Trust.
As of December 12, 1994, Wornat Leasing, acting in various capacities for
various accounts, was the owner of record of 362,318 shares (47.67%) of
Investment Shares of Limited Term Income Fund. As of December 12, 1994, Olsen &
Co., acting in various capacities for various accounts, was the owner of record
of 210,970 shares (26.20%) of Connecticut Intermediate Municipal Income Fund
and 221,527 shares (32.24%) of Massachusetts Intermediate Municipal Income
Fund.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for acts or obligations of the Trust on behalf
of an Income Fund. To protect shareholders of an Income Fund, the Trust has
filed legal documents with Massachusetts that expressly disclaim the liability
of shareholders of an Income Fund for 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 on
behalf of an Income Fund.
In the unlikely event a shareholder is held personally liable for the Trust's
obligations on behalf of an Income Fund, the Trust is required to use the
property of that Income Fund to protect or compensate the shareholder. On
request, the Trust will defend any claim made and pay any judgment against a
shareholder of the Income Funds for any act or obligation of the Trust on
behalf of the Income Funds. Therefore, financial loss resulting from liability
as a shareholder of the Income Funds will occur only if the Trust cannot meet
its obligations to indemnify shareholders and pay judgments against them from
the assets of the Income Funds.
EFFECT OF 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 investment company
continuously engaged in the issuance of its shares, and prohibit banks
generally from issuing, underwriting, selling, 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.
Shawmut Bank is subject to such banking laws and regulations.
Shawmut Bank believes, based upon the advice of its counsel, that it may
perform the services for the Income Funds contemplated by its advisory
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 or future statutes and
regulations, could prevent Shawmut Bank from continuing to perform all or a
part of the above services for its customers and/or the Income Funds. If it
were prohibited from engaging in these customer-related activities, the
Trustees would consider alternative advisers and means of continuing available
investment services. In such event, changes in the operation of the Income
Funds may occur, including possible termination of any automatic or other
Income Fund share investment and redemption services then being provided by
Shawmut Bank. It is not expected that existing shareholders would suffer any
adverse financial consequences (if another adviser with equivalent abilities
to Shawmut Bank is found) as a result of any of these occurrences.
TAX INFORMATION
FEDERAL INCOME TAX
The Income Funds will pay no federal income tax because each Income Fund
expects to meet requirements of the Internal Revenue Code, as amended,
applicable to regulated investment companies and to receive the special tax
treatment afforded to such companies.
Each Income Fund will be treated as a single, separate entity for federal
income tax purposes so that income (including capital gains) and losses
realized by The Shawmut Funds' other portfolios will not be combined for tax
purposes with those realized by each Income Fund.
Unless otherwise exempt, shareholders are required to pay federal income tax on
any dividends and other distributions received. This applies whether dividends
and distributions are received in cash or as additional Investment Shares.
Shareholders are urged to consult their own tax advisers regarding the status
of their accounts under state and local tax laws.
OTHER CLASSES OF SHARES
Fixed Income Fund, Intermediate Government Income Fund, and Limited Term
Income Fund all offer a separate class of shares known as Trust Shares. Trust
Shares are sold primarily to accounts for which Shawmut Bank, N.A., or its
affiliates, act in a fiduciary or agency capacity. Trust Shares are sold at
net asset value, without a sales load, and without a Rule 12b-1 Plan.
Investments in Trust Shares are subject to a minimum initial investment of
$1,000.
The amount of dividends payable to Trust Shares will exceed that of Investment
Shares by the difference between class expenses and distribution expenses
borne by shares of each respective class.
The stated advisory fee is the same for both classes of shares.
PERFORMANCE INFORMATION
FROM TIME TO TIME THE INCOME FUNDS ADVERTISE THEIR TOTAL RETURN YIELD AND
TAX-EQUIVALENT YIELD FOR INVESTMENT SHARES.
Total return represents the change, over a specified period of time, in the
value of an investment in Investment Shares after reinvesting all income and
capital gains distributions. It is calculated by dividing that change by the
initial investment and is expressed as a percentage.
The yields of Investment Shares of the Income Funds are calculated by dividing
the net investment income per Investment Share (as defined by the Securities
and Exchange Commission) earned by the Income Funds over a thirty-day period by
the maximum offering price per Investment Share on the last day of the period.
This number is then annualized using semi-annual compounding. The yield does
not necessarily reflect income actually earned by Investment Shares and,
therefore, may not correlate to the dividends or other distributions paid to
shareholders.
The tax-equivalent yield for the Connecticut/Massachusetts Intermediate
Municipal Income Funds is calculated similarly to the yield but is adjusted to
reflect the taxable yield that the Connecticut/Massachusetts Intermediate
Municipal Income Funds would have had to earn to equal its actual yield,
assuming a 32.50% and 40.00% combined federal and state tax rate for
Connecticut and Massachusetts, respectively and assuming that income is 100%
tax-exempt.
Total return, yield and tax-equivalent-yield will be calculated separately for
Trust Shares and Investment Shares. Because Investment Shares are subject to a
sales load and a 12b-1 fee, the total return, yield and tax-equivalent-yield
for Trust Shares, for the same period, will exceed that of Investment Shares.
The performance information for Investment Shares reflects the effect of the
maximum sales load which, if excluded would increase the total return, yield
and tax-equivalent-yield.
From time to time, the Income Funds may advertise their performance using
certain financial publications and/or compare their performance to certain
indices.
Further information about the performance of the Income Funds is contained in
the Trust's Combined Annual Report dated October 31, 1994, which can be
obtained free of charge.
INVESTMENT ADVISER
Shawmut Bank, N.A.
One Federal Street
Boston, MA 02211
ADMINISTRATOR
Federated Administrative Services
Federated Investors Tower
Pittsburgh, PA 15222-3779
CUSTODIAN
Shawmut Bank, N.A.
One Federal Street
Boston, MA 02211
TRANSFER AGENT
Federated Services Company
Federated Investors Tower
Pittsburgh, PA 15222-3779
DISTRIBUTOR
Federated Securities Corporation
Federated Investors Tower
Pittsburgh, PA 15222-3779
LEGAL COUNSEL
Dickstein, Shapiro & Morin, L.L.P.
2101 L Street, N.W.
Washington, D.C. 20037
Houston, Houston & Donnelly
2510 Centre City Tower
Pittsburgh, PA 15222
SHAWMUT
MONEY MARKET FUNDS
PRIME MONEY MARKET
CONNECTICUT MUNICIPAL MONEY MARKET
MASSACHUSETTS MUNICIPAL MONEY MARKET
SHAWMUT EQUITY FUNDS
GROWTH AND INCOME EQUITY
GROWTH EQUITY
SMALL CAPITALIZATION EQUITY
QUANTITATIVE EQUITY
CALL 1-800-SHAWMUT
FOR MORE INFORMATION ON THE
SHAWMUT FAMILY OF FUNDS
820482107
820482404
820482503
820482818
820482826
3120920A-R (12/94)
SHAWMUT
INCOME FUNDS
PROSPECTUS
TRUST SHARES
LIMITED TERM INCOME
INTERMEDIATE GOVERNMENT INCOME
FIXED INCOME
CONNECTICUT INTERMEDIATE
MUNICIPAL INCOME
MASSACHUSETTS INTERMEDIATE
MUNICIPAL INCOME
December 31, 1994
SHAWMUT LIMITED TERM INCOME FUND
SHAWMUT INTERMEDIATE GOVERNMENT
INCOME FUND
SHAWMUT FIXED INCOME FUND
SHAWMUT CONNECTICUT INTERMEDIATE
MUNICIPAL INCOME FUND
SHAWMUT MASSACHUSETTS INTERMEDIATE
The Shawmut Income Funds MUNICIPAL INCOME FUND
Trust Shares--Combined Prospectus
The shares offered by this prospectus represent interests in Trust Shares of
the income portfolios (collectively, the "Income Funds" or individually, as
appropriate in context, the "Fund") of The Shawmut Funds (the "Trust"), an
open-end management investment company (a mutual fund). In addition to the
Income Funds, the Trust consists of the following separate investment
portfolios, each having distinct investment objectives and policies:
EQUITY FUNDS MONEY MARKET FUNDS
Shawmut Growth and Income
Equity Fund Shawmut Prime Money Market Fund
Shawmut Growth Equity Fund Shawmut Connecticut Municipal Money Market Fund
Shawmut Small Capitalization
Equity Fund Shawmut Massachusetts Municipal Money Market Fund
Shawmut Quantitative Equity
Fund
This combined prospectus contains the information you should read and know
before you invest in the Income Funds. Keep this prospectus for future
reference. The Income Funds have also filed a Combined Statement of Additional
Information for Trust Shares and Investment Shares dated December 31, 1994,
with the Securities and Exchange Commission. The information contained in the
Combined Statement of Additional Information is incorporated by reference into
this prospectus. You may request a copy of the Combined Statement of Additional
Information free of charge, obtain other information, or make inquiries about
the Income Funds by writing or calling the Trust.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
ALTHOUGH INCOME FUNDS MAY PAY HIGHER RATES THAN BANK DEPOSITS, THEIR NET ASSET
VALUES ARE SENSITIVE TO INTEREST RATE MOVEMENT AND A RISE IN INTEREST RATES CAN
RESULT IN A DECLINE IN THE VALUE OF YOUR INVESTMENT.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF
SHAWMUT BANK, ARE NOT ENDORSED OR GUARANTEED BY SHAWMUT BANK, AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD
OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE SHARES INVOLVES INVESTMENT
RISKS, INCLUDING FLUCTUATIONS IN VALUE AND EARNINGS AND THE POSSIBLE LOSS OF
PRINCIPAL INVESTED.
Prospectus dated December 31, 1994
Table of Contents
- ------------------------------------------------------------------------------
SYNOPSIS..................................................................... 2
- --------------------------------------------------------------------------------
EXPENSE SUMMARY.............................................................. 3
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS......................................................... 4
- --------------------------------------------------------------------------------
GENERAL INFORMATION.......................................................... 6
- --------------------------------------------------------------------------------
THE SHAWMUT PORTFOLIOS....................................................... 6
- --------------------------------------------------------------------------------
OBJECTIVES AND POLICIES...................................................... 6
- --------------------------------------------------------------------------------
INVESTMENTS, STRATEGIES, AND RISKS........................................... 10
- --------------------------------------------------------------------------------
ADMINISTRATION............................................................... 18
- --------------------------------------------------------------------------------
NET ASSET VALUE.............................................................. 22
- --------------------------------------------------------------------------------
INVESTING IN SHARES.......................................................... 22
- --------------------------------------------------------------------------------
EXCHANGE PRIVILEGE........................................................... 24
- --------------------------------------------------------------------------------
REDEEMING SHARES............................................................. 24
- --------------------------------------------------------------------------------
SHAREHOLDER INFORMATION...................................................... 26
- --------------------------------------------------------------------------------
EFFECT OF BANKING LAWS....................................................... 27
- --------------------------------------------------------------------------------
TAX INFORMATION.............................................................. 27
- --------------------------------------------------------------------------------
OTHER CLASSES OF SHARES...................................................... 28
- --------------------------------------------------------------------------------
PERFORMANCE INFORMATION...................................................... 28
- --------------------------------------------------------------------------------
Synopsis
INVESTMENT OBJECTIVES
The Shawmut Funds offer you a convenient, affordable way to participate in
separate, professionally managed portfolios of securities. This prospectus
relates only to the Income Funds of the Trust.
INCOME FUNDS
SHAWMUT LIMITED TERM INCOME FUND
("Limited Term Income Fund") seeks current income consistent with low principal
volatility and total return by investing in a portfolio of income-producing
securities with a term limited to a dollar-weighted average maturity of three
years or less.
SHAWMUT INTERMEDIATE GOVERNMENT INCOME FUND
("Intermediate Government Income Fund") seeks current income consistent with
total return by investing in a portfolio consisting primarily of U.S.
government securities with a dollar-weighted average maturity of between three
and ten years.
SHAWMUT FIXED INCOME FUND
("Fixed Income Fund") seeks current income consistent with total return by
investing in income-producing securities consisting primarily of
investment-grade notes and bonds and U.S. government securities.
SHAWMUT CONNECTICUT INTERMEDIATE MUNICIPAL INCOME FUND
("Connecticut Intermediate Municipal Income Fund") seeks current income which
is exempt from federal regular income tax and Connecticut state income tax by
investing primarily in Connecticut municipal securities, including securities
of states, territories, and possessions of the United States which are not
issued by or on behalf of Connecticut or its political subdivisions and
financing authorities, but which are exempt from Connecticut state income tax.
SHAWMUT MASSACHUSETTS INTERMEDIATE MUNICIPAL INCOME FUND
("Massachusetts Intermediate Municipal Income Fund") seeks current income which
is exempt from federal regular income tax and income taxes imposed by the
Commonwealth of Massachusetts by investing primarily in Massachusetts municipal
securities, including securities of states, territories, and possessions of the
United States which are not issued by or on behalf of Massachusetts or its
political subdivisions and financing authorities, but which are exempt from
Massachusetts state income tax.
BUYING SHARES
A minimum initial investment of $1,000 may be required. Subsequent investments
must be in amounts of at least $100, as described in this prospectus in the
section entitled "Minimum Investment Required." Trust Shares are currently sold
at net asset value and are redeemed at net asset value without a sales load.
FUND MANAGEMENT
The Income Funds' investment adviser is Shawmut Bank, N.A., which makes
investment decisions for the Income Funds.
SHAREHOLDER SERVICES
When you become a shareholder, you can easily obtain information about your
account by calling your Shawmut Bank trust officer.
THE SHAWMUT INCOME FUNDS
Expense Summary
Trust Shares
<TABLE>
<CAPTION>
PORTFOLIOS
LIMITED INTERMEDIATE CONNECTICUT MASSACHUSETTS
TERM GOVERNMENT FIXED INTERMEDIATE INTERMEDIATE
INCOME INCOME INCOME MUNICIPAL MUNICIPAL
FUND FUND FUND INCOME FUND** INCOME FUND**
<S> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) None None None None* None*
Maximum Sales Load Imposed on Reinvested
Dividends (as a percentage of offering price) None None None None None
Contingent Deferred Sales Charge (as a percentage
of original purchase price or redemption
proceeds as applicable) None None None None None
Redemption Fee (as a percentage of amount
redeemed,
if applicable) None None None None None
Exchange Fee None None None None None
ANNUAL TRUST SHARES OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waivers)(1) 0.60% 0.60% 0.60% 0.00% 0.00%
12b-1 Fees(2) None None None 0.00% 0.00%
Total Other Expenses (after waivers and
reimbursements)(3) 0.43% 0.41% 0.34% 0.48% 0.51%
Total Trust Shares Operating Expenses (after
waivers and reimbursements)(4) 1.03% 1.01% 0.94% 0.48% 0.51%
</TABLE>
(1) The management fee has been reduced to reflect the voluntary waiver by the
investment adviser. The adviser can terminate this voluntary waiver at any
time at its sole discretion. The maximum management fee is 0.70% for the
Connecticut Intermediate Municipal Income Fund and Massachusetts
Intermediate Municipal Income Fund; 0.80% for Fixed Income Fund,
Intermediate Government Income Fund, and Limited Term Income Fund.
(2) As of the date of this prospectus, the Connecticut Intermediate Muncipal
Income Fund and the Massachusetts Intermediate Municipal Income Fund are not
paying or accruing 12b-1 fees. The Connecticut Intermediate Municipal Income
Fund and Massachusetts Intermediate Municipal Income Fund do not intend to
accrue or pay 12b-1 fees until either a separate class of shares has been
created for certain fiduciaries investors or a determination is made that
such investors will be subject to 12b-1 fees.
(3) Other expenses have been reduced to reflect the voluntary waiver by the
custodian for all funds; and reimbursement by the adviser for the
Connecticut Intermediate Municipal Income Fund and the Massachusetts
Intermediate Municipal Income Fund.
(4) Absent the voluntary waivers and reimbursements explained in the above
footnotes, the Trust Shares Operating Expenses are 3.09% for the Connecticut
Intermediate Municipal Income Fund; 4.21% for the Massachusetts Intermediate
Municipal Income Fund; 1.18% for the Fixed Income Fund; 1.24% for the
Intermediate Government Income Fund; and 1.26% for the Limited Term Income
Fund.
* Shares of these funds purchased by or for accounts in which the trust
department of Shawmut Bank, N.A., or its affiliates, serve in a fiduciary or
agency capacity are sold without a sales load. Other purchasers pay a sales
load of up to 2.00% of the public offering price, as described in the Income
Funds--Investment Shares prospectus.
** Connecticut Intermediate Municipal Income Fund and Massachusetts
Intermediate Municipal Income Fund sell their shares without class
designation. Purchasers of either the Trust Shares or Investment Shares of
the other Shawmut Funds may purchase shares of Connecticut Intermediate
Municipal Income Fund and Massachusetts Intermediate Municipal Income Fund.
The purpose of this table is to assist an investor in understanding the various
costs and expenses that a shareholder of Trust Shares will bear, either directly
or indirectly. For more complete descriptions of the various costs and expenses,
see "Administration" and "Investing in Shares." Wire-transferred redemptions of
less than $5,000 may be subject to additional fees.
EXAMPLE
You would pay the following expenses on a $1,000 investment assuming (1) 5%
annual return and (2) redemption at the end of each time period. As noted in the
table above, the Income Funds charge no contingent deferred sales charge.
1 Year 3 Years 5 Years 10 Years
Limited Term Income Fund... $11 $33 $57 $126
Intermediate Government
Income Fund................ $10 $32 $56 $124
Fixed Income Fund.......... $10 $30 $52 $115
Connecticut Intermediate
Municipal Income Fund...... $ 5 $15 $27 $ 60
Massachusetts Intermediate
Municipal Income Fund...... $ 5 $16 $29 $ 64
THE ABOVE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
The information set forth in the foregoing table and example relates only to
Trust Shares of the Income Funds. Fixed Income Fund, Intermediate Government
Income Fund, and Limited Term Income Fund also offer another class of shares
called Investment Shares. Trust Shares and Investment Shares are subject to
certain of the same expenses; however, Investment Shares are subject to a 12b-1
fee of up to .50 of 1% of average net assets. See "Other Classes of Shares."
SHAWMUT INCOME FUNDS
Financial Highlights
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
The following table has been audited by Price Waterhouse LLP, the Income Funds'
independent accountants whose report thereon dated December 16, 1994, is
included in the Annual Report of The Shawmut Funds for the fiscal year ended
October 31, 1994, which is incorporated by reference into the Statement of
Additional Information. This table should be read in conjunction with the
Income Funds' financial statements and notes thereto, which may be obtained
from the Income Funds.
<TABLE>
<CAPTION>
DISTRIBUTIONS
NET REALIZED DIVIDENDS TO
AND TO SHAREHOLDERS
NET ASSET UNREALIZED TOTAL SHAREHOLDERS FROM NET
YEAR ENDED VALUE, NET GAIN/(LOSS) FROM FROM NET REALIZED GAIN
OCTOBER BEGINNING INVESTMENT ON INVESTMENT INVESTMENT ON INVESTMENT
31, OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME TRANSACTIONS
<S> <C> <C> <C> <C> <C> <C>
<CAPTION>
INVESTMENT SHARES
LIMITED TERM INCOME FUND
<S> <C> <C> <C> <C> <C> <C>
1993** $10.09 0.34 (0.09) 0.25 (0.34) --
1994 $10.00 0.49 (0.58) (0.09) (0.46) --
<CAPTION>
INTERMEDIATE GOVERNMENT INCOME FUND
<S> <C> <C> <C> <C> <C> <C>
1993** $10.18 0.37 0.08 0.45 (0.37) --
1994 $10.26 0.52 (0.92) (0.40) (0.49) --
<CAPTION>
FIXED INCOME FUND
<S> <C> <C> <C> <C> <C> <C>
1993** $10.23 0.40 0.31 0.71 (0.39) --
1994 $10.55 0.59 (1.21) (0.62) (0.56) (0.05)
<CAPTION>
CONNECTICUT INTERMEDIATE MUNICIPAL INCOME FUND++
<S> <C> <C> <C> <C> <C> <C>
1993*** $10.00 0.13 0.24 0.37 (0.13) --
1994 $10.24 0.42 (0.93) (0.51) (0.40) (0.01)
<CAPTION>
MASSACHUSETTS INTERMEDIATE MUNICIPAL INCOME FUND++
<S> <C> <C> <C> <C> <C> <C>
1993*** $10.00 0.14 0.29 0.43 (0.13) --
1994 $10.30 0.42 (0.99) (0.57) (0.42) --
<CAPTION>
TRUST SHARES
<S> <C> <C> <C> <C> <C> <C>
LIMITED TERM INCOME FUND
1993* $10.00 0.49 -- 0.49 (0.49) --
1994 $10.00 0.52 (0.59) (0.07) (0.48) --
INTERMEDIATE GOVERNMENT INCOME FUND
1993* $10.00 0.52 0.26 0.78 (0.52) --
1994 $10.26 0.54 (0.92) (0.38) (0.51) --
FIXED INCOME FUND
1993* $10.00 0.55 0.55 1.10 (0.55) --
1994 $10.55 0.61 (1.21) (0.60) (0.58) (0.05)
CONNECTICUT INTERMEDIATE MUNICIPAL INCOME FUND++
1993*** $10.00 0.13 0.24 0.37 (0.13) --
1994 $10.24 0.42 (0.93) (0.51) (0.40) (0.01)
MASSACHUSETTS INTERMEDIATE MUNICIPAL INCOME FUND++
1993*** $10.00 0.14 0.29 0.43 (0.13) --
1994 $10.30 0.42 (0.99) (0.57) (0.42) --
</TABLE>
* For the period from December 14, 1992 (date of initial public investment)
to October 31, 1993.
** For the period from February 12, 1993 (date of initial public offering) to
October 31, 1993.
*** For the period from June 17, 1993 (date of initial public investment) to
October 31, 1993.
+ Based on net asset value which does not reflect the sales load or contingent
deferred sales charge, if applicable.
++ Connecticut Intermediate Municipal Income Fund and Massachusetts
Intermediate Municipal Income Fund sell their shares without class
designation.
<TABLE>
<CAPTION>
NET ASSET NET NET ASSETS, PORTFOLIO
TOTAL VALUE, END TOTAL INVESTMENT EXPENSE WAIVER/ END OF PERIOD TURNOVER
DISTRIBUTIONS OF PERIOD RETURN+ EXPENSES INCOME REIMBURSEMENT(B) (000 OMITTED) RATE
<S> <C> <C> <C> <C> <C> <C> <C>
(0.34) $ 10.00 2.57% 1.13%(a) 5.07%(a) 0.48%(a) $ 3,859 53%
(0.46) $ 9.45 (0.96%) 1.28% 5.01% 0.48% $ 7,219 144%
(0.37) $ 10.26 4.45% 1.15%(a) 5.41%(a) 0.50%(a) $ 13,812 30%
(0.49) $ 9.37 (3.99%) 1.26% 5.29% 0.48% $ 11,032 84%
(0.39) $ 10.55 7.02% 1.12%(a) 5.61%(a) 0.48%(a) $ 9,550 33%
(0.61) $ 9.32 (6.08%) 1.19% 5.95% 0.49% $ 8,414 73%
(0.13) $ 10.24 3.75% 0.50%(a) 3.80%(a) 2.33%(a) $ 7,288 8%
(0.41) $ 9.32 (5.17%) 0.48% 4.23% 2.61% $ 8,002 59%
(0.13) $ 10.30 4.35% 0.50%(a) 4.07%(a) 3.57%(a) $ 4,009 0%
(0.42) $ 9.31 (5.71%) 0.51% 4.35% 3.70% $ 6,568 41%
(0.49) $ 10.00 5.02% 0.88%(a) 5.54%(a) 0.23%(a) $ 66,998 53%
(0.48) $ 9.45 (0.69%) 1.03% 5.26% 0.23% $ 55,187 144%
(0.52) $ 10.26 7.97% 0.88%(a) 5.83%(a) 0.26%(a) $ 62,399 30%
(0.51) $ 9.37 (3.75%) 1.01% 5.54% 0.23% $ 57,551 84%
(0.55) $ 10.55 11.26% 0.85%(a) 6.06%(a) 0.22%(a) $ 92,485 33%
(0.63) $ 9.32 (5.85%) 0.94% 6.20% 0.24% $ 82,468 73%
(0.13) $ 10.24 3.75% 0.50%(a) 3.80%(a) 2.33%(a) $ 7,288 8%
(0.41) $ 9.32 (5.17%) 0.48% 4.23% 2.61% $ 8,002 59%
(0.13) $ 10.30 4.35% 0.50%(a) 4.07%(a) 3.57%(a) $ 4,009 0%
(0.42) $ 9.31 (5.71%) 0.51% 4.35% 3.70% $ 6,568 41%
</TABLE>
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
Further information about the Income Funds' performance is contained in the
Trust's Combined Annual Report dated October 31, 1994, which can be obtained
free of charge.
GENERAL INFORMATION
The Trust was established as a Massachusetts business trust under a
Declaration of Trust dated July 16, 1992. The Declaration of Trust permits the
Trust to offer separate series of shares representing interests in separate
portfolios of securities. The shares in any one portfolio may be offered in
separate classes. As of the date of this prospectus, the Board of Trustees
(the "Trustees") has established two classes of shares of several of the
Income Funds, known as Trust Shares and Investment Shares. This prospectus
relates only to Trust Shares of the Income Funds that offer separate classes
of shares. Trust Shares are sold primarily to accounts for which Shawmut Bank,
N.A., or its affiliates, act in a fiduciary or agency capacity.
A minimum initial investment of $1,000 may be required. Subsequent investments
must be in amounts of at least $100, as described in this prospectus in the
section entitled "Minimum Investment Required." Trust Shares are currently
sold at net asset value and are redeemed at net asset value without a sales
charge imposed by the Income Funds.
THE SHAWMUT PORTFOLIOS
The shareholders of the Income Funds are shareholders of The Shawmut Funds,
which currently consist of Shawmut Connecticut Intermediate Municipal Income
Fund, Shawmut Connecticut Municipal Money Market Fund, Shawmut Fixed Income
Fund, Shawmut Growth and Income Equity Fund, Shawmut Growth Equity Fund,
Shawmut Intermediate Government Income Fund, Shawmut Limited Term Income Fund,
Shawmut Massachusetts Intermediate Municipal Income Fund, Shawmut
Massachusetts Municipal Money Market Fund, Shawmut Prime Money Market Fund,
Shawmut Quantitative Equity Fund, and Shawmut Small Capitalization Equity
Fund. Shareholders in the Income Funds have easy access to the other
portfolios of The Shawmut Funds through an exchange program. The Shawmut Funds
are advised by Shawmut Bank, N.A., and distributed by Federated Securities
Corp.
OBJECTIVES AND POLICIES
LIMITED TERM INCOME FUND
INVESTMENT OBJECTIVE
The investment objective of the Limited Term Income Fund is current income
consistent with low principal volatility and total return. The investment
objective cannot be changed without approval of shareholders. While there is no
assurance that the Limited Term Income Fund will achieve its investment
objective, it endeavors to do so by following the investment policies described
in this prospectus.
INVESTMENT POLICIES
THE LIMITED TERM INCOME FUND PURSUES ITS INVESTMENT OBJECTIVE BY INVESTING
PRIMARILY IN A PORTFOLIO OF INVESTMENT GRADE BONDS AND NOTES AND U.S.
GOVERNMENT SECURITIES.
The Limited Term Income Fund will maintain a dollar-weighted average maturity
of three years or less. For purposes of computing average maturity, the Limited
Term Income Fund considers the market accepted average life of the assets of
the Limited Term Income Fund. Market accepted average life considers the
anticipated prepayment or call of underlying securities that might influence
stated maturity. The investment policies described above may be changed by the
Trustees without shareholder approval. Shareholders will be notified before any
material change in these investment policies becomes effective.
ACCEPTABLE INVESTMENTS
Under normal circumstances, the Limited Term Income Fund will invest at least
65% of the total value of its assets in income producing securities. The
securities in which the Limited Term Income Fund invests include, but are not
limited to:
direct obligations of the U.S. Treasury, such as U.S. Treasury bills, notes,
and bonds;
obligations of U.S. government agencies or instrumentalities such as Federal
Home Loan Banks, Federal National Mortgage Association, Government National
Mortgage Association, Federal Farm Credit Banks, Student Loan Marketing
Association, or Federal Home Loan Mortgage Corporation;
domestic issues of corporate debt obligations having floating or fixed rates
of interest and rated in one of the five highest categories by a nationally
recognized statistical rating organization (rated Aaa, Aa, A, Baa, or Ba by
Moody's Investors Service, Inc. ("Moody's") or AAA, AA, A, BBB, or BB by
Standard & Poor's Ratings Group ("Standard & Poor's") or Fitch Investors
Service, Inc. ("Fitch")), or which are of comparable quality in the judgment
of the adviser;
commercial paper rated Prime-1 or Prime-2 by Moody's, A-1 or A-2 by
Standard & Poor's, or F-1 or F-2 by Fitch;
asset-backed securities rated BBB or higher by a nationally recognized
statistical rating organization, which may include, but are not limited
to, interests in pools of receivables such as motor vehicle installment
purchase obligations and credit card receivables, and mortgage-related
asset-backed securities;
repurchase agreements collateralized by eligible investments; and
certain derivative securities.
INTERMEDIATE GOVERNMENT FUND
INVESTMENT OBJECTIVE
The investment objective of the Intermediate Government Income Fund is current
income consistent with total return. The investment objective cannot be changed
without approval of shareholders. While there is no assurance that the
Intermediate Government Income Fund will achieve its investment objective, it
endeavors to do so by following the investment policies described in this
prospectus.
INVESTMENT POLICIES
THE INTERMEDIATE GOVERNMENT INCOME FUND PURSUES ITS INVESTMENT OBJECTIVE BY
INVESTING IN A PORTFOLIO OF INVESTMENT GRADE BONDS AND NOTES AND U.S.
GOVERNMENT SECURITIES.
The Intermediate Government Income Fund will maintain a dollar-weighted average
maturity of between three to ten years. For purposes of computing average
maturity, the Intermediate Government Income Fund considers the market accepted
average life of the assets of the Intermediate Government Income Fund. Market
accepted average life considers the anticipated prepayment or call of
underlying securities that might influence stated maturity. The investment
policies described above may be changed by the Trustees without the approval of
shareholders. Shareholders will be notified before any material change in these
investment policies becomes effective.
ACCEPTABLE INVESTMENTS
Under normal circumstances, the Intermediate Government Income Fund will invest
at least 65% of the total value of its assets in U.S. government securities.
The securities in which the Intermediate Government Income Fund invests
include, but are not limited to:
direct obligations of the U.S. Treasury, such as U.S. Treasury bills, notes,
and bonds;
obligations of U.S. government agencies or instrumentalities such as Federal
Home Loan Banks, Federal National Mortgage Association, Government National
Mortgage Association, Federal Farm Credit Banks, Student Loan Marketing
Association, or Federal Home Loan Mortgage Corporation;
domestic issues of corporate debt obligations having floating or fixed rates
of interest and rated in one of the five highest categories by a nationally
recognized statistical rating organization (rated Aaa, Aa, A, Baa, or Ba by
Moody's or AAA, AA, A, BBB, or BB by Standard & Poor's or Fitch), or which
are of comparable quality in the judgment of the adviser;
asset-backed securities rated BBB or higher by a nationally recognized
statistical rating organization, which may include, but are not limited to,
interests in pools of receivables such as motor vehicle installment
purchase obligations and credit card receivables, and mortgage-related
asset-backed securities;
repurchase agreements collateralized by eligible investments; and
certain derivative securities.
FIXED INCOME FUND
INVESTMENT OBJECTIVE
The investment objective of the Fixed Income Fund is current income consistent
with total return. The investment objective cannot be changed without approval
of shareholders. While there is no assurance that the Fixed Income Fund will
achieve its investment objective, it endeavors to do so by following the
investment policies described in this prospectus.
INVESTMENT POLICIES
THE FIXED INCOME FUND PURSUES ITS INVESTMENT OBJECTIVE BY INVESTING PRIMARILY
IN A PORTFOLIO OF INVESTMENT GRADE NOTES AND BONDS AND U.S. GOVERNMENT
SECURITIES.
The investment policies described above may be changed by the Trustees without
shareholder approval. Shareholders will be notified before any material change
in these policies becomes effective.
ACCEPTABLE INVESTMENTS
Under normal circumstances, the Fixed Income Fund will invest at least 65% of
the total value of its assets in fixed income securities. The securities in
which the Fixed Income Fund invests include, but are not limited to:
direct obligations of the U.S. Treasury, such as U.S. Treasury bills, notes,
and bonds;
obligations of U.S. government agencies or instrumentalities such as Federal
Home Loan Banks, Federal National Mortgage Association, Government National
Mortgage Association, Federal Farm Credit Land Banks, Student Loan Marketing
Association, or Federal Home Loan Mortgage Corporation;
domestic issues of corporate debt obligations having floating or fixed rates
of interest and rated in one of the five highest categories by a nationally
recognized statistical rating organization (rated Aaa, Aa, A, Baa, or Ba by
Moody's or AAA, AA, A, BBB, or BB by Standard & Poor's or Fitch), or which
are of comparable quality in the judgment of the adviser;
commercial paper rated Prime-1 or Prime-2 by Moody's, A-1 or A-2 by
Standard & Poor's, or F-1 or F-2 by Fitch;
asset-backed securities rated BBB or higher by a nationally recognized
statistical rating organization, which may include, but are not limited
to, interests in pools of receivables such as motor vehicle installment
purchase obligations and credit card receivables, and mortgage-related
asset-backed securities;
repurchase agreements collateralized by eligible investments; and
certain derivative securities.
CONNECTICUT INTERMEDIATE MUNICIPAL INCOME FUND
INVESTMENT OBJECTIVE
The investment objective of the Connecticut Intermediate Municipal Income Fund
is current income which is exempt from federal regular income tax and
Connecticut state income tax. The investment objective cannot be changed
without approval of shareholders. While there is no assurance that the
Connecticut Intermediate Municipal Income Fund will achieve its investment
objective, it endeavors to do so by following the investment policies described
in this prospectus.
INVESTMENT POLICIES
THE CONNECTICUT INTERMEDIATE MUNICIPAL INCOME FUND PURSUES ITS INVESTMENT
OBJECTIVE BY INVESTING PRIMARILY IN A PORTFOLIO OF CONNECTICUT MUNICIPAL
SECURITIES.
The investment policies may be changed by the Trustees without the approval of
shareholders. Shareholders will be notified before any material change in these
investment policies becomes effective. As a matter of investment policy, which
may not be changed without shareholder approval, the Connecticut Intermediate
Municipal Income Fund will invest its assets so that, under normal
circumstances, at least 80% of its annual interest income is exempt from
federal regular income tax or that at least 80% of the total value of its
assets are invested in obligations the interest income from which is exempt
from federal regular income tax.
ACCEPTABLE INVESTMENTS
Under normal circumstances, the Connecticut Intermediate Municipal Income Fund
will invest its assets so that at least 65% of the value of its total assets
will be invested in debt obligations issued by or on behalf of the State of
Connecticut and its political subdivisions and financing authorities, and
obligations of other states, territories and possessions of the United States,
including the District of Columbia, and any political subdivision or financing
authority of any of these, the income from which is, in the opinion of
qualified legal counsel, exempt from federal regular income tax and Connecticut
state income tax imposed upon non-corporate taxpayers ("Connecticut Municipal
Securities"). The Connecticut Intermediate Municipal Income Fund will maintain
a dollar-weighted average maturity of between three to ten years. The
Connecticut Municipal Securities in which the Connecticut Intermediate
Municipal Income Fund invests are subject to the following quality standards:
rated Baa or above by Moody's or BBB or above by Standard & Poor's or Fitch. A
description of the rating categories is contained in the Appendix to the
Combined Statement of Additional Information; or
insured by a municipal bond insurance company, which is rated Aaa by Moody's
or AAA by Standard & Poor's or Fitch; or
guaranteed at the time of purchase by the U.S. government as to the payment
of principal and interest; or
fully collateralized by an escrow of U.S. government securities; or
unrated if determined to be of comparable quality to one of the foregoing
rating categories by the Fund's investment adviser; or
are appropriately rated derivative securities.
MASSACHUSETTS INTERMEDIATE MUNICIPAL INCOME FUND
INVESTMENT OBJECTIVE
The investment objective of the Massachusetts Intermediate Municipal Income
Fund is current income which is exempt from federal regular income tax and
income taxes imposed by the Commonwealth of Massachusetts. The investment
objective cannot be changed without approval of shareholders. While there is no
assurance that the Massachusetts
Intermediate Municipal Income Fund will achieve its investment objective, it
endeavors to do so by following the investment policies described in this
prospectus.
INVESTMENT POLICIES
THE MASSACHUSETTS INTERMEDIATE MUNICIPAL INCOME FUND PURSUES ITS INVESTMENT
OBJECTIVE BY INVESTING PRIMARILY IN A PORTFOLIO OF MASSACHUSETTS MUNICIPAL
SECURITIES.
The investment policies described above may be changed by the Trustees without
the approval of shareholders. Shareholders will be notified before any material
change in these investment policies becomes effective. As a matter of
investment policy, which may not be changed without shareholder approval, the
Massachusetts Intermediate Municipal Income Fund will invest its assets so
that, under normal circumstances, at least 80% of its annual interest income is
exempt from federal regular income tax or that at least 80% of the total value
of its assets are invested in obligations the interest income from which is
exempt from federal regular income tax.
ACCEPTABLE INVESTMENTS
Under normal circumstances, the Massachusetts Intermediate Municipal Income
Fund will invest its assets so that at least 65% of the value of its total
assets will be invested in debt obligations issued by or on behalf of the
Commonwealth of Massachusetts and its political subdivisions and financing
authorities, and obligations of other states, territories and possessions of
the United States, including the District of Columbia, and any political
subdivision or financing authority of any of these, the income from which is,
in the opinion of qualified legal counsel, exempt from federal regular income
tax and Massachusetts state income tax imposed upon non-corporate taxpayers
("Massachusetts Municipal Securities"). The Massachusetts Intermediate
Municipal Income Fund will maintain a dollar-weighted average maturity of
between three to ten years. The Massachusetts Municipal Securities in which the
Massachusetts Intermediate Municipal Income Fund invests are subject to the
following quality standards:
rated Baa or above by Moody's or BBB or above by Standard & Poor's or Fitch. A
description of the rating categories is contained in the Appendix to the
Statement of Additional Information; or
insured by a municipal bond insurance company which is rated Aaa by Moody's
or AAA by Standard & Poor's or Fitch; or
guaranteed at the time of purchase by the U.S. government as to the payment
of principal and interest; or
fully collateralized by an escrow of U.S. government securities; or
unrated if determined to be of comparable quality to one of the foregoing
rating categories by the Fund's investment adviser; or
are appropriately rated derivative securities.
INVESTMENTS, STRATEGIES, AND RISKS
U.S. GOVERNMENT SECURITIES. Some obligations issued or guaranteed by agencies
or instrumentalities of the U.S. government, such as Government National
Mortgage Association participation certificates, are backed by the full faith
and credit of the U.S. Treasury. No assurances can be given that the U.S.
government will provide financial support to other agencies or
instrumentalities, since it is not obligated to do so. These instrumentalities
are supported by:
the issuer's right to borrow an amount limited to a specific line of credit
from the U.S. Treasury;
discretionary authority of the U.S. government to purchase certain
obligations of an agency or instrumentality; or
the credit of the agency or instrumentality.
CORPORATE DEBT OBLIGATIONS. The Fixed Income Fund, Intermediate Government
Income Fund, and Limited Term Income Fund may invest in corporate debt
obligations, including corporate bonds, notes, and debentures, which may have
floating or fixed rates of interest. Fixed Income Fund, Intermediate Government
Income Fund, and Limited Term Income Fund will not invest in corporate debt
obligations that are rated lower than Baa by Moody's or BBB by Standard &
Poor's or Fitch, except that each of these Funds may invest up to 10% of the
value of their respective total assets in corporate debt obligations rated "Ba"
or "BB" so long as not more than 1% of each respective Fund's total assets is
invested in the Ba-rated or BB-rated obligations of a single issuer. Bonds
rated Baa by Moody's or BBB by Standard & Poor's or Fitch are considered medium
grade obligations and are regarded as having an adequate capacity to pay
interest and repay principal. They are neither highly protected nor poorly
secured, but lack outstanding investment characteristics and in fact have
speculative characteristics as well. Debt rated Ba by Moody's or BB by Standard
& Poor's or Fitch are judged to have speculative elements, their future cannot
be considered as well assured. They face major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payments. The
rating may also be used for debt subordinated to senior debt that is assigned
an actual or implied "Baa" or "BBB"-rating, and may include obligations
convertible into equity investments. If a security loses its rating or has its
rating reduced after the Fund has purchased it, the Fund is not required to
sell or otherwise dispose of the security, but may consider doing so. If
ratings made by Moody's or Standard & Poor's change because of changes in those
organizations or in their ratings systems, the Fund will attempt to obtain
comparable ratings as substitute standards in accordance with the investment
policies of the Fund.
FLOATING RATE CORPORATE DEBT OBLIGATIONS. Fixed Income Fund, Intermediate
Government Income Fund, and Limited Term Income Fund expect to invest in
floating rate corporate debt obligations. Floating rate securities are
generally offered at an initial interest rate which is at or above
prevailing market rates. The interest rate paid on these securities is then
reset periodically (commonly every 90 days) to an increment over some
predetermined interest rate index. Commonly utilized indices include the
three-month Treasury bill rate, the 180-day Treasury bill rate, the one-
month or three-month London Interbank Offered Rate (LIBOR), the prime rate
of a bank, the commercial paper rates, or the longer-term rates on U.S.
Treasury securities.
FIXED RATE CORPORATE DEBT OBLIGATIONS. Fixed Income Fund, Intermediate
Government Income Fund, and Limited Term Income Fund may also invest in
fixed rate securities, including fixed rate securities with short-term
characteristics. Fixed rate securities with short-term characteristics are
long-term debt obligations, but are treated in the market as having short
maturities because call features of the securities may make them callable
within a short period of time. A fixed rate security with short-term
characteristics would include a fixed income security priced close to call
or redemption price or a fixed income security approaching maturity, where
the expectation of call or redemption is high.
ASSET-BACKED SECURITIES. Fixed Income Fund, Intermediate Government Income
Fund and Limited Term Income Fund may also invest in asset-backed securities
which are created by the grouping of certain governmental, government-related,
and private loans, receivables and other lender assets, including vehicle
installment purchase obligations and credit card receivables, into pools.
Interests in these pools are sold as individual securities and are not backed
or guaranteed by the U.S. government. These securities differ from other forms
of debt securities, which normally provide for periodic payment of interest in
fixed amounts with principal paid at maturity or specified call dates.
Asset-backed securities, however, provide periodic payments which generally
consist of both interest and principal payments. The estimated average life of
an asset-backed security and the average maturity of a portfolio including such
assets varies with the prepayment experience with respect to the underlying
debt instruments. The credit characteristics of asset-backed securities also
differ in a number of respects from those of traditional debt securities.
The credit quality of most asset-backed securities depends primarily upon the
credit quality of the assets underlying such securities, how well the entity
issuing the securities is insulated from the credit risk of the originator or
any other affiliated entities, and the amount and quality of any credit support
provided to such securities. Fixed Income Fund, Intermediate Government Income
Fund, and Limited Term Income Fund will not invest in asset-backed securities
that are rated lower than Baa by Moody's or BBB by Standard & Poor's or Fitch.
Fixed Income Fund, Intermediate Government Income Fund, and Limited Term Income
Fund may also invest in mortgage-related asset-backed securities which are
issued by private entities such as investment banking firms and companies
related to the construction industry. The mortgage-related securities in which
Fixed Income Fund, Intermediate Government Income Fund, and Limited Term Income
Fund may invest may be: (i) privately issued securities which are
collateralized by pools of mortgages in which each mortgage is guaranteed as to
payment of principal and interest by an agency or instrumentality of the U.S.
government; (ii) privately issued securities which are collateralized by pools
of mortgages in which payment of principal and interest are guaranteed by the
issuer and such guarantee is collateralized by U.S. government securities;
(iii) privately issued securities in which the proceeds of the issuance are
invested in mortgage-backed securities and payment of the principal and
interest is supported by the credit of any agency or instrumentality of the
U.S. government; or (iv) other privately issued securities in which the
proceeds of the issuance are invested in mortgage-backed securities and payment
of the principal and interest is guaranteed or supported by the credit of a
non-governmental entity, including corporations. The mortgage-related
securities provide for a periodic payment consisting of both interest and
principal. The interest portion of these payments will be distributed by Fixed
Income Fund, Intermediate Government Income Fund, and Limited Term Income Fund
as income, and the capital portion will be reinvested.
While mortgage-related securities generally entail less risk of a decline
during periods of rapidly rising interest rates, mortgage-related securities
may also have less potential for capital appreciation than other similar
investments (e.g., investments with comparable maturities) because as interest
rates decline, the likelihood increases that mortgages will be prepaid.
Furthermore, if mortgage-related securities are purchased at a premium,
mortgage foreclosures and unscheduled principal payments may result in some
loss of a holder's principal investment to the extent of the premium paid.
Conversely, if mortgage-related securities are purchased at a discount, both a
scheduled payment of principal and an unscheduled prepayment of principal would
increase current and total returns and would accelerate the recognition of
income, which would be taxed as ordinary income when distributed to
shareholders.
TEMPORARY INVESTMENTS. In such proportions as, in the judgment of its
investment adviser, prevailing market conditions warrant, Fixed Income Fund,
Intermediate Government Income Fund, and Limited Term Income Fund may, for
temporary defensive purposes, invest in:
short-term money market instruments rated in one of the top two rating
categories by or nationally recognized statistical rating organization;
securities issued and/or guaranteed as to payment of principal and interest
by the U.S. government, its agencies, or instrumentalities; and
repurchase agreements.
LENDING OF PORTFOLIO SECURITIES. In order to generate additional income, the
Income Funds may lend portfolio securities, on a short-term or long-term basis
or both, up to one-third of the value of its total assets to broker/dealers,
banks, or other institutional borrowers of securities. The Income Funds will
only enter into loan arrangements with broker/dealers, banks, or other
institutions which the investment adviser has determined are creditworthy under
guidelines established by the Trustees and will receive collateral in the form
of cash or U.S. government securities equal to at least 100% of the value of
the securities loaned.
There is the risk that when lending portfolio securities, the securities may
not be available to the Income Funds on a timely basis and the Income Funds
may, therefore, lose the opportunity to sell the securities at a desirable
price. In addition, in the event that a borrower of securities would file for
bankruptcy or become insolvent, disposition of the securities may be delayed
pending court action.
DERIVATIVE SECURITIES. Each of each Income Funds may invest up to 20% of the
market value of each Fund's total assets in the derivative securities
described below.
OPTIONS AND FUTURES CONTRACTS. The Income Funds may buy and sell options
and futures contracts to manage their respective individual exposure to
changing interest rates, security prices, and currency exchange rates. Some
options
and futures strategies, including selling futures, buying puts, and writing
calls, tend to hedge the Income Funds' respective investments against price
fluctuations. Other strategies, including buying futures, writing puts, and
buying calls, tend to increase market exposure. Options and futures may be
combined with each other or with forward contracts in order to adjust the
risk and return characteristics of the overall strategy. The Income Funds
may invest in options and futures based on any type of security, index, or
currency, including options and futures traded on foreign exchanges and
options not traded on exchanges.
Options and futures can be volatile investments, and involve certain risks.
If the investment adviser applies a hedge at an inappropriate time or judges
market conditions incorrectly, options and futures may lower an Income
Fund's individual return. An Income Fund could also experience losses if the
prices of its options and futures positions were poorly correlated with its
other investments, or if it could not close out its positions because of an
illiquid secondary market.
Each of the Income Funds will not hedge more than 20% of their respective
total assets by selling futures, buying puts, and writing calls under normal
conditions. In addition, each of the Income Funds will not buy futures or
write puts whose underlying value exceeds 20% of their respective total
assets, and the Income Funds will not buy calls with a value exceeding 5% of
their respective total assets.
INDEXED SECURITIES. The Income Funds may invest in indexed securities, sold
by brokers or dealers or other financial institutions (such as commercial
banks) deemed creditworthy by the Income Fund's adviser, whose value is
linked to foreign currencies, interest rates, commodities, indices, or other
financial indicators. Most indexed securities are short to intermediate term
fixed-income securities whose values at maturity or whose interest rates
rise or fall according to the change in one or more specified underlying
instruments. Indexed securities may be positively or negatively indexed
(i.e., their value may increase or decrease if the underlying instrument
appreciates), and may have return characteristics similar to direct
investments in the underlying instrument or to one or more options on the
underlying instrument. Indexed securities may be more volatile than the
underlying instrument itself. Each of the Income Funds intends to invest not
more than 5% of the market value of its total assets in indexed securities.
SWAP AGREEMENTS. As one way of managing its exposure to different types of
investments, each of the Income Funds may enter into interest rate swaps,
currency swaps, and other types of swap agreements such as caps, collars,
and floors. Depending on how they are used, swap agreements may increase or
decrease the overall volatility of the Income Fund's investments, its share
price and yield.
Swap agreements are sophisticated hedging instruments that typically involve
a small investment of cash relative to the magnitude of risks assumed. As a
result, swaps can be highly volatile and may have a considerable impact on
an Income Fund's performance. Swap agreements are subject to risks related
to the counterparty's ability to perform, and may decline in value if the
counterparty's creditworthiness deteriorates. An Income Fund may also suffer
losses if it is unable to terminate outstanding swap agreements to reduce
its exposure through offsetting transactions. When an Income Fund enters
into a swap agreement, assets of the Income Funds equal to the value of the
swap agreement will be segregated by the Income Fund. Each of the Income
Funds intends to invest not more than 5% of the market value of the Income
Funds' total assets in swap agreements.
REPURCHASE AGREEMENTS. The U.S. government securities and other securities
in which each Income Fund invests may be purchased pursuant to repurchase
agreements. Repurchase agreements are arrangements in which banks,
broker/dealers, and other recognized financial institutions sell U.S.
government securities or other securities to an Income Fund and agree at the
time of sale to repurchase them at a mutually agreed upon time and price. To
the extent that the original seller does not repurchase the securities from
the Income Funds, the Income Funds could receive less than the repurchase
price on any sale of such securities.
RESTRICTED AND ILLIQUID SECURITIES. The Income Funds intend to invest in
restricted securities. Restricted securities are any securities in which
each Income Fund may otherwise invest pursuant to its investment objective
and policies but which are subject to restriction on resale under
federal securities law.
However, each Income Fund will limit investments in illiquid securities,
including certain restricted securities not determined by the Trustees to be
liquid, non-negotiable fixed time deposits with maturities over seven days,
over-the-counter options, and repurchase agreements providing for settlement
in more than seven days after notice, to 15% of its net assets.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS.__The Income Funds may
purchase securities on a when-issued or delayed delivery basis. These
transactions are arrangements in which the Income Funds purchase securities
with payment and delivery scheduled for a future time. The seller's failure
to complete these transactions may cause the Income Funds to miss a price or
yield considered to be advantageous. Settlement dates may be a month or more
after entering into these transactions, and the marked values of the
securities purchased may vary from the purchase prices. Accordingly, the
Income Funds may pay more/less than the market value of the securities on
the settlement date.
The Income Funds may dispose of a commitment prior to settlement if the
adviser deems it appropriate to do so. In addition, the Income Funds may
enter into transactions to sell its purchase commitments to third parties at
current market values and simultaneously acquire other commitments to
purchase similar securities at later dates. The Income Funds may realize
short-term profits or losses upon the sale of such commitments.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES. The Income Funds may
invest in the securities of other investment companies, but they will not,
respectively, own more than 3% of the total outstanding voting stock of any
investment company, invest more than 5% of their respective total assets in
any one investment company, or invest more than 10% of their respective
total assets in investment companies in general. The Income Funds will
invest in other investment companies primarily for the purpose of investing
its short-term cash which has not yet been invested in other portfolio
instruments. However, from time to time, on a temporary basis, each of the
Income Funds may invest exclusively in one other investment company managed
similarly to the appropriate Fund. Shareholders should realize that, when
one of the Income Funds invests in other investment companies, certain fund
expenses, such as custodian fees and administrative fees, may be duplicated.
The adviser will waive its investment advisory fee on assets invested in
securities of other investment companies.
The following acceptable investments apply only to the CONNECTICUT
INTERMEDIATE MUNICIPAL INCOME FUND and MASSACHUSETTS INTERMEDIATE MUNICIPAL
INCOME FUND (referred to jointly as the "Connecticut/Massachusetts
Intermediate Municipal Income Funds"):
PARTICIPATION INTERESTS. The Connecticut/Massachusetts Intermediate
Municipal Income Funds may purchase interests in Connecticut and
Massachusetts Municipal Securities, (collectively referred to as "Municipal
Securities") from financial institutions such as commercial and investment
banks, savings and loan associations and insurance companies. These
interests may take the form of participations, beneficial interests in a
trust, partnership interests or any other form of indirect ownership that
allows the Connecticut/Massachusetts Intermediate Municipal Income Funds to
treat the income from the investment as exempt from federal regular income
tax. The Connecticut/ Massachusetts Intermediate Municipal Income Funds
invest in these participation interests in order to obtain credit
enhancement or demand features that would not be available through direct
ownership of the underlying Municipal Securities.
MUNICIPAL LEASES. The Connecticut/Massachusetts Intermediate Municipal
Income Funds may invest in municipal leases. Municipal leases are
obligations issued by state and local governments or authorities to finance
the acquisition of equipment and facilities and may be considered to be
illiquid. They may take the form of a lease, an installment purchase
contract, a conditional sales contract, or a participation certificate in
any of the above.
VARIABLE RATE DEMAND NOTES. Variable rate demand notes are long-term
Municipal Securities that have variable or floating interest rates and
provide the Connecticut/Massachusetts Intermediate Municipal Income Funds
with the right to tender the security for repurchase at its stated principal
amount plus accrued interest. The interest rate may float or be adjusted at
regular intervals (ranging from daily to annually) and is normally based on
a municipal interest index or
another published interest rate or interest rate index. Most variable rate
demand notes allow the Connecticut/Massachusetts Intermediate Municipal
Income Funds to demand the repurchase of the security on not more than seven
days prior notice. Other notes only permit the Connecticut/Massachusetts
Intermediate Municipal Income Funds to tender the security at the time of
each interest rate adjustment or at other fixed intervals. The
Connecticut/Massachusetts Intermediate Municipal Income Funds treat variable
rate demand notes as maturing on the later of the date of the next interest
adjustment or the date on which the Connecticut/Massachusetts Intermediate
Municipal Income Funds may next tender the security for repurchase.
TENDER OPTION BONDS AND ZERO COUPON SECURITIES. The
Connecticut/Massachusetts Intermediate Municipal Income Funds may purchase
tender option bonds and similar securities. A tender option bond generally
has a long maturity and bears interest at a fixed rate substantially higher
than prevailing short-term tax-exempt rates, and is coupled with an
agreement by a third party, such as a bank, broker/dealer, or other
financial institution, pursuant to which such institution grants the
security holders the option, usually upon not more than seven days notice or
at periodic intervals, to tender their securities to the institution and
receive the face value of the security. In providing the option, the
financial institution receives a fee that reduces the fixed rate of the
underlying bond and results in the Connecticut/Massachusetts Intermediate
Municipal Income Funds effectively receiving a demand obligation that bears
interest at the prevailing short-term tax exempt rate. The
Connecticut/Massachusetts Intermediate Municipal Income Funds' adviser will
monitor, on an ongoing basis, the creditworthiness of the issuer of the
tender option bond, the financial institution providing the option, and any
custodian holding the underlying long-term bond. The bankruptcy,
receivership, or default of any of the parties to the tender option bond
will adversely affect the quality and marketability of the security.
The Connecticut/Massachusetts Intermediate Municipal Income Funds may also
invest in zero coupon securities, which are debt securities issued or sold
at a discount from their face value. These securities do not entitle the
holder to any periodic payments of interest prior to maturity. The discount
from face value of these securities depends upon various factors, including:
the time remaining until maturity or cash payment date, prevailing interest
rates, the liquidity of the security, and the perceived credit quality of
the issuer. Zero coupon securities may also take the form of debt securities
that have been stripped of their unmatured interest coupons. The market
value of zero coupon securities is generally more volatile, and is more
likely to react to changes in interest rates, than the market value of
interest-bearing securities with similar maturities and credit qualities.
SYNTHETIC BOND DERIVATIVES. The Connecticut/Massachusetts Intermediate
Municipal Income Funds may invest its assets in derivative securities that
provide the Connecticut/Massachusetts Intermediate Municipal Income Funds
with tax-exempt income. These securities are formed when an investment bank
acquires all or part of a fixed rate municipal bond and divides it into two
classes of variable rate securities. One of these classes of securities
provides investors with a source of short-term, variable rate, tax-exempt
income that is determined through an auction mechanism. The other class of
security is sold as a residual rate security, which has a long duration and
also offers a source of tax-exempt income. There is an inverse relationship
between the rate of interest income paid between the two classes of
securities. This means that the holder of the short-term security may
receive interest income that is greater than, or less than, the coupon rate
of the underlying fixed rate bond, and that the holder of the residual
security would, for the same period, receive a rate of return that is less
than, or greater than, as the case may be, the bond's coupon rate.
TEMPORARY INVESTMENTS. The Connecticut/Massachusetts Intermediate Municipal
Income Funds normally invest their assets so that at least 80% of their
annual interest income is exempt from federal regular income tax or that at
least 80% of the total value of their assets are invested in obligations the
interest income from which is exempt from federal regular income tax. At
least 65% of the value of the Connecticut Intermediate Municipal Income
Fund's total assets will be invested in Connecticut Municipal Securities. At
least 65% of the value of Massachusetts Intermediate Municipal Income Fund's
total assets will be invested in Massachusetts Municipal Securities.
However, from time to time on a temporary basis, when the investment adviser
determines that market conditions call for a temporary defensive posture,
the Connecticut/Massachusetts Intermediate Municipal Income Funds may invest
in short-term tax-exempt or taxable temporary investments. These temporary
investments include: shares of similarly managed mutual funds; notes issued
by or on behalf of municipal or corporate issuers; obligations issued or
guaranteed by the U.S. government, its agencies, or instrumentalities; other
debt securities; commercial paper; certificates of deposit of banks; and
repurchase agreements (arrangements in which the organization selling the
Connecticut/Massachusetts Intermediate Municipal Income Funds a bond or
temporary investment agrees at the time of sale to repurchase it at a
mutually agreed upon time and price).
There are no rating requirements applicable to temporary investments.
However, the investment adviser will limit temporary investments to those it
considers to be of good quality.
Although the Connecticut/Massachusetts Intermediate Municipal Income Funds
are permitted to make taxable, temporary investments, there is no current
intention of generating income that is not predominantly exempt from federal
regular income tax or state income tax.
CONNECTICUT AND MASSACHUSETTS MUNICIPAL SECURITIES. Connecticut and
Massachusetts Municipal Securities are generally issued to finance public
works, such as airports, bridges, highways, housing, health-related
entities, transportation-related projects, educational programs, water and
pollution control, and sewer works. They are also issued to repay
outstanding obligations, to raise funds for general operating expenses, and
to make loans to other public institutions and facilities.
Connecticut and Massachusetts Municipal Securities include industrial
development bonds issued by or on behalf of public authorities to provide
financing aid to acquire sites or construct and equip facilities for
privately or publicly owned corporations. The availability of this financing
encourages these corporations to locate within the sponsoring communities
and thereby increases local employment.
The two principal classifications of Municipal Securities are "general
obligation" and "revenue" bonds. General obligation bonds are secured by the
issuer's pledge of its full faith and credit and taxing power for the
payment of principal and interest. Interest on and principal of revenue
bonds, however, are payable only from the revenue generated by the facility
financed by the bond or other specified sources of revenue. Revenue bonds do
not represent a pledge of credit or create any debt of or charge against the
general revenues of a municipality or public authority. Industrial
development bonds are typically classified as revenue bonds.
MUNICIPAL BOND INSURANCE. The Connecticut/Massachusetts Intermediate
Municipal Income Funds may purchase Connecticut and Massachusetts Municipal
Securities covered by insurance which guarantees the timely payment of
principal at maturity and interest on such securities. These insured
Connecticut and Massachusetts Municipal Securities are either (1) covered by
an insurance policy applicable to a particular security, whether obtained by
the issuer of the security or by a third party ("Issuer-Obtained Insurance")
or (2) insured under master insurance policies issued by municipal bond
insurers, which may be purchased by the Connecticut/Massachusetts
Intermediate Municipal Income Funds.
The Connecticut/Massachusetts Intermediate Municipal Income Funds may
require or obtain municipal bond insurance when purchasing or holding
specific Connecticut and Massachusetts Municipal Securities when, in the
opinion of the Connecticut/Massachusetts Intermediate Municipal Income
Funds' investment adviser, such insurance would benefit the
Connecticut/Massachusetts Intermediate Municipal Income Funds, for example,
through improvement of portfolio quality or increased liquidity of certain
securities.
Issuer-Obtained Insurance policies are noncancellable and continue in force
as long as the Connecticut and Massachusetts Municipal Securities are
outstanding and their respective insurers remain in business. If a
Connecticut or Massachusetts Municipal Security is covered by
Issuer-Obtained Insurance, then such security need not be insured by the
policies purchased by the Connecticut/Massachusetts Intermediate Municipal
Income Funds.
The Connecticut/Massachusetts Intermediate Municipal Income Funds may
purchase two types of policies issued by municipal bond insurers. One type
of policy covers certain Connecticut and Massachusetts Municipal Securities
only during the period in which they are in the Connecticut/Massachusetts
Intermediate Municipal Income Funds' portfolios. In the event that a
Connecticut or Massachusetts Municipal Security covered by such a policy is
sold from the Connecticut/Massachusetts Intermediate Municipal Income Funds,
the insurer of the relevant policy will be liable only for those payments of
interest and principal which are due and owing at the time of sale.
The other type of policy covers Connecticut and Massachusetts Municipal
Securities not only while they remain in the Connecticut/Massachusetts
Intermediate Municipal Income Funds' portfolios, but also until their final
maturity even if they are sold out of the Connecticut/Massachusetts
Intermediate Municipal Income Funds' portfolios, so that the coverage may
benefit all subsequent holders of those Connecticut and Massachusetts
Municipal Securities. The Connecticut/Massachusetts Intermediate Municipal
Income Funds will obtain insurance which covers Connecticut and
Massachusetts Municipal Securities until final maturity even after they are
sold out of the Connecticut/Massachusetts Intermediate Municipal Income
Funds' portfolios only if, in the judgment of the investment adviser, the
Connecticut/ Massachusetts Intermediate Municipal Income Funds would receive
net proceeds from the sale of those securities, after deducting the cost of
such permanent insurance and related fees, significantly in excess of the
proceeds it would receive if such Connecticut and Massachusetts Municipal
Securities were sold without insurance. Payments received from municipal
bond insurers may not be tax-exempt income to shareholders of the
Connecticut/Massachusetts Intermediate Municipal Income Funds.
The premiums for the policies are paid by the Connecticut/Massachusetts
Intermediate Municipal Income Funds and the yield on the
Connecticut/Massachusetts Intermediate Municipal Income Funds' portfolios
are reduced thereby. Premiums for the policies are paid by the
Connecticut/Massachusetts Intermediate Municipal Income Funds monthly, and
are adjusted for purchases and sales of Connecticut and Massachusetts
Municipal Securities during the month.
CONNECTICUT AND MASSACHUSETTS INVESTMENT RISKS. Yields on Connecticut and
Massachusetts Municipal Securities depend on a variety of factors,
including: the general conditions of the short-term municipal note market
and of the municipal bond market; the size and maturity of the particular
offering; the maturity of the obligations; and the rating of the issue.
Further, any adverse economic conditions or developments affecting the State
of Connecticut and the Commonwealth of Massachusetts or their municipalities
could impact the Connecticut/Massachusetts Intermediate Municipal Income
Funds' portfolios. The ability of the Connecticut/Massachusetts Intermediate
Municipal Income Funds to achieve their investment objectives also depends
on the continuing ability of the issuers of Connecticut and Massachusetts
Municipal Securities and demand features, or the credit enhancers of either,
to meet their obligations for the payment of interest and principal when
due.
Investing in Connecticut and Massachusetts Municipal Securities which meet
the Connecticut/ Massachusetts Intermediate Municipal Income Funds' quality
standards may not be possible if the State of Connecticut and the
Commonwealth of Massachusetts or their municipalities do not maintain their
current credit ratings. An expanded discussion of the current economic risks
associated with the purchase of Connecticut or Massachusetts Municipal
Securities is contained in the Combined Statement of Additional Information.
NON-DIVERSIFICATION. The Connecticut/Massachusetts Intermediate Municipal
Income Funds are non-diversified investment portfolios. As such, there is no
limit on the percentage of assets which can be invested in any single
issuer. An investment in the Connecticut/Massachusetts Intermediate
Municipal Income Funds, therefore, will entail greater risk than would exist
in a diversified investment portfolio because the higher percentage of
investments among fewer
issuers may result in greater fluctuation in the total market value of the
Connecticut/Massachusetts Intermediate Municipal Income Funds' portfolios.
Any economic, political, or regulatory developments affecting the value of
the securities in the Connecticut/Massachusetts Intermediate Municipal
Income Funds' portfolios will have a greater impact on the total value of
the portfolios than would be the case if the portfolios were diversified
among more issuers.
The Connecticut/Massachusetts Intermediate Municipal Income Funds intend to
comply with Subchapter M of the Internal Revenue Code. This undertaking
requires that at the end of each quarter of the taxable year, with regard to
at least 50% of their respective total assets, no more than 5% of their
respective total assets are invested in the securities of a single issuer;
beyond that, no more than 25% of their respective total assets are invested
in the securities of a single issuer.
INVESTMENT LIMITATIONS
THE INCOME FUNDS FOLLOW A NUMBER OF GUIDELINES IN MANAGING THEIR PORTFOLIOS IN
ORDER TO LIMIT INVESTMENT RISKS.
FIXED INCOME FUND, INTERMEDIATE GOVERNMENT INCOME FUND, AND LIMITED TERM INCOME
FUND WILL NOT:
borrow money directly or through reverse repurchase agreements (arrangements
in which the Income Funds sell a portfolio instrument for a percentage of its
cash value with an arrangement to buy it back on a set date) or pledge
securities except, under certain circumstances, Fixed Income Fund,
Intermediate Government Income Fund, and Limited Term Income Fund may borrow
up to one-third of the value of their total individual fund assets and pledge
up to 10% of the value of their total individual fund assets to secure such
borrowings;
with respect to 75% of the value of their respective total assets, invest
more than 5% in securities of one issuer other than cash, cash items or
securities issued or guaranteed by the government of the United States, its
agencies, or instrumentalities and repurchase agreements collateralized by
such securities, or acquire more than 10% of the outstanding voting
securities of any one issuer; or
invest more than 10% of their respective total assets in securities subject
to restrictions on resale under the Securities Act of 1933 (except for
commercial paper issued under Section 4(2) of the Securities Act of 1933 and
certain other securities which meet the criteria for liquidity as
established by the Trustees).
THE CONNECTICUT/MASSACHUSETTS INTERMEDIATE MUNICIPAL INCOME FUNDS WILL NOT:
borrow money directly or through reverse repurchase agreements (arrangements
in which a fund sells a portfolio instrument for a percentage of its cash
value with an arrangement to buy it back on a set date) or pledge securities
except, under certain circumstances, the Connecticut/Massachusetts
Intermediate Municipal Income Funds may borrow up to one-third of the value of
their respective total assets and pledge up to 10% of the value of those
assets to secure such borrowings; or
invest more than 5% of their respective total assets in industrial
development bonds when the payment of principal and interest is the
responsibility of companies (or guarantors, where applicable) with less than
three years of continuous operations, including the operation of any
predecessor.
ADMINISTRATION
MANAGEMENT OF THE SHAWMUT FUNDS
BOARD OF TRUSTEES
THE SHAWMUT FUNDS ARE MANAGED BY A BOARD OF TRUSTEES.
The Trustees are responsible for managing the Trust's business affairs and for
exercising all the Trust's powers except those reserved for the shareholders.
The Executive Committee of the Board of Trustees handles the Board's
responsibilities between meetings of the Board.
INVESTMENT ADVISER
PURSUANT TO AN INVESTMENT ADVISORY CONTRACT WITH THE TRUST, INVESTMENT
DECISIONS FOR THE INCOME FUNDS ARE MADE BY SHAWMUT BANK, N.A. (THE "ADVISER"),
SUBJECT TO DIRECTION BY THE TRUSTEES.
The Adviser continually conducts investment research and supervision for the
Income Funds and is responsible for the purchase or sale of portfolio
instruments, for which it receives an annual fee from the respective assets of
the Income Funds.
ADVISORY FEES
The Adviser receives an annual investment advisory fee equal to .80 of 1% of
Shawmut Fixed Income Fund's, Shawmut Intermediate Government Income Fund's, and
Shawmut Limited Term Income Fund's average daily net assets and .70 of 1% of
Shawmut Connecticut Intermediate Municipal Income Fund's and Shawmut
Massachusetts Intermediate Municipal Income Fund's average daily net assets.
The fee paid by the Income Funds, while higher than the advisory fee paid by
other mutual funds in general, is comparable to fees paid by mutual funds with
similar objectives and policies. The Adviser has undertaken to waive a portion
of its advisory fee, up to the amount of the advisory fee, to reimburse each of
the Income Funds for operating expenses in excess of limitations established by
certain states. The Adviser may further voluntarily waive a portion of its fee
or reimburse the Income Funds for certain operating expenses. The Adviser can
terminate such voluntary waiver or reimbursement policy with any of the Income
Funds at any time at its sole discretion.
ADVISER'S BACKGROUND
SHAWMUT BANK, N.A., A NATIONAL BANKING ASSOCIATION, AND ITS AFFILIATES HAVE
MANAGED COMMINGLED FUNDS FOR OVER FIFTY YEARS. AS OF OCTOBER 31, 1994, SHAWMUT
NATIONAL CORPORATION, THROUGH ITS SUBSIDIARIES INCLUDING SHAWMUT BANK, N.A.,
MANAGED MORE THAN $15 BILLION IN TOTAL ASSETS. SHAWMUT BANK, N.A., HAS SERVED
AS AN ADVISER TO MUTUAL FUNDS SINCE THE INCEPTION DATE OF THE SHAWMUT FUNDS ON
DECEMBER 1, 1992.
Shawmut Bank, N.A., a national banking association, along with Shawmut Bank
Connecticut, National Association and Shawmut Bank NH, are the principal
subsidiaries of Shawmut National Corporation, a super-regional bank holding
company formed on February 29, 1988, and based in southern New England. Shawmut
National Corporation serves consumers through its network of banking offices
with a full range of deposit and lending products, as well as investment
services. As part of their regular banking operations, Shawmut Bank may make
loans to public companies. Thus, it may be possible, from time to time, for the
Income Funds to hold or acquire the securities of issuers which are also
lending clients of Shawmut Bank. The lending relationship will not be a factor
in the selection of securities. The principal executive offices of the
investment adviser are located at One Federal Street, Boston, Massachusetts
02211.
Robert W. Gleason Jr. has been the portfolio manager of Connecticut
Intermediate Municipal Income Fund and Massachusetts Intermediate Municipal
Income Fund since their inception in June, 1993. Mr. Gleason joined a
predecessor to Shawmut Bank, in July, 1976 and has been a Vice President and
portfolio manager since 1985. Mr. Gleason received his B.A. degree in Business
Administration from Colby College, followed by studies at New York University
and Columbia University Graduate Schools of Business Administration. Mr.
Gleason has been participating in investment portfolio management for over 38
years.
Maximiliaan J. Brenninkmeyer has been the portfolio manager of Fixed Income
Fund since its inception in December, 1992. Mr. Brenninkmeyer is a Vice
President of Shawmut Bank, the Fixed Income Fund's Adviser. He is a Chartered
Financial Analyst and holds a M.S. from Bentley College and a B.A. from the
College of the Holy Cross.
Michael M. Spencer has been the portfolio manager of Intermediate Government
Income Fund since April, 1993. Mr. Spencer joined Shawmut Bank in 1985 as an
investment officer and has been a Vice President of the Intermediate Government
Income Fund's Adviser since 1989. Mr. Spencer is a Chartered Financial Analyst
and received his B.A. from the University of Notre Dame.
Perry J. Vieth has been the portfolio manager of Limited Term Income Fund since
April, 1994. Mr. Vieth is a Vice President of Shawmut Bank. His
responsibilities include the management of investment accounts and providing
expertise on derivative securities. Mr. Vieth received his J.D. from the
University of Notre Dame and his undergraduate degree from Marquette
University.
DISTRIBUTION OF TRUST SHARES
FEDERATED SECURITIES CORP. IS THE PRINCIPAL DISTRIBUTOR FOR TRUST SHARES.
Federated Securities Corp., Federated Investors Tower, Pittsburgh, Pennsylvania
15222-3779, is a Pennsylvania corporation organized on November 14, 1969, and
is the principal distributor for a number of investment companies. Federated
Securities Corp. is a subsidiary of Federated Investors.
DISTRIBUTION PLAN.__Under the distribution plan adopted in accordance with
Investment Company Act Rule 12b-1 (the "Plan"), the Connecticut Intermediate
Municipal Income Fund and the Massachusetts Intermediate Municipal Income Fund
will pay to the distributor an amount computed at an annual rate of up to .50
of 1% of the average daily net asset value of the Connecticut Intermediate
Municipal Income Fund and Massachusetts Intermediate Municipal Income Fund to
finance any activity which is principally intended to result in the sale of
shares subject to the Plan.
The distributor may, from time to time and for such periods as its deems
appropriate, voluntarily reduce its compensation under the Plan.
The distributor may select financial institutions such as banks, fiduciaries,
custodians for public funds, investment advisers, and broker/dealers
("brokers") to provide distribution and/or administrative services as agents
for their clients or customers. Administrative services may include, but are
not limited to, the following functions: providing office space, equipment,
telephone facilities, and various clerical, supervisory, computer, and other
personnel as necessary or beneficial to establish and maintain shareholder
accounts and records; processing purchase and redemption transactions and
automatic investments of client account cash balances; answering routine
client inquiries; assisting clients in changing dividend options, account
designations, and addresses; and providing such other services as may be
reasonably be requested.
The distributor will pay financial institutions a fee based upon the Shares
subject to the Plan and owned by their clients or customers. The schedules of
such fees and the basis upon which such fees will be paid will be determined
from time to time by the distributor.
The Plan is a "compensation" type plan. As such the Connecticut Intermediate
Municipal Income Fund and Massachusetts Intermediate Municipal Income Fund
make no payments to the distributor except as described above. Therefore, the
Connecticut Intermediate Municipal Income Fund and Massachusetts Intermediate
Municipal Income Fund do not pay for unreimbursed expenses of the distributor
including amounts expended by the distributor in excess of amounts received by
it from the Connecticut Intermediate Municipal Income Fund and Massachusetts
Intermediate Municipal Income Fund, including interest, carrying or other
financing charges in connection with excess amounts expended, or the
distributor's overhead expenses. However, the distributor may be able to
recover such amounts or may earn a profit from future payments made by the
Connecticut Intermediate Municipal Income Fund and Massachusetts Intermediate
Municipal Income Fund under the Plan.
As of the date of this prospectus, the Connecticut Intermediate Municipal
Income Fund and Massachusetts Intermediate Municipal Income Fund are not
paying or accruing 12b-1 fees. The Connecticut Intermediate Municipal Income
Fund and Massachusetts Intermediate Municipal Income Fund do not intend to
accrue or pay 12b-1 fees until either a separate class
of shares has been created for certain fiduciary investors or a determination
is made that such investors will be subject to 12b-1 fees.
OTHER PAYMENTS TO FINANCIAL INSTITUTIONS.__The distributor may also pay
financial institutions a fee based on the average net asset value of shares of
their customers invested in an Income Fund for providing administrative
services. This fee is in addition to the amounts paid under the distribution
plan for administrative services, and, if paid, will be reimbursed by the
Adviser and not an Income Fund.
An Income Fund's investment adviser or its affiliates may also offer to pay a
fee from their own assets to financial institutions as financial assistance
for providing substantial marketing and sales support. The support may include
sponsoring sales, educational and training seminars for their employees,
providing sales literature, and engineering computer software programs that
emphasize the attributes of an Income Fund. Such assistance will be predicted
upon the amount of shares the dealer sells or may sell, and/or upon the type
and nature of sales or operational support furnished by the financial
institution. These payments will be made by an Income Fund's investment
adviser and will not be made from the assets of an Income Fund.
The Glass-Steagall Act prohibits a depository institution (such as a
commercial bank or a savings and loan association) from being an underwriter
or distributor of most securities. In the event the Glass-Steagall Act is
deemed to prohibit depository institutions from acting in the administrative
capacities described above or should Congress relax current restrictions on
depository institutions, the Trustees will consider appropriate changes in the
services.
State securities laws governing the ability of depository institutions to act
as underwriters or distributors of securities may differ from interpretations
given to the Glass-Steagall Act and, therefore, banks and financial
institutions may be required to register as dealers pursuant to state law.
ADMINISTRATION OF THE INCOME FUNDS
ADMINISTRATIVE SERVICES. Federated Administrative Services ("FAS"), Federated
Investors Tower, Pittsburgh, Pennsylvania 15222-3779, a subsidiary of Federated
Investors, provides the Income Funds with certain administrative personnel and
services necessary to operate the Income Funds, such as legal and accounting
services. FAS provides these at an annual rate as specified below:
<TABLE>
<S> <C>
MAXIMUM
ADMINISTRATIVE AVERAGE AGGREGATED DAILY
FEE NET ASSETS OF THE TRUST
..150 of 1% First $250 million
..125 of 1% Next $250 million
..100 of 1% Next $250 million
..075 of 1% Over $750 million
</TABLE>
The administrative fee received by FAS during any fiscal year shall be at
least $50,000 for each of the Income Funds. FAS may voluntarily choose to
waive a portion of its fee.
CUSTODIAN. Shawmut Bank, N.A., One Federal Street, Boston, Massachusetts
02211, is custodian for the securities and cash of the Income Funds. Under the
Custodian Agreement, Shawmut Bank, N.A., holds the Income Funds' portfolio
securities in safekeeping and keeps all necessary records and documents
relating to its duties.
TRANSFER AGENT, DIVIDEND DISBURSING AGENT, AND PORTFOLIO ACCOUNTING
SERVICES. Federated Services Company, Federated Investors Tower, Pittsburgh,
Pennsylvania 15222-3779, is transfer agent and dividend disbursing agent for
the Income Funds. It also provides certain accounting and recordkeeping
services with respect to each of the Income Funds' portfolio investments.
LEGAL COUNSEL. Legal counsel is provided by Houston, Houston & Donnelly, 2510
Centre City Tower, Pittsburgh, Pennsylvania 15222, and Dickstein, Shapiro &
Morin, L.L.P., 2101 L Street, N.W., Washington, DC 20037.
INDEPENDENT ACCOUNTANTS. The independent accountants for the Income Funds are
Price Waterhouse LLP, 160 Federal Street, Boston, Massachusetts 02110.
NET ASSET VALUE
THE TERM "NET ASSET VALUE" REFERS TO THE VALUE OF ONE INCOME FUND SHARE.
Each Income Fund's net asset value per Trust share fluctuates. The net asset
value for Trust Shares is determined by adding the interest of the Trust
Shares in the market value of all securities and other assets of an Income
Fund, subtracting the interest of the Trust Shares in the liabilities of an
Income Fund and those attributable to Trust Shares, and dividing the remainder
by the total number of Trust Shares outstanding. The net asset value for Trust
Shares of an Income Fund may differ from that of Investment Shares 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.
INVESTING IN SHARES
YOU CAN BUY TRUST SHARES BY FEDERAL RESERVE WIRE, MAIL, OR TRANSFER, AS
EXPLAINED BELOW.
Trust Shares of the Income Funds are sold by the distributor on days on which
the New York Stock Exchange and Federal Reserve Wire System are open for
business. Trust Shares of the Income Funds may also be purchased through
Shawmut Bank, N.A., Shawmut Bank Connecticut, National Association, Shawmut
Bank NH, or their affiliates (collectively, "Shawmut Bank") on days on which
both Shawmut Bank and the New York Stock Exchange and Federal Wire Reserve
System are open for business. Texas residents must purchase, exchange, and
redeem Trust Shares through Federated Securities Corp. at 1-800-356-2805. The
Income Funds reserve the right to reject any purchase request.
THROUGH SHAWMUT BANK. An investor may call their Shawmut Bank trust officer to
receive information and to place an order to purchase Shares. Shawmut Bank will
purchase Trust Shares on behalf of investors and maintain all records relating
to the Trust Shares. Through its trust accounting systems, Shawmut Bank
provides shareholders of Trust Shares with detailed periodic statements that
integrate information regarding investments in the Income Funds with other
Shawmut Bank investment services.
Orders placed through Shawmut Bank are considered received when payment is
converted to federal funds and the applicable Income Fund is notified of the
purchase order. The completion of the purchase transaction will generally occur
within one business day after Shawmut Bank receives a purchase order. Purchase
orders must be received by Shawmut Bank before 4:00 p.m. (Eastern time) and
must be transmitted by Shawmut Bank to the applicable Income Fund before 5:00
p.m. (Eastern time) in order for Trust Shares to be purchased at that day's
public offering price.
DIRECTLY FROM THE DISTRIBUTOR. An investor may place an order to purchase
Trust Shares directly from the distributor. To do so: complete and sign the new
account form available from the Income Funds; complete an application for the
establishment of a trust account with Shawmut Bank; enclose a check made
payable to the full name of your desired portfolio (see the cover of the
prospectus)--Trust Shares (as appropriate); and mail both to The Shawmut Funds,
Attention: Vice President, Securities Operations, OF0501, One Federal Street,
Boston, Massachusetts 02211. The order is considered received after a trust
account is established and the check is converted by Shawmut Bank into federal
funds. This is generally the next business day after Shawmut Bank receives the
check.
To purchase Trust Shares of the Income Funds by wire, call 1-800-SHAWMUT. All
information needed will be taken over the telephone, and the order is
considered received when Shawmut Bank receives payment by wire. To request
additional information concerning purchases by wire, please contact Federated
Securities Corp., the Income Funds' distributor, at 1-800-356-2805. Shares
cannot be purchased by wire on any day which both Shawmut Bank and the New York
Stock Exchange and Federal Reserve Wire System are not open for business.
MINIMUM INVESTMENT REQUIRED
THE MINIMUM INITIAL INVESTMENT IS $1,000.
The minimum initial investment in Trust Shares by an investor is $1,000.
Subsequent investments must be in amounts of at least $100. The Income Funds
may waive the initial minimum investment for employees of Shawmut Bank and its
affiliates, from time to time.
WHAT SHARES COST
SHARES ARE SOLD AT THEIR NET ASSET VALUE NEXT DETERMINED AFTER AN ORDER IS
RECEIVED. THERE IS NO SALES LOAD IMPOSED BY THE INCOME FUNDS UPON THE PURCHASE
OF TRUST SHARES.
The net asset value is determined at the close of the New York Stock Exchange,
normally 4:00 p.m. (Eastern time), Monday through Friday, except on: (i) days
on which there are not sufficient changes in the value of an Income 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) on the following holidays: New Year's
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, and Christmas Day.
Shares of the Connecticut/Massachusetts Intermediate Municipal Income Funds are
sold at their net asset value next determined after an order is received
without a sales load, to or for accounts in which the trust department of
Shawmut Bank serves in a fiduciary or agency capacity. Other purchasers may pay
a sales load of up to 2.00% of the public offering price, as described in the
Income Funds--Investment Shares prospectus.
SUBACCOUNTING SERVICES
Institutions are encouraged to open single master accounts. However, certain
institutions may wish to use the transfer agent's subaccounting system to
minimize their internal recordkeeping requirements. The transfer agent charges
a fee based on the level of subaccounting services rendered. Certain
institutions holding Trust Shares in a fiduciary, agency, custodial, or similar
capacity may charge or pass through subaccounting fees as part of or in
addition to normal trust or agency account fees. They may also charge fees for
other services provided which may be related to the ownership of Trust Shares.
This prospectus should, therefore, be read together with any agreement between
the customer and the institution with regard to the services provided, the fees
charged for those services, and any restrictions and limitations imposed.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Income Funds, Federated Services Company maintains a
share account for each shareholder of record. Share certificates are not issued
unless requested by contacting Shawmut Bank in writing.
Detailed confirmations of each purchase or redemption are sent to Shawmut Bank
or other shareholders of record. Monthly statements are sent by Shawmut Bank to
its trust customers to report account activity during the previous month,
including dividends paid during the period.
DIVIDENDS
Dividends are declared and paid monthly to all shareholders invested in each
Income Fund on the record date.
CAPITAL GAINS
Capital gains realized by an Income Fund, if any, will be distributed to that
Income Fund's shareholder at least once every 12 months.
EXCHANGE PRIVILEGE
EXCHANGING SHARES. Shareholders may exchange Trust Shares, with a minimum net
asset value of $1,000, for shares of the same designated class of other funds
advised by Shawmut Bank.
Exchanges are subject to the minimum initial purchase requirements of such fund
being acquired. Prior to any exchange, the shareholder must receive a copy of
the current prospectus of the class 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, Trust Shares
submitted for exchange will be redeemed at the next-determined net asset value.
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 modified or terminated at any time.
Shareholders will be notified of the modification or termination of the
exchange privilege. A shareholder may obtain further information on the
exchange privilege by calling their trust officer at Shawmut Bank.
EXCHANGE-BY-TELEPHONE. Instructions for exchanges between participating funds
which are part of the Trust may be given by telephone to their trust officer at
Shawmut Bank. To utilize the exchange-by-telephone service, a shareholder must
complete an authorization form permitting Shawmut Bank to instruct the Income
Funds to honor telephone instructions. The authorization is included in Shawmut
Bank's trust account documentation. Trust Shares may be exchanged by telephone
only between trust accounts having identical registrations. Exchange
instructions given by telephone may be electronically recorded.
Any Trust 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.
Telephone exchange instructions must be received before 4:00 p.m. (Eastern
time) for Trust 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 Shawmut Bank during times of drastic
economic or market changes. If a shareholder cannot contact Shawmut Bank by
telephone, it is recommended that an exchange request be made in writing and
sent by overnight mail to Shawmut Bank, Attention: Vice President, Securities
Operation, OF0501, One Federal Street, Boston, Massachusetts 02211.
If reasonable procedures are not followed by the Income Funds, they may be
liable for losses due to fraudulent or unauthorized telephone instructions.
REDEEMING SHARES
YOU CAN REDEEM TRUST SHARES BY MAIL OR TELEPHONE. TO ENSURE YOUR SHARES ARE
REDEEMED EXPEDITIOUSLY, PLEASE FOLLOW THE PROCEDURES EXPLAINED BELOW.
The Income Funds redeem Trust Shares at their net asset value next determined
after Federated Services Company receives the redemption request. Redemptions
will be made on days on which the Income Funds compute their net asset value.
Requests for redemptions can be made by telephone or in writing by contacting
a Shawmut Bank trust officer. Redemption requests received prior to 4:00 p.m.
(Eastern time) will be effected on the same business day.
THROUGH SHAWMUT BANK
Shareholders may redeem Trust Shares by calling their Shawmut Bank trust
officer to request the redemption. Trust Shares will be redeemed at the net
asset value next determined after Federated Services Company receives the
redemption request. Shawmut Bank is responsible for promptly submitting
redemption requests and for maintaining proper written records of redemption
instructions received from the Income Funds' shareholders. In order to effect a
redemption on the same business day as a request, Shawmut Bank is responsible
for the timely transmission of the redemption request to the appropriate Income
Fund.
Before Shawmut Bank may request redemption by telephone on behalf of a
shareholder, an authorization form permitting the Income Funds to accept
redemption requests by telephone must first be completed. This authorization is
included in Shawmut Bank's trust account documentation. Redemption instructions
given by telephone may be electronically recorded. In the event of drastic
economic or market changes, a shareholder may experience difficulty in
redeeming by telephone. If such a case should occur, it is recommended that a
redemption request be made in writing and sent by overnight mail to Shawmut
Bank, Attention: Vice President, Securities Operation, OF0501, One Federal
Street, Boston, Massachusetts 02211.
If reasonable procedures are not followed by the Income Funds, they may be
liable for losses due to fraudulent or unauthorized telephone instructions.
DIRECTLY FROM THE INCOME FUNDS
BY MAIL. A shareholder may redeem Trust Shares by sending a written request to
Federated Services Company. If Shares are purchased by Shawmut Bank on behalf
of a trust customer, only Shawmut Bank, as the shareholder of record, can
request a redemption from Federated Services Company. The written request
should include the shareholder's name, the Income Funds' name and class of
shares name, the account number, and the share or dollar amount requested. If
share certificates have been issued, they must be properly endorsed and should
be sent by registered or certified mail with the written request. Shareholders
should call the Income Funds for assistance in redeeming by mail.
SIGNATURES. Shareholders requesting a redemption of $50,000 or more, a
redemption of any amount to be sent to an address other than that on record
with the Income Funds, 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;
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 Income Funds do not accept signatures guaranteed by a notary public.
The Income Funds and their transfer agent have adopted standards for accepting
signature guarantees from the above institutions. The Income Funds may elect
in the future to limit eligible signature guarantors to institutions that are
members of a signature guarantee program. The Income Funds and their transfer
agent reserve the right to amend these standards at any time without notice.
RECEIVING PAYMENT
Redemption payments will generally be made directly to the trust account
maintained by an investor with Shawmut Bank. This deposit is normally made
within one business day, but in no event more than seven days, after the
redemption request, provided the transfer agent has received payment from the
shareholder. The net asset value of Trust Shares redeemed is determined, and
dividends, if any, are paid up to and including, the day prior to the day that
a redemption request is processed. Pursuant to instructions from Shawmut Bank,
redemption proceeds may be transferred from a shareholder account by check or
by wire.
BY CHECK. 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 redemption
request provided the transfer agent has received payment for Trust Shares from
the shareholder.
BY WIRE. Requests to wire proceeds from redemptions received before 4:00 p.m.
(Eastern time) will be honored the following business day after Shawmut Bank
receives proper instructions.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Income
Funds may redeem shares in any account and pay the proceeds to the shareholder
if the account balance falls below a required minimum of $1,000. This
requirement does not apply, however, if the balance falls below $1,000 because
of changes in an Income Fund's net asset value.
Before shares are redeemed to close an account, the shareholder is notified in
writing and allowed 30 days to purchase additional shares to meet the minimum
requirement.
REDEMPTION IN KIND
The Income Funds are obligated to redeem Trust Shares solely in cash up to
$250,000 or 1% of the net asset value of each Income Fund, whichever is less,
for any one shareholder within a 90-day period.
Any redemption beyond this amount will also be in cash unless the Trustees
determine that further cash payments will have a material adverse effect on
remaining shareholders. In such a case, the Income Funds will pay all or a
portion of the remainder of the redemption in portfolio instruments, valued in
the same way as an Income Fund determines net asset value. The portfolio
instruments will be selected in a manner that the Trustees deem fair and
equitable.
Redemption in kind is not as liquid as a cash redemption. If redemption is made
in kind, shareholders receiving their securities and selling them before their
maturity could receive less than the redemption value of their securities and
could incur certain transaction costs.
SHAREHOLDER INFORMATION
VOTING RIGHTS
EACH TRUST SHARE OF AN INCOME FUND GIVES THE SHAREHOLDER ONE VOTE IN TRUSTEE
ELECTIONS AND OTHER MATTERS SUBMITTED TO SHAREHOLDERS OF THE TRUST FOR VOTE.
All shares of each portfolio in the Trust have equal voting rights except that,
in matters affecting only a particular fund or class, only shareholders of that
fund or class are entitled to vote. As a Massachusetts business trust, the
Trust is not required to hold annual shareholder meetings. Shareholder approval
will be sought only for certain changes in the Trust or an Income Fund's
operation and for the election of Trustees under certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a special
meeting. A special meeting of the shareholders shall be called by the Trustees
upon the written request of shareholders owning at least 10% of the outstanding
shares of the Trust.
As of December 12, 1994, Olsen & Co., acting in various capacities for various
accounts, was the owner of record of 210,970 shares (26.20%) of Connecticut
Intermediate Municipal Income Fund; 221,527 shares (32.24%) of Massachusetts
Intermediate Municipal Income Fund; 5,752,056 shares (100%) of Trust Shares of
Limited Term Income Fund; 6,045,290 shares (100%) of Trust Shares of
Intermediate Government Income Fund; and 8,543,585 shares (100%) of Trust
Shares of Fixed Income Fund.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for acts or obligations of the Trust on behalf
of an Income Fund. To protect shareholders of an Income Fund, the Trust has
filed legal documents with Massachusetts that expressly disclaim the liability
of shareholders of a Income Fund for 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 on
behalf of an Income Fund.
In the unlikely event a shareholder is held personally liable for the Trust's
obligations on behalf of an Income Fund, the Trust is required to use the
property of that Income Fund to protect or compensate the shareholder. On
request, the Trust will defend any claim made and pay any judgment against a
shareholder of the Income Funds for any act or obligation of the Trust on
behalf of the Income Funds. Therefore, financial loss resulting from liability
as a shareholder of the Income Funds will occur only if the Trust cannot meet
its obligations to indemnify shareholders and pay judgments against them from
the assets of the Income Funds.
EFFECT OF 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 investment company
continuously engaged in the issuance of its shares, and prohibit banks
generally from issuing, underwriting, selling, 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.
Shawmut Bank is subject to such banking laws and regulations.
Shawmut Bank believes, based upon the advice of its counsel, that it may
perform the services for the Income Funds contemplated by its advisory
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 or future statutes and
regulations, could prevent Shawmut Bank from continuing to perform all or a
part of the above services for its customers and/or the Income Funds. If it
were prohibited from engaging in these customer-related activities, the
Trustees would consider alternative advisers and means of continuing available
investment services. In such event, changes in the operation of the Income
Funds may occur, including possible termination of any automatic or other
Income Fund share investment and redemption services then being provided by
Shawmut Bank. It is not expected that existing shareholders would suffer any
adverse financial consequences (if another adviser with equivalent abilities
to Shawmut Bank is found) as a result of any of these occurrences.
TAX INFORMATION
FEDERAL INCOME TAX
The Income Funds will pay no federal income tax because each Income Fund
expects to meet requirements of the Internal Revenue Code, as amended,
applicable to regulated investment companies and to receive the special tax
treatment afforded to such companies.
Each Income Fund will be treated as a single, separate entity for federal
income tax purposes so that income (including capital gains) and losses
realized by The Shawmut Funds' other portfolios will not be combined for tax
purposes with those realized by each Income Fund.
Unless otherwise exempt, shareholders are required to pay federal income tax on
any dividends and other distributions received. This applies whether dividends
and distributions are received in cash or as additional Trust Shares.
Shareholders are urged to consult their own tax advisers regarding the status
of their accounts under state and local tax laws.
OTHER CLASSES OF SHARES
Fixed Income Fund, Intermediate Government Income Fund, and Limited Term
Income Fund all offer a separate class of shares known as Investment Shares.
Investment Shares are sold primarily to financial institutions that rely upon
the distribution services provided by the distributor in the marketing of
Investment Shares, as well as to retail customers of such institutions.
Investment Shares are sold at net asset value plus a sales charge. Investments
in Investment Shares are subject to a minimum initial investment of $1,000.
Investment Shares are distributed pursuant to 12b-1 Plans adopted by the Trust
whereby the distributor is paid a fee of up to .50 of 1% of the Investment
Shares' average daily net assets.
The amount of dividends payable to Trust Shares will exceed that of Investment
Shares by the difference between class expenses and distribution expenses
borne by shares of each respective class.
The stated advisory fee is the same for both classes of shares.
PERFORMANCE INFORMATION
FROM TIME TO TIME THE INCOME FUNDS ADVERTISE THEIR TOTAL RETURN, YIELD AND
TAX-EQUIVALENT YIELD FOR TRUST SHARES.
Total return represents the change, over a specified period of time, in the
value of an investment in Trust Shares after reinvesting all income and
capital gains distributions. It is calculated by dividing that change by the
initial investment and is expressed as a percentage.
The yields of Trust Shares of the Income Funds are calculated by dividing the
net investment income per share (as defined by the Securities and Exchange
Commission) earned by the Income Funds over a thirty-day period by the maximum
offering price per Trust Share on the last day of the period. This number is
then annualized using semi-annual compounding. The yield does not necessarily
reflect income actually earned by Trust Shares and, therefore, may not
correlate to the dividends or other distributions paid to shareholders.
The tax-equivalent yield for the Connecticut/Massachusetts Intermediate
Municipal Income Funds is calculated similarly to the yield but is adjusted to
reflect the taxable yield that the Connecticut/Massachusetts Intermediate
Municipal Income Funds would have had to equal its actual yield, assuming a
32.50% and 40.00% combined federal and state tax rate for Connecticut and
Massachusetts, respectively and assuming that income is 100% tax-exempt.
Total return, yield and tax-equivalent yield will be calculated separately for
Trust Shares and Investment Shares. Because Investment Shares are subject to a
sales load and a 12b-1 fee, the total return, yield on tax equivalent yield
for Trust Shares, for the same period, will exceed that of Investment Shares.
Trust Shares are sold without any sales load or other similar non-recurring
charges.
From time to time, the Income Funds may advertise their performance using
certain financial publications and/or compare their performance to certain
indices.
Further information about the performance of the Income Funds is contained in
the Trust's Combined Annual Report dated October 31, 1994, which can be
obtained free of charge.
INVESTMENT ADVISER
Shawmut Bank, N.A.
One Federal Street
Boston, MA 02211
ADMINISTRATOR
Federated Administrative Services
Federated Investors Tower
Pittsburgh, PA 15222-3779
CUSTODIAN
Shawmut Bank, N.A.
One Federal Street
Boston, MA 02211
TRANSFER AGENT
Federated Services Company
Federated Investors Tower
Pittsburgh, PA 15222-3779
DISTRIBUTOR
Federated Securities Corporation
Federated Investors Tower
Pittsburgh, PA 15222-3779
LEGAL COUNSEL
Dickstein, Shapiro & Morin, L.L.P.
2101 L Street, N.W.
Washington, D.C. 20037
Houston, Houston & Donnelly
2510 Centre City Tower
Pittsburgh, PA 15222
SHAWMUT
MONEY MARKET FUNDS
PRIME MONEY MARKET
CONNECTICUT MUNICIPAL MONEY MARKET
MASSACHUSETTS MUNICIPAL MONEY MARKET
SHAWMUT EQUITY FUNDS
GROWTH AND INCOME EQUITY
GROWTH EQUITY
SMALL CAPITALIZATION EQUITY
QUANTITATIVE EQUITY
CALL 1-800-SHAWMUT
FOR MORE INFORMATION ON THE
SHAWMUT FAMILY OF FUNDS
820482800
820482867
820482859
820482818
820482826
3120920A-I (12/94)
The Shawmut Income Funds
(Portfolios of The Shawmut Funds)
Shawmut Connecticut Intermediate Municipal Income Fund
Shawmut Fixed Income Fund
Trust Shares
Investment Shares
Shawmut Intermediate Government Income Fund
Trust Shares
Investment Shares
Shawmut Limited Term Income Fund
Trust Shares
Investment Shares
Shawmut Massachusetts Intermediate Municipal Income Fund
Combined Statement of Additional Information
Shawmut Connecticut Intermediate Municipal Income Fund
("Connecticut Intermediate Municipal Income Fund"),
Shawmut Fixed Income Fund ("Fixed Income Fund"), Shawmut
Intermediate Government Income Fund ("Intermediate
Government Income Fund"), Shawmut Limited Term Income
Fund ("Limited Term Income Fund"), and Shawmut
Massachusetts Intermediate Municipal Income Fund
("Massachusetts Intermediate Municipal Income Fund")
(collectively, referred to as the "Income Funds")
represent interests in investment portfolios of The
Shawmut Funds (the "Trust"). This Combined Statement of
Additional Information should be read with the respective
prospectus for the Income Funds, Trust Shares and
Investment Shares, dated December 31, 1994. This
Statement is not a prospectus itself. To receive a copy
of either prospectus write or call the Income Funds.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE SHARES OFFERED BY THE PROSPECTUS ARE NOT DEPOSITS OR
OBLIGATIONS OF SHAWMUT BANK, ARE NOT ENDORSED OR
GUARANTEED BY SHAWMUT BANK, ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT
IN THESE SHARES INVOLVES INVESTMENT RISKS, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL.
INVESTMENT SHARES OF THE SHAWMUT FUNDS ARE AVAILABLE
THROUGH REGISTERED REPRESENTATIVES OF SHAWMUT BROKERAGE,
INC. OR OTHER BROKERS, MEMBER NASD/SIPC. SHAWMUT
BROKERAGE, INC. IS AN AFFILIATE OF SHAWMUT BANK.
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Statement dated December 31, 1994.
FEDERATED SECURITIES
CORP.
Distributor
A subsidiary of Federated
Investors
General Information About
the Income Funds 1
Investment Objective and
Policies 1
Acceptable Investments 1
Types of Investments 1
Characteristics of
Municipal Securities 2
Munipreferred Securities 2
Participation Interests 2
Variable Rate Municipal
Securities 2
Municipal Leases 2
U.S. Government
Obligations 3
Asset-Backed Securities 3
Put and Call Options 5
Corporate Debt Obligations 5
Variable Rate Demand Notes 6
When-Issued and Delayed
Delivery Transactions 6
Temporary Investments 6
Repurchase Agreements 6
Restricted and Illiquid
Securities 7
Reverse Repurchase
Agreements 7
Lending of Portfolio
Securities 7
Portfolio Turnover 8
Investment Limitations 8
Connecticut Investment
Risks 10
(Connecticut Intermediate
Municipal Income Fund)
Massachusetts Investment
Risks 11
(Massachusetts
Intermediate Municipal
Income Fund)
The Shawmut Funds Management 12
Officers and Trustees 12
The Funds 15
Income Funds Ownership 16
Trustee Liability 16
Investment Advisory Services 16
Adviser to the Income
Funds 16
Advisory Fees 16
Brokerage Transactions 17
Purchasing Shares 18
Distribution Plan 18
Conversion to Federal
Funds 19
Determining Net Asset Value 19
Valuing Municipal Bonds 19
Use of Amortized Cost 19
Determining Market Value
of Securities 19
Exchange Privilege 19
Requirements for Exchange 19
Making an Exchange 19
Redeeming Shares 20
Redemption in Kind 20
Tax Status 20
The Income Funds' Tax
Status 20
Federal Income Tax 20
Massachusetts State Income
Tax 20
Other State and Local
Taxes 21
Shareholders' Tax Status 21
Capital Gains 21
Total Return 21
Yield 22
Tax-Equivalent Yield 22
Tax-Equivalency Table 22
Performance Comparisons 24
Duration 24
Financial Statements 24
Appendix 25
General Information About the Income Funds
The Income Funds are portfolios of The Shawmut Funds, which
was established as a Massachusetts business trust under a
Declaration of Trust dated July 16, 1992.
Shares of the Fixed Income Fund, the Intermediate Government
Income Fund, and the Limited Term Income Fund are offered in
two classes, known as Trust Shares and Investment Shares. This
Combined Statement of Additional Information relates to the
Trust Shares and Investment Shares of the Fixed Income Fund,
the Intermediate Government Income Fund, and the Limited Term
Income Fund as well as the Connecticut Intermediate Municipal
Income Fund and Massachusetts Intermediate Municipal Income
Fund (individually and collectively referred to as "Shares").
Investment Objective and Policies
Connecticut Intermediate Municipal Income Fund seeks current
income which is exempt from federal regular income tax and
Connecticut state income tax by investing primarily in
Connecticut municipal securities, including securities of
states, territories, and possessions of the United States
which are not issued by or on behalf of Connecticut or its
political subdivisions and financing authorities, but which
are exempt from Connecticut state income tax.
Fixed Income Fund seeks current income consistent with total
return by investing in income producing securities consisting
primarily of investment grade notes and bonds and U.S.
government securities.
Intermediate Government Income Fund seeks to provide current
income consistent with total return by investing in a
portfolio consisting primarily of U.S. government securities
with a dollar-weighted average maturity of between three to
ten years.
Limited Term Income Fund seeks to provide current income
consistent with low principal volatility and total return by
investing in a portfolio of income producing securities of a
limited term with a dollar-weighted average maturity of three
years or less.
Massachusetts Intermediate Municipal Income Fund seeks current
income which is exempt from federal regular income tax and
income taxes imposed by the Commonwealth of Massachusetts by
investing primarily in Massachusetts municipal securities,
including securities of states, territories, and possessions
of the United States which are not issued by or on behalf of
Massachusetts or its political subdivisions and financing
authorities, but which are exempt from Massachusetts state
income tax.
The policies described below may be changed by the Board of
Trustees ("Trustees") without shareholder approval.
Shareholders will be notified before any material change in
these policies becomes effective.
Acceptable Investments
Connecticut Intermediate Municipal Income Fund and
Massachusetts Intermediate Municipal Income Fund (referred to
jointly as the "Connecticut/Massachusetts Intermediate
Municipal Income Funds") invest primarily in Connecticut and
Massachusetts (respectively) municipal securities. Fixed
Income Fund invests primarily in a portfolio of investment
grade bonds. The Intermediate Government Income Fund invests
primarily in a portfolio of securities which are issued or
guaranteed as to payment of principle and interest by the U.S.
government, its agencies or instrumentalities, and maintains
an average maturity between three to ten years. Limited Term
Income Fund invests primarily in a portfolio of investment
grade bonds and notes and government securities. The Income
Funds may pursue their respective objectives by investing in
certain securities and engaging in certain investment
transactions as described below and in the prospectus. The
Connecticut/Massachusetts Intermediate Municipal Income Funds
do not intend to invest more than 5% of their respective total
assets in "Synthetic Bond Derivatives," as described in the
prospectus.
Types of Investments
Connecticut/Massachusetts Intermediate Municipal Income Funds
invest in various municipal securities. Examples of
Connecticut and Massachusetts municipal securities are:
omunicipal notes and commercial paper;
ogeneral obligation serial bonds sold with differing
maturity dates;
orefunded municipal bonds; and
oall revenue bonds, including industrial development
bonds.
Below are securities in which the Fixed Income Fund,
Intermediate Government Income Fund, and Limited Term Income
Fund may invest:
odirect obligations of the U.S. Treasury, such as U.S.
Treasury bills, notes, and bonds;
oobligations issued or guaranteed by the U.S. government,
its agencies or instrumentalities;
odomestic issues of corporate debt obligations (rated Aaa,
Aa, A, Baa, or Ba by Moody's Investors Service, Inc.;
AAA, AA, A, BBB, or BB by Standard & Poor's Ratings Group
or Fitch Investors Service, Inc.); and
ocommercial paper whose ratings include: Prime-1 or Prime-
2 by Moody's Investor Service, Inc., A-1 or A-2 by
Standard & Poor's Ratings Group or F-1 or F-2 by Fitch
Investors Service, Inc.
Characteristics of Municipal Securities
The Connecticut and Massachusetts municipal securities in
which the Connecticut/Massachusetts Intermediate Municipal
Income Funds invest (respectively) have the characteristics
set forth in the prospectus.
If a rated bond loses its rating or has its rating reduced
after the Fund has purchased it, the Connecticut/Massachusetts
Intermediate Municipal Income Funds is not required to drop
the bond from the portfolio, but will consider doing so. If
ratings made by Moody's Investors Service, Inc., Standard &
Poor's Ratings Group, or Fitch's Investors Service, Inc.
change because of changes in those organizations or in their
rating systems, the Connecticut/Massachusetts Intermediate
Municipal Income Funds will try to use comparable ratings as
standards in accordance with the investment policies described
in the Connecticut/Massachusetts Intermediate Municipal Income
Funds' prospectus.
Munipreferred Securities
The Connecticut/Massachusetts Intermediate Municipal Income
Funds may purchase interests in municipal securities that are
offered in the form of a security representing a diversified
portfolio of investment grade bonds. These securities provide
investors such as the Connecticut/Massachusetts Intermediate
Municipal Income Funds with liquidity and income exempt from
federal regular income tax and some state income taxes.
Participation Interests
The financial institutions from which the
Connecticut/Massachusetts Intermediate Municipal Income Funds
purchases participation interests frequently provide or secure
from another financial institution irrevocable letters of
credit or guarantees and give the Connecticut/Massachusetts
Intermediate Municipal Income Funds the right to demand
payment of the principal amounts of the participation
interests plus accrued interest on short notice (usually
within seven days).
Variable Rate Municipal Securities
Variable interest rates generally reduce changes in the market
value of municipal securities from their original purchase
prices. Accordingly, as interest rates decrease or increase,
the potential for capital appreciation or depreciation is less
for variable rate municipal securities than for fixed income
obligations.
The terms of these variable rate demand instruments require
payment of principal and accrued interest from the issuer of
the municipal obligations, the issuer of the participation
interests, or a guarantor of either issuer.
Municipal Leases
Connecticut/Massachusetts Intermediate Municipal Income Funds
may purchase municipal securities in the form of participation
interests which represent undivided proportional interests in
lease payments by a governmental or non-profit entity. The
lease payments and other rights under the lease provide for
and secure the payments on the certificates. Lease obligations
may be limited by municipal charter or the nature of the
appropriation for the lease. In particular, lease obligations
may be subject to periodic appropriation. If the entity does
not appropriate funds for future lease payments, the entity
cannot be compelled to make such payments. Furthermore, a
lease may provide that the participant cannot accelerate lease
obligations upon default. The participants would only be able
to enforce lease payments as they became due. In the event of
default or failure of appropriation, unless the participation
interests are credit enhanced, it is unlikely that the
participants would be able to obtain an acceptable substitute
source of payment.
When determining whether municipal leases purchased by the
Connecticut/Massachusetts Intermediate Municipal Income Funds
will be classified as a liquid or illiquid security, the Board
of Trustees has directed the Shawmut Bank, N.A. to consider
certain factors such as: the frequency of trades and quotes
for the security; the volatility of quotations and trade
prices for the security; the number of dealers willing to
purchase or sell the security and the number of potential
purchasers; dealer undertaking to make a market in the
security; the nature of the security and the nature of the
marketplace trades (e.g., the time needed to dispose of the
security, the method of soliciting offers, and the mechanics
of transfer); the rating of the security and the financial
condition and prospects of the issuer of the security; whether
the lease can be terminated by the lessee; the potential
recovery, if any, from a sale of the leased property upon
termination of the lease; the lessee's general credit strength
(e.g., its debt, administrative, economic and financial
characteristics and prospects); the likelihood that the lessee
will discontinue appropriating funding for the lease property
because the property is no longer deemed essential to its
operations (e.g., the potential for an "event of
nonappropriation"); any credit enhancement or legal recourse
provided upon an event of nonappropriation or other
termination of the lease; and such other factors as may be
relevant to the Connecticut/Massachusetts Intermediate
Municipal Income Funds' ability to dispose of the security.
U.S. Government Obligations
The types of U.S. government obligations in which Fixed Income
Fund, Intermediate Government Income Fund, and Limited Term
Income Funds may invest generally include direct obligations
of the U.S. Treasury (such as U.S. Treasury bills, notes, and
bonds) and obligations issued or guaranteed by U.S. government
agencies or instrumentalities. These securities are backed by:
othe full faith and credit of the U.S. Treasury;
othe issuer's right to borrow from the U.S. Treasury;
othe discretionary authority of the U.S. government to
purchase certain obligations of agencies or
instrumentalities; or
othe credit of the agency or instrumentality issuing the
obligations.
Examples of agencies and instrumentalities which are
permissible investments which may not always receive financial
support from the U.S. government are:
oFederal Farm Credit Banks;
oFederal Home Loan Banks;
oFederal National Mortgage Association;
oStudent Loan Marketing Association; and
oFederal Home Loan Mortgage Corporation.
Asset-Backed Securities
Fixed Income Fund, Intermediate Government Income Fund, and
Limited Term Income Funds may invest in non-mortgage related
asset-backed securities and mortgage-related asset-backed
securities.
Non-Mortgage Related Asset-Backed Securities
Fixed Income Fund, Intermediate Government Income Fund,
and Limited Term Income Funds may invest in non-mortgage
related asset-backed securities including, but not
limited to, interests in pools of receivables, such as
motor vehicle installment purchase obligations and credit
card receivables. These securities may be in the form of
pass-through instruments or asset-backed bonds. The
securities, all of which are issued by nongovernmental
entities and carry no direct or indirect government
guarantee, are structurally similar to collateralized
mortgage obligations and mortgage pass-through
securities, which are described below.
Non-mortgage related asset-backed securities present
certain risks that are not presented by mortgage-backed
securities. Primarily, these securities do not have the
benefit of the same security interest in the related
collateral. Credit card receivables are generally
unsecured and the debtors are entitled to the protection
of a number of state and federal consumer credit laws,
many of which give such debtors the right to set off
certain amounts owed on the credit cards, thereby
reducing the balance due. Most issuers of asset-backed
securities backed by motor vehicle installment purchase
obligations permit the servicer of such receivables to
retain possession of the underlying obligations. If the
servicer sells these obligations to another party, there
is a risk that the purchaser would acquire an interest
superior to that of the holders of the related asset-
backed securities. Further, if a vehicle is registered in
one state and is then reregistered because the owner and
obligor move to another state, such reregistration could
defeat the original security interest in the vehicle in
certain cases. In addition, because of the large number
of vehicles involved in a typical issuance and technical
requirements under state laws, the trustee for the
holders of asset-backed securities backed by automobile
receivables may not have a proper security interest in
all of the obligations backing such receivables.
Therefore, there is the possibility that recoveries on
repossessed collateral may not, in some cases, be
available to support payments on these securities.
Mortgage-Related Asset-Backed Securities
Fixed Income Fund, Intermediate Government Income Fund,
and Limited Term Income Funds may also invest in various
mortgage-related asset-backed securities. These types of
investments may include adjustable rate mortgage
securities, collateralized mortgage obligations, real
estate mortgage investment conduits, or other securities
collateralized by or representing an interest in real
estate mortgages.
Adjustable Rate Mortgage Securities ("ARMS")
ARMS are pass-through mortgage securities with adjustable
rather than fixed interest rates. The ARMS in which the
Fixed Income Fund, Intermediate Government Income Fund,
and Limited Term Income Funds invests are issued by the
Government National Mortgage Association ("GNMA"), the
Federal National Mortgage Association ("FNMA"), and the
Federal Home Loan Mortgage Corporation ("FHLMC") and are
actively traded. The underlying mortgages which
collateralize ARMS issued by GNMA are fully guaranteed by
the Federal Housing Administration ("FHA") or Veterans
Administration ("VA"), while those collateralizing ARMS
issued by FHLMC or FNMA are typically conventional
residential mortgages conforming to strict underwriting
size and maturity constraints.
Unlike conventional bonds, ARMS pay back principal over
the life of the ARMS rather than at maturity. Thus, a
holder of the ARMS, such as the Fund, would receive
monthly scheduled payments of principal and interest, and
may receive unscheduled principal payments representing
prepayments on the underlying mortgages. At the time that
a holder of the ARMS reinvests the payments and any
unscheduled prepayments of principal that it receives,
the holder may receive a rate of interest which is
actually lower than the rate of interest paid on the
existing ARMS. As a consequence, ARMS may be a less
effective means of "locking in" long-term interest rates
than other types of U.S. government securities.
While ARMS generally entail less risk of a decline during
periods of rapidly rising rates, ARMS may also have less
potential for capital appreciation than other similar
investments (e.g., investments with comparable
maturities) because as interest rates decline, the
likelihood increases that mortgages will be prepaid.
Furthermore, if ARMS are purchased at a premium, mortgage
foreclosures and unscheduled principal payments may
result in some loss of a holder's principal investment to
the extent of the premium paid. Conversely, if ARMS are
purchased at a discount, both a scheduled payment of
principal and an unscheduled prepayment of principal
would increase current and total returns and would
accelerate the recognition of income, which would be
taxed as ordinary income when distributed to
shareholders.
Collateralized Mortgage Obligations ("CMOS")
CMOs are bonds issued by single-purpose, stand-alone
finance subsidiaries or trusts of financial institutions,
government agencies, investment bankers, or companies
related to the construction industry. CMOs purchased by
the Fixed Income Fund, Intermediate Government Income
Fund, and Limited Term Income Funds may be:
ocollateralized by pools of mortgages in which each
mortgage is guaranteed as to payment of principal and
interest by an agency or instrumentality of the U.S.
government;
ocollateralized by pools of mortgages in which payment
of principal and interest is guaranteed by the issuer
and such guarantee is collateralized by U.S. government
securities;
osecurities in which the proceeds of the issuance are
invested in mortgage securities and payment of the
principal and interest is supported by the credit of an
agency or instrumentality of the U.S. government; or
osecurities in which the proceeds of the issuance are
invested in mortgage securities and payment of the
principal and interest is guaranteed or supported by
the credit of a non-governmental entity, including
corporations.
All CMOs purchased by the Fund are investment grade, as
rated by a nationally recognized statistical rating
organization.
Privately Issued Mortgage-Related Securities
Privately issued mortgage-related securities generally
represent an ownership interest in federal agency
mortgage pass through securities such as those issued by
Government National Mortgage Association. The terms and
characteristics of the mortgage instruments may vary
among pass through mortgage loan pools.
The market for such mortgage-related securities has
expanded considerably since its inception. The size of
the primary issuance market and the active participation
in the secondary market by securities dealers and other
investors makes government-related pools highly liquid.
Put and Call Options
The Fixed Income Fund, Intermediate Government Income Fund,
and Limited Term Income Funds may purchase put options on
their portfolio securities. These options will be used as a
hedge to attempt to protect securities which the Fund holds
against decreases in value. The Fixed Income Fund,
Intermediate Government Income Fund, and Limited Term Income
Funds may also write covered call options on all or any
portion of its portfolio to generate income for the Fund. The
Fixed Income Fund, Intermediate Government Income Fund, and
Limited Term Income Funds will write call options on
securities either held in its portfolio, or which it has the
right to obtain without payment of further consideration, or
for which it has segregated cash or U.S. government securities
in the amount of any additional consideration.
The Fixed Income Fund, Intermediate Government Income Fund,
and Limited Term Income Funds may purchase and write over-the-
counter options on portfolio securities in negotiated
transactions with the buyers or writers of the options when
options on the portfolio securities held by the Fixed Income
Fund, Intermediate Government Income Fund, and Limited Term
Income Funds are not traded on an exchange. The Fixed Income
Fund, Intermediate Government Income Fund, and Limited Term
Income Funds purchases and writes options only with investment
dealers and other financial institutions (such as commercial
banks or savings and loan associations) deemed creditworthy by
the Fixed Income Fund, Intermediate Government Income Fund,
and Limited Term Income Funds' investment adviser.
Over-the-counter options are two-party contracts with price
and terms negotiated between buyer and seller. In contrast,
exchange-traded options are third-party contracts with
standardized strike prices and expiration dates and are
purchased from a clearing corporation. Exchange-traded options
have a continuous liquid market while over-the-counter options
may not. The Fixed Income Fund, Intermediate Government Income
Fund, and Limited Term Income Funds will not buy call options
or write put options, other than to close out open option
positions, without further notification to shareholders.
Corporate Debt Obligations
The Fixed Income Fund, Intermediate Government Income Fund,
and Limited Term Income Funds may invest in corporate debt
obligations, including corporate bonds, notes, and debentures,
which may have floating or fixed rates of interest.
Floating Rate Corporate Debt Obligations
The Fixed Income Fund, Intermediate Government Income
Fund, and Limited Term Income Funds expects to invest in
floating rate corporate debt obligations. Floating rate
securities are generally offered at an initial interest
rate which is at or above prevailing market rates. The
interest rate paid on these securities is then reset
periodically (commonly every 90 days) to an increment
over some predetermined interest rate index. Commonly
utilized indices include the three-month Treasury bill
rate, the 180-day Treasury bill rate, the one-month or
three-month London Interbank Offered Rate (LIBOR), the
prime rate of a bank, the commercial paper rates, or the
longer-term rates on U.S. Treasury securities.
Some of the floating rate corporate debt obligations in
which the Fixed Income Fund, Intermediate Government
Income Fund, and Limited Term Income Funds may invest
include floating rate corporate debt securities issued by
savings and loan associations and collateralized by
adjustable rate mortgage loans, also known as
collateralized thrift notes. Many of these collateralized
thrift notes have received AAA ratings from recognized
rating agencies. Collateralized thrift notes differ from
traditional "pass through" certificates in which payments
made are linked to monthly payments made by individual
borrowers net of any fees paid to the issuer or guarantor
of such securities. Collateralized thrift notes pay a
floating interest rate which is tied to a pre-determined
index, such as the 180-day Treasury bill rate. Floating
rate corporate debt obligations may also include
securities issued to fund commercial real estate
construction.
Fixed Rate Corporate Debt Obligations
Fixed Income Fund, Intermediate Government Income Fund,
and Limited Term Income Funds may also invest in fixed
rate securities, including fixed rate securities with
short-term characteristics. Fixed rate securities with
short-term characteristics are long-term debt
obligations, but are treated in the market as having
short maturities because call features of the securities
may make them callable within a short period of time. A
fixed rate security with short-term characteristics would
include a fixed income security priced close to call or
redemption price or a fixed income security approaching
maturity, where the expectation of call or redemption is
high.
Fixed rate securities tend to exhibit more price
volatility during times of rising or falling interest
rates than securities with floating rates of interest.
This is because floating rate securities, as described
above, behave like short-term instruments in that the
rate of interest they pay is subject to periodic
adjustments based on a designated interest rate index.
Fixed rate securities pay a fixed rate of interest and
are more sensitive to fluctuating interest rates. In
periods of rising interest rates the value of a fixed
rate security is likely to fall. Fixed rate securities
with short-term characteristics are not subject to the
same price volatility as fixed rate securities without
such characteristics. Therefore, they behave more like
floating rate securities with respect to price
volatility.
Variable Rate Demand Notes
Variable rate demand notes are long-term corporate debt
instruments that have variable or floating interest rates and
provide the Fund with the right to tender the security for
repurchase at its stated principal amount plus accrued
interest. Such securities typically bear interest at a rate
that is intended to cause the securities to trade at par. The
interest rate may float or be adjusted at regular intervals
(ranging from daily to annually), and is normally based on an
interest index or a stated percentage of a prime rate or
another published rate. Many variable rate demand notes allow
the Fund to demand the repurchase of the security on not more
than seven days prior notice. Other notes only permit the Fund
to tender the security at the time of each interest rate
adjustment or at other fixed intervals.
When-Issued and Delayed Delivery Transactions
These transactions are made to secure what is considered to be
an advantageous price or yield for the Income Funds. No fees
or other expenses, other than normal transaction costs, are
incurred. However, liquid assets of the Income Funds
sufficient to make payment for the securities to be purchased
are segregated on the Income Funds' records at the trade date.
These assets are marked to market daily and are maintained
until the transaction has been settled. The Income Funds do
not intend to engage in when-issued and delayed delivery
transactions to an extent that would cause the segregation of
more than 20% of the total value of its assets.
Temporary Investments
The Income Funds may also invest in temporary investments
during times of unusual market conditions for defensive
purposes.
Repurchase Agreements
Repurchase agreements are arrangements in which banks,
broker/dealers, and other recognized financial institutions
sell U.S. government securities or certificates of deposit to
the Income Funds and agree at the time of sale to repurchase
them at a mutually agreed upon time and price within one year
from the date of acquisition. An Income Fund requires its
custodian to take possession of the securities subject to
repurchase agreements. To the extent that the original seller
does not repurchase the securities from the Income Funds, the
Income Funds could receive less than the repurchase price on
any sale of such securities. In the event that such a
defaulting seller filed for bankruptcy or became insolvent,
disposition of such securities by the Income Funds might be
delayed pending court action. The Income Funds believe that
under the regular procedures normally in effect for custody of
the Income Funds' portfolio securities subject to repurchase
agreements, a court of competent jurisdiction would rule in
favor of the Income Funds and allow retention or disposition
of such securities. The Income Funds may only enter into
repurchase agreements with banks and other recognized
financial institutions, such as broker/dealers, which are
deemed by the Income Funds' adviser to be creditworthy
pursuant to guidelines established by the Trustees.
From time to time, such as when suitable
Connecticut/Massachusetts municipal bonds are not available,
the Connecticut/Massachusetts Intermediate Municipal Income
Funds may invest a portion of their respective assets in cash.
Any portion of the Connecticut/Massachusetts Intermediate
Municipal Income Funds' assets maintained in cash will reduce
the amount of assets in Connecticut or Massachusetts municipal
bonds (respectively) and thereby reduce the
Connecticut/Massachusetts Intermediate Municipal Income Funds'
yield.
Restricted and Illiquid Securities
The Income Funds may invest in commercial paper issued in
reliance on the exemption from registration afforded by
Section 4(2) of the Securities Act of 1933. Section 4(2)
commercial paper is restricted as to disposition under federal
securities law and is generally sold to institutional
investors, such as the Income Funds, who agree that they are
purchasing the paper for investment purposes and not with a
view to public distribution. Any resale by the purchaser must
be in an exempt transaction. Section 4(2) commercial paper is
normally resold to other institutional investors like the
Income Funds through or with the assistance of the issuer or
investment dealers who make a market in Section 4(2)
commercial paper, thus providing liquidity. The Income Funds
believe that Section 4(2) commercial paper and possibly
certain other restricted securities which meet the criteria
for liquidity established by the Trustees are quite liquid.
The Income Funds intend, therefore, to treat the restricted
securities which meet the criteria for liquidity established
by the Trustees including Section 4(2) commercial paper (as
determined by the Income Funds' adviser) as liquid and not
subject to the investment limitation applicable to illiquid
securities. In addition, because Section 4(2) commercial paper
is liquid, the Income Funds intend to not subject such paper
to the limitation applicable to restricted securities.
The ability of the Trustees to determine the liquidity of
certain restricted securities is permitted under a Securities
and Exchange Commission (the "SEC") Staff position set forth
in the adopting release for Rule 144A under the Securities Act
of 1933 (the "Rule"). The Rule is a non-exclusive, safe-harbor
for certain secondary market transactions involving securities
subject to restrictions on resale under federal securities
laws. The Rule provides an exemption from registration for
resales of otherwise restricted securities to qualified
institutional buyers. The Rule was expected to further enhance
the liquidity of the secondary market for securities eligible
for resale under the Rule. The Trust, on behalf of the Income
Funds, believes that the Staff of the SEC has left the
question of determining the liquidity of all restricted
securities (eligible for resale under Rule 144A) for
determination to the Trustees. The Trustees consider the
following criteria in determining the liquidity of certain
restricted securities:
othe frequency of trades and quotes for the security;
othe number of dealers willing to purchase or sell the
security and the number of other potential buyers;
odealer undertakings to make a market in the security; and
othe nature of the security and the nature of the
marketplace trades.
Reverse Repurchase Agreements
The Income Funds may also enter into reverse repurchase
agreements. This transaction is similar to borrowing cash. In
a reverse repurchase agreement the Income Funds transfer
possession of a portfolio instrument to another person, such
as a financial institution, broker, or dealer, in return for a
percentage of the instrument's market value in cash, and
agrees that on a stipulated date in the future the Income
Funds will repurchase the portfolio instrument by remitting
the original consideration plus interest at an agreed upon
rate. The use of reverse repurchase agreements may enable the
Income Funds to avoid selling portfolio instruments at a time
when a sale may be deemed to be disadvantageous, but the
ability to enter into reverse repurchase agreements does not
ensure that the Income Funds will be able to avoid selling
portfolio instruments at a disadvantageous time.
When effecting reverse repurchase agreements, liquid assets of
the Income Funds, in a dollar amount sufficient to make
payment for the obligations to be purchased, are segregated at
the trade date. These securities are marked to market daily
and maintained until the transaction is settled.
Lending of Portfolio Securities
The Income Funds may lend portfolio securities under certain
circumstances. The collateral received when the Income Funds
lend portfolio securities must be valued daily and, should the
market value of the loaned securities increase, the borrower
must furnish additional collateral to the Income Funds. During
the time portfolio securities are on loan, the borrower pays
the Income Funds any dividends or interest paid on such
securities. Loans are subject to termination at the option of
the Income Funds or the borrower. The Income Funds may pay
reasonable administrative and custodial fees in connection
with a loan and may pay a negotiated portion of the interest
earned on the cash or equivalent collateral to the borrower or
placing broker.
Portfolio Turnover
The Income Funds may trade or dispose of portfolio securities
as considered necessary to meet its investment objective.
For the fiscal year ended October 31, 1994, the portfolio
turnover rates for the Connecticut Intermediate Municipal
Income Fund and Massachusetts Intermediate Municipal Income
Fund were 59% and 41%, respectively. During the period from
June 17, 1993 (date of initial public investment) to October
31, 1993, the portfolio turnover rates for the Connecticut
Intermediate Municipal Income Fund and Massachusetts
Intermediate Municipal Income Fund were 8% and 0%,
respectively.
For the fiscal year ended October 31, 1994, the portfolio
turnover rates for the Fixed Income Fund, Intermediate
Government Income Fund, and Limited Term Income Fund were 73%,
84% and 144%, respectively. During the period from December
14, 1992 (date of initial public investment), to October 31,
1993, the portfolio turnover rates for the Fixed Income Fund,
Intermediate Government Income Fund, and Limited Term Income
Fund were 33%, 30% and 53%, respectively.
Portfolio turnover during the fiscal year ended October 31,
1994 for Limited Term Income Fund was 144%. Given the
unprecedented rise in interest rates during the first calendar
quarter of 1994, the decision was made to reposition the
portfolio to benefit from this new interest rate environment.
Also, the portfolio was restructured as the portfolio manager
of Limited Term Income Fund changed. These changes had no
significant impact on either performance or the tax liability
of the Limited Term Income Fund and its shareholders, and Fund
expenses were not a factor as Limited Term Income Fund
incurred no brokerage commissions.
Investment Limitations
Selling Short and Buying on Margin
The Income Funds will not sell any securities short or
purchase any securities on margin but may obtain such
short-term credits as may be necessary for clearance of
purchases and sales of securities.
Issuing Senior Securities and Borrowing Money
The Income Funds will not issue senior securities except
that the Income Funds may borrow money directly or
through reverse repurchase agreements in amounts up to
one-third of the value of its total assets, including the
amounts borrowed.
The Income Funds will not borrow money or engage in
reverse repurchase agreements for investment leverage,
but rather as a temporary, extraordinary, or emergency
measure to facilitate management of the portfolio by
enabling the Income Funds to meet redemption requests
when the liquidation of portfolio securities is deemed to
be inconvenient or disadvantageous. The Income Funds will
not purchase any securities while borrowings in excess of
5% of its total assets are outstanding.
Pledging Assets
The Income Funds will not mortgage, pledge, or
hypothecate any assets except to secure permitted
borrowings. In those cases, the Income Funds may pledge
assets having a market value not exceeding the lesser of
the dollar amounts borrowed or 10% of the value of its
total assets at the time of the pledge.
Underwriting
The Income Funds will not underwrite any issue of
securities except as it may be deemed to be an
underwriter under the Securities Act of 1933 in
connection with the sale of restricted securities which
the Income Funds may purchase pursuant to its investment
objective, policies, and limitations.
Investing in Real Estate
The Income Funds will not purchase or sell real estate,
including limited partnership interests, although it may
invest in the securities of companies whose business
involves the purchase or sale of real estate or in
securities which are secured by real estate or interests
in real estate.
Investing in Commodities
The Income Funds will not buy or sell commodities,
commodity contracts, or commodities futures contracts.
Lending Cash or Securities
The Fixed Income Fund, Intermediate Government Income
Fund and Limited Term Income Fund will not lend any of
their respective assets, except portfolio securities up
to one third of the value of its total assets. This shall
not prevent the Income Funds from purchasing or holding
money market instruments, repurchase agreements,
obligations of the U.S. government, its agencies or
instrumentalities, and certain debt instruments as
permitted by its investment objective, policies and
limitations, or the Trust's Declaration of Trust.
The Connecticut/Massachusetts Intermediate Municipal
Income Funds will not lend any of its assets except that
it may acquire publicly or non-publicly issued municipal
bonds or temporary investments or enter into repurchase
agreements in accordance with its investment objective,
policies, and limitations or its Declaration of Trust.
Put and Call Options
The Connecticut/Massachusetts Intermediate Municipal
Income Funds will not buy or sell puts, calls, straddles,
spreads, or any combination of these.
Diversification of Investments
With regard to at least 50% of Connecticut/Massachusetts
Intermediate Municipal Income Funds' total assets, no
more than 5% of Connecticut/Massachusetts Intermediate
Municipal Income Funds' total assets are to be invested
in the securities of a single issuer, and no more than
25% of Connecticut/Massachusetts Intermediate Municipal
Income Funds' total assets are to be invested in the
securities of a single issuer at the close of each
quarter of each fiscal year. Under this limitation, each
governmental subdivision, including states, territories,
possessions of the United States, or their political
subdivisions, agencies, authorities, instrumentalities,
or similar entities, will be considered a separate issuer
if its assets and revenues are separate, from those of
the government body creating it and the security is
backed only by its own assets and revenues. Industrial
development bonds backed only by the assets and revenues
of a non-governmental issuer are considered to be issued
solely by that user. If, in the case of an industrial
development bond or government-issued security, a
governmental or other entity guarantees the security,
such guarantee would be considered a separate security
issued by the guarantor, as well as the other issuer,
subject to limited exclusions allowed by the Investment
Company Act of 1940.
Concentration of Investments
With respect to securities comprising 75% of the value of
its total assets, the Fixed Income Fund, Intermediate
Government Income Fund and Limited Term Income Fund will
not purchase securities issued by any one issuer (other
than cash, cash items or securities issued or guaranteed
by the government of the United States or its agencies or
instrumentalities and repurchase agreements
collateralized by such securities) if as a result more
than 5% of the value of its total assets would be
invested in the securities of that issuer or if it would
own more than 10% of the outstanding voting securities of
such issuer. Fixed Income Fund, Intermediate Government
Income Fund and Limited Term Income Fund will not invest
25% or more of its total assets in any one industry.
However, investing in U.S. government obligations shall
not be considered investments in any one industry.
The Connecticut/Massachusetts Intermediate Municipal
Income Funds will not purchase securities if, as a result
of such purchase, 25% or more of the value of its total
assets would be invested in any one industry or in
industrial development bonds or other securities, the
interest upon which is paid from revenues of similar
types of projects. However, the Connecticut/Massachusetts
Intermediate Municipal Income Funds may invest as
temporary investments more than 25% of the value of its
assets in cash or cash items, securities issued or
guaranteed by the U.S. government, its agencies, or
instrumentalities, or instruments secured by these money
market instruments, i.e., repurchase agreements.
Investing in Restricted Securities
The Connecticut/Massachusetts Intermediate Municipal
Income Funds will not invest more than 10% of the value
of its assets in securities subject to restrictions on
resale under the Securities Act of 1933.
The above investment limitations cannot be changed without
shareholder approval. The following limitations, however, may
be changed by the Trustees without shareholder approval.
Shareholders will be notified before any material change in
these limitations becomes effective.
Investing in Restricted Securities
The Fixed Income Fund, Intermediate Government Income
Fund and Limited Term Income Fund will not invest more
than 10% of the value of its assets in securities subject
to restrictions on resale under the Securities Act of
1933 except for commercial paper issued under Section
4(2) of the Securities Act of 1933 and certain other
restricted securities which meet the criteria for
liquidity as established by the Trustees.
Investing in Securities of Other Investment Companies
The Connecticut/Massachusetts Intermediate Municipal
Income Funds will each limit its investment in other
investment companies to no more than 3% of the total
outstanding voting stock of any investment company, will
invest no more than 5% of their respective total assets
in any one investment company, and will invest no more
than 10% of their respective total assets in investment
companies in general. The Funds will purchase securities
of closed-end investment companies only in open market
transactions involving only customary broker's
commissions. However, these limitations are not
applicable if the securities are acquired in a merger,
consolidation, reorganization, or acquisition of assets.
It should be noted that investment companies incur
certain expenses such as management fees, and therefore
any investment by the Connecticut/Massachusetts
Intermediate Municipal Income Funds in shares of another
investment company would be subject to such duplicate
expenses.
Investing in Synthetic Bond Derivatives
The Connecticut/Massachusetts Intermediate Municipal
Income Funds will limit the individual investments in
synthetic bond derivatives to 10% of total assets.
Investing in Issuers Whose Securities are Owned by Officers
and Trustees of the Trust
The Income Funds will not purchase or retain the
securities of any issuer if the officers and Trustees of
the Trust or the Income Funds' investment adviser owning
individually more than 1/2 of 1% of the issuer's
securities together own more than 5% of the issuer's
securities.
Investing in Illiquid Securities
The Income Funds will not invest more than 15% of their
respective net assets in illiquid obligations, including
repurchase agreements providing for settlement in more
than seven days after notice, non-negotiable fixed time
deposits with maturities over seven days, and restricted
securities not determined by the Trustees to be liquid.
Investing in New Issuers
The Connecticut/Massachusetts Intermediate Municipal
Income Funds will not invest more than 5% of the value of
their respective total assets in industrial development
bonds where the principal and interest are the
responsibility of companies (or guarantors, where
applicable) with less than three years of continuous
operations, including the operation of any predecessor.
Investing in Minerals
The Income Funds will not purchase or sell, oil, gas, or
other mineral exploration or development programs, or
leases.
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.
The Income Funds did not borrow money or pledge securities in
excess of 5% of their respective net assets during the past
fiscal year, and do not intend to borrow money or pledge
securities or invest in repurchase agreements in excess of 5%
of the value of their respective net assets during the coming
fiscal year.
For purposes of its policies and limitations, the Income Funds
consider 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."
Connecticut Investment Risks (Connecticut Intermediate
Municipal Income Fund)
The Fund invests in obligations of Connecticut issuers which
results in the Fund's performance being subject to risks
associated with the overall conditions present within the
state. The following information is a brief summary of the
recent prevailing economic conditions and a general summary of
the state's financial status. This information is based on
official statements relating to securities that have been
offered by Connecticut issuers and from other sources believed
to be reliable but should not be relied upon as a complete
description of all relevant information.
The State of Connecticut has experienced fiscal problems in
three of the last four years. Following a contentious budget
enactment for fiscal year 1992, the State enacted an
individual income tax while slightly reducing the sales tax.
The State has also suffered from the recent national recession
that impacted the State especially hard and continues to force
changing economic conditions in the State.
The Connecticut economy is largely composed of manufacturing
(especially defense related) and service industries (such as
insurance) that were robust and growing for much of the past
two decades. Beginning in the late 1980's, the regional
economy slowed down and entered a recession that has affected
several areas of the State's economy. Specifically, the
cutbacks in the defense and insurance industries and general
corporate restructurings due to declining profits have caused
large numbers of job losses and increased the fiscal strain on
the State and local governments.
The two major revenue sources available to cities and towns in
Connecticut are local property taxes and aid from the state.
State aid is mostly related to educational grants and human
service funds for lower income individuals. Property values
and the resulting taxes which grew significantly during the
1980's have stabilized and even fallen slightly in some areas.
Especially hard hit are those local governments with large job
losses due to cutbacks or shutdowns due to the impact to the
tax base.
The Fund's concentration in securities issued by the State and
its political subdivisions provides a greater level of risk
than a fund which is diversified across numerous states and
municipal entities. The ability of the State or its
municipalities to meet their obligations will depend on the
availability of tax and other revenues; economic, political,
and demographic conditions within the State; and the
underlying fiscal condition of the State and its
municipalities.
In light of the enactment of a personal income tax in the
state of Connecticut replacing the high interest and dividends
tax as well as a reduction in the sales tax, the long term
fiscal outlook for the state has improved. And as a
consequence, Moody's Investors Service, Inc., Standard &
Poor's Ratings Group, and Fitch's Investors Service, Inc. have
maintained their double AA ratings.
Massachusetts Investment Risks (Massachusetts Intermediate
Municipal Income Fund)
The Commonwealth of Massachusetts stabilized its fiscal
position in 1992. Through conservative revenue estimates and
significant expenditure reductions the Commonwealth was able
to generate a surplus ($283 million) for the 1992 fiscal year
end. Tax revenues exceeded the administration's estimates by
approximately $1.2 billion or 7%. The Commonwealth greatly
reduced its reliance upon short-term debt in fiscal 1992.
Approximately $635 million of commercial paper was issued in
1992 to fund current operations compared with $1.2 billion
issued in both 1991 and 1990. The Commonwealth projects
commercial paper borrowing to be only $400 million in fiscal
1993. Expenditure reductions also contributed to a large
degree to the stabilization of the Commonwealth's financial
position in 1992. Local aid payments were reduced from $2.7
billion in 1991 to $2.47 billion. Higher education spending
was reduced by $70 million (11.5%) and the state's work force
was reduced by 8,250 employees. Medicaid expenditures were
only 1.9% higher compared with increases which were averaging
19.25% during the period 1988 to 1991.
The fiscal 1993 budget has allowed for increased spending
while instituting additional expenditure controls. The budget
forecasts total revenue of $14,485 million (a 4.9% increase)
and tax revenue is estimated at $9,685 million (a 2.2%
increase). Fund balances are expected to be drawn down by $364
million. Nonrecurring revenues included in the budget total
$229 million, compared with $830 million included in the 1992
budget. Projected spending of $14,849.5 million is an 8.7%
increase over fiscal 1992. The largest spending increase
(13.8% or $349 million) is for direct local aid. This
represents the first increase in three years. Medicaid
expenditures are budgeted to increase 7.9% even after program
reforms which are to save $100 million in 1993. This reflects
the difficulty for state governments to control Medicaid
costs.
Debt levels for the Commonwealth are among the highest of the
states. The debt situation has been exacerbated by the
issuance of $250 million of fiscal recovery bonds at the end
of fiscal 1992. In fiscal 1991, dedicated income tax bonds
were issued to finance the combined deficits in the general
and local aid funds. The issuance was part of the Fiscal
Recovery Loan Act of 1990. $1.4 billion of bonds were issued
and are secured by the pledge of dedicated tax revenues. These
bonds amortize through 1997. Debt service requirements for
general obligation and special obligation debt alone are 8.2%
of estimated fiscal 1993 spending requirements. The increased
debt levels which are the result of capital borrowing and
deficit bonds have doubled scheduled debt service requirements
between 1987 and 1992. As a result, debt service will remain
high through 1997.
The regional economy may have reached the trough of the
current economic cycle. The largest cause for concern in the
Massachusetts economy is the significant job loss which has
occurred between 1989 and present. From calendar year 1989 to
1991, 309,200 non-farm jobs were lost. This represents a 10.1%
decline with the largest decline of 5.4% occurring in 1991.
Much of the loss has occurred in the construction and high
tech industries. The defense related industries, which provide
3% of private sector employment, have suffered some employment
losses. However, more significant declines are expected in
this industry in the future, especially with the election of
the new administration. There is some sign of moderation on
the employment front. The unemployment rate has declined to
8.3% as of July 1992 from an average of 9% in 1991. The
service sector in Massachusetts has fared rather well and has
been expanding. The presence of a large number of higher
education and health care institutions, a well educated work
force, and a large investment community has helped to provide
a solid economic base. The presence of several large public
works programs (MWRA, Bay Tunnel), improvements in the banking
community and lower real estate values should put the
Commonwealth in a stronger position as the national economy
recovers.
During the past few years, the current administration in
cooperation with the legislature have made steady progress in
resolving the fiscal ills facing the Commonwealth which
included budget tightening, reducing local state aid, and
employing new methods of financing projects. Because of the
significant progress, the major rating agencies upgraded the
Commonwealth to A rated status this past fall.
The Shawmut Funds Management
Officers and Trustees
Officers and Trustees are listed with their addresses, present
positions with The Shawmut Funds, and principal occupations.
John F. Donahue@*
Federated Investors Tower
Pittsburgh, Pennsylvania
Chairman and Trustee
Chairman and Trustee, Federated Investors, Federated Advisers,
Federated Management, and Federated Research; Chairman and
Director, Federated Research Corp.; Chairman, Passport
Research, Ltd.; Director, AEtna Life and Casualty Company;
Chief Executive Officer and Director, Trustee, or Managing
General Partner of the Funds. Mr. Donahue is the father of J.
Christopher Donahue , Vice President of the Trust.
Thomas G. Bigley
28th Floor
One Oxford Centre
Pittsburgh, Pennsylvania
Trustee
Director, Oberg Manufacturing Co.; Chairman of the Board,
Children's Hospital of Pittsburgh; Director, Trustee or
Managing General Partner of the Funds; formerly, Senior
Partner, Ernst & Young LLP.
John T. Conroy, Jr.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, Florida
Trustee
President, Investment Properties Corporation; Senior Vice-
President, John R. Wood and Associates, Inc., Realtors;
President, Northgate Village Development Corporation; Partner
or Trustee in private real estate ventures in Southwest
Florida; Director, Trustee, or Managing General Partner of the
Funds; formerly, President, Naples Property Management, Inc.
William J. Copeland
One PNC Plaza - 23rd Floor
Pittsburgh, Pennsylvania
Trustee
Director and Member of the Executive Committee, Michael Baker,
Inc.; Director, Trustee, or Managing General Partner of the
Funds; formerly, Vice Chairman and Director, PNC Bank, N.A.,
and PNC Bank Corp. and Director, Ryan Homes, Inc.
James E. Dowd
571 Hayward Mill Road
Concord, Massachusetts
Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.;
Director, Trustee, or Managing General Partner of the Funds;
formerly, Director, Blue Cross of Massachusetts, Inc.
Lawrence D. Ellis, M.D.
3471 Fifth Avenue, Suite 1111
Pittsburgh, Pennsylvania
Trustee
Hematologist, Oncologist, and Internist, Presbyterian and
Montefiore Hospitals; Professor of Medicine and Trustee,
University of Pittsburgh; Director of Corporate Health,
University of Pittsburgh Medical Center; Director, Trustee, or
Managing General Partner of the Funds.
Edward L. Flaherty, Jr.@
Two Gateway Center-Suite 674
Pittsburgh, Pennsylvania
Trustee
Attorney-at-law; Partner, Henny, Koeheba, Meyer and Flaherty;
Director, Eat'N Park Restaurants, Inc., and Statewide
Settlement Agency, Inc.; Director, Trustee, or Managing
General Partner of the Funds; formerly, Counsel, Horizon
Financial, F.A., Western Region.
Edward C. Gonzales *
Federated Investors Tower
Pittsburgh, Pennsylvania
President , Treasurer and Trustee
Vice President, Treasurer, and Trustee, Federated Investors;
Vice President and Treasurer, Federated Advisers, Federated
Management, Federated Research, Federated Research Corp., and
Passport Research, Ltd.; Executive Vice President, Treasurer,
and Director, Federated Securities Corp.; Trustee, Federated
Services Company and Federated Shareholder Services; Chairman,
Treasurer, and Trustee, Federated Administrative Services;
Trustee or Director of some of the Funds; Vice President and
Treasurer of the Funds.
Peter E. Madden
225 Franklin Street
Boston, Massachusetts
Trustee
Consultant; State Representative, Commonwealth of
Massachusetts; Director, Trustee, or Managing General Partner
of the Funds; formerly, President, State Street Bank and Trust
Company and State Street Boston Corporation and Trustee, Lahey
Clinic Foundation, Inc.
Gregor F. Meyer
Two Gateway Center-Suite 674
Pittsburgh, Pennsylvania
Trustee
Attorney-at-law; Partner, Henny, Koeheba, Meyer and Flaherty;
Chairman, Meritcare, Inc.; Director, Eat'N Park Restaurants,
Inc.; Director, Trustee, or Managing General Partner of the
Funds; formerly, Vice Chairman, Horizon Financial, F.A.
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, Pennsylvania
Trustee
Professor, Foreign Policy and Management Consultant; Trustee,
Carnegie Endowment for International Peace, RAND Corporation,
Online Computer Library Center, Inc., and U.S. Space
Foundation; Chairman, Czecho Slovak Management Center;
Director, Trustee, or Managing General Partner of the Funds;
President Emeritus, University of Pittsburgh; formerly,
Chairman, National Advisory Council for Environmental Policy
and Technology.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, Pennsylvania
Trustee
Public relations/marketing consultant; Director, Trustee, or
Managing General Partner of the Funds.
J. Christopher Donahue
Federated Investors Tower
Pittsburgh, Pennsylvania
Vice President
President and Trustee, Federated Investors, Federated
Advisers, Federated Management, and Federated Research;
President and Director, Federated Research Corp.; President,
Passport Research, Ltd.; Trustee, Federated Administrative
Services, Federated Services Company, and Federated
Shareholder Services; President or Vice President of the
Funds; Director, Trustee, or Managing General Partner of some
of the Funds. Mr. Donahue is the son of John F. Donahue,
Chairman and Trustee of the Trust.
Richard B. Fisher
Federated Investors Tower
Pittsburgh, Pennsylvania
Vice President
Executive Vice President and Trustee, Federated Investors;
Director, Federated Research Corp.; Chairman and Director,
Federated Securities Corp.; President or Vice President of
some of the Funds; Director or Trustee of some of the Funds.
John W. McGonigle
Federated Investors Tower
Pittsburgh, Pennsylvania
Vice President and Secretary
Vice President, Secretary, General Counsel, and Trustee,
Federated Investors; Vice President, Secretary, and Trustee,
Federated Advisers, Federated Management, and Federated
Research; Vice President and Secretary, Federated Research
Corp. and Passport Research, Ltd.; Trustee, Federated Services
Company; Executive Vice President, Secretary, and Trustee,
Federated Administrative Services; Secretary and Trustee,
Federated Shareholder Services; Executive Vice President and
Director, Federated Securities Corp.; Vice President and
Secretary of the Funds.
Jeffrey W. Sterling
Federated Investors Tower
Pittsburgh, Pennsylvania
Vice President and Assistant Treasurer
Vice President, Federated Administrative Services; Vice
President and Assistant Treasurer of some of the Funds.
* This Trustee is deemed to be an "interested person" as
defined in the Investment Company Act of 1940, as amended.
@ Member of the Executive Committee. The Executive Committee
of the Board of Trustees handles the responsibilities of the
Board of Trustees between meetings of the Board.
The Funds
"The Funds" and "Funds" mean the following investment
companies: American Leaders Fund, Inc.; Annuity Management
Series; Arrow Funds; Automated Cash Management Trust;
Automated Government Money Trust; California Municipal Cash
Trust; Cash Trust Series II; Cash Trust Series, Inc.; DG
Investor Series; Edward D. Jones & Co. Daily Passport Cash
Trust; Federated ARMs Fund; Federated Exchange Fund, Ltd.;
Federated GNMA Trust; Federated Government Trust; Federated
Growth Trust; Federated High Yield Trust; Federated Income
Securities Trust; Federated Income Trust; Federated Index
Trust; Federated Institutional Trust; Federated Intermediate
Government Trust; Federated Master Trust; Federated Municipal
Trust; Federated Short-Intermediate Government Trust;
Federated Short-Term U.S. Government Trust; Federated Stock
Trust; Federated Tax-Free Trust; Federated U.S. Government
Bond Fund; First Priority Funds; Fixed Income Securities,
Inc.; Fortress Adjustable Rate U.S. Government Fund, Inc.;
Fortress Municipal Income Fund, Inc.; Fortress Utility Fund,
Inc.; Fund for U.S. Government Securities, Inc.; Government
Income Securities, Inc.; High Yield Cash Trust; Insight
Institutional Series, Inc.; Insurance Management Series;
Intermediate Municipal Trust; International Series, Inc.;
Investment Series Funds, Inc.; Investment Series Trust;
Liberty Equity Income Fund, Inc.; Liberty High Income Bond
Fund, Inc.; Liberty Municipal Securities Fund, Inc.; Liberty
U.S. Government Money Market Trust; Liberty Term Trust, Inc. -
1999; Liberty Utility Fund, Inc.; Liquid Cash Trust; Managed
Series Trust; The Medalist Funds: Money Market Management,
Inc.; Money Market Obligations Trust; Money Market Trust;
Municipal Securities Income Trust; New York Municipal Cash
Trust; 111 Corcoran Funds; Peachtree Funds; The Planters
Funds; Portage Funds; RIMCO Monument Funds; Short-Term
Municipal Trust; Star Funds; The Starburst Funds; The
Starburst Funds II; Stock and Bond Fund, Inc.; Sunburst Funds;
Targeted Duration Trust; Tax-Free Instruments Trust; Trademark
Funds; Trust for Financial Institutions; Trust For Government
Cash Reserves; Trust for Short-Term U.S. Government
Securities; Trust for U.S. Treasury Obligations; and World
Investment Series, Inc.
Income Funds Ownership
Officers and Trustees own less than 1% of an Income Fund's
outstanding shares.
As of December 12, 1994, the following shareholders of record
owned 5% or more of the outstanding Shares of the Income
Funds: Olsen & Co. owned approximately 5,752,056 shares (100%)
of the Trust Shares of the Limited Term Income Fund; Wornat
Leasing owned approximately 362,318 shares (47.67%) of the
Investment Shares of the Limited Term Income Fund; Olsen & Co.
owned approximately 6,045,290 shares (100%) of the Trust
Shares of the Intermediate Government Income Fund; Olsen & Co.
owned approximately 8,543,585 shares (100%) of the Trust
Shares of the Fixed Income Fund; Olsen & Co. owned
approximately 210,970 shares (26.20%) of the Connecticut
Intermediate Municipal Income Fund; Eleanor D. Cecarelli owned
approximately 53,196 shares (6.61%) of the Connecticut
Intermediate Municipal Income Fund; Olsen & Co. owned
approximately 221,527 shares (32.24%) of the Massachusetts
Intermediate Municipal Income Fund and John Fanelli and Gina
A. Fanelli owned approximately 80,646 shares (11.74%) of the
Massachusett Intermediate Municipal Income Fund.
Trustee Liability
The Trust's Declaration of Trust provides that the Trustees
will not be liable for errors of judgment or mistakes of fact
or law. However, they are not protected against any liability
to which they would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of their
office.
Investment Advisory Services
Adviser to the Income Funds
The Income Funds' investment adviser is Shawmut Bank, N.A.
(the "Adviser"). The Adviser shall not be liable to the Trust,
the Income Funds or any shareholder of the Income 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.
Because of internal controls maintained by Shawmut Bank ,
N.A.to restrict the flow of non-public information, an Income
Funds' investments are typically made without any knowledge of
Shawmut Bank, N.A.'s or its affiliates' lending relationships
with an issuer.
Advisory Fees
For its advisory services, the Adviser receives an annual
investment advisory fee as described in the combined
prospectus.
During the fiscal year ended October 31, 1994, the Adviser
earned the following advisory fees: Connecticut Intermediate
Municipal Income Fund, $58,691, all of which was voluntarily
waived; Fixed Income Fund, $789,707, of which $197,427 was
voluntarily waived; Intermediate Government Income Fund,
$615,460, of which $153,865 was voluntarily waived; Limited
Term Income Fund, $546,634, of which $136,659 was voluntarily
waived; and Massachusetts Intermediate Municipal Income Fund,
$40,530, all of which was voluntarily waived. In addition, the
Adviser reimbursed other operating expenses for the following
Funds: Connecticut Intermediate Municipal Income Fund,
$145,926 and Massachusetts Intermediate Municipal Income Fund,
$161,962.
During the period from June 19, 1993 (date of initial public
investment) to October 31, 1993, the Adviser earned the
following advisory fees: Connecticut Intermediate Municipal
Income Fund, $11,033, all of which was voluntarily waived;
Massachusetts Intermediate Municipal Income Fund, $6,559, all
of which was voluntarily waived. During the period from
December 14, 1992 (date of initial public investment) to
October 31, 1993, the Adviser earned the following advisory
fees: Fixed Income Fund, $605,022, of which $169,100 was
voluntarily waived; Intermediate Government Income Fund,
$443,271, of which $122,880 was voluntarily waived; and
Limited Term Income Fund, $411,275, of which $116,939 was
voluntarily waived. In addition, the Investment Adviser
reimbursed other operating expenses for the following Income
Funds: Connecticut Intermediate Municipal Income Fund,
$23,435, and Massachusetts Intermediate Municipal Income Fund,
$25,582.
State Expense Limitations
The Adviser has undertaken to comply with the expense
limitations established by certain states for investment
companies whose shares are registered for sale in those
states. If the Income Funds' normal operating expenses
(including the investment advisory fee, but not including
brokerage commissions, interest, taxes, and extraordinary
expenses) exceed 2 1/2% per year of the first $30 million
of average net assets, 2% per year of the next $70
million of average net assets, and 1 1/2% per year of the
remaining average net assets, the Adviser will reimburse
the Income Funds for its expenses over the limitation.
If the Income Funds' monthly projected operating expenses
exceed this limitation, the investment advisory fee paid
will be reduced by the amount of the excess, subject to
an annual adjustment. If the expense limitation is
exceeded, the amount to be reimbursed by the Adviser will
be limited, in any single fiscal year, by the amount of
the investment advisory fee.
This arrangement is not part of the advisory contract and
may be amended or rescinded in the future.
Administrative Services
Federated Administrative Services, a subsidiary of Federated
Investors, provides administrative personnel and services to
the Income Funds for the fee set forth in the prospectus. For
the fiscal year ended October 31, 1994 Federated
Administrative Services earned the following administrative
fees from the Funds: Connecticut Intermediate Municipal Income
Fund, $50,000; Fixed Income Fund, $106,280; Intermediate
Government Income Fund, $82,788; Limited Term Income Fund,
$73,627; and Massachusetts Intermediate Municipal Income Fund,
$50,000. For the period from June 17, 1993 (date of initial
public investment) to October 31, 1993, Federated
Administrative Services earned the following administrative
fees from the Funds: Connecticut Intermediate Municipal Income
Fund, $1,931, all of which was voluntarily waived; and
Massachusetts Intermediate Municipal Income Fund, $1,149, all
of which was voluntarily waived. For the period from December
14, 1992 (date of initial public investment) to October 31,
1993, Federated Administrative Services earned the following
administrative fees from the Funds: Fixed Income Fund,
$94,878; Intermediate Government Income Fund, $69,486; and
Limited Term Income Fund, $64,554.
Shawmut Bank, N.A., serves as custodian to the Income Funds.
As compensation for its services, the custodian receives a fee
based upon a sliding scale ranging from a minimum of .011% to
a maximum of .02%, plus certain transaction costs. For the
fiscal year ended October 31, 1994, the Funds' custodian
earned the following fees: Connecticut Intermediate Municipal
Income Fund, $12,000, all of which was voluntarily waived;
Fixed Income Fund, $19,744, all of which was voluntarily
waived; Intermediate Government Income Fund, $15,380, all of
which was voluntarily waived; Limited Term Income Fund,
$13,646, all of which was voluntarily waived; and
Massachusetts Intermediate Municipal Income Fund, $12,000, all
of which was voluntarily waived. For the period from June 17,
1993 (date of initial public investment) to October 31, 1993,
the Funds' custodian earned the following fees: Connecticut
Intermediate Municipal Income Fund, $315, all of which was
voluntarily waived; and Massachusetts Intermediate Municipal
Income Fund, $187, all of which was voluntarily waived. For
the period from December 14, 1992 (date of initial public
investment) to October 31, 1993, the Funds' custodian earned
the following fees: Fixed Income Fund, $8,011, all of which
was voluntarily waived; Intermediate Government Income Fund,
$6,534, all of which was voluntarily waived; and Limited Term
Income Fund, $5,350, all of which was voluntarily waived.
Brokerage Transactions
It is the Income Funds' policy with respect to the selection
of brokers and dealers in the purchase and sale of securities
to obtain the "best net realized price" on each transaction.
The Income Funds conduct business only with financially sound
brokers or dealers on that basis. Brokerage commission is,
however, only one element in determining "best net realized
price." The Adviser may also select brokers and dealers who
offer research and other services. These services may be
furnished directly to the Income Funds or to the Adviser and
may include:
oadvice as to the advisability of investing in securities;
osecurity analysis and reports;
oeconomic studies;
oindustry studies;
oreceipt of quotations for portfolio evaluations; and
osimilar 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 may be used by the
Adviser for 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.
Purchasing Shares
Shares are sold at their net asset value plus a sales
load(Investment Shares only) on days on which the New York
Stock Exchange and the Federal Reserve Wire System are open
for business. The procedure for purchasing Shares of the
Income Funds is explained in the respective prospectuses under
"Investing in Trust Shares" or "Investing in Investment
Shares."
Distribution Plan
With respect to the Investment Shares class of the Fixed
Income Fund, Intermediate Government Income Fund, Limited Term
Income Fund, and Connecticut/Massachusetts Intermediate
Municipal Income Funds, the Trust has adopted a Plan pursuant
to Rule 12b-1 which was promulgated by the Securities and
Exchange Commission pursuant to the Investment Company Act of
1940. The Plan permits the payment of fees to administrators
(including broker/dealers and depository institutions such as
commercial banks and savings and loan associations) for
distribution and administrative services. The Plan is designed
to stimulate administrators to provide distribution and
administrative support services to these Funds and their
shareholders. The administrative services are provided by a
representative who has knowledge of the shareholder's
particular circumstances and goals, and include, but are not
limited to: communicating account openings; communicating
account closings; entering purchase transactions; entering
redemption transactions; providing or arranging to provide
accounting support for all transactions, wiring funds and
receiving funds for Share purchases and redemptions,
confirming and reconciling all transactions, reviewing the
activity in these Funds' accounts, and providing training and
supervision of broker personnel; posting and reinvesting
dividends to these accounts or arranging for this service to
be performed by these Funds' transfer agent; and maintaining
and distributing current copies of prospectuses and
shareholder reports to the beneficial owners of shares of
these Funds and prospective shareholders.
By adopting the Plan, the Trustees expect that these Funds
will be able to achieve a more predictable flow of cash for
investment purposes and to meet redemptions. This will
facilitate more efficient portfolio management and assist
these Funds in seeking to achieve its investment objectives.
By identifying potential investors whose needs are served by
the Income Funds' objectives, and properly servicing these
accounts, the Income Funds may be able to curb sharp
fluctuations in rates of redemptions and sales.
Other benefits which these Funds hope to achieve through the
Plan include, but are not limited to, the following: (1) an
efficient and effective administrative system; (2) a more
efficient use of shareholder assets by having them rapidly
invested in the Income Funds through an automatic transfer of
funds from a demand deposit account to an investment account,
with a minimum of delay and administrative detail; and (3) an
efficient and reliable shareholder records system and prompt
responses to shareholder requests and inquiries concerning
their accounts.
As of the date of this Statement of Additional Information,
neither the Connecticut Intermediate Municipal Income Fund nor
the Massachusetts Intermediate Municipal Income Fund are
accruing or paying 12b-1 fees. The Connecticut Intermediate
Municipal Income Fund and Massachusetts Intermediate Municipal
Income Fund do not intend to accrue or pay 12b-1 fees until
either a separate class of shares has been created for certain
fiduciary investors for these portfolios or a determination is
made that such investors will be subject to the 12b-1 fees.
For the fiscal year ended October 31, 1994, brokers earned the
following fees from the Investment Shares of the Income Funds
pursuant to the Plan: Fixed Income Fund, $49,392, of which
$24,696 was voluntarily waived; Intermediate Government Income
Fund, $68,227, of which $34,113 was voluntarily waived; and
Limited Term Income Fund, $31,201, of which $15,600 was
voluntarily waived.
For the period from December 14, 1992 (date of initial public
investment) to October 31, 1993, brokers earned the following
fees from the Investment Shares of the Income Funds pursuant
to the Plan: Fixed Income Fund, $17,497, of which $8,749 was
voluntarily waived; Intermediate Government Income Fund,
$24,926, of which $12,463 was voluntarily waived; Limited Term
Income Fund, $5,779, of which $2,889 was voluntarily waived;
Conversion to Federal Funds
It is the Income Funds' policy to be as fully invested as
possible so that maximum interest may be earned. To this end,
all payments from shareholders must be in federal funds or be
converted into federal funds. Shawmut Bank, N.A., on behalf of
its customers, acts as the shareholder's agent in depositing
checks and converting them to federal funds. Purchases through
the distributor are converted to federal funds by the Income
Funds' transfer agent who, in turn, purchases the Shares of
the appropriate Income Fund on behalf of the shareholder.
Determining Net Asset Value
The net asset value generally changes each day. The days on
which net asset value is calculated by the Income Funds are
described in the respective prospectuses for Trust Shares and
Investment Shares.
Valuing Municipal Bonds
For the Connecticut/Massachusetts Intermediate Municipal
Income Funds, the Board of Trustees uses an independent
pricing service to value municipal bonds. The independent
pricing service takes into consideration yield, stability,
risk, quality, coupon rate, maturity, type of issue, trading
characteristics, special circumstances of a security or
trading market, and any other factors or market data it
considers relevant in determining valuations for normal
institutional size trading units of debt securities, and does
not rely exclusively on quoted prices.
Use of Amortized Cost
The Trustees has decided that the fair value of debt
securities authorized to be purchased by the Connecticut/
Massachusetts Intermediate Municipal Income Funds with
remaining maturities of 60 days or less at the time of
purchase shall be their amortized cost value, unless the
particular circumstances of the security indicate otherwise.
Under this method, portfolio instruments and assets are valued
at the acquisition cost as adjusted for amortization of
premium or accumulation of discount rather than at current
market value. The Executive Committee continually assesses
this method of valuation and recommends changes where
necessary to assure that the Income Funds' portfolio
instruments are valued at their fair value as determined in
good faith by the Trustees.
Determining Market Value of Securities
Market values of the Fixed Income Fund, Intermediate
Government Income Fund, and Limited Term Income Funds'
portfolio securities are determined as follows:
oaccording to the last sale price on a national securities
exchange, if available;
oin the absence of recorded sales for bonds, notes, and
other fixed income securities, as determined by an
independent pricing service;
ofor short-term obligations, according to the mean between
bid and asked prices, as furnished by an independent
pricing service or for short-term obligations with
maturities of 60 days or less at the time of purchase, at
amortized cost; or
ofor all other securities, at fair value as determined in
good faith by the Fund's Board of Trustees.
Prices provided by independent pricing services may be
determined without relying exclusively on quoted prices and
may reflect: institutional trading in similar groups of
securities, yield, quality, coupon rate, maturity, type of
issue, trading characteristics, and other market data.
Exchange Privilege
Requirements for Exchange
Shareholders using the exchange privilege must exchange Shares
having a net asset value of at least $1,000. Before the
exchange, the shareholder must receive a prospectus of the
fund for which the exchange is being made. Further information
on the exchange privilege and prospectuses may be obtained by
calling Shawmut Bank, N.A.
Making an Exchange
Instructions for exchanges may be given in writing or by
telephone. Written instructions may require a signature
guarantee.
Redeeming Shares
The Income Funds redeem shares at the next computed net asset
value after the redemption requests are received. Redemption
procedures are explained in the respective prospectuses under
"Redeeming Trust Shares" or "Redeeming Investment Shares."
Redemption in Kind
Although the Trust intends to redeem shares in cash, it
reserves the right under certain circumstances to pay the
redemption price in whole or in part by a distribution of
securities from the Income Funds' respective portfolios.
Redemption in kind will be made in conformity with applicable
Securities and Exchange Commission rules, taking such
securities at the same value employed in determining net asset
value and selecting the securities in a manner the Trustees
determine to be fair and equitable.
The Trust has elected to be governed by Rule 18f-1 of the
Investment Company Act of 1940 under which the Trust is
obligated to redeem shares for any one shareholder in cash
only up to the lesser of $250,000 or 1% of an Income Fund's or
class of share's net asset value during any 90-day period.
Tax Status
The Income Funds' Tax Status
The Income Funds will pay no federal income tax because the
Income Funds expect to meet the requirements of Subchapter M
of the Internal Revenue Code applicable to regulated
investment companies and to receive the special tax treatment
afforded to such companies. To qualify for this treatment,
each of the Income Funds must, among other requirements:
oderive at least 90% of its gross income from dividends,
interest, and gains from the sale of securities;
oderive less than 30% of its gross income from the sale of
securities held less than three months;
oinvest in securities within certain statutory limits; and
odistribute to its shareholders at least 90% of its net
income earned during the year.
Federal Income Tax
Each of the Income Funds will be treated as a single, separate
entity for federal income tax purposes so that income
(including capital gains) and losses realized by the Trust's
other portfolios will not be combined for tax purposes with
those realized by each of the Income Funds.
Shareholders are not required to pay the federal regular
income tax on any dividends received from the Connecticut/
Massachusetts Intermediate Municipal Income Funds that
represent net interest on tax-exempt municipal bonds.
In the case of a corporate shareholder, dividends of the
Connecticut/Massachusett Intermediate Municipal Income Funds
which represent interest on municipal bonds may be subject to
the 20% corporate alternative minimum tax. The corporate
alternative minimum tax treats 75% of the excess of a
taxpayer's pre-tax "adjusted current earnings" over the
taxpayer's alternative minimum taxable income as a tax
preference item. Since "earnings and profits" generally
includes the full amount of any of the Income Funds'
dividends, and alternative minimum taxable income does not
include the portion of the Income Funds' dividend attributable
to municipal bonds which are not private activity bonds, 75%
of the difference will be included in the calculation of the
corporation's alternative minimum tax.
Dividends of the Connecticut/Massachusett Intermediate
Municipal Income Funds representing net interest income earned
on some temporary investments and any realized net short-term
gains are taxed as ordinary income. Long-term capital gains
distributions are taxed as long-term capital gains, regardless
of the length of time the Income Funds shares have been held
by the shareholder.
These tax consequences apply whether dividends are received in
cash or as additional Shares. Information on the tax status of
dividends and distributions is provided annually.
Massachusetts State Income Tax
Individual shareholders of the Massachusetts Intermediate
Municipal Income Fund who are subject to Massachusetts income
taxation will not be required to pay Massachusetts income tax
on that portion of their dividends which is attributable to
interest earned on Massachusetts tax-free municipal
obligations, gain from the sale of certain of such
obligations, interest earned on obligations of the United
States, and interest earned on obligations of United States
territories or possessions to the extent interest on such
obligations is exempt from taxation by the state pursuant to
federal law. All remaining dividends will be subject to
Massachusetts income tax.
If a shareholder of the Massachusetts Intermediate Municipal
Income Fund is a Massachusetts business corporation or any
foreign business corporation which exercises its charter,
qualifies to do business, actually does business or owns or
uses any part of its capital, plant or other property in
Massachusetts, then it will be subject to Massachusetts excise
taxation either as a tangible property corporation or as an
intangible property corporation. If the corporate shareholder
is a tangible property corporation, it will be taxed upon its
net income allocated to Massachusetts and the value of certain
tangible property. If it is an intangible property
corporation, it will be taxed upon its net income and net
worth allocated to Massachusetts. Net income is gross income
less allowable deductions for federal income tax purposes,
subject to specified modifications. Dividends received from
the Fund are includable in gross income and generally may not
be deducted by a corporate shareholder in computing its net
income. The corporation's shares in the Massachusetts
Intermediate Municipal Income Fund are not includable in the
computation of the tangible property base of a tangible
property corporation, but are includable in the computation of
the net worth base of an intangible property corporation.
Shares of Massachusetts Intermediate Municipal Income Fund
will be exempt from local property taxes in Massachusetts.
Other State and Local Taxes
Income from the Connecticut/Massachusetts Intermediate
Municipal Income Funds is not necessarily free from state
income taxes or from local property taxes in states other than
Connecticut and Massachusetts (respectively). State laws
differ on this issue, and shareholders are urged to consult
their own tax advisers regarding the status of their accounts
under state and local tax laws.
Shareholders' Tax Status
Shareholders are subject to federal income tax on dividends
received as cash or additional Shares.
Capital Gains
Capital gains or losses may be realized by the
Connecticut/Massachusetts Intermediate Municipal Income Funds
on the sale of portfolio securities and as a result of
discounts from par value on securities held to maturity. Sales
would generally be made because of:
othe availability of higher relative yields;
odifferentials in market values;
onew investment opportunities;
ochanges in creditworthiness of an issuer; or
oan attempt to preserve gains or limit losses.
Distribution of long-term capital gains are taxed as such,
whether they are taken in cash or reinvested, and regardless
of the length of time the shareholder has owned the shares.
Fixed Income Fund, Intermediate Government Income Fund, and
Limited Term Income Funds' shareholders are subject to federal
income tax on dividends received as cash or additional Shares.
No portion of any income dividend paid by the Fund is eligible
for the dividends received deduction available to
corporations. These dividends, and any short-term capital
gains, are taxable as ordinary income.
Total Return
The average annual total return for the shares of the
Connecticut/Massachusetts Intermediate Municipal Income Fund
for the fiscal year ended October 31, 1994 were (7.07%) and
(7.59%), respectively. The average annual total return for the
shares of the Connecticut/Massachusetts Intermediate Municipal
Income Funds for the period from June 17, 1993, (date of
initial public investment), to October 31, 1994 were (2.58%),
and (2.59%), respectively.
The average annual total return for the Investment shares of
the Fixed Income Fund, Intermediate Government Income Fund and
Limited Term Income Fund for the fiscal year ended October 31,
1994 were (8.00%), (5.92%) and(2.90%), respectively. The
average annual total return for the Investment Shares of the
Fixed Income Fund, Intermediate Government Income Fund and
Limited Term Income Fund for the period from February 12, 1993
(date of initial public investment) to October 31, 1994 were
0.89%, (1.03%), and (0.28%), respectively.
The average annual total return for the Trust Shares of the
Fixed Income Fund, Intermediate Government Income Fund and
Limited Term Income Fund for the fiscal year ended October 31,
1994 were (5.85%), (3.75%) and (0.69%), respectively. The
average annual total return for the Trust Shares of the Fixed
Income Fund, Intermediate Government Income Fund and Limited
Term Income Fund for the period from December 14, 1992 (date
of initial public investment) to October 31, 1994 were 2.49%,
2.06%, and 2.25%, respectively.
The average annual total return for both classes of the Income
Funds (as applicable) 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
offering price 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 applicable sales load (Investment Shares
only), adjusted over the period by any additional Shares,
assuming the quarterly reinvestment of all dividends and
distributions.
Yield
The thirty-day yields for the Connecticut Intermediate
Municipal Income Fund and Massachusetts Intermediate Municipal
Income Fund for the period ended October 31, 1994, were 4.74%,
and 4.88%, respectively. The thirty-day yields for the
Investment Shares of the Fixed Income Fund, Intermediate
Government Income Fund and Limited Term Income Fund for the
period ended October 31, 1994, were 6.40%, 5.91%, and 5.60%
respectively. The thirty day yields for the Trust Shares of
the Fixed Income Fund, Intermediate Government Income Fund and
Limited Term Income Fund for the period ended October 31,
1994, were 6.79%, 6.29%, and 5.97% respectively.
The yield for both classes of Shares of the Income Funds (as
applicable) is determined by dividing the net investment
income per share (as defined by the Securities and Exchange
Commission) earned by the Income Funds over a thirtyday period
by the maximum offering price per Share on the last day of the
period. This value is 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 twelve-month period and is reinvested every six
months. The yield does not necessarily reflect income actually
earned by the Shares because of certain adjustments required
by the Securities and Exchange Commission and, therefore, may
not correlate to the dividends or other distributions paid to
shareholders.
To the extent that financial institutions and broker/dealers
charge fees in connection with services provided in
conjunction with an investment in the Income Funds,
performance will be reduced for those shareholders paying
those fees.
Tax-Equivalent Yield
The Connecticut Intermediate Municipal Income Fund's tax-
equivalent yield for the period ended October 31, 1994 was
7.02%.
The Massachusetts Intermediate Municipal Income Fund's tax-
equivalent yield for the period ended October 31, 1994 was
8.13%.
The tax-equivalent yield for the Connecticut/Massachusetts
Intermediate Municipal Income Funds is calculated similarly to
the yield, but is adjusted to reflect the taxable yield that
the Connecticut Intermediate Municipal Income Fund, assuming a
32.50% combined federal and state tax rate, and Massachusetts
Intermediate Municipal Income Fund, assuming a 40.00% combined
federal and state tax rate, would have had to earn to equal
its actual yield, assuming that income earned by the
Connecticut/Massachusetts Intermediate Municipal Income Funds
are 100% tax-exempt.
Tax-Equivalency Table
The Connecticut/Massachusetts Intermediate Municipal Income
Funds may also use a tax-equivalency table in advertising and
sales literature. The interest earned by the municipal
obligations in the Connecticut/Massachusetts Intermediate
Municipal Income Funds' portfolio generally remains free from
federal income tax and is free from the income taxes imposed
by the State of Connecticut and the Commonwealth of
Massachusetts*. As the table below indicates, a "tax-free"
investment is an attractive choice for investors, particularly
in times of narrow spreads between "tax-free" and taxable
yields.
TAXABLE YIELD EQUIVALENT FOR 1994
COMMONWEALTH OF MASSACHUSETTS
Federal Tax Bracket:
15.00% 28.00% 31.00% 36.00% 39.60%
Combined Federal and State:
27.00% 40.00% 43.00% 48.00% 51.60%
Joint Return: $1-38,000 $38,001-91-850$91,851-140,000$140
,001-250,000Over $250,000
Single Return: $1-22,750$22,751-55,100 $55,101-115,000 $1
15,001-250,000 Over $250,000
Tax-Exempt
Yield Taxable Yield Equivalent
1.50% 2.05% 2.50% 2.63% 2.88% 3.10%
2.00% 2.74% 3.33% 3.51% 3.85% 4.13%
2.50% 3.42% 4.17% 4.39% 4.81% 5.17%
3.00% 4.11% 5.00% 5.26% 5.77% 6.20%
3.50% 4.79% 5.83% 6.14% 6.73% 7.23%
4.00% 5.48% 6.67% 7.02% 7.69% 8.26%
4.50% 6.16% 7.50% 7.89% 8.65% 9.30%
5.00% 6.85% 8.33% 8.77% 9.62% 10.33%
5.50% 7.53% 9.17% 9.65% 10.58% 11.36%
6.00% 8.22% 10.00% 10.53% 11.54% 12.40%
Note: The maximum marginal tax rate for each bracket was used
in calculating the taxable yield equivalent. Furthermore,
additional state and local taxes paid on comparable taxable
investments were not used to increase federal deductions.
The above chart is for illustrative purposes only and uses tax
brackets that went into effect beginning January 1, 1994. It
is not an indicator of past or future performance of the Fund.
TAXABLE YIELD EQUIVALENT FOR 1994
STATE OF CONNECTICUT
Federal Tax Bracket:
15.00% 28.00% 31.00% 36.00% 39.60%
Combined Federal and State:
19.50% 32.50% 35.50% 40.50% 44.10%
Joint Return: $1-38,000 $38,001-91,850$91,851-140,000$140
,001-250,000Over $250,000
Single Return: $1-22,750 $22,751-55,100$55,101-115,000$115
,001-250,000Over $250,000
Tax-Exempt
Yield Taxable Yield Equivalent
1.50% 1.86% 2.22% 2.33% 2.52% 2.68%
2.00% 2.48% 2.96% 3.10% 3.36% 3.58%
2.50% 3.11% 3.70% 3.88% 4.20% 4.47%
3.00% 3.73% 4.44% 4.65% 5.04% 5.37%
3.50% 4.35% 5.19% 5.43% 5.88% 6.26%
4.00% 4.97% 5.93% 6.20% 6.72% 7.16%
4.50% 5.59% 6.67% 6.98% 7.56% 8.05%
5.00% 6.21% 7.41% 7.75% 8.40% 8.94%
5.50% 6.83% 8.15% 8.53% 9.24% 9.84%
6.00% 7.45% 8.89% 9.30% 10.08% 10.73%
Note: The maximum marginal tax rate for each bracket was used
in calculating the taxable yield equivalent. Furthermore,
additional state and local taxes paid on comparable taxable
investments were not used to increase federal deductions.
The above chart is for illustrative purposes only and uses tax
brackets that went into effect beginning January 1, 1994. It
is not an indicator of past or future performance of the Fund.
* Some portion of the Fund's income may be subject to the
federal alternative minimum tax and state and local regular or
alternative minimum taxes.
Performance Comparisons
The Income Funds' performance depends upon such variables as:
oportfolio quality;
oaverage portfolio maturity;
otype of instruments in which the portfolio is invested;
ochanges in interest rates and market value of portfolio
securities;
ochanges in the Income Funds' or either class of shares'
expenses (as applicable); and
ovarious other factors.
The Income Funds' 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.
Investors may use financial publications and/or indices to
obtain a more complete view of the Income Fund's performance.
When comparing performance, investors should consider all
relevant factors such as the composition of any 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 Income Funds use in advertising may include:
o 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, the Income Funds will quote its
Lipper ranking in the "income funds" category in advertising
and sales literature.
o Lehman Brothers Municipal Bond Indices are indices comprised
of state general obligation and/or revenue debt issues with
varying maturities and rating limitations.
Advertisements and other sales literature for the Income Funds
may refer to total return. Total return is the historic change
in the value of an investment in the Income Funds based on
monthly reinvestment of dividends over a specific period of
time.
Advertisements may quote performance information which does
not reflect the effect of the sales load.
Duration
Duration is a commonly used measure of the potential
volatility in the price of a bond, or other fixed income
security, or in a portfolio of fixed income securities, prior
to maturity. Volatility is the magnitude of the change in the
price of a bond relative to a given change in the market rate
of interest. A bond's price volatility depends on three
primary variables: the bond's coupon rate; maturity date; and
the level of market yields of similar fixed income securities.
Generally, bonds with lower coupons or longer maturities will
be more volatile than bonds with higher coupons or shorter
maturities. Duration combines these variables into a single
measure.
Duration is calculated by dividing the sum of the time-
weighted values of the cash flows of a bond or bonds,
including interest and principal payments, by the sum of the
present values of the cash flows. When the Fund invests in
mortgage pass-through securities, its duration will be
calculated in a manner which requires assumptions to be made
regarding future principal prepayments. A more complete
description of this calculation is available upon request from
the Fund.
Financial Statements
The financial statements for the fiscal year ended October 31,
1994 are incorporated herein by reference to the Annual Report
of the Trust dated October 31, 1994 (File Nos. 33-48933 and
811-58437). A copy of the Annual Report may be obtained
without charge by contacting the Trust at the address listed
on the back cover of the prospectus.
Appendix
Standard & Poor's Ratings Group Long Term Debt Ratings
Definitions
AAA-Debt rated "AAA" has the highest rating assigned by
Standard & Poor's Ratings Group. 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.
BBB-Debt rated "BBB" is regarded as having an adequate
capacity to pay interest and repay principal. Whereas it
normally exhibits adequate protection parameters, adverse
economic conditions or changing circumstances are more likely
to lead to a weakened capacity to pay interest and repay
principal for debt in this category than in higher rated
categories.
BB,B-Debt rated "BB" or "B", is regarded, on balance, as
predominantly speculative with respect to capacity to pay
interest and repay principal in accordance with the terms of
the obligation. "BB" indicates a low degree of speculation.
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 Ratings Group does not rate a
particular type of obligation as a matter of policy.
Plus (+) or minus (-): The ratings from "AA" to "B" 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 Rating
Definitions
Aaa-Bonds which are rated "Aaa" are judged to be of the best
quality. They carry the smallest degree of investment risk and
are generally referred to as "gilt edged." Interest payments
are protected by a large or by an exceptionally stable margin
and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of
such issues.
Aa-Bonds which are rated "Aa" are judged to be of high quality
by all standards. Together with the "Aaa" group they comprise
what are generally known as high grade bonds. They are rated
lower than the best bonds because margins of protection may
not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may
be other elements present which make the long-term risks
appear somewhat larger than 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.
Baa-Bonds which are rated "Baa" are considered as medium grade
obligations, i.e., they are neither highly protected nor
poorly secured. Interest payments and principal security
appear adequate for the present but certain protective
elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack
outstanding investment characteristics and in fact have
speculative characteristics as well.
Ba-Bonds which are "Ba" are judged to have speculative
elements; their future cannot be considered as well-assured.
Often the protection of interest and principal payments may be
very moderate and thereby not well safeguarded during both
good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B-Bonds which are rated "B" generally lack characteristics of
the desirable investment. Assurance of interest and principal
payments or of maintenance of other terms of the contract over
any long period of time may be small.
NR-Not rated by Moody's.
Moody's applies numerical modifiers, 1, 2 and 3 in each
generic rating classification from Aa through B in its
corporate or municipal bond rating system. The modifier 1
indicates that the security ranks in the higher end of its
generic rating category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates that the issue ranks in
the lower end of its generic rating category.
Fitch Investors Service, Inc., Investment Grade Rating
Definitions
AAA-Bonds considered to be investment grade and of the highest
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.
BBB-Bonds considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay
interest and repay principal is considered to be adequate.
Adverse changes in economic conditions and circumstances,
however, are more likely to have adverse impact on these
bonds, and therefore impair timely payment. The likelihood
that the ratings of these bonds will fall below investment
grade is higher than for bonds with higher ratings.
BB-Bonds are considered speculative. The obligor's ability to
pay interest and repay principal may be affected over time by
adverse economic changes. However, business and financial
alternatives can be identified which could assist the obligor
in satisfying its debt service requirements.
B-Bonds are considered highly speculative. While bonds in this
class are currently meeting debt service requirements, the
probability of continued timely payment of principal and
interest reflects the obligor's limited margin of safety and
the need for reasonable business and economic activity
throughout the life of the issue.
NR-NR indicates that Fitch does not rate the specific issue.
Plus (+) or Minus (-): Plus and minus signs are used with a
rating symbol to indicate the relative position of a credit
within the rating category. Plus and minus signs, however, are
not used in the AAA category.
Standard & Poor's Ratings Group Municipal Note Rating
Definitions
SP-1-Very strong or strong capacity to pay principal and
interest. Those issues determined to possess overwhelming
safety characteristics will be given a plus (+) designation.
SP-2-Satisfactory capacity to pay principal and interest.
Moody's Investors Service, Inc. Short-Term Loan Rating
Definitions
MIG1/VMIG1-This designation denotes best quality. There is
present strong protection by established cash flows, superior
liquidity support or demonstrated broadbased access to the
market for refinancing.
MIG2/VMIG2-This designation denotes high quality. Margins of
protection are ample although not so large as in the preceding
group.
Fitch Investors Service, Inc., Short-Term Debt Rating
Definitions
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 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.
Standard & Poor's Ratings Group Commercial Paper Rating
Definitions
A-1-This highest category indicates that the degree of safety
regarding timely payment is strong. Those issues determined to
possess extremely strong safety characteristics are denoted
with a plus (+) sign designation.
A-2-Capacity for timely payment on issues with this
designation is satisfactory. However, the relative degree of
safety is not as high for issues designated A-1.
Moody's Investors Service, Inc., Commercial Paper Rating
Definitions
Prime-1-Issuers rated Prime-1 (or 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:
Leading market positions in well established industries;
High rates of return on funds employed;
Conservative capitalization structures with moderate reliance
on debt and ample asset protection;
Broad margins in 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.
Prime-2-Issuers rated Prime-2 (or related supporting
institutions) have a strong capacity for repayment of short-
term promissory obligations. This will normally be evidenced
by many of the characteristics cited above but to a lesser
degree. Earnings trends and coverage ratios, while sound, will
be more subject to variation. Capitalization characteristics,
while still appropriate, may be more affected by external
conditions. Ample alternate liquidity is maintained.
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[LOGO]
SHAWMUT
MONEY MARKET FUNDS
PROSPECTUS
INVESTMENT SHARES
PRIME MONEY MARKET
CONNECTICUT MUNICIPAL MONEY MARKET
MASSACHUSETTS MUNICIPAL MONEY MARKET
DECEMBER 31, 1994
SHAWMUT PRIME MONEY MARKET FUND
THE SHAWMUT MONEY MARKET FUNDS SHAWMUT CONNECTICUT MUNICIPAL MONEY
MARKET FUND
SHAWMUT MASSACHUSETTS MUNICIPAL MONEY
MARKET FUND
INVESTMENT SHARES--COMBINED PROSPECTUS
The shares ("Shares") offered by this prospectus represent interests in
Investment Shares of the money market portfolios (collectively, the "Money
Market Funds" or individually, as appropriate in context, the "Fund") of The
Shawmut Funds (the "Trust"), an open-end management investment company (a
mutual fund). In addition to the Money Market Funds, the Trust consists of the
following separate investment portfolios, each having distinct investment
objectives and policies:
<TABLE>
<S> <C>
INCOME FUNDS EQUITY FUNDS
Shawmut Limited Term Income Fund Shawmut Growth and Income Equity Fund
Shawmut Intermediate Government Income Fund Shawmut Growth Equity Fund
Shawmut Fixed Income Fund Shawmut Small Capitalization Equity Fund
Shawmut Connecticut Intermediate Municipal Shawmut Quantitative Equity Fund
Income Fund
Shawmut Massachusetts Intermediate Municipal
Income Fund
</TABLE>
This combined prospectus contains the information you should read and know
before you invest in the Money Market Funds. Keep this prospectus for future
reference. The Money Market Funds have also filed a Combined Statement of
Additional Information for Trust Shares and Investment Shares dated December
31, 1994, with the Securities and Exchange Commission. The information
contained in the Combined Statement of Additional Information is incorporated
by reference into this prospectus. You may request a copy of the Combined
Statement of Additional Information free of charge, obtain other information,
or make inquiries about the Money Market Funds by writing or calling the
Trust.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
EACH OF THE MONEY MARKT FUNDS ATTEMPTS TO MAINTAIN A STABLE NET ASSET VALUE OF
$1.00 PER SHARE; THERE CAN BE NO ASSURANCE THAT EACH OF THE MONEY MARKET FUNDS
WILL BE ABLE TO DO SO.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF
SHAWMUT BANK, ARE NOT ENDORSED OR GUARANTEED BY SHAWMUT BANK, AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE
BOARD OR ANY OTHER GOVERNMENT AGENCY.
INVESTMENT SHARES OF THE SHAWMUT FUNDS ARE AVAILABLE THROUGH LICENSED
REPRESENTATIVES OF SHAWMUT BROKERAGE, INC., OR OTHER BROKERS, MEMBERS
NASD/SIPC. SHAWMUT BROKERAGE, INC. IS AN AFFILIATE OF SHAWMUT BANK.
Prospectus dated December 31, 1994
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
SYNOPSIS..................................................................... 2
- --------------------------------------------------------------------------------
EXPENSE SUMMARY.............................................................. 3
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS......................................................... 4
- --------------------------------------------------------------------------------
GENERAL INFORMATION.......................................................... 5
- --------------------------------------------------------------------------------
THE SHAWMUT PORTFOLIOS....................................................... 5
- --------------------------------------------------------------------------------
OBJECTIVES AND POLICIES...................................................... 5
- --------------------------------------------------------------------------------
INVESTMENTS, STRATEGIES, AND RISKS........................................... 8
- --------------------------------------------------------------------------------
ADMINISTRATION............................................................... 13
- --------------------------------------------------------------------------------
NET ASSET VALUE.............................................................. 16
- --------------------------------------------------------------------------------
INVESTING IN SHARES.......................................................... 16
- --------------------------------------------------------------------------------
EXCHANGE PRIVILEGE........................................................... 18
- --------------------------------------------------------------------------------
REDEEMING SHARES............................................................. 19
- --------------------------------------------------------------------------------
SHAREHOLDER INFORMATION...................................................... 21
- --------------------------------------------------------------------------------
EFFECT OF BANKING LAWS....................................................... 22
- --------------------------------------------------------------------------------
TAX INFORMATION.............................................................. 22
- --------------------------------------------------------------------------------
OTHER CLASSES OF SHARES...................................................... 24
- --------------------------------------------------------------------------------
PERFORMANCE INFORMATION...................................................... 24
- --------------------------------------------------------------------------------
SYNOPSIS
INVESTMENT OBJECTIVES
The Shawmut Funds offer you a convenient, affordable way to participate in
separate, professionally managed portfolios of securities. This prospectus
relates only to the Money Market Funds of the Trust.
MONEY MARKET FUNDS
SHAWMUT PRIME MONEY MARKET FUND
("Prime Money Market Fund") seeks current income, consistent with stability of
principal and liquidity, by investing primarily in a diversified portfolio of
money market instruments maturing in thirteen months or less.
SHAWMUT CONNECTICUT MUNICIPAL MONEY MARKET FUND
("Connecticut Municipal Money Market Fund") seeks current income which is
exempt from federal regular income tax and Connecticut state income tax on
individuals, trusts, and estates (the "CSIT"), consistent with stability of
principal and liquidity, by investing primarily in short-term Connecticut
municipal securities, including securities of states, territories, and
possessions of the United States which are not issued by or on behalf of
Connecticut or its political subdivisions and financing authorities, but which
are exempt from CSIT.
SHAWMUT MASSACHUSETTS MUNICIPAL MONEY MARKET FUND
("Massachusetts Municipal Money Market Fund") seeks current income which is
exempt from federal regular income tax and income taxes imposed by the
Commonwealth of Massachusetts, consistent with stability of principal and
liquidity, by investing primarily in short-term Massachusetts municipal
securities, including securities of states, territories, and possessions of the
United States which are not issued by or on behalf of Massachusetts or its
political subdivisions and financing authorities, but which are exempt from
income taxes imposed by the Commonwealth of Massachusetts.
BUYING SHARES
A minimum initial investment of $2,500 may be required. Subsequent investments
must be in amounts of at least $100, as described in this prospectus in the
section entitled "Minimum Investment Required."
FUND MANAGEMENT
The Money Market Funds' investment adviser is Shawmut Bank, N.A., which makes
investment decisions for the Money Market Funds.
SHAREHOLDER SERVICES
When you become a shareholder, you can easily obtain information about your
account by calling 1-800-SHAWMUT.
THE SHAWMUT MONEY MARKET FUNDS
EXPENSE SUMMARY Investment Shares
<TABLE>
<CAPTION>
PORTFOLIOS
CONNECTICUT MASSACHUSETTS
PRIME MUNICIPAL MUNICIPAL
MONEY MONEY MONEY
MARKET FUND MARKET FUND+ MARKET FUND*+
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) None None None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price) None None None
Contingent Deferred Sales Charge (as a percentage of original
purchase price or redemption proceeds, as applicable) None None None
Redemption Fee (as a percentage of amount redeemed,
if applicable) None None None
Exchange Fee None None None
ANNUAL INVESTMENT SHARES OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waivers)(1) 0.29% 0.42% 0.42%
12b-1 Fees(2) 0.25% 0.25% 0.00%
Total Other Expenses (after waivers and reimbursements)(3) 0.14% 0.11% 0.11%
Total Investment Shares Operating Expenses (after waivers
and reimbursements)(4) 0.68% 0.78% 0.53%
</TABLE>
(1) The management fee has been reduced to reflect the voluntary waiver by the
investment adviser. The adviser can terminate this anticipated voluntary
waiver at any time at its sole discretion. The maximum management fee is
0.50%.
(2) The 12b-1 fee has been reduced to reflect the voluntary waiver by the
distributor. Both the Prime Money Market Fund and Connecticut Municipal
Money Market Fund can pay up to 0.50% of the average daily net assets of
Investment Shares as a 12b-1 fee to the distributor. As of date of this
prospectus, the Massachusetts Municipal Money Market Fund is not paying or
accruing 12b-1 fees. The Massachusetts Municipal Money Market Fund does not
intend to accrue or pay 12b-1 fees until either a separate class of shares
has been created for certain fiduciary investors or a determination is made
that such investors will be subject to the 12b-1 fees. The Massachusetts
Municipal Money Market Fund can pay up to 0.50% of the average daily net
assets as a 12b-1 fee to the distributor.
(3) Other expenses have been reduced to reflect the voluntary waiver by the
custodian for all funds; the voluntary reimbursement by the adviser for the
Massachusetts Municipal Money Market Fund; and the voluntary waiver by the
administrator and reimbursement by the adviser for the Prime Money Market
Fund and the Connecticut Municipal Money Market Fund.
(4) Absent the voluntary waivers and reimbursements explained in the above
footnotes, the Investment Shares Operating Expenses are 1.22% for the Prime
Money Market Fund; 1.50% for the Connecticut Municipal Money Market Fund;
and 1.21% for the Massachusetts Municipal Money Market Fund.
* Massachusetts Municipal Money Market Fund currently sells its shares without
class designation. Purchasers of either the Trust Shares or Investment
Shares of the other Shawmut Funds may purchase shares of Massachusetts
Municipal Money Market Fund.
+ As of December 1, 1994, the Management Fees (after waivers) are 0.32% and
0.15% for the Connecticut Municipal Money Market Fund and Massachusetts
Municipal Money Market Fund, respectively. The Total Investment Shares
Operating Expenses are 0.56%, excluding 12b-1 fees for the Connecticut/
Massachusetts Municipal Money Market Funds.
The purpose of this table is to assist an investor in understanding the various
costs and expenses that a shareholder of Investment Shares will bear, either
directly or indirectly. For more complete descriptions of the various costs and
expenses, see "Administration" and "Investing in Shares." Wire-transferred
redemptions of less than $5,000 may be subject to additional fees.
EXAMPLE
You would pay the following expenses on a $1,000 investment assuming (1) 5%
annual return and (2) redemption at the end of each time period. As noted in the
table above, the Money Market Funds charge no contingent deferred sales charge.
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Prime Money Market Fund........................................................ $7 $22 $38 $85
Connecticut Municipal Money Market Fund........................................ $8 $25 $43 $97
Massachusetts Municipal Money Market Fund...................................... $5 $17 $30 $66
</TABLE>
THE ABOVE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
The information set forth in the foregoing table and example relates only to
Investment Shares of the Money Market Funds. Prime Money Market Fund and
Connecticut Municipal Money Market Fund also offer another class of shares
called Trust Shares. Trust Shares and Investment Shares are subject to certain
of the same expenses; however, Investment Shares are subject to a 12b-1 fee of
up to .50 of 1% of average net assets. See "Other Classes of Shares."
FINANCIAL HIGHLIGHTS THE SHAWMUT MONEY MARKET FUNDS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
The following table has been audited by Price Waterhouse LLP, the Money Market
Funds' independent accountants whose report thereon dated December 16, 1994, is
included in the Annual Report of The Shawmut Funds for the fiscal year ended
October 31, 1994, which is incorporated by reference into the Statement of
Additional Information. This table should be read in conjunction with the Money
Market Funds' financial statements and notes thereto, which may be obtained
from the Money Market Funds.
<TABLE>
<CAPTION>
DIVIDENDS
TO NET ASSETS,
NET ASSET SHAREHOLDERS NET ASSET EXPENSE END OF
YEAR ENDED VALUE, NET FROM NET VALUE, NET WAIVER/ PERIOD
OCTOBER BEGINNING INVESTMENT INVESTMENT END OF TOTAL INVESTMENT REIMBURSEMENT (000
31, OF PERIOD INCOME INCOME PERIOD RETURN+ EXPENSES INCOME (B) OMITTED)
<CAPTION>
INVESTMENT SHARES
PRIME MONEY MARKET FUND
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1993* $1.00 0.02 (0.02) $1.00 1.73% 0.85%(a) 2.36%(a) 0.37%(a) $ 28,758
1994 $1.00 0.03 (0.03) $1.00 3.28% 0.68% 3.33% 0.54% $156,192
<CAPTION>
CONNECTICUT MUNICIPAL MONEY MARKET FUND
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1993** $1.00 0.001 (0.001) $1.00 0.14% 0.36%(a) 2.12%(a) 5.46%(a) $ 6,582
1994 $1.00 0.02 (0.02) $1.00 1.83% 0.78% 1.99% 0.72% $ 80,663
<CAPTION>
MASSACHUSETTS MUNICIPAL MONEY MARKET FUND++
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1993***** $1.00 0.001 (0.001) $1.00 0.12% 0.11%(a) 2.75%(a) 35.31%(a) $ 1,237
1994 $1.00 0.02 (0.02) $1.00 1.99% 0.53% 2.00% 0.68% $ 31,516
<CAPTION>
TRUST SHARES
PRIME MONEY MARKET FUND
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1993*** $1.00 0.02 (0.02) $1.00 2.41% 0.58%(a) 2.71%(a) 0.12%(a) $257,851
1994 $1.00 0.03 (0.03) $1.00 3.54% 0.43% 3.58% 0.29% $499,319
<CAPTION>
CONNECTICUT MUNICIPAL MONEY MARKET FUND
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1994**** $1.00 0.02 (0.02) $1.00 2.08% 0.53%(a) 2.24%(a) 0.47%(a) $ 34,354
<CAPTION>
MASSACHUSETTS MUNICIPAL MONEY MARKET FUND++
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1993***** $1.00 0.001 (0.001) $1.00 0.12% 0.11%(a) 2.75%(a) 35.31%(a) $ 1,237
1994 $1.00 0.02 (0.02) $1.00 1.99% 0.53% 2.00% 0.68% $ 31,516
</TABLE>
* For the period from February 12, 1993 (date of initial public investment)
to October 31, 1993.
** For the period from October 4, 1993 (date of initial public investment)
to October 31, 1993.
*** For the period from December 14, 1992 (date of initial public investment)
to October 31, 1993.
**** For the period from December 16, 1993 (date of initial public
investment) to October 31, 1994.
***** For the period from October 5, 1993 (date of initial public investment)
to October 31, 1993.
+ Based on net asset value which does not reflect the sales load or
contingent deferred sales charge, if applicable.
++ Massachusetts Municipal Money Market Fund currently sells its shares
without class designation.
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
GENERAL INFORMATION
The Trust was established as a Massachusetts business trust under a
Declaration of Trust dated July 16, 1992. The Declaration of Trust permits the
Trust to offer separate series of shares representing interests in separate
portfolios of securities. The shares in any one portfolio may be offered in
separate classes. As of the date of this prospectus, the Board of Trustees
(the "Trustees") has established two classes of shares of Connecticut
Municipal Money Market Fund and Prime Money Market Fund, known as Trust Shares
and Investment Shares. This prospectus relates only to Investment Shares of
Connecticut Municipal Money Market Fund and Prime Money Market Fund, and to
the Shares of Massachusetts Municipal Money Market Fund. Investment Shares are
sold primarily to financial institutions that rely upon the distribution
services provided by the distributor in the marketing of Investment Shares, as
well as to retail customers of such institutions.
A minimum initial investment of $2,500 may be required. Subsequent investments
must be in amounts of at least $100, as described in this prospectus in the
section entitled "Minimum Investment Required" or $50 for participants in the
Systematic Investment Program or retirement plan accounts. Investment Shares
are sold at net asset value and are redeemed at net asset value without a
sales load imposed by the Money Market Funds.
THE SHAWMUT PORTFOLIOS
The shareholders of the Money Market Funds are shareholders of The Shawmut
Funds, which currently consist of Shawmut Connecticut Intermediate Municipal
Income Fund, Shawmut Connecticut Municipal Money Market Fund, Shawmut Fixed
Income Fund, Shawmut Growth and Income Equity Fund, Shawmut Growth Equity
Fund, Shawmut Intermediate Government Income Fund, Shawmut Limited Term Income
Fund, Shawmut Massachusetts Intermediate Municipal Income Fund, Shawmut
Massachusetts Municipal Money Market Fund, Shawmut Prime Money Market Fund,
Shawmut Quantitative Equity Fund, and Shawmut Small Capitalization Equity
Fund. Shareholders in the Money Market Funds have easy access to the other
portfolios of The Shawmut Funds through an exchange program. The Shawmut Funds
are advised by Shawmut Bank, N.A., and distributed by Federated Securities
Corp.
OBJECTIVES AND POLICIES
PRIME MONEY MARKET FUND
INVESTMENT OBJECTIVE
The investment objective of the Prime Money Market Fund is to provide current
income consistent with stability of principal and liquidity. The investment
objective cannot be changed without the approval of shareholders. While there
is no assurance that the Prime Money Market Fund will achieve its investment
objective, it endeavors to do so by following the investment policies described
in this prospectus.
INVESTMENT POLICIES
THE PRIME MONEY MARKET FUND PURSUES ITS INVESTMENT OBJECTIVE BY INVESTING
PRIMARILY IN A DIVERSIFIED PORTFOLIO OF MONEY MARKET INSTRUMENTS MATURING IN
THIRTEEN MONTHS OR LESS.
Unless indicated otherwise, the investment policies set forth in this
prospectus may be changed by the Trustees without the approval of shareholders.
Shareholders will be notified before any material change in these investment
policies becomes effective. The average maturity of these securities, computed
on a dollar-weighted basis, will be 90 days or less.
ACCEPTABLE INVESTMENTS
The Prime Money Market Fund invests in eligible quality money market
instruments that are either rated in one of the two highest short-term rating
categories by one or more nationally recognized statistical rating
organizations ("NRSROs") or are of comparable quality to securities having such
ratings. Examples of these instruments include, but are not limited to:
.. domestic issues of corporate debt obligations, including notes, bonds, and
debentures;
.. commercial paper, including eurodollar commercial paper ("Europaper");
.. certificates of deposit, demand and time deposits, and bankers' acceptances
of domestic banks and other deposit institutions ("Bank Instruments");
.. short-term credit facilities, such as demand notes;
.. obligations issued or guaranteed as to payment of principal and interest
by the U.S. government or one of its agencies or instrumentalities
("Government Securities"); and
.. repurchase agreements.
The Prime Money Market Fund invests only in instruments denominated and
payable in U.S. dollars.
CONNECTICUT MUNICIPAL MONEY MARKET FUND
INVESTMENT OBJECTIVE
The investment objective of the Connecticut Municipal Money Market Fund is to
provide current income exempt from federal regular income tax and the CSIT,
consistent with stability of principal and liquidity. The investment objective
cannot be changed without the approval of shareholders. While there is no
assurance that the Connecticut Municipal Money Market Fund will achieve its
investment objective, it endeavors to do so by following the investment
policies described in this prospectus.
INVESTMENT POLICIES
THE CONNECTICUT MUNICIPAL MONEY MARKET FUND PURSUES ITS INVESTMENT OBJECTIVE BY
INVESTING IN A PORTFOLIO OF CONNECTICUT MUNICIPAL SECURITIES (AS DEFINED BELOW)
WITH REMAINING MATURITIES OF THIRTEEN MONTHS OR LESS AT THE TIME OF PURCHASE BY
THE CONNECTICUT MUNICIPAL MONEY MARKET FUND.
Unless indicated otherwise, the investment policies described in this
prospectus may be changed by the Trustees without the approval of shareholders.
Shareholders will be notified before any material changes in these policies
become effective. As a matter of investment policy which cannot be changed
without approval of shareholders, the Connecticut Municipal Money Market Fund
invests its assets so that at least 80% of its annual interest income is exempt
from federal regular income tax or at least 80% of the total value of its
assets are invested in obligations the interest income from which is exempt
from federal regular income tax. The average maturity of the securities in the
Connecticut Municipal Money Market Fund's portfolio, computed on a
dollar-weighted basis, will be 90 days or less.
ACCEPTABLE INVESTMENTS
Under normal circumstances, the Connecticut Municipal Money Market Fund will
invest its assets so that at least 65% of the value of its assets will be
invested in debt obligations issued by or on behalf of the State of Connecticut
and its political subdivisions and financing authorities, and obligations of
other states, territories and possessions of the United States, including the
District of Columbia, and any political subdivision or financing authority of
any of these, the interest
income from which is, in the opinion of qualified legal counsel, exempt from
federal regular income tax and CSIT ("Connecticut Municipal Securities").
Examples of Connecticut Municipal Securities include, but are not limited to:
.. municipal commercial paper and other short-term notes;
.. variable rate demand notes;
.. municipal bonds (including bonds having remaining maturities of less than
thirteen months without demand features);
.. municipal leases, including certificates of participation in leases;
.. tender option bonds; and
.. participation, trust, and partnership interests in any of the foregoing
obligations.
MASSACHUSETTS MUNICIPAL MONEY MARKET FUND
INVESTMENT OBJECTIVE
The investment objective of the Massachusetts Municipal Money Market Fund is
to provide current income exempt from federal regular income tax and the
income taxes imposed by the Commonwealth of Massachusetts, consistent with
stability of principal and liquidity. The investment objective cannot be
changed without the approval of shareholders. While there is no assurance that
the Massachusetts Municipal Money Market Fund will achieve its investment
objective, it endeavors to do so by following the investment policies
described in this prospectus.
INVESTMENT POLICIES
THE MASSACHUSETTS MUNICIPAL MONEY MARKET FUND PURSUES ITS INVESTMENT OBJECTIVE
BY INVESTING IN A PORTFOLIO OF MASSACHUSETTS MUNICIPAL SECURITIES (AS DEFINED
BELOW) WITH REMAINING MATURITIES OF THIRTEEN MONTHS OR LESS AT THE TIME OF
PURCHASE BY THE MASSACHUSETTS MUNICIPAL MONEY MARKET FUND.
Unless indicated otherwise, the investment policies described in this
prospectus may be changed by the Trustees without the approval of
shareholders. Shareholders will be notified before any material changes in
these policies become effective. As a matter of investment policy which cannot
be changed without approval of shareholders, the Massachusetts Municipal Money
Market Fund invests its assets so that at least 80% of its annual interest
income is exempt from federal regular income tax or at least 80% of the total
value of its assets are invested in obligations the interest income from which
is exempt from federal regular income tax. The average maturity of the
securities in the Massachusetts Municipal Money Market Fund's portfolio,
computed on a dollar-weighted basis, will be 90 days or less.
ACCEPTABLE INVESTMENTS
Under normal circumstances, the Massachusetts Municipal Money Market Fund will
invest its assets so that at least 65% of the value of its assets will be
invested in debt obligations issued by or on behalf of the Commonwealth of
Massachusetts and its political subdivisions and financing authorities, and
obligations of other states, territories and possessions of the United States,
including the District of Columbia, and any political subdivision or financing
authority of any of these, the interest income from which is, in the opinion
of qualified legal counsel, exempt from federal regular income tax and income
taxes imposed by the Commonwealth of Massachusetts imposed upon non-corporate
taxpayers ("Massachusetts Municipal Securities"). Examples of Massachusetts
Municipal Securities include, but are not limited to:
.. municipal commercial paper and other short-term notes;
.. variable rate demand notes;
.. municipal bonds (including bonds having remaining maturities of less than
thirteen months without demand features);
.. municipal leases, including certificates of participation in leases;
.. tender option bonds; and
.. participation, trust, and partnership interests in any of the foregoing
obligations.
INVESTMENTS, STRATEGIES, AND RISKS
VARIABLE RATE DEMAND NOTES. Variable rate demand notes are long-term
securities (Municipal Securities for the Connecticut/Massachusetts Municipal
Money Market Funds and long-term corporate debt instruments for the Prime
Money Market Fund) that have variable or floating interest rates and provide
the Money Market Funds with the right to tender the security for repurchase at
its stated principal amount plus accrued interest. Such securities typically
bear interest at a rate that is intended to cause the securities to trade at
par. The interest rate may float or be adjusted at regular intervals (ranging
from daily to annually), and is normally based on an applicable interest index
or another published interest rate or interest rate index. Most variable rate
demand notes allow the Money Market Funds to demand the repurchase of the
security on not more than seven days prior notice. Other notes only permit the
Money Market Funds to tender the security at the time of each interest rate
adjustment or at other fixed intervals. See "Demand Features." The Money
Market Funds treat variable rate demand notes as maturing on the later of the
date of the next interest rate adjustment or the date on which the Money
Market Funds may next tender the security for repurchase.
RATINGS. The Connecticut and Massachusetts Municipal Securities (collectively
referred to as "Municipal Securities"), in which the Connecticut/Massachusetts
Municipal Money Market Funds invest must either be rated in one of the two
highest short-term rating categories by one or more NRSROs or be of comparable
quality to securities having such ratings. NRSRO's two highest rating
categories are determined without regard for sub-categories and gradations.
For example, securities rated SP-1+, SP-1, or SP-2 by Standard & Poor's
Ratings Group ("S&P"), MIG-1 or MIG-2 by Moody's Investors Service, Inc.
("Moody's"), or FIN-1+, FIN-1, and FIN-2 by Fitch Investors Service, Inc.
("Fitch") are all considered rated in one of the two highest short-term rating
categories. The Connecticut/Massachusetts Municipal Money Market Funds will
follow applicable regulations in determining whether a security rated by more
than one NRSRO can be treated as being in one of the two highest short-term
rating categories. See "Regulatory Compliance."
If a Municipal Security has not been rated by a NRSRO, the
Connecticut/Massachusetts Municipal Money Market Funds' investment adviser
will acquire the security only if it determines that the security is of
comparable quality to securities that have received the requisite ratings. In
this regard, the adviser will generally treat Municipal Securities as eligible
portfolio securities if the issuer has received long-term bond ratings within
the two highest rating categories by a NRSRO with respect to other bonds
issued. The adviser also considers other relevant information in its
evaluation of unrated short-term securities.
For the Prime Money Market Fund's securities, NRSRO's two highest rating
categories are also determined without regard for sub-categories and
gradations. For example, the Prime Money Market Fund's securities rated A-1+,
A-1, or A-2 by S&P, Prime-1 or Prime-2 by Moody's, or F-1 (+ or -) or F-2 (+
or -) by Fitch are all considered rated in one of the two highest short-term
rating categories. The Prime Money Market Fund will limit its investments in
securities rated in the second highest short-term rating category, e.g., A-2
by S&P, Prime 2 by Moody's or F-2 (+ or -) by Fitch, to not more than 5% of
its total assets, with not more than 1% invested in the securities of any one
issuer. The Prime Money Market Fund will follow applicable regulations in
determining whether a security rated by more than one NRSRO can be treated as
being in the one of the two highest short-term rating categories. See
"Regulatory Compliance."
CREDIT ENHANCEMENT. Certain of the Money Market Funds' acceptable investments
may have been credit enhanced by a guaranty, letter of credit, or insurance.
The Money Market Funds typically evaluate the credit quality and ratings of
credit enhanced securities based upon the financial condition and ratings of
the party providing the credit enhancement (the "credit enhancer"), rather
than the issuer. Generally, the Prime Money Market Fund will not treat credit
enhanced
securities as having been issued by the credit enhancer for diversification
purposes. However, the Connecticut/Massachusetts Municipal Money Market Funds
will not treat credit enhanced securities as having been issued by the credit
enhancer for diversification purposes, unless the Connecticut/Massachusetts
Municipal Money Market Funds have invested more than 10% of their respective
assets in securities issued, guaranteed, or otherwise credit enhanced by the
credit enhancer, in which case the securities will be treated as having been
issued both by the issuer and the credit enhancer. The bankruptcy,
receivership, or default of the credit enhancer may adversely affect the
quality and marketability of the underlying security.
The Connecticut/Massachusetts Municipal Money Market Funds may have more than
25% of their respective total assets invested in securities credit enhanced by
banks or insurance companies.
DEMAND FEATURES. The Money Market Funds may acquire securities that are
subject to puts and standby commitments ("demand features") to purchase the
securities at their principal amount (usually with accrued interest) within a
fixed period (usually seven days) following a demand by a Money Market Fund.
The demand feature may be issued by the issuer of the underlying securities, a
dealer in the securities, or by another third party, and may not be
transferred separately from the underlying security. A Money Market Fund uses
these arrangements to provide liquidity and not to protect against changes in
the market value of the underlying securities. The bankruptcy, receivership,
or default by the issuer of the demand feature, or a default on the underlying
security or other event that terminates the demand feature before its
exercise, will adversely affect the liquidity of the underlying security.
Demand features that are exercisable even after a payment default on the
underlying security may be treated as a form of credit enhancement.
RESTRICTED AND ILLIQUID SECURITIES. The Money Market Funds may invest in
restricted securities. Restricted securities are any securities in which a
Money Market Fund may otherwise invest pursuant to its investment objective
and policies but which are subject to restrictions on resale under federal
securities laws. Pursuant to criteria established by the Trustees, certain
restricted securities are considered liquid. To the extent restricted
securities are deemed to be illiquid, each Money Market Fund will limit their
purchase, together with other securities not considered to be liquid, to 10%
of its individual net assets.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Money Market Funds may
purchase securities on a when-issued or delayed delivery basis. These
transactions are arrangements in which the Money Market Funds purchase
securities with payment and delivery scheduled for a future time. The seller's
failure to complete these transactions may cause the Money Market Funds to
miss a price or yield considered to be advantageous. Settlement dates may be a
month or more after entering into these transactions, and the market values of
the securities purchased may vary from the purchase prices. Accordingly, the
Money Market Fund may pay more/less than the market value of the securities on
the settlement date.
The Money Market Funds may dispose of a commitment prior to settlement if the
adviser deems it appropriate to do so. In addition, the Money Market Funds may
enter into transactions to sell its purchase commitments to third parties at
current market values and simultaneously acquire other commitments to purchase
similar securities at later dates. The Money Market Funds may realize
short-term profits or losses upon the sale of such commitments.
TEMPORARY INVESTMENTS. In such proportions as, in the judgment of its
investment adviser, prevailing market conditions warrant, the Prime Money
Market Fund may, for temporary defensive purposes, invest in repurchase
agreements and other mutual funds.
From time to time on a temporary basis, when the investment adviser determines
that market conditions call for a temporary defensive posture, the
Connecticut/Massachusetts Municipal Money Market Funds may invest in
short-term non-Connecticut/Massachusetts (respectively) municipal tax-exempt
obligations or other taxable, temporary investments. All temporary investments
will satisfy the same credit quality standards as the
Connecticut/Massachusetts Municipal Money Market Funds' acceptable
investments. See "Ratings" above. Temporary investments include: investments
in other mutual funds; notes issued by or on behalf of municipal or corporate
issuers; marketable obligations issued or guaranteed
by the U.S. government, its agencies, or instrumentalities; other debt
securities; commercial paper; certificates of deposit of banks; and repurchase
agreements (arrangements in which the organization sells a Money Market Fund a
temporary investment and agrees at the time of sale to repurchase it at a
mutually agreed upon time and price).
Although the Connecticut/Massachusetts Municipal Money Market Funds are
permitted to make taxable, temporary investments, there is no current
intention of generating income subject to federal regular income tax, CSIT, or
income taxes imposed by the Commonwealth of Massachusetts, respectively.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES. The Money Market Funds
may invest in the securities of other investment companies but will not,
respectively, own more than 3% of the total outstanding voting stock of any
investment company, invest more than 5% of their respective total assets in
any one investment company, or invest more than 10% of their respective total
assets in investment companies in general. The Money Market Funds will invest
in other investment companies primarily for the purpose of investing
short-term cash which has not yet been invested in other portfolio
instruments. However, from time to time on a temporary basis, each of the
Money Market Funds may invest exclusively in one other investment company
managed similarly to the appropriate Fund. Shareholders should realize that
when one of the Money Market Funds invests in other investment companies,
certain fund expenses, such as custodian fees and administrative fees, may be
duplicated. The adviser will waive its investment advisory fee on assets
invested in securities of other investment companies.
The following investments and strategies apply only to the
CONNECTICUT/MASSACHUSETTS MUNICIPAL MONEY MARKET FUNDS:
MUNICIPAL LEASES. Municipal leases are obligations issued by state and local
governments or authorities to finance the acquisition of equipment and
facilities and may be considered to be illiquid. They may take the form of a
lease, an installment purchase contract, a conditional sales contract, or a
participation certificate in any of the above.
PARTICIPATION INTERESTS. The Connecticut/Massachusetts Municipal Money Market
Funds may purchase interests in Municipal Securities from financial
institutions such as commercial and investment banks, savings and loan
associations, and insurance companies. These interests may take the form of
participations, beneficial interests in a trust, partnership interests, or any
other form of indirect ownership that allows the Connecticut/Massachusetts
Municipal Money Market Funds to treat the income from the investment as exempt
from federal regular income tax. The Connecticut/Massachusetts Municipal Money
Market Funds invest in these participation interests in order to obtain credit
enhancement or demand features that would not be available through direct
ownership of the underlying Municipal Securities.
TENDER OPTION BONDS. The Connecticut/Massachusetts Municipal Money Market
Funds may purchase tender option bonds and similar securities. A tender option
bond generally has a long maturity and bears interest at a fixed rate
substantially higher than prevailing short-term tax-exempt rates, and is
coupled with an agreement by a third party, such as a bank, broker-dealer, or
other financial institution, pursuant to which such institution grants the
security holders the option, usually upon not more than seven days notice or
at periodic intervals, to tender their securities to the institution and
receive the face value of the security. In providing the option, the financial
institution receives a fee that reduces the fixed rate of the underlying bond
and results in the Connecticut/Massachusetts Municipal Money Market Funds
effectively receiving a demand obligation that bears interest at the
prevailing short-term tax exempt rate. The Connecticut/Massachusetts Municipal
Money Market Funds' adviser will monitor, on an ongoing basis, the
creditworthiness of the issuer of the tender option bond, the financial
institution providing the option, and any custodian holding the underlying
long-term bond. The bankruptcy, receivership, or default of any of the parties
to the tender option bond will adversely affect the quality and marketability
of the security.
NON-DIVERSIFICATION. The Connecticut/Massachusetts Municipal Money Market
Funds are non-diversified investment portfolios. As such, there is no limit on
the percentage of assets which can be invested in any single issuer. An
investment in the Connecticut/Massachusetts Municipal Money Market Fund,
therefore, will entail greater risk than would exist in a diversified
investment portfolio because the higher percentage of investments among fewer
issuers may
result in greater fluctuation in the total market value of the
Connecticut/Massachusetts Municipal Money Market Funds' portfolios. Any
economic, political, or regulatory developments affecting the value of the
securities in the Connecticut/ Massachusetts Municipal Money Market Funds'
portfolios will have a greater impact on the total value of the portfolios
than would be the case if the portfolios were diversified among more issuers.
The Connecticut/Massachusetts Municipal Money Market Funds intend to comply
with Subchapter M of the Internal Revenue Code. This undertaking requires that
at the end of each quarter of the taxable year, with regard to at least 50% of
their respective total assets, no more than 5% of their respective total
assets are invested in the securities of a single issuer; beyond that, no more
than 25% of their respective total assets are invested in the securities of a
single issuer.
CONNECTICUT AND MASSACHUSETTS MUNICIPAL SECURITIES. Connecticut and
Massachusetts Municipal Securities are generally issued to finance public
works, such as airports, bridges, highways, housing, health-related entities,
transportation-related projects, educational programs, water and pollution
control, and sewer works. They are also issued to repay outstanding
obligations, to raise funds for general operating expenses, and to make loans
to other public institutions and facilities.
Connecticut and Massachusetts Municipal Securities include industrial
development bonds issued by or on behalf of public authorities to provide
financing aid to acquire sites or construct and equip facilities for privately
or publicly owned corporations. The availability of this financing encourages
these corporations to locate within the sponsoring communities and thereby
increases local employment.
The two principal classifications of Municipal Securities are "general
obligation" and "revenue" bonds. General obligation bonds are secured by the
issuer's pledge of its full faith and credit and taxing power for the payment
of principal and interest. Interest on and principal of revenue bonds,
however, are payable only from the revenue generated by the facility financed
by the bond or other specified sources of revenue. Revenue bonds do not
represent a pledge of credit or create any debt of or charge against the
general revenues of a municipality or public authority. Industrial development
bonds are typically classified as revenue bonds.
STANDBY COMMITMENTS. Some securities dealers are willing to sell Connecticut
and Massachusetts Municipal Securities to the Connecticut/Massachusetts
Municipal Money Market Funds accompanied by their commitments to repurchase
the Municipal Securities prior to maturity, at the Connecticut/Massachusetts
Municipal Money Market Funds' option, for the amortized cost of the Municipal
Securities at the time of repurchase. These arrangements are not used to
protect against changes in the market value of Municipal Securities. They
permit the Connecticut/Massachusetts Municipal Money Market Funds, however, to
remain fully invested and still provide liquidity to satisfy redemptions. The
cost of Connecticut or Massachusetts Municipal Securities accompanied by these
standby commitments could be greater than the cost of Municipal Securities
without such commitments. Standby commitments are not marketable or otherwise
assignable and have value only to the Connecticut/Massachusetts Municipal
Money Market Funds. The default or bankruptcy of a securities dealer giving
such a commitment would not affect the quality of the Connecticut or
Massachusetts Municipal Securities purchased. However, without a standby
commitment, these securities could be more difficult to sell. The
Connecticut/Massachusetts Municipal Money Market Funds enter into standby
commitments only with those dealers whose credit the investment adviser
believes to be of high quality.
CONNECTICUT AND MASSACHUSETTS INVESTMENT RISKS. Yields on Connecticut and
Massachusetts Municipal Securities depend on a variety of factors, including:
the general conditions of the short-term municipal note market and of the
municipal bond market; the size and maturity of the particular offering; the
maturity of the obligations; and the rating of the issue. Further, any adverse
economic conditions or developments affecting the State of Connecticut and the
Commonwealth of Massachusetts or their municipalities could impact the
Connecticut/Massachusetts Municipal Money Market Funds' portfolios. The
ability of the Connecticut/Massachusetts Municipal Money Market Funds to
achieve their investment objectives also depends on the continuing ability of
the issuers of Connecticut and Massachusetts Municipal
Securities and demand features, or the credit enhancers of either, to meet
their obligations for the payment of interest and principal when due.
Investing in Connecticut and Massachusetts Municipal Securities which meet the
Connecticut/Massachusetts Municipal Money Market Funds' quality standards may
not be possible if the State of Connecticut and the Commonwealth of
Massachusetts or their municipalities do not maintain their current credit
ratings. An expanded discussion of the current economic risks associated with
the purchase of Connecticut or Massachusetts Municipal Securities is contained
in the Combined Statement of Additional Information.
The following investments and strategies apply only to the PRIME MONEY MARKET
FUND:
REPURCHASE AGREEMENTS. The U.S. government securities and other securities in
which the Prime Money Market Fund invests may be purchased pursuant to
repurchase agreements. Repurchase agreements are arrangements in which banks,
broker/dealers, and other recognized financial institutions sell U.S.
government securities or other securities to the Prime Money Market Fund and
agree at the time of sale to repurchase them at a mutually agreed upon time
and price. To the extent that the original seller does not repurchase the
securities from the Prime Money Market Fund, the Prime Money Market Fund could
receive less than the repurchase price on any sale of such securities.
BANK INSTRUMENTS. The Prime Money Market Fund only invests in Bank
Instruments either issued by an institution having capital, surplus and
undivided profits over $100 million, or insured by the Bank Insurance Fund
("BIF") or the Savings Association Insurance Fund ("SAIF"). Bank Instruments
may include Eurodollar Certificates of Deposit ("ECDs"), Yankee Certificates
of Deposit ("Yankee CDs") and Eurodollar Time Deposits ("ETDs"). The Prime
Money Market Fund will treat securities credit enhanced with a bank's letter
of credit as Bank Instruments.
SHORT-TERM CREDIT FACILITIES. Demand notes are short-term borrowing
arrangements between a corporation and an institutional lender (such as the
Prime Money Market Fund) payable upon demand by either party. The notice
period for demand typically ranges from one to seven days, and the party may
demand full or partial payment. The Prime Money Market Fund may also enter
into, or acquire participations in, short-term revolving credit facilities
with corporate borrowers. Demand notes and other short-term credit
arrangements usually provide for floating or variable rates of interest.
INVESTMENT LIMITATIONS
THE MONEY MARKET FUNDS FOLLOW A NUMBER OF GUIDELINES IN MANAGING THEIR
PORTFOLIOS IN ORDER TO LIMIT INVESTMENT RISKS.
The following investment limitations apply only to CONNECTICUT/MASSACHUSETTS
MUNICIPAL MONEY MARKET FUNDS:
The Connecticut/Massachusetts Municipal Money Market Funds will not borrow
money directly or pledge securities except, under certain circumstances, they
may borrow up to one-third of the value of their respective total assets and
pledge up to 10% of the value of total assets to secure such borrowings.
The above investment limitation cannot be changed without shareholder
approval. The following limitation, however, can be changed by the Trustees
without shareholder approval. Shareholders will be notified before any
material change in this limitation becomes effective.
The Connecticut/Massachusetts Municipal Money Market Funds will not invest
more than 5% of their respective total assets in industrial development bonds
or other Municipal Securities when the payment of principal and interest is
the responsibility of companies (or guarantors, where applicable) with less
than three years of continuous operations, including the operation of any
predecessor.
The following investment limitations apply only to PRIME MONEY MARKET FUND:
The Prime Money Market Fund will not borrow money directly or pledge
securities except under certain circumstances. The Prime Money Market Fund may
borrow up to one-third of the value of its total assets either directly or
through reverse repurchase agreements and pledge up to 10% of the value of its
total assets to secure such borrowings.
The above investment limitation cannot be changed without shareholder
approval. The following limitation, however, can be changed by the Trustees
without shareholder approval. Shareholders will be notified before any
material change in this limitation becomes effective.
The Prime Money Market Fund will not invest more than 5% of the value of its
total assets in securities of issuers which have records of less than three
years of continuous operations, including the operation of any predecessor.
REGULATORY COMPLIANCE
The Money Market Funds may follow non-fundamental operational policies that
are more restrictive than their respective fundamental investment limitations,
as set forth in this prospectus and its Combined Statement of Additional
Information, in order to comply with applicable laws and regulations,
including the provisions of and regulations under the Investment Company Act
of 1940, as amended. In particular, the Money Market Funds will comply with
the various requirements of Rule 2a-7 which regulates money market mutual
funds. Each of the Money Market Funds will determine the effective maturity of
its respective 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 Money Market Funds may change these operational policies to reflect
changes in the laws and regulations without the approval of its shareholders.
ADMINISTRATION
MANAGEMENT OF THE SHAWMUT FUNDS
[/TABLE]
BOARD OF TRUSTEES
THE SHAWMUT FUNDS ARE MANAGED BY A BOARD OF TRUSTEES.
The Trustees are responsible for managing the Trust's business affairs and for
exercising all the Trust's powers except those reserved for the shareholders.
The Executive Committee of the Board of Trustees handles the Board's
responsibilities between meetings of the Board.
INVESTMENT ADVISER
PURSUANT TO AN INVESTMENT ADVISORY CONTRACT WITH THE TRUST, INVESTMENT
DECISIONS FOR THE MONEY MARKET FUNDS ARE MADE BY SHAWMUT BANK, N.A. (THE
"ADVISER"), SUBJECT TO DIRECTION BY THE TRUSTEES.
The Adviser continually conducts investment research and supervision for the
Money Market Funds and is responsible for the purchase or sale of portfolio
instruments, for which it receives an annual fee from the respective assets of
the Money Market Funds.
ADVISORY FEES
The Adviser receives an annual investment advisory fee equal to .50 of 1% of
each of the Money Market Funds' average daily net assets. The Adviser has
undertaken to waive a portion of its advisory fee, up to the amount of the
advisory fee, to reimburse each of the Money Market Funds for operating
expenses in excess of limitations established by certain states. The Adviser
may further voluntarily waive a portion of its fee or reimburse any of the
Money Market Funds for certain operating expenses. The Adviser can terminate
such voluntary waiver or reimbursement policy with any of the Money Market
Funds at any time at its sole discretion.
ADVISER'S BACKGROUND
SHAWMUT BANK, N.A., A NATIONAL BANKING ASSOCIATION, AND ITS AFFILIATES HAVE
MANAGED COMMINGLED FUNDS FOR OVER FIFTY YEARS. AS OF OCTOBER 31, 1994, SHAWMUT
NATIONAL CORPORATION, THROUGH ITS SUBSIDIARIES INCLUDING SHAWMUT BANK, N.A.,
MANAGED MORE THAN $15 BILLION IN TOTAL ASSETS. SHAWMUT BANK, N.A. HAS SERVED
AS AN ADVISER TO MUTUAL FUNDS SINCE THE INCEPTION OF THE SHAWMUT FUNDS ON
DECEMBER 1, 1992.
Shawmut Bank, N.A., a national banking association, along with Shawmut Bank
Connecticut, National Association and Shawmut Bank NH, are the principal
subsidiaries of Shawmut National Corporation, a super-regional bank holding
company formed on February 29, 1988, and based in southern New England.
Shawmut National Corporation serves consumers through its network of banking
offices with a full range of deposit and lending products, as well as
investment services. As part of their regular banking operations, Shawmut Bank
may make loans to public companies. Thus, it may be possible, from time to
time, for the Money Market Funds to hold or acquire the securities of issuers
which are also lending clients of Shawmut Bank. The lending relationship will
not be a factor in the selection of securities. The principal executive
offices of the investment adviser are located at One Federal Street, Boston,
Massachusetts 02211.
DISTRIBUTION OF INVESTMENT SHARES
FEDERATED SECURITIES CORP. IS THE PRINCIPAL DISTRIBUTOR FOR INVESTMENT SHARES.
Federated Securities Corp., Federated Investors Tower, Pittsburgh,
Pennsylvania 15222-3779, is a Pennsylvania corporation organized on November
14, 1969, and is the principal distributor for a number of investment
companies. Federated Securities Corp. is a subsidiary of Federated Investors.
DISTRIBUTION PLAN. Under the distribution plan adopted in accordance with
Investment Company Act Rule 12b-1 (the "Plan"), each of the Money Market Funds
will pay to the distributor an amount computed at an annual rate of up to .50
of 1% of the average daily net asset value of the Investment Shares of each of
the Money Market Funds, to finance any activity which is principally intended
to result in the sale of Investment Shares subject to the Plan.
The distributor may, from time to time and for such periods as it deems
appropriate, voluntarily reduce its compensation under the Plan.
The distributor may select financial institutions such as banks, fiduciaries,
custodians for public funds, investment advisers, and broker/dealers
("brokers") to provide distribution and/or administrative services as agents
for their clients or customers who own Investment Shares of the Money Market
Funds. Administrative services may include, but are not limited to, the
following functions: providing office space, equipment, telephone facilities,
and various clerical, supervisory, computer, and other personnel as necessary
or beneficial to establish and maintain shareholder accounts and records;
processing purchase and redemption transactions and automatic investments of
client account cash balances; answering routine client inquiries; assisting
clients in changing dividend options, account designations, and addresses; and
providing such other services as may reasonably be requested.
The distributor will pay financial institutions a fee based upon the
Investment Shares subject to the Plan and owned by their clients or customers.
The schedules of such fees and the basis upon which such fees will be paid
will be determined, from time to time, by the distributor.
The Plan is a "compensation" type plan. As such, the Money Market Funds make
no payments to the distributor except as described above. Therefore, the Money
Market Funds do not pay for unreimbursed expenses of the distributor,
including amounts expended by the distributor in excess of amounts received by
it from the Money Market Funds interest, carrying, or other financing charges
in connection with excess amounts expended, or the distributor's overhead
expenses. However, the distributor may be able to recover such amounts or may
earn a profit from future payments made by the Money Market Funds under the
Plan.
OTHER PAYMENTS TO FINANCIAL INSTITUTIONS.__The distributor may also pay
financial institutions a fee based on the average net asset value of shares of
their customers invested in a Money Market Fund for providing administrative
services. This fee is in addition to the amounts paid under the distribution
plan for administrative services, and, if paid, will be reimbursed by the
Adviser and not a Money Market Fund.
A Money Market Fund's investment adviser or its affiliates may also offer to
pay a fee from their own assets to financial institutions as financial
assistance for providing substantial marketing and sales support. The support
may include sponsoring sales, educational and training seminars for their
employees, providing sales literature, and engineering computer software
programs that emphasize the attributes of a Money Market Fund. Such assistance
will be predicated upon the amount of shares the dealer sells or may sell,
and/or upon the type and nature of sales or operational support furnished by
the financial institution. These payments will be made by a Money Market
Fund's investment adviser and will not be made from the assets of a Money
Market Fund.
The Glass-Steagall Act prohibits a depository institution (such as a
commercial bank or a savings and loan association) from being an underwriter
or distributor of most securities. In the event the Glass-Steagall Act is
deemed to prohibit depository institutions from acting in the administrative
capacities described above or should Congress relax current restrictions on
depository institutions, the Trustees will consider appropriate changes in the
services.
State securities laws governing the ability of depository institutions to act
as underwriters or distributors of securities may differ from interpretations
given to the Glass-Steagall Act and, therefore, banks and financial
institutions may be required to register as dealers pursuant to state law.
ADMINISTRATION OF THE MONEY MARKET FUNDS
ADMINISTRATIVE SERVICES. Federated Administrative Services ("FAS"), Federated
Investors Tower, Pittsburgh, Pennsylvania 15222-3779, a subsidiary of
Federated Investors, provides the Money Market Funds with certain
administrative personnel and services necessary to operate the Money Market
Funds, such as legal and accounting services. FAS provides these at an annual
rate as specified below:
<TABLE>
<CAPTION>
MAXIMUM AVERAGE AGGREGATED DAILY
ADMINISTRATIVE FEE NET ASSETS OF THE TRUST
<S> <C>
.150 of 1% First $250 million
.125 of 1% Next $250 million
.100 of 1% Next $250 million
.075 of 1% Over $750 million
</TABLE>
The administrative fee received by FAS during any fiscal year shall be at
least $50,000 for each of the Money Market Funds. FAS may voluntarily choose
to waive a portion of its fee.
CUSTODIAN. Shawmut Bank, N.A., One Federal Street, Boston, Massachusetts
02211, is custodian for the securities and cash of the Money Market Funds.
Under the Custodian Agreement, Shawmut Bank, N.A., holds the Money Market
Funds' portfolio securities in safekeeping and keeps all necessary records and
documents relating to its duties.
TRANSFER AGENT, DIVIDEND DISBURSING AGENT, AND PORTFOLIO ACCOUNTING
SERVICES. Federated Services Company, Federated Investors Tower, Pittsburgh,
Pennsylvania 15222-3779, is transfer agent and dividend disbursing agent for
the Money Market Funds. It also provides certain accounting and recordkeeping
services with respect to each of the Money Market Funds' portfolio
investments.
LEGAL COUNSEL. Legal counsel is provided by Houston, Houston & Donnelly, 2510
Centre City Tower, Pittsburgh, Pennsylvania 15222, and Dickstein, Shapiro &
Morin, L.L.P., 2101 L Street, N.W., Washington, DC 20037.
INDEPENDENT ACCOUNTANTS. The independent accountants for the Money Market
Funds are Price Waterhouse LLP, 160 Federal Street, Boston, Massachusetts
02110.
NET ASSET VALUE
THE TERM "NET ASSET VALUE" REFERS TO THE VALUE OF ONE MONEY MARKET FUND SHARE.
The Money Market Funds attempt to stabilize the net asset value of their
respective shares at $1.00. The net asset value per share is determined by
dividing the sum of the market value of all securities and other assets, less
liabilities, by the number of shares outstanding. The Money Market Funds cannot
guarantee that the net asset value of their respective shares will always
remain at $1.00 per share.
INVESTING IN SHARES
YOU CAN BUY INVESTMENT SHARES BY FEDERAL RESERVE WIRE, MAIL, OR TRANSFER, AS
EXPLAINED BELOW.
Shares of the Money Market Funds are sold by the distributor on days on which
the New York Stock Exchange and Federal Reserve Wire System are open for
business. Shares of the Money Market Funds may also be purchased in branches of
Shawmut Bank, N.A., Shawmut Bank Connecticut, National Association, Shawmut
Bank NH, and their affiliates (collectively, "Shawmut Bank"), from certain
brokers which have offices located in branches of Shawmut Bank under lease
agreements with Shawmut Bank. Offices of the brokers located in branches of
Shawmut Bank are open on days on which each of Shawmut Bank and the New York
Stock Exchange and Federal Reserve Wire System are open for business. Call
1-800-SHAWMUT for the name and telephone number of the broker located in the
Shawmut Bank branch nearest you. Texas residents must purchase, exchange, and
redeem Investment Shares through Federated Securities Corp. at 1-800-356-2805.
The Money Market Funds reserve the right to reject any purchase request.
THROUGH A BROKER. An investor may call a broker to receive information and to
place an order to purchase Investment Shares. Call 1-800-SHAWMUT to speak with
a broker or for referral to a broker serving your area. Orders placed through a
broker are considered received when payment is converted to federal funds and
the applicable Money Market Fund is notified of the purchase order. The
completion of the purchase transaction will generally occur within one business
day after a broker receives a purchase order. Purchase orders must be received
by a broker before 11:00 a.m. (Eastern time) and must be transmitted by a
broker to the applicable Money Market Fund before 12:00 noon (Eastern time) in
order for Investment Shares to be purchased at that day's public offering
price.
Payments must be made by either check, wire transfer of federal funds or
federal funds deposited into a deposit account established by a shareholder at
Shawmut Bank. Payment is normally made through a debit to the deposit account
no later than the business day following the conversion of a check into federal
funds. In addition, Investment Shares may be purchased through other brokers or
dealers who have sales agreements with the Money Market Funds' distributor.
DIRECTLY FROM THE MONEY MARKET FUNDS. An investor may place an order to
purchase Investment Shares directly from the Money Market Funds. To do so call
1-800-SHAWMUT to request a new account form. Once received complete and sign
the form; enclose a check made payable to Shawmut Connecticut Municipal Money
Market Fund, Shawmut Massachusetts Municipal Money Market Fund, Prime Money
Market Fund--Investment Shares (as appropriate); and mail to The Shawmut Funds,
c/o Transfer Agency, 1001 Liberty Avenue, Pittsburgh, Pennsylvania 15222-3779.
The order is considered received after the check is converted into federal
funds and the transfer agent establishes a shareholder account for the
investor. This is generally the next business day after the Fund receives the
check.
MINIMUM INVESTMENT REQUIRED
THE MINIMUM INITIAL INVESTMENT IS $2,500, OR $500 IN THE CASE OF RETIREMENT
PLAN ACCOUNTS.
The minimum initial investment in Investment Shares by an investor is $2,500,
or $500 in the case of retirement plan accounts. Subsequent investments by
participants in the Systematic Investment Program, as described in this
prospectus,
or by retirement plan accounts, must be in amounts of at least $50. Subsequent
investments by all other investors must be in amounts of at least $100. The
Money Market Funds may waive the initial minimum investment for employees of
Shawmut Bank and its affiliates, from time to time.
WHAT SHARES COST
INVESTMENT SHARES ARE SOLD AT THEIR NET ASSET VALUE NEXT DETERMINED AFTER AN
ORDER IS RECEIVED.
The net asset value is determined at 12:00 p.m. and 4:00 p.m. (Eastern time),
Monday through Friday, except on: (i) days on which there are not sufficient
changes in the value of a Money Market 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)
on the following holidays: New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
Money Market Funds Investment Shares are sold at their net asset value next
determined after an order is received without a sales load.
EXCHANGING SECURITIES FOR MONEY MARKET FUND SHARES
Investors may exchange certain Municipal Securities, or a combination of
securities and cash, for Shares of Connecticut Municipal Money Market Fund and
Massachusetts Municipal Money Market Fund, respectively. The securities and any
cash must have a market value of at least $2,500. Each of these Funds reserves
the right to determine the acceptability of securities to be exchanged.
Securities accepted by the Connecticut/Massachusetts Municipal Money Market
Fund are valued in the same manner as the Connecticut/Massachusetts Municipal
Money Market Fund values its assets. Investors wishing to exchange securities
should first contact Federated Securities Corp.
When shares are purchased by exchange of Connecticut Municipal Securities or
Massachusetts Municipal Securities, the proceeds from the redemption of those
shares are not available until the transfer agent is reasonably certain that
the transfer has settled, which can take up to five business days.
SYSTEMATIC INVESTMENT PROGRAM
Once an account in a Money Market Fund has been opened, shareholders may add to
their investment on a regular basis in a minimum amount of $50. Under this
program, Money Market Funds may be automatically withdrawn periodically from
the shareholder's checking account and invested in Investment Shares at the net
asset value next determined after an order is received by a Money Market Fund.
A shareholder may apply for participation in this program through a broker or
the distributor.
SUBACCOUNTING SERVICES
Institutions are encouraged to open single master accounts. However, certain
institutions may wish to use the transfer agent's subaccounting system to
minimize their internal recordkeeping requirements. The transfer agent charges
a fee based on the level of subaccounting services rendered. Certain
institutions holding Investment Shares in a fiduciary, agency, custodial, or
similar capacity may charge or pass through subaccounting fees as part of or in
addition to normal trust or agency account fees. They may also charge fees for
other services provided which may be related to the ownership of Investment
Shares. This prospectus should, therefore, be read together with any agreement
between the customer and the institution with regard to the services provided,
the fees charged for those services, and any restrictions and limitations
imposed.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Money Market Funds, Federated Services Company
maintains a share account for each shareholder of record. Share certificates
are not issued unless requested by contacting a broker in writing.
Detailed confirmations of each purchase or redemption are sent to each
shareholder of record. Monthly statements are sent to report account activity
during the previous month, including dividends paid during the period.
DIVIDENDS
Dividends are declared daily and paid monthly to all shareholders invested in
each Money Market Fund on the record date. Investment Shares purchased by wire
before 11:00 a.m. (Eastern time) begin earning dividends that day. Investment
Shares purchased by check begin earning dividends on the next business day
after the check is converted by a broker into federal funds.
CAPITAL GAINS
Capital gains realized by a Money Market Fund, if any, will be distributed to
that Money Market Fund's shareholders at least once every 12 months.
EXCHANGE PRIVILEGE
EXCHANGING SHARES. Shareholders may exchange Investment Shares, with a minimum
net asset value of $1,000, except retirement plan accounts, which must have a
minimum net asset value of $500, for shares of the same designated class of
other funds advised by Shawmut Bank. Shares of funds with a sales load may be
exchanged at net asset value for shares of other funds with an equal sales
load, a lower sales load or no sales load. Shares of funds with no sales load,
or a lower sales load, acquired by direct purchase or reinvestment of dividends
on such shares may be exchanged for shares of funds with a sales load, or a
higher sales load, at net asset value, plus the applicable sales load or
additional incremental sales load, as the case may be, imposed by the fund
shares being purchased.
When an exchange is made from a fund with a sales load to a fund with no sales
load, the shares exchanged and additional shares which have been purchased by
reinvesting dividends 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 load would be a net
asset value.
Exchanges are subject to the minimum initial purchase requirements of such fund
being acquired. Prior to any exchange, the shareholder must receive a copy of
the current prospectus of the class 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, Investment Shares
submitted for exchange will be redeemed at the next-determined net asset value.
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 modified or terminated at any time.
Shareholders will be notified of the modification or termination of the
exchange privilege. A shareholder may obtain further information on the
exchange privilege by calling a broker.
EXCHANGE-BY-TELEPHONE. Instructions for exchanges between participating funds
which are part of the Trust may be given by calling a broker or by calling the
Money Market Funds. Call 1-800-SHAWMUT to speak with a broker, or for referral
to a broker serving your area. To utilize the exchange-by-telephone service, a
shareholder must complete an authorization form permitting a Shawmut Fund to
honor telephone instructions. The authorization is included in the shareholder
account application. Investment Shares may be exchanged by telephone only
between fund accounts having identical shareholder registrations. Exchange
instructions given by telephone may be electronically recorded.
Any Investment 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.
Telephone exchange instructions must be received before 11:00 a.m. (Eastern
time) for Investment 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 a broker or the Money
Market Funds during times of drastic economic or market changes. If a
shareholder cannot contact a broker or the Money Market Funds by telephone, it
is recommended that an exchange request be made in writing and sent by
overnight mail to The Shawmut Funds, c/o Transfer Agency, 1001 Liberty Avenue,
Pittsburgh, Pennsylvania 15222-3779.
If reasonable procedures are not followed by the Money Market Funds, they may
be liable for losses due to unauthorized or fraudulent telephone instructions.
REDEEMING SHARES
YOU CAN REDEEM INVESTMENT SHARES BY MAIL OR TELEPHONE. TO ENSURE YOUR SHARES
ARE REDEEMED EXPEDITIOUSLY, PLEASE FOLLOW THE PROCEDURES EXPLAINED BELOW.
The Money Market Funds redeem Investment Shares at their net asset value next
determined after Federated Services Company receives the redemption request.
Redemptions will be made on days on which the Money Market Funds compute their
net asset value. Requests for redemptions can be made by telephone or in
writing by contacting a broker or directly from the Money Market Funds.
Redemption requests received prior to 2:00 p.m. (Eastern time) will be effected
on the same business day.
THROUGH A BROKER
Shareholders may redeem Investment Shares by calling their broker to request
the redemption. Investment Shares will be redeemed at the net asset value next
determined after Federated Services Company receives the redemption request. A
broker is responsible for promptly submitting redemption requests and for
maintaining proper written records of redemption instructions received from the
Money Market Funds' shareholders. In order to effect a redemption on the same
business day as a request, a broker is responsible for the timely transmission
of the redemption request to the appropriate Money Market Fund.
Before a broker may request redemption by telephone on behalf of a shareholder,
an authorization form permitting the Money Market Funds to accept redemption
requests by telephone must first be completed. This authorization is included
in shareholder's account application. Redemption instruction given by telephone
may be electronically recorded. In the event of drastic economic or market
changes, a shareholder may experience difficulty in redeeming by telephone. If
such a case should occur, it is recommended that a redemption request be made
in writing and sent by overnight mail to The Shawmut Funds, c/o Transfer
Agency, 1001 Liberty Avenue, Pittsburgh, Pennsylvania 15222-3779.
If reasonable procedures are not followed by the Money Market Funds, they may
be liable for losses due to unauthorized or fraudulent telephone instructions.
DIRECTLY FROM THE MONEY MARKET FUNDS
BY MAIL. A shareholder may redeem Investment Shares by sending a written
request to The Shawmut Funds, c/o Transfer Agency, 1001 Liberty Avenue,
Pittsburgh, Pennsylvania 15222-3779. The written request should include the
shareholder's name, the Money Market Fund's name and class of shares name, the
account number, and the share or dollar amount requested. If share certificates
have been issued, they must be properly endorsed and should be sent by
registered or certified mail with the written request. Shareholders should call
the Money Market Funds for assistance in redeeming by mail.
SIGNATURES. Shareholders requesting a redemption of $50,000 or more, a
redemption of any amount to be sent to an address other than that on record
with the Money Market Funds, 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;
.. 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 Money Market Funds do not accept signatures guaranteed by a notary
public.
The Money Market Funds and their transfer agent have adopted standards for
accepting signature guarantees from the above institutions. The Money
Market Funds may elect in the future to limit eligible signature guarantors
to institutions that are members of a signature guarantee program. The
Money Market Funds and their transfer agent reserve the right to amend
these standards at any time without notice.
RECEIVING PAYMENT
Redemption payments will generally be made directly to the account
maintained by an investor with Shawmut Bank. This deposit is normally made
within one business day, but in no event more than seven days, after the
redemption request, provided the transfer agent has received payment from
the shareholder. The net asset value of Investment Shares redeemed is
determined, and dividends, if any, are paid up to and including, the day
prior to the day that a redemption request is processed. Pursuant to
instructions from a broker, redemption proceeds may be transferred from a
shareholder account by check or by wire.
BY CHECK. 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
redemption request provided the transfer agent has received payment for
Investment Shares from the Shareholder.
BY WIRE. Requests to wire proceeds from redemptions received before 4:00
p.m. (Eastern time) will be honored the following business day after a
broker receives proper instructions. Applicable charges are imposed on a
shareholder's account maintained with Shawmut Bank.
CHECKWRITING
At the shareholder's request, a broker will establish a checking account
for redeeming Investment Shares. With a Money Market Fund checking account,
Investment Shares may be redeemed simply by writing a check. Checks must be
written in a minimum amount of the lesser of $500.00 or the current account
balance. The redemption will be made at the net asset value on the date
that the check is presented to the appropriate Money Market Fund. A check
may not be written to close an account. For further information, contact
your a broker Investment Specialist or the appropriate Money Market Fund.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Money
Market Funds may redeem shares in any account and pay the proceeds to the
shareholder if the account balance falls below a required minimum of
$2,500, or $500 in the case of retirement plan accounts. This requirement
does not apply, however, if the balance falls below $2,500 or $500,
respectively, because of changes in a Money Market Fund's net asset value.
Before shares are redeemed to close an account, the shareholder is notified
in writing and allowed 30 days to purchase additional shares to meet the
minimum requirement.
SYSTEMATIC WITHDRAWAL PROGRAM
Shareholders who desire to receive payments of a predetermined amount may
take advantage of the Systematic Withdrawal Program. Under this program,
Investment Shares are redeemed to provide for periodic withdrawal payments
in an amount directed by the shareholder. Depending upon the amount of the
withdrawal payments, the amount of dividends
paid and capital gains distributions with respect to Investment Shares,
redemptions may reduce, and eventually deplete, the shareholder's
investment in the Money Market Funds. For this reason, payments under this
program should not be considered as yield or income on the shareholder's
investment in the Money Market Funds' Investment Shares. To be eligible to
participate in this program, a shareholder must have an account value of at
least $10,000. A shareholder may apply for participation in this program
through a broker.
REDEMPTION IN KIND
The Money Market Funds are obligated to redeem Investment Shares solely in
cash up to $250,000 or 1% of the net asset value of shares of each Money
Market Fund, whichever is less, for any one shareholder within a 90-day
period.
Any redemption beyond this amount will also be in cash unless the Trustees
determine that further cash payments will have a material adverse effect on
remaining shareholders. In such a case, the Money Market Funds will pay all
or a portion of the remainder of the redemption in portfolio instruments,
valued in the same way as a Money Market Fund determines net asset value.
The portfolio instruments will be selected in a manner that the Trustees
deem fair and equitable.
Redemption in kind is not as liquid as a cash redemption. If redemption is
made in kind, shareholders receiving their securities and selling them
before their maturity could receive less than the redemption value of their
securities and could incur certain transaction costs.
SHAREHOLDER INFORMATION
VOTING RIGHTS
EACH INVESTMENT SHARE OF A MONEY MARKET FUND GIVES THE SHAREHOLDER ONE VOTE IN
TRUSTEE ELECTIONS AND OTHER MATTERS SUBMITTED TO SHAREHOLDERS OF THE TRUST FOR
VOTE.
All shares of each portfolio in the Trust have equal voting rights except that,
in matters affecting only a particular fund or class, only shareholders of that
fund or class are entitled to vote. As a Massachusetts business trust, the
Trust is not required to hold annual shareholder meetings. Shareholder approval
will be sought only for certain changes in the Trust or a Money Market Fund's
operation and for the election of Trustees under certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a special
meeting. A special meeting of the shareholders shall be called by the Trustees
upon the written request of shareholders owning at least 10% of the outstanding
shares of the Trust.
As of December 12, 1994, Olsen & Co., acting in various capacities for various
accounts, was the owner of record of 17,269,924 shares (47.81%) of
Massachusetts Municipal Money Market Fund. As of December 12, 1994, Shawmut
Bank, (Deposit Balancing), acting in various capacities for various accounts,
was the owner of record of 63,187,088 shares (80.36%) of Investment Shares of
Connecticut Municipal Money Market Fund.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for acts or obligations of the Trust on behalf
of a Money Market Fund. To protect shareholders of a Money Market Fund, the
Trust has filed legal documents with Massachusetts that expressly disclaim the
liability of shareholders of a Money Market Fund for 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 on behalf of the Money Market Funds.
In the unlikely event a shareholder is held personally liable for the Trust's
obligations on behalf of a Money Market Fund, the Trust is required to use the
property of that Money Market Fund to protect or compensate the shareholder. On
request, the Trust will defend any claim made and pay any judgment against a
shareholder of the Money Market Funds for any act or obligation of the Trust on
behalf of the Money Market Funds. Therefore, financial loss resulting from
liability as a shareholder of the Money Market Funds will occur only if the
Trust cannot meet its obligations to indemnify shareholders and pay judgments
against them from the assets of the Money Market Funds.
EFFECT OF 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 investment company
continuously engaged in the issuance of its shares, and prohibit banks
generally from issuing, underwriting, selling, 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.
Shawmut Bank is subject to such banking laws and regulations.
Shawmut Bank believes, based upon the advice of its counsel, that it may
perform the services for the Money Market Funds contemplated by its advisory
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 or future statutes and
regulations, could prevent Shawmut Bank from continuing to perform all or a
part of the above services for its customers and/or the Money Market Funds. If
it were prohibited from engaging in these customer-related activities, the
Trustees would consider alternative advisers and means of continuing available
investment services. In such event, changes in the operation of the Money
Market Funds may occur, including possible termination of any automatic or
other Money Market Fund share investment and redemption services then being
provided by Shawmut Bank. It is not expected that existing shareholders would
suffer any adverse financial consequences (if another adviser with equivalent
abilities to Shawmut Bank is found) as a result of any of these occurrences.
TAX INFORMATION
FEDERAL INCOME TAX
The Money Market Funds will pay no federal income tax because each Money Market
Fund expects to meet requirements of the Internal Revenue Code, as amended,
applicable to regulated investment companies and to receive the special tax
treatment afforded to such companies.
Each Money Market Fund will be treated as a single, separate entity for federal
income tax purposes so that income (including capital gains) and losses
realized by The Shawmut Funds' other portfolios will not be combined for tax
purposes with those realized by each Money Market Fund.
Unless otherwise exempt, shareholders are required to pay federal income tax on
any dividends and other distributions received. This applies whether dividends
and distributions are received in cash or as additional Investment Shares.
Shareholders are urged to consult their own tax advisers regarding the status
of their accounts under state and local tax laws.
CONNECTICUT TAX CONSIDERATIONS
As applied to Connecticut resident individuals, estates and trusts owning
shares in the Connecticut Municipal Money Market Fund, the CSIT taxes items of
income derived from such shares in a variety of ways.
Distributions which are tax-exempt interest dividends under the federal income
tax are not subject to the CSIT to the extent that such distributions are
derived from interest on obligations issued by or on behalf of the State of
Connecticut or its instrumentalities or by State municipalities ("Connecticut
obligations"), or to the extent that such dividends are derived from interest
on obligations, the income from which federal law forbids the states to tax.
All other tax-exempt interest dividends distributed by the Connecticut
Municipal Money Market Fund are subject to the CSIT.
Regarding proper treatment of distributions from the Connecticut Municipal
Money Market Fund which are capital gains dividends for federal income tax
purposes and which are derived from the sale or exchange of Connecticut
obligations, shareholders should consult their local tax adviser.
All other distributions from the Connecticut Municipal Money Market Fund are
subject to the CSIT.
For purposes of the CSIT, a shareholder's Connecticut tax basis in the shares
of the Connecticut Municipal Money Market Fund will be the federal adjusted tax
basis of such shareholder, and any gain realized for federal income tax
purposes on the disposition of shares in the Connecticut Municipal Money Market
Fund will constitute taxable gain for purposes of the CSIT.
The Connecticut corporation business tax ("CCBT") is imposed on corporations
and certain other entities. Distributions from the Connecticut Municipal Money
Market Fund to a shareholder subject to the CCBT are not eligible for the
dividends received deduction under the CCBT and, therefore, are included in the
taxable income of a taxpayer to the extent such distributions are treated as
either exempt-interest dividends or capital gains dividends for federal income
tax purposes. The Connecticut Department of Revenue Services has issued a
letter ruling which has the effect of treating all other distributions from the
Connecticut Municipal Money Market Fund as eligible for the CCBT dividends
received deduction. Any gain realized for federal income tax purposes on the
disposition of shares in the Connecticut Municipal Money Market Fund is
includable in the gross income of a shareholder subject to the CCBT.
MASSACHUSETTS TAX CONSIDERATIONS
Under the laws of the Commonwealth of Massachusetts, dividends paid by the
Massachusetts Municipal Money Market Fund representing interest payments on
municipal obligations issued by the Commonwealth of Massachusetts or a
political subdivision thereof (or interest on obligations of United States
territories or possessions to the extent exempt from taxation by the states
pursuant to federal law) will be exempt from Massachusetts individual income
tax. Accordingly, shareholders of the Massachusetts Municipal Money Market Fund
who are residents of the Commonwealth of Massachusetts will not be subject to
Massachusetts individual income tax on dividends paid by the Massachusetts
Municipal Money Market Fund to the extent such dividends are derived from
interest on municipal obligations which would be tax-exempt if directly
received by such shareholder, whether such dividends are taken in cash or
reinvested in additional shares of the Massachusetts Municipal Money Market
Fund.
Massachusetts corporations must include all dividends paid by the Massachusetts
Municipal Money Market Fund in their net income, and the value of their shares
of stock in the Massachusetts Municipal Money Market Fund in their net worth,
when computing the Massachusetts excise taxes on corporations.
OTHER STATE AND LOCAL TAXES
Income from the Connecticut/Massachusetts Municipal Money Market Fund is not
necessarily free from regular state income taxes in states other than
Connecticut/Massachusetts, as appropriate, or from personal property taxes.
State laws differ on this issue and shareholders are urged to consult their own
tax advisers regarding the status of their accounts under state and local tax
laws.
OTHER CLASSES OF SHARES
Connecticut Municipal Money Market Fund and Prime Money Market Fund offer a
separate classes of shares known as Trust Shares. Trust Shares are sold
primarily to accounts for which Shawmut Bank, N.A., or its affiliates, act in
a fiduciary or agency capacity. Trust Shares are sold at net asset value,
without a sales load, and without a Rule 12b-1 Plan. Investments in Trust
Shares are subject to a minimum initial investment of $2,500.
The amount of dividends payable to Trust Shares will exceed that of Investment
Shares by the difference between class expenses and distribution expenses
borne by shares of each respective class.
The stated advisory fee is the same for both classes of shares.
PERFORMANCE INFORMATION
FROM TIME TO TIME THE MONEY MARKET FUNDS ADVERTISE THEIR YIELD, EFFECTIVE YIELD
AND TAX-EQUIVALENT YIELD FOR INVESTMENT SHARES.
The yield of Investment Shares represents the annualized rate of income earned
on an investment in Investment Shares over a seven-day period. It is the
annualized dividends earned during the period on the investment, shown as a
percentage of the investment.
The effective yield is calculated similarly to the yield, but, when annualized,
the income earned by an investment in Investment Shares is assumed to be
reinvested daily. The effective yield will be slightly higher than the yield
because of the compounding effect of this assumed reinvestment.
The tax-equivalent yield for the Connecticut/Massachusetts Municipal Money
Market Funds is calculated similarly to the yield, but is adjusted to reflect
the taxable yield that the Connecticut/Massachusetts Municipal Money Market
Funds would have had to earn to equal its actual yield, assuming a 32.50% and
40.00% combined federal and state tax rate for Connecticut and Massachusetts,
respectively, for and assuming that income is 100% tax-exempt.
Advertisements and other sales literature may also refer to total return. Total
return represents the change, over a specified period of time, in the value of
an investment in Investment Shares after reinvesting all income distributions.
It is calculated by dividing that change by the initial investment and is
expressed as a percentage.
Yield, effective yield and tax-equivalent yield will be calculated separately
for Trust Shares and Investment Shares. Because Investment Shares are subject
to 12b-1 fees, the yield, effective yield and tax-equivalent yield of Trust
Shares, for the same period, will exceed that of Investment Shares.
From time to time, the Money Market Funds may advertise their performance for
Investment Shares using certain financial publications and/or compare their
performance to certain indices.
Further information about the performance of the Money Market Funds is
contained in the Trust's Combined Annual Report dated October 31, 1994, which
can be obtained free of charge.
INVESTMENT ADVISER
Shawmut Bank, N.A.
One Federal Street
Boston, MA 02211
ADMINISTRATOR
Federated Administrative Services
Federated Investors Tower
Pittsburgh, PA 15222-3779
CUSTODIAN
Shawmut Bank, N.A.
One Federal Street
Boston, MA 02211
TRANSFER AGENT
Federated Services Company
Federated Investors Tower
Pittsburgh, PA 15222-3779
DISTRIBUTOR
Federated Securities Corporation
Federated Investors Tower
Pittsburgh, PA 15222-3779
LEGAL COUNSEL
Dickstein, Shapiro & Morin, L.L.P.
2101 L Street, N.W.
Washington, D.C. 20037
Houston, Houston & Donnelly
2510 Centre City Tower
Pittsburgh, PA 15222
SHAWMUT INCOME FUNDS
LIMITED TERM INCOME
INTERMEDIATE GOVERNMENT INCOME
FIXED INCOME
CONNECTICUT INTERMEDIATE MUNICIPAL INCOME
MASSACHUSETTS INTERMEDIATE MUNICIPAL INCOME
SHAWMUT EQUITY FUNDS
GROWTH AND INCOME EQUITY
GROWTH EQUITY
SMALL CAPITALIZATION
QUANTITATIVE EQUITY
CALL 1-800-SHAWMUT
FOR MORE INFORMATION ON THE
SHAWMUT FAMILY OF FUNDS
[LOGO] 820482693
820482776
820482792
3120921A-R (12/94)
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SHAWMUT
MONEY MARKET FUNDS
PROSPECTUS
TRUST SHARES
PRIME MONEY MARKET
CONNECTICUT MUNICIPAL MONEY MARKET
MASSACHUSETTS MUNICIPAL MONEY MARKET
DECEMBER 31, 1994
SHAWMUT PRIME MONEY MARKET FUND
THE SHAWMUT MONEY MARKET FUNDS SHAWMUT CONNECTICUT MUNICIPAL
MONEY MARKET FUND
SHAWMUT MASSACHUSETTS MUNICIPAL
MONEY MARKET FUND
TRUST SHARES--COMBINED PROSPECTUS
The shares offered by this prospectus represent interests in Trust Shares of
the money market portfolios (collectively, the "Money Market Funds" or
individually, as appropriate in context, the "Fund") of The Shawmut Funds (the
"Trust"), an open-end management investment company (a mutual fund). In
addition to the Money Market Funds, the Trust consists of the following
separate investment portfolios, each having a distinct investment objective and
policies:
INCOME FUNDS EQUITY FUNDS
Shawmut Limited Term Income Fund Shawmut Growth and Income Equity Fund
Shawmut Intermediate Government
Income Fund Shawmut Growth Equity Fund
Shawmut Fixed Income Fund Shawmut Small Capitalization Equity Fund
Shawmut Connecticut Intermediate
Municipal Income Fund Shawmut Quantitative Equity Fund
Shawmut Massachusetts Intermediate
Municipal Income Fund
This combined prospectus contains the information you should read and know
before you invest in the Money Market Funds. Keep this prospectus for future
reference. The Money Market Funds have also filed a Combined Statement of
Additional Information for Trust Shares and Investment Shares dated December
31, 1994, with the Securities and Exchange Commission. The information
contained in the Combined Statement of Additional Information is incorporated
by reference into this prospectus. You may request a copy of the Combined
Statement of Additional Information free of charge, obtain other information,
or make inquiries about the Money Market Funds by writing or calling the Trust.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
EACH OF THE MONEY MARKET FUNDS ATTEMPTS TO MAINTAIN A STABLE NET ASSET VALUE OF
$1.00 PER SHARE; THERE CAN BE NO ASSURANCE THAT EACH OF THE MONEY MARKET FUNDS
WILL BE ABLE TO DO SO.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF
SHAWMUT BANK, ARE NOT ENDORSED OR GUARANTEED BY SHAWMUT BANK, AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD
OR ANY OTHER GOVERNMENT AGENCY.
Prospectus dated December 31, 1994
TABLE OF CONTENTS
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SYNOPSIS................................................................... 2
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EXPENSE SUMMARY............................................................ 3
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FINANCIAL HIGHLIGHTS....................................................... 4
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GENERAL INFORMATION........................................................ 5
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THE SHAWMUT PORTFOLIOS..................................................... 5
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OBJECTIVES AND POLICIES.................................................... 5
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INVESTMENTS, STRATEGIES, AND RISKS......................................... 8
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ADMINISTRATION............................................................ 13
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NET ASSET VALUE........................................................... 16
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INVESTING IN SHARES....................................................... 16
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EXCHANGE PRIVILEGE........................................................ 18
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REDEEMING SHARES.......................................................... 19
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SHAREHOLDER INFORMATION................................................... 21
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EFFECT OF BANKING LAWS.................................................... 21
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TAX INFORMATION........................................................... 22
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OTHER CLASSES OF SHARES................................................... 23
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PERFORMANCE INFORMATION................................................... 24
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SYNOPSIS
INVESTMENT OBJECTIVES
The Shawmut Funds offer you a convenient, affordable way to participate in
separate, professionally managed portfolios of securities. This prospectus
relates only to the Money Market Funds of the Trust.
MONEY MARKET FUNDS
SHAWMUT PRIME MONEY MARKET FUND
("Prime Money Market Fund") seeks current income, consistent with stability of
principal and liquidity, by investing primarily in a diversified portfolio of
money market instruments maturing in thirteen months or less.
SHAWMUT CONNECTICUT MUNICIPAL MONEY MARKET FUND
("Connecticut Municipal Money Market Fund") seeks current income which is
exempt from federal regular income tax and Connecticut state income tax on
individuals, trusts, and estates (the "CSIT"), consistent with stability of
principal and liquidity, by investing primarily in short-term Connecticut
municipal securities, including securities of states, territories, and
possessions of the United States which are not issued by or on behalf of
Connecticut or its political subdivisions and financing authorities, but which
are exempt from CSIT.
SHAWMUT MASSACHUSETTS MUNICIPAL MONEY MARKET FUND
("Massachusetts Municipal Money Market Fund") seeks current income which is
exempt from federal regular income tax and income taxes imposed by the
Commonwealth of Massachusetts, consistent with stability of principal and
liquidity, by investing primarily in short-term Massachusetts municipal
securities, including securities of states, territories, and possessions of the
United States which are not issued by or on behalf of Massachusetts or its
political subdivisions and financing authorities, but which are exempt from
income taxes imposed by the Commonwealth of Massachusetts.
BUYING SHARES
A minimum initial investment of $2,500 may be required. Subsequent investments
must be in amounts of at least $100, as described in this prospectus in the
section entitled "Minimum Investment Required." Trust Shares are currently sold
at net asset value and are redeemed at net asset value without a sales load.
FUND MANAGEMENT
The Money Market Funds' investment adviser is Shawmut Bank, N.A., which makes
investment decisions for the Money Market Funds.
SHAREHOLDER SERVICES
As a shareholder, you can easily obtain information about your account by
calling your Shawmut Bank trust officer.
THE SHAWMUT MONEY MARKET FUNDS
EXPENSE SUMMARY Trust Shares
PORTFOLIOS
PRIME CONNECTICUT MASSACHUSETTS
MONEY MUNICIPAL MUNICIPAL
MARKET MONEY MARKET MONEY MARKET
FUND FUND+ FUND*+
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed
on Purchases (as a
percentage of offering price) None None None
Maximum Sales Load Imposed
on Reinvested Dividends (as a
percentage of offering price) None None None
Contingent Deferred Sales
Charge (as a percentage of
original purchase price or
redemption proceeds as applicable) None None None
Redemption Fee (as a percentage
of amount redeemed, if applicable) None None None
Exchange Fee None None None
ANNUAL TRUST SHARES OPERATING EXPENSES
(As a percentage of average
net assets)
Management Fee (after
waivers)(1) 0.29% 0.42% 0.42%
12b-1 Fees(2) None None 0.00%
Total Other Expenses (after
waivers and reimbursements)(3) 0.14% 0.11% 0.11%
Total Trust Shares Operating
Expenses (after waivers and
reimbursements)(4) 0.43% 0.53% 0.53%
(1) The management fee has been reduced to reflect the voluntary waiver by the
investment adviser. The adviser can terminate this voluntary waiver at any
time at its sole discretion. The maximum management fee is .50%.
(2) As of the date of this prospectus, the Massachusetts Municipal Money Market
Fund is not paying or accruing 12b-1 fees. The Massachusetts Municipal Money
Market Fund does not intend to accrue or pay 12b-1 fees until either a
separate class of shares has been created for certain fiduciary investors or
a determination is made that such investors will be subject to 12b-1 fees.
(3) Other expenses have been reduced to reflect the voluntary waiver by the
custodian for all funds; the voluntary reimbursement by the adviser for the
Massachusetts Municipal Money Market Fund; and the voluntary waiver by the
administrator and reimbursement by the adviser for the Prime Money Market
Fund and the Connecticut Municipal Money Market Fund.
(4) Absent the voluntary waivers and reimbursements explained in the above
footnotes, the Trust Shares Operating Expenses are 0.72% for the Prime Money
Market Fund; 1.00% for the Connecticut Municipal Money Market Fund; and
1.21% for the Massachusetts Municipal Money Market Fund.
* Massachusetts Municipal Money Market Fund currently sells its shares without
class designation. Purchasers of either the Trust Shares or Investment
Shares of the other Shawmut Funds may purchase shares of Massachusetts
Municipal Money Market Fund.
+ As of December 1, 1994, the Management Fees (after waivers) are 0.32% and
0.15% for the Connecticut Municipal Money Market Fund and Massachusetts
Municipal Money Market Fund, respectively. The Total Trust Share Operating
Expenses are 0.56% for each of the Connecticut/Massachusetts Municipal Money
Market Funds.
The purpose of this table is to assist an investor in understanding the various
costs and expenses that a shareholder of Trust Shares will bear, either directly
or indirectly. For more complete descriptions of the various costs and expenses,
see "Administration" and "Investing in Shares." Wire-transferred redemptions of
less than $5,000 may be subject to additional fees.
EXAMPLE
You would pay the following expenses on a $1,000 investment assuming (1) 5%
annual return and (2) redemption at the end of each time period. As noted in the
table above, the Money Market Funds charge no contingent deferred sales charge.
1 year 3 years 5 years 10 years
Prime Money Market Fund....... $4 $14 $24 $54
Connecticut Municipal Money
Market Fund.................. $5 $17 $30 $66
Massachusetts Municipal
Money Market Fund............. $5 $17 $30 $66
THE ABOVE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
The information set forth in the foregoing table and example relates only to
Trust Shares of the Money Market Funds. Connecticut Municipal Money Market Fund
and Prime Money Market Fund also offer another class of shares called Investment
Shares. Trust Shares and Investment Shares are subject to certain of the same
expenses; however, Investment Shares are subject to a 12b-1 fee of up to 0.50 of
1% of average net assets. See "Other Classes of Shares."
Financial Highlights SHAWMUT MONEY MARKET FUNDS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
The following table has been audited by Price Waterhouse LLP, the Money Market
Funds' independent accountants whose report thereon dated December 16, 1994, is
included in the Annual Report of The Shawmut Funds for the fiscal year ended
October 31, 1994, which is incorporated by reference into the Statement of
Additional Information. This table should be read in conjunction with the Money
Markets Funds' financial statements and notes thereto, which may be obtained
from the Money Market Funds.
DIVIDENDS
TO
NET ASSET SHAREHOLDERS NET ASSET
YEAR ENDED VALUE, NET FROM NET VALUE,
OCTOBER BEGINNING INVESTMENT INVESTMENT END OF TOTAL
31, OF PERIOD INCOME INCOME PERIOD RETURN+
INVESTMENT SHARES
PRIME MONEY MARKET FUND
1993* $1.00 0.02 (0.02) $1.00 1.73%
1994 $1.00 0.03 (0.03) $1.00 3.28%
CONNECTICUT MUNICIPAL MONEY MARKET FUND
1993** $1.00 0.001 (0.001) $1.00 0.14%
1994 $1.00 0.02 (0.02) $1.00 1.83%
MASSACHUSETTS MUNICIPAL MONEY MARKET FUND++
1993***** $1.00 0.001 (0.001) $1.00 0.12%
1994 $1.00 0.02 (0.02) $1.00 1.99%
TRUST SHARES
PRIME MONEY MARKET FUND
1993*** $1.00 0.02 (0.02) $1.00 2.41%
1994 $1.00 0.03 (0.03) $1.00 3.54%
CONNECTICUT MUNICIPAL MONEY MARKET FUND
1994**** $1.00 0.02 (0.02) $1.00 2.08%
MASSACHUSETTS MUNICIPAL MONEY MARKET FUND++
1993***** $1.00 0.001 (0.001) $1.00 0.12%
1994 $1.00 0.02 (0.02) $1.00 1.99%
NET ASSETS,
EXPENSE END OF
NET WAIVER/ PERIOD
INVESTMENT REIMBURSEMENT (000
EXPENSES INCOME (b) OMITTED)
INVESTMENT SHARES
PRIME MONEY MARKET FUND
1993** 0.85%(a) 2.36%(a) 0.37%(a) $28,758
1994 0.68% 3.33% 0.54% $156,192
CONNECTICUT MUNICIPAL MONEY MAREKT FUND
1993** 0.36%(a) 2.12%(a) 5.46%(a) $6,582
1994 0.78% 1.99% 0.72% $80,663
MASSACHUSETTS MUNICIPAL MONEY MARKET FUND++
1993***** 0.11%(a) 2.75%(a) 35.31%(a) $1,237
1994 0.53% 2.00% 0.68% $31,516
TRUST SHARES
PRIME MONEY MARKET FUND
1993*** 0.58%(a) 2.71%(a) 0.12%(a) $257,851
1994 0.43% 3.58% 0.29% $499,319
CONNECTICUT MUNICIPAL MONEY MARKET FUND
1994**** 0.53%(a) 2.24%(a) 0.47%(a) $34,354
MASSACHUSETTS MUNICIPAL MONEY MARKET FUND++
1993***** 0.11%(a) 2.75%(a) 35.31%(a) $1,237
1994 0.53% 2.00% 0.68% $31,516
* For the period from February 12, 1993 (date of initial public investment)
to October 31, 1993.
** For the period from October 4, 1993 (date of initial public investment)
to October 31, 1993.
*** For the period from December 14, 1992 (date of initial public investment)
to October 31, 1993.
**** For the period from December 16, 1993 (date of initial public
investment) to October 31, 1994.
***** For the period from October 5, 1993 (date of initial public investment)
to October 31, 1993.
+ Based on net asset value which does not reflect the sales load or
contingent deferred sales charge, if applicable.
++ Massachusetts Municipal Money Market Fund currently sells its shares
without class designation.
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
GENERAL INFORMATION
The Trust was established as a Massachusetts business trust under a
Declaration of Trust dated July 16, 1992. The Declaration of Trust permits the
Trust to offer separate series of shares representing interests in separate
portfolios of securities. The shares in any one portfolio may be offered in
separate classes. As of the date of this prospectus, the Board of Trustees
(the "Trustees") has established two classes of shares of Connecticut
Municipal Money Market Fund and Prime Money Market Fund, known as Trust Shares
and Investment Shares. This prospectus relates only to Trust Shares of
Connecticut Municipal Money Market Fund and Prime Money Market Fund and to the
Shares of Massachusetts Municipal Money Market Fund.
A minimum initial investment of $2,500 may be required. Subsequent investments
must be in amounts of at least $100, as described in this prospectus in the
section entitled "Minimum Investment Required." Trust shares are sold at net
asset value and are redeemed at net asset value without a contingent deferred
sales charge imposed by the Money Market Funds.
THE SHAWMUT PORTFOLIOS
The shareholders of the Money Market Funds are shareholders of The Shawmut
Funds, which currently consist of Shawmut Connecticut Intermediate Municipal
Income Fund, Shawmut Connecticut Municipal Money Market Fund, Shawmut Fixed
Income Fund, Shawmut Growth and Income Equity Fund, Shawmut Growth Equity
Fund, Shawmut Intermediate Government Income Fund, Shawmut Limited Term Income
Fund, Shawmut Massachusetts Intermediate Municipal Income Fund, Shawmut
Massachusetts Municipal Money Market Fund, Shawmut Prime Money Market Fund,
Shawmut Quantitative Equity Fund, and Shawmut Small Capitalization Equity
Fund. Shareholders in the Money Market Funds have easy access to the other
portfolios of The Shawmut Funds through an exchange program. The Shawmut Funds
are advised by Shawmut Bank, N.A., and distributed by Federated Securities
Corp.
OBJECTIVES AND POLICIES
PRIME MONEY MARKET FUND
INVESTMENT OBJECTIVE
The investment objective of the Prime Money Market Fund is to provide current
income consistent with stability of principal and liquidity. The investment
objective cannot be changed without the approval of shareholders. While there
is no assurance that the Prime Money Market Fund will achieve its investment
objective, it endeavors to do so by following the investment policies
described in this prospectus.
INVESTMENT POLICIES
THE PRIME MONEY MARKET FUND PURSUES ITS INVESTMENT OBJECTIVE BY INVESTING
PRIMARILY IN A DIVERSIFIED PORTFOLIO OF MONEY MARKET INSTRUMENTS MATURING IN
THIRTEEN MONTHS OR LESS.
Unless indicated otherwise, the investment policies set forth in this
prospectus may be changed by the Trustees without the approval of
shareholders. Shareholders will be notified before any material change in
these investment policies becomes effective. The average maturity of these
securities, computed on a dollar-weighted basis, will be 90 days or less.
ACCEPTABLE INVESTMENTS
The Prime Money Market Fund invests in eligible quality money market
instruments that are either rated in one of the two highest short-term rating
categories by one or more nationally recognized statistical rating
organizations ("NRSROs") or are of comparable quality to securities having
such ratings. Examples of these instruments include, but are not limited to:
.. domestic issues of corporate debt obligations, including notes, bonds, and
debentures;
.. commercial paper, including eurodollar commercial paper ("Europaper");
.. certificates of deposit, demand and time deposits, and bankers' acceptances
of domestic banks and other deposit institutions ("Bank Instruments");
.. short-term credit facilities, such as demand notes;
.. obligations issued or guaranteed as to payment of principal and interest
by the U.S. government or one of its agencies or instrumentalities
("Government Securities"); and
.. repurchase agreements.
The Prime Money Market Fund invests only in instruments denominated and
payable in U.S. dollars.
CONNECTICUT MUNICIPAL MONEY MARKET FUND
INVESTMENT OBJECTIVE
The investment objective of the Connecticut Municipal Money Market Fund is to
provide current income exempt from federal regular income tax and the CSIT,
consistent with stability of principal and liquidity. The investment objective
cannot be changed without the approval of shareholders. While there is no
assurance that the Connecticut Municipal Money Market Fund will achieve its
investment objective, it endeavors to do so by following the investment
policies described in this prospectus.
INVESTMENT POLICIES
THE CONNECTICUT MUNICIPAL MONEY MARKET FUND PURSUES ITS INVESTMENT OBJECTIVE
BY INVESTING IN A PORTFOLIO OF CONNECTICUT MUNICIPAL SECURITIES (AS DEFINED
BELOW) WITH REMAINING MATURITIES OF THIRTEEN MONTHS OR LESS AT THE TIME OF
PURCHASE BY THE CONNECTICUT MUNICIPAL MONEY MARKET FUND.
Unless indicated otherwise, the investment policies described in this
prospectus may be changed by the Trustees without the approval of
shareholders. Shareholders will be notified before any material changes in
these policies become effective. As a matter of investment policy which cannot
be changed without approval of shareholders, the Connecticut Municipal Money
Market Fund invests its assets so that at least 80% of its annual interest
income is exempt from federal regular income tax or at least 80% of the total
value of its assets are invested in obligations the interest income from which
is exempt from federal regular income tax. The average maturity of the
securities in the Connecticut Municipal Money Market Fund's portfolio,
computed on a dollar-weighted basis, will be 90 days or less.
ACCEPTABLE INVESTMENTS
Under normal circumstances, the Connecticut Municipal Money Market Fund will
invest its assets so that at least 65% of the value of its assets will be
invested in debt obligations issued by or on behalf of the State of
Connecticut and its political subdivisions and financing authorities, and
obligations of other states, territories and possessions of the United States,
including the District of Columbia, and any political subdivision or financing
authority of any of these, the interest
income from which is, in the opinion of qualified legal counsel, exempt from
federal regular income tax and CSIT ("Connecticut Municipal Securities").
Examples of Connecticut Municipal Securities include, but are not limited to:
.. municipal commercial paper and other short-term notes;
.. variable rate demand notes;
.. municipal bonds (including bonds having remaining maturities of less than
thirteen months without demand features);
.. municipal leases, including certificates of participation in leases;
.. tender option bonds; and
.. participation, trust, and partnership interests in any of the foregoing
obligations.
MASSACHUSETTS MUNICIPAL MONEY MARKET FUND
INVESTMENT OBJECTIVE
The investment objective of the Massachusetts Municipal Money Market Fund is
to provide current income exempt from federal regular income tax and the
income taxes imposed by the Commonwealth of Massachusetts, consistent with
stability of principal and liquidity. The investment objective cannot be
changed without the approval of shareholders. While there is no assurance that
the Massachusetts Municipal Money Market Fund will achieve its investment
objective, it endeavors to do so by following the investment policies
described in this prospectus.
INVESTMENT POLICIES
THE MASSACHUSETTS MUNICIPAL MONEY MARKET FUND PURSUES ITS INVESTMENT OBJECTIVE
BY INVESTING IN A PORTFOLIO OF MASSACHUSETTS MUNICIPAL SECURITIES (AS DEFINED
BELOW) WITH REMAINING MATURITIES OF THIRTEEN MONTHS OR LESS AT THE TIME OF
PURCHASE BY THE MASSACHUSETTS MUNICIPAL MONEY MARKET FUND.
Unless indicated otherwise, the investment policies described in this
prospectus may be changed by the Trustees without the approval of
shareholders. Shareholders will be notified before any material changes in
these policies become effective. As a matter of investment policy which cannot
be changed without approval of shareholders, the Massachusetts Municipal Money
Market Fund invests its assets so that at least 80% of its annual interest
income is exempt from federal regular income tax or at least 80% of the total
value of its assets are invested in obligations the interest income from which
is exempt from federal regular income tax. The average maturity of the
securities in the Massachusetts Municipal Money Market Fund's portfolio,
computed on a dollar-weighted basis, will be 90 days or less.
ACCEPTABLE INVESTMENTS
Under normal circumstances, the Massachusetts Municipal Money Market Fund will
invest its assets so that at least 65% of the value of its assets will be
invested in debt obligations issued by or on behalf of the Commonwealth of
Massachusetts and its political subdivisions and financing authorities, and
obligations of other states, territories and possessions of the United States,
including the District of Columbia, and any political subdivision or financing
authority of any of these, the interest income from which is, in the opinion
of qualified legal counsel, exempt from federal regular income tax and income
taxes imposed by the Commonwealth of Massachusetts imposed upon non-corporate
taxpayers ("Massachusetts Municipal Securities"). Examples of Massachusetts
Municipal Securities include, but are not limited to:
.. municipal commercial paper and other short-term notes;
.. variable rate demand notes;
.. municipal bonds (including bonds having remaining maturities of less than
thirteen months without demand features);
.. municipal leases, including certificates of participation in leases;
.. tender option bonds; and
.. participation, trust, and partnership interests in any of the foregoing
obligations.
INVESTMENTS, STRATEGIES, AND RISKS
VARIABLE RATE DEMAND NOTES. Variable rate demand notes are long-term
securities (Municipal Securities for the Connecticut/Massachusetts Municipal
Money Market Funds and long-term corporate debt instruments for the Prime
Money Market Fund) that have variable or floating interest rates and provide
the Money Market Funds with the right to tender the security for repurchase at
its stated principal amount plus accrued interest. Such securities typically
bear interest at a rate that is intended to cause the securities to trade at
par. The interest rate may float or be adjusted at regular intervals (ranging
from daily to annually), and is normally based on an applicable interest index
or another published interest rate or interest rate index. Most variable rate
demand notes allow the Money Market Funds to demand the repurchase of the
security on not more than seven days prior notice. Other notes only permit the
Money Market Funds to tender the security at the time of each interest rate
adjustment or at other fixed intervals. See "Demand Features." The Money
Market Funds treat variable rate demand notes as maturing on the later of the
date of the next interest rate adjustment or the date on which the Money
Market Funds may next tender the security for repurchase.
RATINGS. The Connecticut and Massachusetts Municipal Securities (collectively
referred to as "Municipal Securities") in which the Connecticut/Massachusetts
Municipal Money Market Funds invest must either be rated in one of the two
highest short-term rating categories by one or more NRSROs or be of comparable
quality to securities having such ratings. NRSRO's two highest rating
categories are determined without regard for sub-categories and gradations.
For example, securities rated SP-1+, SP-1, or SP-2 by Standard & Poor's Rating
Group ("S&P"), MIG-1 or MIG-2 by Moody's Investors Service, Inc. ("Moody's"),
or FIN-1+, FIN-1, and FIN-2 by Fitch Investors Service, Inc. ("Fitch") are all
considered rated in one of the two highest short-term rating categories. The
Connecticut/Massachusetts Municipal Money Market Funds will follow applicable
regulations in determining whether a security rated by more than one NRSRO can
be treated as being in one of the two highest short-term rating categories.
See "Regulatory Compliance."
If a Municipal Security has not been rated by a NRSRO, the
Connecticut/Massachusetts Municipal Money Market Funds' investment adviser
will acquire the security only if it determines that the security is of
comparable quality to securities that have received the requisite ratings. In
this regard, the adviser will generally treat Municipal Securities as eligible
portfolio securities if the issuer has received long-term bond ratings within
the two highest rating categories by a NRSRO with respect to other bonds
issued. The adviser also considers other relevant information in its
evaluation of unrated short-term securities.
For the Prime Money Market Fund's securities, NRSRO's two highest rating
categories are also determined without regard for sub-categories and
gradations. For example, the Prime Money Market Fund's securities rated A-1+,
A-1, or A-2 by S&P, Prime-1 or Prime-2 by Moody's, or F-1 (+ or -) or F-2 (+
or -) by Fitch are all considered rated in one of the two highest short-term
rating categories. The Prime Money Market Fund will limit its investments in
securities rated in the second highest short-term rating category, e.g., A-2
by S&P, Prime 2 by Moody's or F-2 (+ or -) by Fitch, to not more than 5% of
its total assets, with not more than 1% invested in the securities of any one
issuer. The Prime Money Market Fund will follow applicable regulations in
determining whether a security rated by more than one NRSRO can be treated as
being in the one of the two highest short-term rating categories. See
"Regulatory Compliance."
CREDIT ENHANCEMENT. Certain of the Money Market Funds' acceptable investments
may have been credit enhanced by a guaranty, letter of credit, or insurance.
The Money Market Funds typically evaluate the credit quality and ratings of
credit enhanced securities based upon the financial condition and ratings of
the party providing the credit enhancement (the "credit enhancer"), rather
than the issuer. Generally, the Prime Money Market Fund will not treat credit
enhanced securities as having been issued by the credit enhancer for
diversification
purposes. However, the Connecticut/Massachusetts Municipal Money Market Funds
will not treat credit enhanced securities as having been issued by the credit
enhancer for diversification purposes, unless the Connecticut/Massachusetts
Municipal Money Market Funds have invested more than 10% of their respective
assets in securities issued, guaranteed, or otherwise credit enhanced by the
credit enhancer, in which case the securities will be treated as having been
issued both by the issuer and the credit enhancer. The bankruptcy,
receivership, or default of the credit enhancer may adversely affect the
quality and marketability of the underlying security.
The Connecticut/Massachusetts Municipal Money Market Funds may have more than
25% of their respective total assets invested in securities credit enhanced by
banks or insurance companies.
DEMAND FEATURES. The Money Market Funds may acquire securities that are
subject to puts and standby commitments ("demand features") to purchase the
securities at their principal amount (usually with accrued interest) within a
fixed period (usually seven days) following a demand by a Money Market Fund.
The demand feature may be issued by the issuer of the underlying securities, a
dealer in the securities, or by another third party, and may not be
transferred separately from the underlying security. A Money Market Fund uses
these arrangements to provide liquidity and not to protect against changes in
the market value of the underlying securities. The bankruptcy, receivership,
or default by the issuer of the demand feature, or a default on the underlying
security or other event that terminates the demand feature before its
exercise, will adversely affect the liquidity of the underlying security.
Demand features that are exercisable even after a payment default on the
underlying security may be treated as a form of credit enhancement.
RESTRICTED AND ILLIQUID SECURITIES. The Money Market Funds may invest in
restricted securities. Restricted securities are any securities in which a
Money Market Fund may otherwise invest pursuant to its investment objective
and policies but which are subject to restrictions on resale under federal
securities laws. Pursuant to criteria established by the Trustees, certain
restricted securities are considered liquid. To the extent restricted
securities are deemed to be illiquid, each Money Market Fund will limit their
purchase, together with other securities not considered to be liquid, to 10%
of its individual net assets.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Money Market Funds may
purchase securities on a when-issued or delayed delivery basis. These
transactions are arrangements in which the Money Market Funds purchase
securities with payment and delivery scheduled for a future time. The seller's
failure to complete these transactions may cause the Money Market Funds to
miss a price or yield considered to be advantageous. Settlement dates may be a
month or more after entering into these transactions, and the market values of
the securities purchased may vary from the purchase prices. Accordingly, the
Money Market Funds may pay more/less than the market value of the securities
on the settlement date.
The Money Market Funds may dispose of a commitment prior to settlement if the
adviser deems it appropriate to do so. In addition, the Money Market Funds may
enter into transactions to sell its purchase commitments to third parties at
current market values and simultaneously acquire other commitments to purchase
similar securities at later dates. The Money Market Funds may realize
short-term profits or losses upon the sale of such commitments.
TEMPORARY INVESTMENTS. In such proportions as, in the judgment of its
investment adviser, prevailing market conditions warrant, the Prime Money
Market Fund may, for temporary defensive purposes, invest in repurchase
agreements and other mutual funds.
From time to time on a temporary basis, when the investment adviser determines
that market conditions call for a temporary defensive posture, the
Connecticut/Massachusetts Municipal Money Market Funds may invest in
short-term non-Connecticut/Massachusetts (respectively) municipal tax-exempt
obligations or other taxable, temporary investments. All temporary investments
will satisfy the same credit quality standards as the
Connecticut/Massachusetts Municipal Money Market Funds' acceptable
investments. See "Ratings" above. Temporary investments include: investments
in other mutual funds; notes issued by or on behalf of municipal or corporate
issuers; marketable obligations issued or guaranteed
by the U.S. government, its agencies, or instrumentalities; other debt
securities; commercial paper; certificates of deposit of banks; and repurchase
agreements (arrangements in which the organization sells a Money Market Fund a
temporary investment and agrees at the time of sale to repurchase it at a
mutually agreed upon time and price).
Although the Connecticut/Massachusetts Municipal Money Market Funds are
permitted to make taxable, temporary investments, there is no current
intention of generating income subject to federal regular income tax or CSIT
or income taxes imposed by the Commonwealth of Massachusetts, respectively.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES. The Money Market Funds
may invest in the securities of other investment companies but will not
respectively own more than 3% of the total outstanding voting stock of any
investment company, invest more than 5% of their respective total assets in
any one investment company, or invest more than 10% of their respective total
assets in investment companies in general. The Money Market Funds will invest
in other investment companies primarily for the purpose of investing
short-term cash which has not yet been invested in other portfolio
instruments. However, from time to time on a temporary basis, the Money Market
Funds may invest exclusively in one other investment company managed similarly
to the appropriate Money Market Fund. Shareholders should realize that when
one of the Money Market Funds invests in other investment companies, certain
fund expenses, such as custodian fees and administrative fees, may be
duplicated. The adviser will waive its investment advisory fee on assets
invested in securities of other investment companies.
The following investments and strategies apply only to the PRIME MONEY MARKET
FUND:
REPURCHASE AGREEMENTS. The U.S. government securities and other securities in
which the Prime Money Market Fund invests may be purchased pursuant to
repurchase agreements. Repurchase agreements are arrangements in which banks,
broker/dealers, and other recognized financial institutions sell U.S.
government securities or other securities to the Prime Money Market Fund and
agree at the time of sale to repurchase them at a mutually agreed upon time
and price. To the extent that the original seller does not repurchase the
securities from the Prime Money Market Fund, the Prime Money Market Fund could
receive less than the repurchase price on any sale of such securities.
BANK INSTRUMENTS. The Prime Money Market Fund only invests in Bank
Instruments either issued by an institution having capital, surplus and
undivided profits over $100 million or insured by the Bank Insurance Fund
("BIF") or the Savings Association Insurance Fund ("SAIF"). Bank Instruments
may include Eurodollar Certificates of Deposit ("ECDs"), Yankee Certificates
of Deposit ("Yankee CDs") and Eurodollar Time Deposits ("ETDs"). The Prime
Money Market Fund will treat securities credit enhanced with a bank's letter
of credit as Bank Instruments.
SHORT-TERM CREDIT FACILITIES. Demand notes are short-term borrowing
arrangements between a corporation and an institutional lender (such as the
Prime Money Market Fund) payable upon demand by either party. The notice
period for demand typically ranges from one to seven days, and the party may
demand full or partial payment. The Prime Money Market Fund may also enter
into, or acquire participations in, short-term revolving credit facilities
with corporate borrowers. Demand notes and other short-term credit
arrangements usually provide for floating or variable rates of interest.
The following investments and strategies apply only to the
CONNECTICUT/MASSACHUSETTS MUNICIPAL MONEY MARKET FUNDS:
MUNICIPAL LEASES. Municipal leases are obligations issued by state and local
governments or authorities to finance the acquisition of equipment and
facilities and may be considered to be illiquid. They may take the form of a
lease, an installment purchase contract, a conditional sales contract, or a
participation certificate in any of the above.
PARTICIPATION INTERESTS. The Connecticut/Massachusetts Municipal Money Market
Funds may purchase interests in Municipal Securities from financial
institutions such as commercial and investment banks, savings and loan
associations, and insurance companies. These interests may take the form of
participations, beneficial interests in a trust, partnership interests, or any
other form of indirect ownership that allows the Connecticut/Massachusetts
Municipal Money Market Funds to treat the income from the investment as
exempt from federal regular
income tax. The Connecticut/Massachusetts Municipal Money Market Funds invest
in these participation interests in order to obtain credit enhancement or
demand features that would not be available through direct ownership of the
underlying Municipal Securities.
TENDER OPTION BONDS. The Connecticut/Massachusetts Municipal Money Market
Funds may purchase tender option bonds and similar securities. A tender option
bond generally has a long maturity and bears interest at a fixed rate
substantially higher than prevailing short-term tax-exempt rates, and is
coupled with an agreement by a third party, such as a bank, broker-dealer, or
other financial institution, pursuant to which such institution grants the
security holders the option, usually upon not more than seven days notice or
at periodic intervals, to tender their securities to the institution and
receive the face value of the security. In providing the option, the financial
institution receives a fee that reduces the fixed rate of the underlying bond
and results in the Connecticut/Massachusetts Municipal Money Market Funds
effectively receiving a demand obligation that bears interest at the
prevailing short-term tax exempt rate. The Connecticut/Massachusetts Municipal
Money Market Funds' adviser will monitor, on an ongoing basis, the
creditworthiness of the issuer of the tender option bond, the financial
institution providing the option, and any custodian holding the underlying
long-term bond. The bankruptcy, receivership, or default of any of the parties
to the tender option bond will adversely affect the quality and marketability
of the security.
NON-DIVERSIFICATION. The Connecticut/Massachusetts Municipal Money Market
Funds are non-diversified investment portfolios. As such, there is no limit on
the percentage of assets which can be invested in any single issuer. An
investment in the Connecticut/Massachusetts Municipal Money Market Fund,
therefore, will entail greater risk than would exist in a diversified
investment portfolio because the higher percentage of investments among fewer
issuers may result in greater fluctuation in the total market value of the
Connecticut/Massachusetts Municipal Money Market Funds' portfolios. Any
economic, political, or regulatory developments affecting the value of the
securities in the Connecticut/Massachusetts Municipal Money Market Funds'
portfolios will have a greater impact on the total value of the portfolios
than would be the case if the portfolios were diversified among more issuers.
The Connecticut/Massachusetts Municipal Money Market Funds intend to comply
with Subchapter M of the Internal Revenue Code. This undertaking requires that
at the end of each quarter of the taxable year, with regard to at least 50% of
their respective total assets, no more than 5% of their respective total
assets are invested in the securities of a single issuer; beyond that, no more
than 25% of their respective total assets are invested in the securities of a
single issuer.
CONNECTICUT AND MASSACHUSETTS MUNICIPAL SECURITIES. Municipal Securities are
generally issued to finance public works, such as airports, bridges, highways,
housing, health-related entities, transportation-related projects, educational
programs, water and pollution control, and sewer works. They are also issued
to repay outstanding obligations, to raise funds for general operating
expenses, and to make loans to other public institutions and facilities.
Connecticut and Massachusetts Municipal Securities include industrial
development bonds issued by or on behalf of public authorities to provide
financing aid to acquire sites or construct and equip facilities for privately
or publicly owned corporations. The availability of this financing encourages
these corporations to locate within the sponsoring communities and thereby
increases local employment.
The two principal classifications of Municipal Securities are "general
obligation" and "revenue" bonds. General obligation bonds are secured by the
issuer's pledge of its full faith and credit and taxing power for the payment
of principal and interest. Interest on and principal of revenue bonds,
however, are payable only from the revenue generated by the facility financed
by the bond or other specified sources of revenue. Revenue bonds do not
represent a pledge of credit or create any debt of or charge against the
general revenues of a municipality or public authority. Industrial development
bonds are typically classified as revenue bonds.
STANDBY COMMITMENTS. Some securities dealers are willing to sell Municipal
Securities to the Connecticut/Massachusetts Municipal Money Market Funds
accompanied by their commitments to repurchase the Municipal Securities prior
to maturity, at the Connecticut/Massachusetts Municipal Money Market Funds'
option, for the amortized cost of the
Municipal Securities at the time of repurchase. These arrangements are not
used to protect against changes in the market value of Municipal Securities.
They permit the Connecticut/Massachusetts Municipal Money Market Funds,
however, to remain fully invested and still provide liquidity to satisfy
redemptions. The cost of Connecticut or Massachusetts Municipal Securities
accompanied by these standby commitments could be greater than the cost of
Municipal Securities without such commitments. Standby commitments are not
marketable or otherwise assignable and have value only to the
Connecticut/Massachusetts Municipal Money Market Funds. The default or
bankruptcy of a securities dealer giving such a commitment would not affect
the quality of the Connecticut or Massachusetts Municipal Securities
purchased. However, without a standby commitment, these securities could be
more difficult to sell. The Connecticut/Massachusetts Municipal Money Market
Funds enter into standby commitments only with those dealers whose credit the
investment adviser believes to be of high quality.
CONNECTICUT AND MASSACHUSETTS INVESTMENT RISKS. Yields on Connecticut and
Massachusetts Municipal Securities depend on a variety of factors, including:
the general conditions of the short-term municipal note market and of the
municipal bond market; the size and maturity of the particular offering; the
maturity of the obligations; and the rating of the issue. Further, any adverse
economic conditions or developments affecting the State of Connecticut and the
Commonwealth of Massachusetts or their municipalities could impact the
Connecticut/Massachusetts Municipal Money Market Funds' portfolios. The
ability of the Connecticut/Massachusetts Municipal Money Market Funds to
achieve their investment objectives also depends on the continuing ability of
the issuers of Connecticut and Massachusetts Municipal Securities and demand
features, or the credit enhancers of either, to meet their obligations for the
payment of interest and principal when due.
Investing in Connecticut and Massachusetts Municipal Securities which meet the
Connecticut/Massachusetts Municipal Money Market Funds' quality standards may
not be possible if the State of Connecticut and the Commonwealth of
Massachusetts or their municipalities do not maintain their current credit
ratings. An expanded discussion of the current economic risks associated with
the purchase of Connecticut or Massachusetts Municipal Securities is contained
in the Combined Statement of Additional Information.
INVESTMENT LIMITATIONS
THE MONEY MARKET FUNDS FOLLOW A NUMBER OF GUIDELINES IN MANAGING THEIR
PORTFOLIOS IN ORDER TO LIMIT INVESTMENT RISKS.
The following limitations apply only to the PRIME MONEY MARKET FUND:
The Prime Money Market Fund will not borrow money directly or pledge
securities except under certain circumstances. The Prime Money Market Fund may
borrow up to one-third of the value of its total assets either directly or
through reverse repurchase agreements and pledge up to 10% of the value of its
total assets to secure such borrowings.
The above investment limitation cannot be changed without shareholder
approval. The following limitation, however, can be changed by the Trustees
without shareholder approval. Shareholders will be notified before any
material change in this limitation becomes effective.
The Prime Money Market Fund will not invest more than 5% of the value of its
total assets in securities of issuers which have records of less than three
years of continuous operations, including the operation of any predecessor.
The following investment limitations apply only to CONNECTICUT/MASSACHUSETTS
MUNICIPAL MONEY MARKET FUNDS:
The Connecticut/Massachusetts Municipal Money Market Funds will not borrow
money directly or pledge securities except, under certain circumstances, they
may borrow up to one-third of the value of their respective total assets and
pledge up to 10% of the value of total assets to secure such borrowings.
The above investment limitation cannot be changed without the respective
shareholder approval. The following limitation, however, can be changed by the
Trustees without shareholder approval. Shareholders will be notified before
any material change in this limitation becomes effective.
The Connecticut/Massachusetts Municipal Money Market Funds will not invest
more than 5% of their respective total assets in industrial development bonds
or other Municipal Securities when the payment of principal and interest is
the responsibility of companies (or guarantors, where applicable) with less
than three years of continuous operations, including the operation of any
predecessor.
REGULATORY COMPLIANCE
The Money Market Funds may follow non-fundamental operational policies that
are more restrictive than their respective fundamental investment limitations,
as set forth in this prospectus and its Combined Statement of Additional
Information, in order to comply with applicable laws and regulations,
including the provisions of and regulations under the Investment Company Act
of 1940, as amended. In particular, the Money Market Funds will comply with
the various requirements of Rule 2a-7 which regulates money market mutual
funds. Each of the Money Market Funds will determine the effective maturity of
its respective 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 Money Market Funds may change these operational policies to reflect
changes in the laws and regulations without the approval of its shareholders.
ADMINISTRATION
MANAGEMENT OF THE SHAWMUT FUNDS
BOARD OF TRUSTEES
THE SHAWMUT FUNDS ARE MANAGED BY A BOARD OF TRUSTEES.
The Trustees are responsible for managing the Trust's business affairs and for
exercising all the Trust's powers except those reserved for the shareholders.
The Executive Committee of the Board of Trustees handles the Board's
responsibilities between meetings of the Board.
INVESTMENT ADVISER
PURSUANT TO AN INVESTMENT ADVISORY CONTRACT WITH THE TRUST, INVESTMENT
DECISIONS FOR THE MONEY MARKET FUNDS ARE MADE BY SHAWMUT BANK, N.A. (THE
"ADVISER"), SUBJECT TO DIRECTION BY THE TRUSTEES.
The Adviser continually conducts investment research and supervision for the
Money Market Funds and is responsible for the purchase or sale of portfolio
instruments, for which it receives an annual fee from the respective assets of
the Money Market Funds.
ADVISORY FEES
The Adviser receives an annual investment advisory fee equal to .50 of 1% of
each of the Money Market Fund's average daily net assets. The Adviser has
undertaken to waive a portion of its advisory fee, up to the amount of the
advisory fee, to reimburse each of the Money Market Funds for operating
expenses in excess of limitations established by certain states. The Adviser
may further voluntarily waive a portion of its fee or reimburse the Money
Market Funds for certain operating expenses. The Adviser can terminate such
voluntary waiver or reimbursement policy with any of the Money Market Funds at
any time at its sole discretion.
ADVISER'S BACKGROUND
SHAWMUT BANK, N.A., A NATIONAL BANKING ASSOCIATION, AND ITS AFFILIATES HAVE
MANAGED COMMINGLED FUNDS FOR OVER FIFTY YEARS. AS OF OCTOBER 31, 1994, SHAWMUT
NATIONAL CORPORATION, THROUGH ITS SUBSIDIARIES INCLUDING SHAWMUT BANK, N.A.
MANAGED MORE THAN $15 BILLION IN TOTAL ASSETS. SHAWMUT BANK, N.A. HAS SERVED
AS AN ADVISER TO MUTUAL FUNDS SINCE THE INCEPTION OF THE SHAWMUT FUNDS ON
DECEMBER 1, 1992.
Shawmut Bank, N.A., a national banking association, along with Shawmut Bank
Connecticut, National Association and Shawmut Bank NH, are the principal
subsidiaries of Shawmut National Corporation, a super-regional bank holding
company formed on February 29, 1988, and based in southern New England.
Shawmut National Corporation serves consumers through its network of banking
offices with a full range of deposit and lending products, as well as
investment services. As part of their regular banking operations, Shawmut Bank
may make loans to public companies. Thus, it may be possible, from time to
time, for the Money Market Funds to hold or acquire the securities of issuers
which are also lending clients of Shawmut Bank. The lending relationship will
not be a factor in the selection of securities. The principal executive
offices of the investment adviser are located at One Federal Street, Boston,
Massachusetts 02211.
DISTRIBUTION OF TRUST SHARES
FEDERATED SECURITIES CORP. IS THE PRINCIPAL DISTRIBUTOR FOR TRUST SHARES.
Federated Securities Corp., Federated Investors Tower, Pittsburgh,
Pennsylvania 15222-3779, is a Pennsylvania corporation organized on November
14, 1969, and is the principal distributor for a number of investment
companies. Federated Securities Corp. is a subsidiary of Federated Investors.
DISTRIBUTION PLAN. Under the distribution plan adopted in accordance with
Investment Company Act Rule 12b-1 (the "Plan"), the Massachusetts Municipal
Money Market Fund will pay to the distributor an amount computed at an annual
rate of up to .50 of 1% of the average daily net asset value of the
Massachusetts Municipal Money Market Fund to finance any activity which is
principally intended to result in the sale of Shares subject to the Plan.
The distributor may, from time to time and for such periods as it deems
appropriate, voluntarily reduce its compensation under the Plan.
The distributor may select financial institutions such as banks, fiduciaries,
custodians for public funds, investment advisers, and broker/dealers
("brokers") to provide distribution and/or administrative services as agents
for their clients or customers. Administrative services may include, but are
not limited to, the following functions: providing office space, equipment,
telephone facilities, and various clerical, supervisory, computer, and other
personnel as necessary or beneficial to establish and maintain shareholder
accounts and records; processing purchase and redemption transactions and
automatic investments of client account cash balances; answering routine
client inquiries; assisting clients in changing dividend options, account
designations, and addresses; and providing such other services as may
reasonably be requested.
The distributor will pay financial institutions a fee based upon the Shares
subject to the Plan and owned by their clients or customers. The schedules of
such fees and the basis upon which such fees will be paid will be determined,
from time to time, by the distributor.
The Plan is a "compensation" type plan. As such, the Massachusetts Municipal
Money Market Fund makes no payments to the distributor except as described
above. Therefore, the Massachusetts Municipal Money Market Fund does not pay
for unreimbursed expenses of the distributor, including amounts expended by
the distributor in excess of amounts received by it from the Massachusetts
Municipal Money Market Fund, including interest, carrying or other financing
charges in connection with excess amounts expended, or the distributor's
overhead expenses. However, the distributor may be able to recover such
amounts or may earn a profit from future payments made by the Massachusetts
Municipal Money Market Fund under the Plan.
As of the date of this prospectus, the Massachusetts Municipal Money Market
Fund is not paying or accruing 12b-1 fees. The Massachusetts Municipal Money
Market Fund does not intend to accrue or pay 12b-1 fees until either a
separate class of shares has been created for certain fiduciary investors or a
determination is made that such investors will be subject to 12b-1 fees.
PAYMENTS TO FINANCIAL INSTITUTIONS. The distributor may pay financial
institutions a fee based on the average net asset value of shares of their
customers invested in a Money Market Fund for providing administrative
services. If paid, this fee will be reimbursed by the Adviser and not a Money
Market Fund.
A Money Market Fund's investment adviser or its affiliates may also offer to
pay a fee from their own assets to financial institutions as financial
assistance for providing substantial marketing and sales support. The support
may include sponsoring sales, educational and training seminars for their
employees, providing sales literature, and engineering computer software
programs that emphasize the attributes of a Money Market Fund. Such assistance
will be predicated upon the amount of shares the dealer sells or may sell,
and/or upon the type and nature of sales or operational support furnished by
the financial institution. These payments will be made by a Money Market
Fund's investment adviser and will not be made from the assets of a Money
Market Fund.
The Glass-Steagall Act prohibits a depository institution (such as a
commercial bank or a savings and loan association) from being an underwriter
or distributor of most securities. In the event the Glass-Steagall Act is
deemed to prohibit depository institutions from acting in the administrative
capacities described above or should Congress relax current restrictions on
depository institutions, the Trustees will consider appropriate changes in the
services.
State securities laws governing the ability of depository institutions to act
as underwriters or distributors of securities may differ from interpretations
given to the Glass-Steagall Act and, therefore, banks and financial
institutions may be required to register as dealers pursuant to state law.
ADMINISTRATION OF THE MONEY MARKET FUNDS
ADMINISTRATIVE SERVICES. Federated Administrative Services ("FAS"), Federated
Investors Tower, Pittsburgh, Pennsylvania 15222-3779, a subsidiary of
Federated Investors, provides the Money Market Funds with certain
administrative personnel and services necessary to operate the Money Market
Funds, such as legal and accounting services. FAS provides these at an annual
rate as specified below:
<TABLE>
<S> <C>
MAXIMUM AVERAGE AGGREGATED DAILY
ADMINISTRATIVE FEE NET ASSETS OF THE TRUST
.150 of 1% First $250 million
.125 of 1% Next $250 million
.100 of 1% Next $250 million
.075 of 1% Over $750 million
</TABLE>
The administrative fee received by FAS during any fiscal year shall be at
least $50,000 for each of the Money Market Funds. FAS may voluntarily choose
to waive a portion of its fee.
CUSTODIAN. Shawmut Bank, N.A., One Federal Street, Boston, Massachusetts
02211, is custodian for the securities and cash of the Money Market Funds.
Under the Custodian Agreement, Shawmut Bank, N.A., holds the Money Market
Funds' portfolio securities in safekeeping and keeps all necessary records and
documents relating to its duties.
TRANSFER AGENT, DIVIDEND DISBURSING AGENT, AND PORTFOLIO ACCOUNTING
SERVICES. Federated Services Company, Federated Investors Tower, Pittsburgh,
Pennsylvania 15222-3779, is transfer agent and dividend disbursing agent for
the Money Market Funds. It also provides certain accounting and recordkeeping
services with respect to each of the Money Market Funds' portfolio
investments.
LEGAL COUNSEL. Legal counsel is provided by Houston, Houston & Donnelly, 2510
Centre City Tower, Pittsburgh, Pennsylvania 15222, and Dickstein, Shapiro &
Morin, 2101 L Street, N.W., Washington, DC 20037.
INDEPENDENT ACCOUNTANTS. The independent accountants for the Money Market
Funds are Price Waterhouse LLP, 160 Federal Street, Boston, Massachusetts
02110.
NET ASSET VALUE
The term "net asset value" refers to the value of one Money Market Fund share.
The Money Market Funds attempt to stabilize the net asset value of their
respective shares at $1.00. The net asset value per share is determined by
dividing the sum of the market value of all securities and other assets, less
liabilities, by the number of shares outstanding. The Money Market Funds
cannot guarantee that the net asset value of their respective shares will
always remain at $1.00 per share.
INVESTING IN SHARES
You can buy Trust Shares by Federal Reserve wire, mail, or transfer, as
explained below.
Shares of the Money Market Funds are sold by the distributor on days on which
the New York Stock Exchange and Federal Reserve Wire System are open for
business. Shares of the Money Market Funds may also be purchased through
Shawmut Bank, N.A., Shawmut Bank Connecticut, National Association, Shawmut
Bank NH, or their affiliates (collectively, "Shawmut Bank") on days on which
both Shawmut Bank and the New York Stock Exchange and Federal Reserve Wire
System are open for business. Texas residents must purchase, exchange, and
redeem Trust Shares through Federated Securities Corp. at 1-800-356-2805. The
Money Market Funds reserve the right to reject any purchase request.
THROUGH SHAWMUT BANK. An investor may call their Shawmut Bank trust officer
to receive information and to place an order to purchase Trust Shares. Shawmut
Bank will purchase Trust Shares on behalf of investors and maintain all
records relating to the Trust Shares. Through its trust accounting systems,
Shawmut Bank provides shareholders of Trust Shares with detailed periodic
statements that integrate information regarding investments in the Money
Market Funds with other Shawmut Bank investment services.
Orders placed through Shawmut Bank are considered received when payment is
converted to federal funds and the applicable Money Market Fund is notified of
the purchase order. The completion of the purchase transaction will generally
occur within one business day after Shawmut Bank receives a purchase order.
Purchase orders must be received by Shawmut Bank before 11:00 a.m. (Eastern
time) and must be transmitted by Shawmut Bank to the applicable Money Market
Fund before 12:00 noon (Eastern time) in order for Trust Shares to be
purchased at that day's public offering price.
DIRECTLY FROM THE DISTRIBUTOR. An investor may place an order to purchase
Trust Shares directly from the distributor. To do so: complete and sign the
new account form available from the Money Market Funds; complete an
application for the establishment of a trust account with Shawmut Bank;
enclose a check made payable to the full name of your desired portfolio (see
the cover of the prospectus) --Trust Shares (as appropriate); and mail both to
the Money Market Funds, Attention: Vice President, Securities Operations,
OF0501, One Federal Street, Boston, Massachusetts 02211. The order is
considered received after a trust account is established and the check is
converted by Shawmut Bank into federal funds. This is generally the next
business day after Shawmut Bank receives the check.
To purchase Trust Shares of the Money Market Funds by wire, call
1-800-SHAWMUT. All information needed will be taken over the telephone, and
the order is considered received when Shawmut Bank receives payment by wire.
To request additional information concerning purchases by wire, please contact
Federated Securities Corp., the Money Market Funds' distributor, at
1-800-356-2805.
Shares cannot be purchased by wire on any day on which both Shawmut Bank and
the New York Stock Exchange and Federal Reserve Wire System are not open for
business.
MINIMUM INVESTMENT REQUIRED
THE MINIMUM INITIAL INVESTMENT IS $2,500.
The minimum initial investment in Trust Shares by an investor is $2,500.
Subsequent investments must be in amounts of at least $100. The Money Market
Funds may waive the initial minimum investment for employees of Shawmut Bank
and its affiliates, from time to time.
WHAT SHARES COST
TRUST SHARES ARE SOLD AT THEIR NET ASSET VALUE NEXT DETERMINED AFTER AN ORDER
IS RECEIVED.
The net asset value is determined at 12:00 p.m. and 4:00 p.m. (Eastern time),
Monday through Friday, except on: (i) days on which there are not sufficient
changes in the value of a Money Market 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) on the following holidays: New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas
Day.
Money Market Fund Trust Shares are sold at their net asset value next
determined after an order is received without a sales load.
EXCHANGING SECURITIES FOR MONEY MARKET FUND SHARES
Investors may exchange certain Connecticut or Massachusetts Municipal
Securities, or a combination of securities and cash, for Shares of Connecticut
Municipal Money Market Fund and Massachusetts Municipal Money Market Fund,
respectively. The securities and any cash must have a market value of at least
$2,500. Each of these Funds reserves the right to determine the acceptability
of securities to be exchanged. Securities accepted by the Connecticut
Municipal Money Market Fund and Massachusetts Municipal Money Market Fund are
valued in the same manner as the Connecticut Municipal Money Market Fund and
Massachusetts Municipal Money Market Fund values their assets. Investors
wishing to exchange securities should first contact Federated Securities Corp.
When shares are purchased by exchange of Connecticut or Massachusetts
Municipal Securities, the proceeds from the redemption of those shares are not
available until the transfer agent is reasonably certain that the transfer has
settled, which can take up to five business days.
SUBACCOUNTING SERVICES
Institutions are encouraged to open single master accounts. However, certain
institutions may wish to use the transfer agent's subaccounting system to
minimize their internal recordkeeping requirements. The transfer agent charges
a fee based on the level of subaccounting services rendered. Certain
institutions holding Trust Shares in a fiduciary, agency, custodial, or
similar capacity may charge or pass through subaccounting fees as part of or
in addition to normal trust or agency account fees. They may also charge fees
for other services provided which may be related to the ownership of Trust
Shares. This prospectus should, therefore, be read together with any agreement
between the customer and the institution with regard to the services provided,
the fees charged for those services, and any restrictions and limitations
imposed.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Money Market Funds, Federated Services Company
maintains a Share account for each shareholder of record. Share certificates
are not issued unless requested by contacting Shawmut Bank in writing.
Detailed confirmations of each purchase or redemption are sent to Shawmut Bank
or other shareholders of record. Monthly statements are sent by Shawmut Bank
to its trust customers to report account activity during the previous month,
including dividends paid during the period.
DIVIDENDS
Dividends are declared daily and paid monthly to all shareholders invested in
each Money Market Fund on the record date. Trust Shares purchased by wire
before 11:00 a.m. (Eastern time) begin earning dividends that day. Trust
Shares purchased by check begin earning dividends on the next business day
after the check is converted by Shawmut Bank into federal funds.
CAPITAL GAINS
Capital gains realized by a Money Market Fund, if any, will be distributed to
that Money Market Fund's shareholders at least once every 12 months.
Exchange Privilege
EXCHANGING SHARES. Shareholders may exchange Trust Shares, with a minimum net
asset value of $1,000, for shares of the same designated class of other funds
advised by Shawmut Bank.
Exchanges are subject to the minimum initial purchase requirements of such
fund being acquired. Prior to any exchange, the shareholder must receive a
copy of the current prospectus of the class 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, Trust Shares
submitted for exchange will be redeemed at the next-determined net asset
value. 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 modified or
terminated at any time. Shareholders will be notified of the modification or
termination of the exchange privilege. A shareholder may obtain further
information on the exchange privilege by calling their trust officer at
Shawmut Bank.
EXCHANGE-BY-TELEPHONE. Instructions for exchanges between participating funds
which are part of the Trust may be given by telephone to their trust officer
at Shawmut Bank. To utilize the exchange-by-telephone service, a shareholder
must complete an authorization form permitting Shawmut Bank to instruct the
Money Market Funds to honor telephone instructions. The authorization is
included in Shawmut Bank's trust account documentation. Trust Shares may be
exchanged by telephone only between trust accounts having identical
shareholder registrations. Exchange instructions given by telephone may be
electronically recorded.
Any Trust 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.
Telephone exchange instructions must be received before 11:00 a.m. (Eastern
time) for Trust 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 Shawmut Bank during times of drastic
economic or market changes. If a shareholder cannot contact Shawmut Bank by
telephone, it
is recommended that an exchange request be made in writing and sent by
overnight mail to Shawmut Bank, Attention: Vice President, Securities
Operation, OF0501, One Federal Street, Boston, Massachusetts 02211.
If reasonable procedures are not followed by the Money Market Funds, they may
be liable for losses due to unauthorized or fraudulent telephone instructions.
REDEEMING SHARES
YOU CAN REDEEM TRUST SHARES BY MAIL OR TELEPHONE. TO ENSURE YOUR SHARES ARE
REDEEMED EXPEDITIOUSLY, PLEASE FOLLOW THE PROCEDURES EXPLAINED BELOW.
The Money Market Funds redeem Trust Shares at their net asset value next
determined after Federated Services Company receives the redemption request.
Redemptions will be made on days on which the Money Market Funds compute their
net asset value. Requests for redemptions can be made by telephone or in
writing by contacting a Shawmut Bank trust officer. Redemption requests
received prior to 11:00 a.m. (Eastern time) will be effected on the same
business day.
THROUGH SHAWMUT BANK
Shareholders may redeem Trust Shares by calling their Shawmut Bank trust
officer to request the redemption. Trust Shares will be redeemed at the net
asset value next determined after Federated Services Company receives the
redemption request. Shawmut Bank is responsible for promptly submitting
redemption requests and for maintaining proper written records of redemption
instructions received from the Money Market Funds' shareholders. In order to
effect a redemption on the same business day as a request, Shawmut Bank is
responsible for the timely transmission of the redemption request to the
appropriate Money Market Fund.
Before Shawmut Bank may request redemption by telephone on behalf of a
shareholder, an authorization form permitting the Money Market Funds to accept
redemption requests by telephone must first be completed. This authorization
is included in Shawmut Bank's trust account documentation. Redemption
instructions given by telephone may be electronically recorded. In the event
of drastic economic or market changes, a shareholder may experience difficulty
in redeeming by telephone. If such a case should occur, it is recommended that
a redemption request be made in writing and sent by overnight mail to Shawmut
Bank, Attention: Vice President, Securities Operation, OF0501, One Federal
Street, Boston, Massachusetts 02211.
If reasonable procedures are not followed by the Money Market Funds, they may
be liable for losses due to unauthorized or fraudulent telephone instructions.
DIRECTLY FROM THE MONEY MARKET FUNDS
BY MAIL. A shareholder may redeem Trust Shares by sending a written request
to Federated Services Company. If Trust Shares are purchased by Shawmut Bank
on behalf of a trust customer, only Shawmut Bank, as the shareholder of
record, can request a redemption from Federated Services Company. The written
request should include the shareholder's name, the Money Market Fund's name
and class of shares name, the account number, and the share or dollar amount
requested. If share certificates have been issued, they must be properly
endorsed and should be sent by registered or certified mail with the written
request. Shareholders should call the Money Market Funds for assistance in
redeeming by mail.
SIGNATURES. Shareholders requesting a redemption of $50,000 or more, a
redemption of any amount to be sent to an address other than that on record
with the Money Market Funds, 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;
.. 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 Money Market Funds do not accept signatures guaranteed by a notary
public.
The Money Market Funds, and their transfer agent have adopted standards
for accepting signature guarantees from the above institutions. The Money
Market Funds may elect in the future to limit eligible signature
guarantors to institutions that are members of a signature guarantee
program. The Money Market Funds and their transfer agent reserve the right
to amend these standards at any time without notice.
RECEIVING PAYMENT
Redemption payments will generally be made directly to the trust account
maintained by an investor with Shawmut Bank. This deposit is normally made
within one business day, but in no event more than seven days, after the
redemption request, provided the transfer agent has received payment from
the shareholder. The net asset value of Trust Shares redeemed is
determined, and dividends, if any, are paid up to and including, the day
prior to the day that a redemption request is processed. Pursuant to
instructions from Shawmut Bank, redemption proceeds may be transferred
from a shareholder account by check or by wire.
BY CHECK. 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 redemption request provided the transfer agent has received payment
for Trust Shares from the shareholder.
BY WIRE. Requests to wire proceeds from redemptions received before 11:00
a.m. (Eastern time) will be honored the following business day after
Shawmut Bank receives proper instructions.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Money
Market Funds may redeem shares in any account and pay the proceeds to the
shareholder if the account balance falls below a required minimum of
$2,500. This requirement does not apply, however, if the balance falls
below $2,500 because of changes in a Money Market Fund's net asset value.
Before shares are redeemed to close an account, the shareholder is
notified in writing and allowed 30 days to purchase additional shares to
meet the minimum requirement.
REDEMPTION IN KIND
The Money Market Funds are obligated to redeem Shares solely in cash up to
$250,000 or 1% of the net asset value of Shares of each Money Market Fund,
whichever is less, for any one shareholder within a 90-day period.
Any redemption beyond this amount will also be in cash unless the Trustees
determine that further cash payments will have a material adverse effect
on remaining shareholders. In such a case, the Money Market Funds will pay
all or a portion of the remainder of the redemption in portfolio
instruments, valued in the same way as a Money Market Fund determines net
asset value. The portfolio instruments will be selected in a manner that
the Trustees deem fair and equitable.
Redemption in kind is not as liquid as a cash redemption. If redemption is
made in kind, shareholders receiving their securities and selling them
before their maturity could receive less than the redemption value of
their securities and could incur certain transaction costs.
SHAREHOLDER INFORMATION
VOTING RIGHTS
EACH TRUST SHARE OF A MONEY MARKET FUND GIVES THE SHAREHOLDER ONE VOTE IN
TRUSTEE ELECTIONS AND OTHER MATTERS SUBMITTED TO SHAREHOLDERS OF THE TRUST FOR
VOTE.
All shares of each portfolio in the Trust have equal voting rights except
that, in matters affecting only a particular fund or class, only shareholders
of that fund or class are entitled to vote. As a Massachusetts business trust,
the Trust is not required to hold annual shareholder meetings. Shareholder
approval will be sought only for certain changes in the Trust or a Money
Market Fund's operation and for the election of Trustees under certain
circumstances.
Trustees may be removed by the Trustees or by shareholders at a special
meeting. A special meeting of the shareholders shall be called by the Trustees
upon the written request of shareholders owning at least 10% of the
outstanding shares of the Trust.
As of December 12, 1994, Olsen & Co., acting in various capacities for various
accounts, was the owner of record of 32,949,499 shares (100%) of the Trust
Shares of Connecticut Municipal Money Market Fund; 527,538,834 shares (100%)
of Trust Shares of Prime Money Market Fund; and 17,269,924 shares (47.81%) of
Massachusetts Municipal Money Market Fund.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for acts or obligations of the Trust on
behalf of a Money Market Fund. To protect shareholders of a Money Market Fund,
the Trust has filed legal documents with Massachusetts that expressly disclaim
the liability of shareholders of a Money Market Fund for 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 on behalf of the Money Market Funds.
In the unlikely event a shareholder is held personally liable for the Trust's
obligations on behalf of a Money Market Fund, the Trust is required to use the
property of that Money Market Fund to protect or compensate the shareholder.
On request, the Trust will defend any claim made and pay any judgment against
a shareholder of the Money Market Funds for any act or obligation of the Trust
on behalf of the Money Market Funds. Therefore, financial loss resulting from
liability as a shareholder of the Money Market Funds will occur only if the
Trust cannot meet its obligations to indemnify shareholders and pay judgments
against them from the assets of the Money Market Funds.
EFFECT OF 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 investment company
continuously engaged in the issuance of its shares, and prohibit banks
generally from issuing, underwriting, selling, 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.
Shawmut Bank is subject to such banking laws and regulations.
Shawmut Bank believes, based upon the advice of its counsel, that it may
perform the services for the Money Market Funds contemplated by its advisory
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 or future statutes and
regulations, could prevent Shawmut Bank from continuing to perform all or a
part of the above services for its customers and/or the Money Market Funds. If
it were prohibited from engaging in these customer-related activities, the
Trustees would consider alternative advisers and means of continuing available
investment services. In such event, changes in the operation of the Money
Market Funds may occur, including possible termination of any automatic or
other Money Market Fund share investment and redemption services then being
provided by Shawmut Bank. It is not expected that existing shareholders would
suffer any adverse financial consequences (if another adviser with equivalent
abilities to Shawmut Bank is found) as a result of any of these occurrences.
TAX INFORMATION
FEDERAL INCOME TAX
The Money Market Funds will pay no federal income tax because each Money
Market Fund expects to meet requirements of the Internal Revenue Code, as
amended, applicable to regulated investment companies and to receive the
special tax treatment afforded to such companies.
Each Money Market Fund will be treated as a single, separate entity for
federal income tax purposes so that income (including capital gains) and
losses realized by The Shawmut Funds' other portfolios will not be combined
for tax purposes with those realized by each Money Market Fund.
Unless otherwise exempt, shareholders are required to pay federal income tax
on any dividends and other distributions received. This applies whether
dividends and distributions are received in cash or as additional Trust
Shares.
Shareholders are urged to consult their own tax advisers regarding the status
of their accounts under state and local tax laws.
CONNECTICUT TAX CONSIDERATIONS
As applied to Connecticut resident individuals, estates and trust owning
shares in the Connecticut Municipal Money Market Fund, the CSIT taxes items of
income derived from such shares in a variety of ways.
Distributions which are tax-exempt interest dividends under the federal income
tax are not subject to the CSIT to the extent that such distributions are
derived from interest on obligations issued by or on behalf of the State of
Connecticut or its instrumentalities or by State municipalities ("Connecticut
obligations"), or to the extent that such dividends are derived from interest
on obligations, the income from which federal law forbids the states to tax.
All other tax-exempt interest dividends distributed by the Connecticut
Municipal Money Market Fund are subject to the CSIT.
Regarding proper treatment of distributions from the Connecticut Municipal
Money Market Fund which are capital gains dividends for federal income tax
purposes and which are derived from the sale or exchange of Connecticut
obligations, shareholders should consult their local tax adviser.
All other distributions from the Connecticut Municipal Money Market Fund are
subject to the CSIT.
For purposes of the CSIT, a shareholder's Connecticut tax basis in the shares
of the Connecticut Municipal Money Market Fund will be the federal adjusted
tax basis of such shareholder, and any gain realized for federal income tax
purposes on the disposition of shares in the Connecticut Municipal Money
Market Fund will constitute taxable gain for purposes of the CSIT.
The Connecticut corporation business tax ("CCBT") is imposed on corporations
and certain other entities. Distributions from the Connecticut Municipal Money
Market Fund to a shareholder subject to the CCBT are not eligible for the
dividends received deduction under the CCBT and, therefore, are included in
the taxable income of a taxpayer to the extent such distributions are treated
as either exempt-interest dividends or capital gains dividends for federal
income tax purposes. The Connecticut Department of Revenue Services has issued
a letter ruling which has the effect of treating all other distributions from
the Connecticut Municipal Money Market Fund as eligible for the CCBT dividends
received deduction. Any gain realized for federal income tax purposes on the
disposition of shares in the Connecticut Municipal Money Market Fund is
includable in the gross income of a shareholder subject to the CCBT.
MASSACHUSETTS TAX CONSIDERATIONS
Under the laws of the Commonwealth of Massachusetts, dividends paid by the
Massachusetts Municipal Money Market Fund representing interest payments on
municipal obligations issued by the Commonwealth of Massachusetts or a
political subdivision thereof (or interest on obligations of United States
territories or possessions to the extent exempt from taxation by the states
pursuant to federal law) will be exempt from Massachusetts individual income
tax. Accordingly, shareholders of the Massachusetts Municipal Money Market
Fund who are residents of the Commonwealth of Massachusetts will not be
subject to Massachusetts individual income tax on dividends paid by the
Massachusetts Municipal Money Market Fund to the extent such dividends are
derived from interest on municipal obligations which would be tax-exempt if
directly received by such shareholder, whether such dividends are taken in
cash or reinvested in additional shares of the Massachusetts Municipal Money
Market Fund.
Massachusetts corporations must include all dividends paid by the
Massachusetts Municipal Money Market Fund in their net income, and the value
of their shares of stock in the Massachusetts Municipal Money Market Fund in
their net worth, when computing the Massachusetts excise taxes on
corporations.
OTHER STATE AND LOCAL TAXES
Income from the Connecticut/Massachusetts Municipal Money Market Funds is not
necessarily free from regular state income taxes in states other than
Connecticut/Massachusetts, as appropriate, or from personal property taxes.
State laws differ on this issue and shareholders are urged to consult their
own tax advisers regarding the status of their accounts under state and local
tax laws.
OTHER CLASSES OF SHARES
Connecticut Municipal Money Market Fund and Prime Money Market Fund offer a
separate class of shares known as Investment Shares. Investment Shares are
sold primarily to financial institutions that rely upon the distribution
services provided by the distributor in the marketing of Investment Shares, as
well as to retail customers of such institutions. Investment Shares are sold
at net asset value. Investments in Investment Shares are subject to a minimum
initial investment of $2,500.
Investment Shares are distributed pursuant to 12b-1 Plans adopted by the Trust
whereby the distributor is paid a fee of up to .50 of 1% of the Investment
Shares' average daily net assets.
The amount of dividends payable to Trust Shares will exceed that of Investment
Shares by the difference between class expenses and distribution expenses
borne by shares of each respective class.
The stated advisory fee is the same for both classes of shares.
PERFORMANCE INFORMATION
From time to time the Money Market Funds advertise their yield, effective
yield and tax-equivalent yield for Trust Shares.
The yield of Trust Shares represents the annualized rate of income earned on
an investment in Trust Shares over a seven-day period. It is the annualized
dividends earned during the period on the investment, shown as a percentage of
the investment.
The effective yield is calculated similarly to the yield, but, when
annualized, the income earned by an investment in Trust Shares is assumed to
be reinvested daily. The effective yield will be slightly higher than the
yield because of the compounding effect of this assumed reinvestment.
The tax-equivalent yield for the Connecticut/Massachusetts Municipal Money
Market Funds is calculated similarly to the yield, but is adjusted to reflect
the taxable yield that the Connecticut/Massachusetts Municipal Money Market
Funds would have had to earn to equal its actual yield, assuming a 32.50% and
40.00% combined federal and state tax rate for Connecticut and Massachusetts,
respectively and assuming that income is 100% tax-exempt.
Advertisements and other sales literature may also refer to total return.
Total return represents the change, over a specified period of time, in the
value of an investment in Trust Shares after reinvesting all income
distributions. It is calculated by dividing that change by the initial
investment and is expressed as a percentage.
Yield, effective yield and tax-equivalent yield will be calculated separately
for Trust Shares and Investment Shares. Because Investment Shares are subject
to 12b-1 fees, the yield, effective yield and tax-equivalent yield of the
Trust Shares, for the same period, will exceed that of Investment Shares.
Trust Shares are sold without any sales load or other similar non-recurring
charges.
From time to time, the Money Market Funds may advertise their performance
using certain financial publications and/or compare their performance to
certain indices.
Further information about the performance of the Money Market Funds is
contained in the Trust's Combined Annual Report dated October 31, 1994, which
can be obtained free of charge.
INVESTMENT ADVISER
Shawmut Bank, N.A.
One Federal Street
Boston, MA 02211
ADMINISTRATOR
Federated Administrative Services
Federated Investors Tower
Pittsburgh, PA 15222-3779
CUSTODIAN
Shawmut Bank, N.A.
One Federal Street
Boston, MA 02211
TRANSFER AGENT
Federated Services Company
Federated Investors Tower
Pittsburgh, PA 15222-3779
DISTRIBUTOR
Federated Securities Corporation
Federated Investors Tower
Pittsburgh, PA 15222-3779
LEGAL COUNSEL
Dickstein, Shapiro & Morin, L.L.P.
2101 L Street, N.W.
Washington, D.C. 20037
Houston, Houston & Donnelly
2510 Centre City Tower
Pittsburgh, PA 15222
SHAWMUT INCOME FUNDS
LIMITED TERM INCOME
INTERMEDIATE GOVERNMENT INCOME
FIXED INCOME
CONNECTICUT INTERMEDIATE MUNICIPAL INCOME
MASSACHUSETTS INTERMEDIATE MUNICIPAL INCOME
SHAWMUT EQUITY FUNDS
GROWTH AND INCOME EQUITY
GROWTH EQUITY
SMALL CAPITALIZATION EQUITY
QUANTITATIVE EQUITY
CALL 1-800-SHAWMUT
FOR MORE INFORMATION ON THE
SHAWMUT FAMILY OF FUNDS
[LOGO] 820482842
820482784
820482792
3120921A-I (12/94)
The Shawmut Money Market Funds
(Portfolios of The Shawmut Funds)
Shawmut Connecticut Municipal Money Market Fund
Trust Shares
Investment Shares
Shawmut Massachusetts Municipal Money Market Fund
Shawmut Prime Money Market Fund
Trust Shares
Investment Shares
Combined Statement of Additional Information
Shawmut Connecticut Municipal Money Market Fund
("Connecticut Municipal Money Market Fund"), Shawmut
Massachusetts Municipal Money Market Fund ("Massachusetts
Municipal Money Market Fund"), and Shawmut Prime Money
Market Fund ("Prime Money Market Fund") (collectively,
referred to as the "Money Market Funds") represent
interests in investment portfolios of The Shawmut Funds
(the "Trust"). This combined Statement of Additional
Information should be read with the respective
prospectuses for the Money Market Funds, Trust Shares and
Investment Shares, dated December 31, 1994. This
Statement is not a prospectus itself. To receive a copy
of either prospectus, write or call the Money Market
Funds.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE SHARES OFFERED BY THE PROSPECTUS ARE NOT DEPOSITS OR
OBLIGATIONS OF SHAWMUT BANK, ARE NOT ENDORSED OR
GUARANTEED BY SHAWMUT BANK, ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, NOR ARE THEY
INSURED OR GUARANTEED BY THE FEDERAL RESERVE BOARD OR ANY
OTHER GOVERNMENT AGENCY. MUTUAL FUNDS INVOLVE INVESTMENT
RISKS, INCLUDING FLUCTUATIONS IN VALUE AND EARNINGS, AND
THE POSSIBLE LOSS OF PRINCIPAL.
INVESTMENT SHARES OF THE SHAWMUT FUNDS ARE AVAILABLE
THROUGH LICENSED REPRESENTATIVES OF SHAWMUT BROKERAGE,
INC., MEMBER NASD/SIPC, AND AN AFFILIATE OF SHAWMUT BANK.
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Statement dated December 31, 1994.
FEDERATED SECURITIES
CORP.
Distributor
A subsidiary of Federated
Investors
General Information About
the Money Market Funds 1
Investment Objective and
Policies 1
Acceptable Investments 1
When-Issued and Delayed
Delivery Transactions 1
Characteristics 1
Types of Acceptable
Investments 2
Munipreferred Securities 2
Participation Interests 2
Variable Rate Demand Notes 2
Municipal Leases 2
Temporary Investments 3
Repurchase Agreements 3
Bank Instruments 3
U.S. Government
Obligations 3
Repurchase Agreements 4
Reverse Repurchase
Agreements 4
Restricted and Illiquid
Securities 4
Investment Limitations 5
Massachusetts Investment
Risks
(Massachusetts Municipal
Money Market Fund) 7
Connecticut Investment
Risks
(Connecticut Municipal
Money Market Fund) 8
The Shawmut Funds Management 9
Officers and Trustees 9
The Funds 12
Money Market Funds
Ownership 13
Trustee Liability 13
Investment Advisory Services 13
Adviser to the Money
Market Funds 13
Advisory Fees 13
Administrative Services 14
Brokerage Transactions 14
Distribution Plan 15
Conversion to Federal
Funds 16
Determining Net Asset Value 16
Use of the Amortized Cost
Method 16
Exchanging Securities for
Money Market Fund Shares 17
Tax Consequences 17
Redeeming Shares 17
Redemption in Kind 17
Exchange Privilege 17
Requirements for Exchange 17
Making an Exchange 17
Tax Status 18
The Money Market Funds'
Tax Status 18
Federal Income Tax 18
Massachusetts State Income
Tax 18
Other State and Local
Taxes 19
Shareholders' Tax Status 19
Capital Gains 19
Yield 19
Effective Yield 19
Tax-Equivalent Yield 20
Tax-Equivalency
Table-Connecticut
Municipal Money Market
Fund 20
Tax-Equivalency
Table-Massachusetts
Municipal Money Market
Fund 21
Performance Comparisons 21
Financial Statements 22
General Information About the Money Market Funds
The Money Market Funds are portfolios of The Shawmut Funds,
which was established as a Massachusetts business trust under
a Declaration of Trust dated July 16, 1992.
Shares of the Connecticut Municipal Money Market Fund and the
Prime Money Market Fund are offered in two classes, known as
Trust Shares and Investment Shares. This combined statement of
additional information relates to Trust Shares and Investment
Shares of the Connecticut Municipal Money Market Fund and the
Prime Money Market Fund, as well as Massachusetts Municipal
Money Market Fund (individually and collectively referred to
as "Shares").
Investment Objective and Policies
Connecticut Municipal Money Market Fund's investment objective
is to provide current income which is exempt from federal
regular income tax and Connecticut state income tax,
consistent with stability of principal and liquidity.
Massachusetts Municipal Money Market Fund's investment
objective is to provide current income which is exempt from
federal regular income tax and income taxes imposed by the
Commonwealth of Massachusetts, consistent with stability of
principal and liquidity. Prime Money Market Fund's investment
objective is to provide current income consistent with
stability of principal and liquidity. These investment
objectives cannot be changed without the approval of
shareholders.
The policies described below may be changed by the Board of
Trustees ("Trustees") without shareholder approval.
Shareholders will be notified before any material change in
these policies becomes effective.
Acceptable Investments
Connecticut Municipal Money Market Fund invests primarily in
debt obligations issued by or on behalf of Connecticut and of
other states, territories and possessions of the United
States, including the District of Columbia, and any political
subdivision or financing authority of any of these, the income
from which is, in the opinion of qualified legal counsel,
exempt from both federal regular income tax and Connecticut
state income tax imposed upon non-corporate taxpayers
("Connecticut Municipal Securities").
Massachusetts Municipal Money Market Fund invests primarily in
debt obligations issued by or on behalf of the Commonwealth of
Massachusetts and of other states, territories and possessions
of the United States, including the District of Columbia, and
any political subdivision or financing authority of any of
these, the income from which is, in the opinion of qualified
legal counsel, exempt from both federal regular income tax and
income taxes imposed by the Commonwealth of Massachusetts
imposed upon non-corporate taxpayers ("Massachusetts Municipal
Securities").
Prime Money Market Fund invests in money market instruments
which mature in thirteen months or less and which include, but
are not limited to, commercial paper and demand master notes,
bank instruments, U.S. government obligations, and repurchase
agreements.
The instruments of banks and savings and loans that are
insured by the Bank Insurance Fund ("BIF") or the Savings
Association Insurance Fund ("SAIF") such as certificates of
deposit, demand and time deposits, savings shares, and
bankers' acceptances, are not necessarily guaranteed by those
organizations.
When-Issued and Delayed Delivery Transactions
These transactions are made to secure what is considered to be
an advantageous price or yield for the Money Market Funds. No
fees or other expenses, other than normal transaction costs,
are incurred. However, liquid assets of the Money Market Funds
sufficient to make payment for the securities to be purchased
are segregated on the Money Market Funds' records at the trade
date. These assets are marked to market daily and are
maintained until the transaction has been settled. The Money
Market Funds do not intend to engage in when-issued and
delayed delivery transactions to an extent that would cause
the segregation of more than 20% of the total value of its
assets.
The following acceptable investments and strategies apply only
to the Connecticut Municipal Money Market Fund and
Massachusetts Municipal Money Market Fund (collectively
referred to as "Connecticut/Massachusetts Municipal Money
Market Funds"):
Characteristics
The Connecticut and Massachusetts Municipal Securities in
which the Connecticut/Massachusetts Municipal Money Market
Funds invest (respectively) have the characteristics set forth
in the prospectus.
Types of Acceptable Investments
Examples of municipal securities are:
omunicipal notes and commercial paper;
ogeneral obligation serial bonds sold with differing
maturity dates;
orefunded municipal bonds; and
oall revenue bonds, including industrial development
bonds.
Munipreferred Securities
The Connecticut/Massachusetts Municipal Money Market Funds may
purchase interests in municipal securities that are offered in
the form of a security representing a diversified portfolio of
investment grade bonds. These securities provide investors,
such as the Connecticut/Massachusetts Municipal Money Market
Funds, with liquidity and income exempt from federal regular
income tax and some state income taxes.
Participation Interests
The financial institutions from which the
Connecticut/Massachusetts Municipal Money Market Funds
purchase participation interests frequently provide or secure
from another financial institution irrevocable letters of
credit or guarantees and give the Connecticut/Massachusetts
Municipal Money Market Funds the right to demand payment of
the principal amounts of the participation interests plus
accrued interest on short notice (usually within seven days).
Variable Rate Demand Notes
Variable interest rates generally reduce changes in the market
value of municipal securities from their original purchase
prices. Accordingly, as interest rates decrease or increase,
the potential for capital appreciation or depreciation is less
for variable rate municipal securities than for fixed income
obligations.
The terms of these variable rate demand instruments require
payment of principal and accrued interest from the issuer of
the municipal obligations, the issuer of the participation
interests, or a guarantor of either issuer.
Municipal Leases
The Connecticut/Massachusetts Municipal Money Market Funds may
purchase municipal securities in the form of participation
interests which represent undivided proportional interests in
lease payments by a governmental or nonprofit entity. The
lease payments and other rights under the lease provide for
and secure the payments on the certificates. Lease obligations
may be limited by municipal charter or the nature of the
appropriation for the lease. In particular, lease obligations
may be subject to periodic appropriation. If the entity does
not appropriate funds for future lease payments, the entity
cannot be compelled to make such payments. Furthermore, a
lease may provide that the participants cannot accelerate
lease obligations upon default. The participants would only be
able to enforce lease payments as they become due. In the
event of a default or failure of appropriation, unless the
participation interests are credit enhanced, it is unlikely
that the participants would be able to obtain an acceptable
substitute source of payment.
When determining whether municipal leases purchased by the
Connecticut/Massachusetts Municipal Money Market Funds will be
classified as a liquid or illiquid security, the Trustees has
directed Shawmut Bank, N.A. to consider certain factors such
as: the frequency of trades and quotes for the security; the
volatility of quotations and trade prices for the security;
the number of dealers willing to purchase or sell the security
and the number of potential purchasers; dealer undertaking to
make a market in the security; the nature of the security and
the nature of the marketplace trades (e.g., the time needed to
dispose of the security, the method of soliciting offers, and
the mechanics of transfer); the rating of the security and the
financial condition and prospects of the issuer of the
security; whether the lease can be terminated by the lessee;
the potential recovery, if any, from a sale of the leased
property upon termination of the lease; the lessee's general
credit strength (e.g., its debt, administrative, economic and
financial characteristics and prospects); the likelihood that
the lessee will discontinue appropriating funding for the
lease property because the property is no longer deemed
essential to its operations (e.g., the potential for an 'event
of nonappropriation'); any credit enhancement or legal
recourse provided upon an event of nonappropriation or other
termination of the lease; and such other factors as may be
relevant to the Connecticut/Massachusetts Municipal Money
Market Funds ' ability to dispose of the security.
Temporary Investments
The Connecticut/Massachusetts Municipal Money Market Funds may
also invest in high quality temporary investments during times
of unusual market conditions for defensive purposes.
Repurchase Agreements
Repurchase agreements are arrangements in which banks,
broker/dealers, and other recognized financial institutions
sell U.S. government securities or other securities to the
Connecticut/Massachusetts Municipal Money Market Funds and
agree at the time of sale to repurchase them at a mutually
agreed upon time and price within one year from the date of
acquisition. The Connecticut/Massachusetts Municipal Money
Market Funds requires its custodian to take possession of the
securities subject to repurchase agreements and these
securities will be marked to market daily. To the extent that
the original seller does not repurchase the securities from
the Connecticut/Massachusetts Municipal Money Market Funds,
the Connecticut/Massachusetts Municipal Money Market Funds
could receive less than the repurchase price on any sale of
such securities. In the event that such a defaulting seller
filed for bankruptcy or became insolvent, disposition of such
securities by the Connecticut/Massachusetts Municipal Money
Market Funds might be delayed pending court action. The
Connecticut/Massachusetts Municipal Money Market Funds
believes that under the regular procedures normally in effect
for custody of the Connecticut/Massachusetts Municipal Money
Market Funds' portfolio securities subject to repurchase
agreements, a court of competent jurisdiction would rule in
favor of the Connecticut/Massachusetts Municipal Money Market
Funds and allow retention or disposition of such securities.
The Connecticut/Massachusetts Municipal Money Market Funds
will only enter into repurchase agreements with banks and
other recognized financial institutions, such as
broker/dealers, which are deemed by the
Connecticut/Massachusetts Municipal Money Market Funds'
adviser to be creditworthy, pursuant to guidelines established
by the Trustees.
From time to time, such as when suitable municipal securities
are not available, the Connecticut/ Massachusetts Municipal
Money Market Funds may invest a portion of their respective
assets in cash. Any portion of the Connecticut/Massachusetts
Municipal Money Market Funds' assets maintained in cash will
reduce the amount of assets in municipal securities and
thereby reduce the Connecticut/Massachusetts Municipal Money
Market Funds' yield.
The following acceptable investments and strategies apply only
to the Prime Money Market Fund:
Bank Instruments
In addition to domestic bank obligations such as certificates
of deposit, demand and time deposits, savings shares, and
bankers' acceptances, the Prime Money Market Fund may invest
in:
oEurodollar Certificates of Deposit issued by foreign
branches of U.S. or foreign banks;
oEurodollar Time Deposits, which are U.S. dollar-
denominated deposits in foreign branches of U.S. or
foreign banks; and
oYankee Certificates of Deposit, which are U.S. dollar-
denominated certificates of deposit issued by U.S.
branches of foreign banks and held in the United States.
U.S. Government Obligations
The types of U.S. government obligations in which the Prime
Money Market Fund may invest generally include direct
obligations of the U.S. Treasury (such as U.S. Treasury bills,
notes, and bonds) and obligations issued or guaranteed by U.S.
government agencies or instrumentalities. These securities are
backed by:
othe full faith and credit of the U.S. Treasury;
othe issuer's right to borrow from the U.S. Treasury;
othe discretionary authority of the U.S. government to
purchase certain obligations of agencies or
instrumentalities; or
othe credit of the agency or instrumentality issuing the
obligations.
Examples of agencies and instrumentalities which are
permissible investments which may not always receive
financial support from the U.S. government are:
oFederal Farm Credit Banks;
oFederal Home Loan Banks;
oFederal National Mortgage Association;
oStudent Loan Marketing Association; and
oFederal Home Loan Mortgage Corporation.
Repurchase Agreements
Repurchase agreements are arrangements in which banks,
broker/dealers and other recognized financial institutions
sell U.S. government securities or certificates of deposit to
the Prime Money Market Fund and agree at the time of sale to
repurchase them at a mutually agreed upon time and price
within one year from the date of acquisition. The Prime Money
Market Fund requires a custodian to take possession of the
securities subject to repurchase agreements, and these
securities are marked to market daily. To the extent that the
original seller does not repurchase the securities from the
Prime Money Market Fund, the Prime Money Market Fund could
receive less than the repurchase price on any sale of such
securities. In the event that such a defaulting seller filed
for bankruptcy or became insolvent, disposition of such
securities by the Prime Money Market Fund might be delayed
pending court action. The Prime Money Market Fund believes
that under the regular procedures normally in effect for
custody of the Prime Money Market Fund's portfolio securities
subject to repurchase agreements, a court of competent
jurisdiction would rule in favor of the Prime Money Market
Fund and allow retention or disposition of such securities.
The Prime Money Market Fund will only enter into repurchase
agreements with banks and other recognized financial
institutions, such as broker/dealers, which are deemed by the
Prime Money Market Fund's adviser to be creditworthy pursuant
to guidelines established by the Trustees.
Reverse Repurchase Agreements
The Prime Money Market Fund may also enter into reverse
repurchase agreements. This transaction is similar to
borrowing cash. In a reverse repurchase agreement the Prime
Money Market Fund transfers possession of a portfolio
instrument to another person, such as a financial institution,
broker, or dealer, in return for a percentage of the
instrument's market value in cash, and agrees that on a
stipulated date in the future the Prime Money Market Fund will
repurchase the portfolio instrument by remitting the original
consideration plus interest at an agreed upon rate. The use of
reverse repurchase agreements may enable the Prime Money
Market Fund to avoid selling portfolio instruments at a time
when a sale may be deemed to be disadvantageous, but the
ability to enter into reverse repurchase agreements does not
ensure that the Prime Money Market Fund will be able to avoid
selling portfolio instruments at a disadvantageous time.
When effecting reverse repurchase agreements, liquid assets of
the Prime Money Market Fund, in a dollar amount sufficient to
make payment for the obligations to be purchased, are
segregated at the trade date. These assets are marked to
market daily and are maintained until the transaction is
settled.
Restricted and Illiquid Securities
The Prime Money Market Fund may invest in commercial paper
issued in reliance on the exemption from registration afforded
by Section 4(2) of the Securities Act of 1933. Section 4(2)
commercial paper is restricted as to disposition under federal
securities law and is generally sold to institutional
investors, such as the Prime Money Market Fund, who agree that
they are purchasing the paper for investment purposes and not
with a view to public distribution. Any resale by the
purchaser must be in an exempt transaction. Section 4(2)
commercial paper is normally resold to other institutional
investors like the Prime Money Market Fund through or with the
assistance of the issuer or investment dealers who make a
market in Section 4(2) commercial paper, thus providing
liquidity. The Prime Money Market Fund believes that Section
4(2) commercial paper and possibly certain other restricted
securities which meet the criteria for liquidity established
by the Trustees are quite liquid. The Prime Money Market Fund
intends, therefore, to treat the restricted securities which
meet the criteria for liquidity established by the Trustees,
including Section 4(2) commercial paper, as determined by the
Prime Money Market Fund's adviser, as liquid and not subject
to the investment limitation applicable to illiquid
securities. In addition, because Section 4(2) commercial paper
is liquid, the Prime Money Market Fund intends to not subject
such paper to the limitation applicable to restricted
securities.
The ability of the Trustees to determine the liquidity of
certain restricted securities is permitted under a Securities
and Exchange Commission (the "SEC") Staff position set forth
in the adopting release for Rule 144A under the Securities Act
of 1933 (the "Rule"). The Rule is a non-exclusive, safe-harbor
for certain secondary market transactions involving securities
subject to restrictions on resale under federal securities
laws. The Rule provides an exemption from registration for
resales of otherwise restricted securities to qualified
institutional buyers. The Rule was expected to further enhance
the liquidity of the secondary market for securities eligible
for resale under the Rule. The Trust, on behalf of the Money
Market Funds, believes that the Staff of the SEC has left the
question of determining the liquidity of all restricted
securities (eligible for resale under Rule 144A) for
determination to the Trustees. The Trustees consider the
following criteria in determining the liquidity of certain
restricted securities:
othe frequency of trades and quotes for the security;
othe number of dealers willing to purchase or sell the
security and the number of other potential buyers;
odealer undertakings to make a market in the security; and
othe nature of the security and the nature of the
marketplace trades.
Investment Limitations
Selling Short and Buying on Margin
The Money Market Funds will not sell any securities short
or purchase any securities on margin but may obtain such
short-term credits as are necessary for the clearance of
transactions.
Issuing Senior Securities and Borrowing Money
The Money Market Funds will not issue senior securities
except that the Money Market Funds may borrow money or
engage in reverse repurchase agreements in amounts up to
one-third of the value of their respective total assets,
including the amounts borrowed.
The Money Market Funds will not borrow money or engage in
reverse repurchase agreements for investment leverage,
but rather as a temporary, extraordinary, or emergency
measure to facilitate management of the portfolio by
enabling the Money Market Funds to meet redemption
requests when the liquidation of portfolio securities is
deemed to be inconvenient or disadvantageous. The Money
Market Funds will not purchase any securities while
borrowings in excess of 5% of their respective total
assets are outstanding.
Pledging Assets
The Money Market Funds will not mortgage, pledge, or
hypothecate any assets except to secure permitted
borrowings. In those cases, it may pledge assets having a
market value not exceeding the lesser of the dollar
amounts borrowed or 10% of the value of total assets at
the time of the pledge.
Investing in Real Estate
The Money Market Funds will not purchase or sell real
estate or real estate limited partnerships, although they
may invest in securities of issuers whose business
involves the purchase or sale of real estate or in
securities which are secured by real estate or interests
in real estate.
Investing in Commodities
The Money Market Funds will not purchase or sell
commodities, commodity contracts, or commodity futures
contracts.
Underwriting
The Money Market Funds will not underwrite any issue of
securities, except as each may be deemed to be an
underwriter under the Securities Act of 1933 in
connection with the sale of securities in accordance with
its respective investment objective, policies, and
limitations.
Lending Cash or Securities
Prime Money Market Fund: The Prime Money Market Fund will
not lend any of its assets except that it may purchase or
hold certain money market instruments including
repurchase agreements and variable amount demand master
notes, in accordance with its investment objective,
policies and limitations.
Connecticut/Massachusetts Municipal Money Market Funds:
The Connecticut/Massachusetts Municipal Money Market
Funds will not lend any of their respective assets except
that each may acquire publicly or non-publicly issued
Connecticut or Massachusetts Municipal securities (as
defined in their prospectus) or temporary investments or
enter into repurchase agreements, in accordance with its
investment objective, policies, limitations and their
Declaration of Trust.
Diversification of Investments
Connecticut/Massachusetts Municipal Money Market Funds:
With regard to at least 50% of their respective total
assets, no more than 5% of their respective total assets
are to be invested in the securities of a single issuer,
and no more than 25% of their respective total assets are
to be invested in the securities of a single issuer at
the close of each quarter of each fiscal year.
Under this limitation, each governmental subdivision,
including states, territories, possessions of the United
States, or their political subdivisions, agencies,
authorities, instrumentalities, or similar entities, will
be considered a separate issuer if its assets and
revenues are separate from those of the governmental body
creating it and the security is backed only by its own
assets and revenues.
Industrial development bonds backed only by the assets
and revenues of a nongovernmental user are considered to
be issued solely by that user. If, in the case of an
industrial development bond or government-issued
security, a governmental or other entity guarantees the
security, such guarantee would be considered a separate
security issued by the guarantor, as well as the other
issuer, subject to limited exclusions allowed by the
Investment Company Act of 1940.
Prime Money Market Fund: With respect to securities
comprising 75% of the value of its total assets, the
Prime Money Market Fund will not purchase securities
issued by any one issuer (other than cash, cash items, or
securities issued or guaranteed by the government of the
United States or its agencies or instrumentalities and
repurchase agreements collateralized by such securities)
if as a result more than 5% of the value of its total
assets would be invested in the securities of that issuer
or if it would own more than 10% of the outstanding
voting securities of such issuer.
Concentration of Investments
Connecticut/Massachusetts Municipal Money Market Funds:
The Connecticut/Massachusetts Municipal Money Market
Funds will not purchase securities if, as a result of
such purchase, 25% or more of the value of their
respective total assets would be invested in any one
industry or in industrial development bonds or other
securities, the interest upon which is paid from revenues
of similar types of projects. However, the
Connecticut/Massachusetts Municipal Money Market Funds
may invest as temporary investments more than 25% of the
value of their respective assets in cash or cash items,
securities issued or guaranteed by the U.S. government,
its agencies, or instrumentalities, or instruments
secured by these money market instruments, and repurchase
agreements.
Prime Money Market Fund: The Prime Money Market Fund will
not invest 25% or more of the value of its total assets
in any one industry. However, investing in domestic bank
instruments (e.g., time and demand deposits and
certificates of deposit, but not bank commercial paper),
U.S. government obligations or repurchase agreements
secured by U.S. government obligations, shall not be
considered investments in any one industry.
Restricted Securities
The Connecticut/Massachusetts Municipal Money Market
Funds will not invest more than 10% of their respective
net assets in securities subject to restrictions on
resale under the Securities Act of 1933.
The above limitations may not be changed without shareholder
approval of the appropriate Money Market Fund's shareholders.
The following limitations, however, may be changed by the
Trustees without shareholder approval. Shareholders will be
notified before any material change in these limitations
becomes effective.
Investing in Securities of Other Investment Companies
The Money Market Funds will limit their respective
investments in other investment companies to not more
than 3% of the total outstanding voting stock of any
investment company, will invest no more than 5% of their
respective total assets in any one investment company,
and will invest no more than 10% of their respective
total assets in investment companies in general. However,
these limitations are not applicable if the securities
are acquired in a merger, consolidation, reorganization,
or acquisition of assets. The Adviser will waive its
investment advisory fee on assets invested in open-end
investment companies.
The Money Market Funds will limit their respective
investments in the securities of other investment
companies to those of money market funds which are of
comparable or better portfolio quality and have
investment objectives and policies similar to their own.
Rule 2a-7 under the Investment Company Act of 1940
requires that the Money Market Funds limit their
investments to instruments that, in the opinion of the
Trustees, present minimal credit risk and that, if rated,
meet minimum rating standards set forth in Rule 2a-7
under the Investment Company Act of 1940. If the
instruments are not rated, the Trustees must determine
that they are of comparable quality. Shares of investment
companies purchased by the Money Market Funds will meet
these same criteria and will have investment policies
consistent with Rule 2a-7 of the Investment Company Act
of 1940.
Investing in New Issuers
The Connecticut/Massachusetts Municipal Money Market
Funds will not invest more than 5% of the value of their
respective total assets in industrial development bonds
where the principal and interest are the responsibility
of companies (or guarantors, where applicable) with less
than three years of continuous operations, including the
operation of any predecessor.The Prime Money Market Fund
will not invest more than 5% of the value of its total
assets in securities of issuers which have records of
less than three years of continuous operations, including
the operation of any predecessor.
Investing in Issuers Whose Securities are Owned by Officers
and Trustees of the Trust
The Money Market Funds will not purchase or retain the
securities of any issuer if the officers and Trustees of
the Trust or the Money Market Funds' investment adviser,
owning individually more than 1/2 of 1% of the issuer's
securities, together own more than 5% of the issuer's
securities.
Dealing in Puts and Calls
The Connecticut/Massachusetts Municipal Money Market
Funds will not purchase or sell puts, calls, straddles,
spreads, or any combination of them, except that the
Connecticut/Massachusetts Municipal Money Market Funds
may purchase municipal securities accompanied by
agreements of sellers to repurchase them at the
appropriate Fund's option.
Investing in Minerals
The Money Market Funds will not purchase or sell oil,
gas, or other mineral exploration or development
programs, or leases.
Investing in Restricted Securities
The Prime Money Market Fund will not invest more than 10%
of its total assets in securities subject to restrictions
on resale under the Securities Act of 1933, except for
commercial paper issued under Section 4(2) of the
Securities Act of 1933 and certain other restricted
securities which meet the criteria for liquidity as
established by the Trustees.
Investing in Illiquid Securities
The Money Market Funds will not invest more than 10% of
the value of their respective net assets in illiquid
securities, including repurchase agreements providing for
settlement in more than seven days after notice, non-
negotiable fixed time deposits with maturities over seven
days, and restricted securities not determined by the
Trustees to be liquid.
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.
The Money Market Funds did not borrow money or pledge
securities in excess of 5% of net assets during the past
fiscal year, and did not intend to borrow money or pledge
securities in excess of 5% of the value of their respective
net assets during the coming fiscal year.
For purposes of its policies and limitations, the Money Market
Funds consider 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."
Massachusetts Investment Risks (Massachusetts Municipal Money
Market Fund)
The Commonwealth of Massachusetts stabilized its fiscal
position in 1992. Through conservative revenue estimates and
significant expenditure reductions the Commonwealth was able
to generate a surplus ($283 million) for the 1992 fiscal year
end. Tax revenues exceeded the administration's estimates by
approximately $1.2 billion or 7%. The Commonwealth greatly
reduced its reliance upon short-term debt in fiscal 1992.
Approximately $635 million of commercial paper was issued in
1992 to fund current operations compared with $1.2 billion
issued in both 1991 and 1990. The Commonwealth projects
commercial paper borrowing to be only $400 million in fiscal
1993. Expenditure reductions also contributed to a large
degree to the stabilization of the Commonwealth's financial
position in 1992. Local aid payments were reduced from $2.7
billion in 1991 to $2.47 billion. Higher education spending
was reduced by $70 million (11.5%) and the Commonwealth's work
force was reduced by 8,250 employees. Medicaid expenditures
were only 1.9% higher compared with increases which were
averaging 19.25% during the period 1988 to 1991.
The fiscal 1993 budget has allowed for increased spending
while instituting additional expenditure controls. The budget
forecasts total revenue of $14,485 million (a 4.9% increase)
and tax revenue is estimated at $9,685 million (a 2.2%
increase). Fund balances are expected to be drawn down by $364
million. Nonrecurring revenues included in the budget total
$229 million, compared with $830 million included in the 1992
budget. Projected spending of $14,849.5 million is an 8.7%
increase over fiscal 1992. The largest spending increase
(13.8% or $349 million) is for direct local aid. This
represents the first increase in three years. Medicaid
expenditures are budgeted to increase 7.9% even after program
reforms which are to save $100 million in 1993. This reflects
the difficulty for state governments to control Medicaid
costs.
Debt levels for the Commonwealth are among the highest of the
states. The debt situation has been exacerbated by the
issuance of $250 million of fiscal recovery bonds at the end
of fiscal 1992. In fiscal 1991, dedicated income tax bonds
were issued to finance the combined deficits in the general
and local aid funds. The issuance was part of the Fiscal
Recovery Loan Act of 1990. $1.4 billion of bonds were issued
and are secured by the pledge of dedicated tax revenues. These
bonds amortize through 1997. Debt service requirements for
general obligation and special obligation debt alone are 8.2%
of estimated fiscal 1993 spending requirements. The increased
debt levels which are the result of capital borrowing and
deficit bonds have doubled scheduled debt service requirements
between 1987 and 1992. As a result, debt service will remain
high through 1997.
The regional economy may have reached the trough of the
current economic cycle. The largest cause for concern in the
Massachusetts economy is the significant job loss which has
occurred between 1989 and present. From calendar year 1989 to
1991, 309,200 non-farm jobs were lost. This represents a 10.1%
decline with the largest decline of 5.4% occurring in 1991.
Much of the loss has occurred in the construction and high
tech industries. The defense related industries, which provide
3% of private sector employment, have suffered some employment
losses. However, more significant declines are expected in
this industry in the future, especially with the election of
the new administration. There is some sign of moderation on
the employment front. The unemployment rate has declined to
8.3% as of July 1992 from an average of 9% in 1991. The
service sector in Massachusetts has fared rather well and has
been expanding. The presence of a large number of higher
education and health care institutions, a well educated work
force, and a large investment community has helped to provide
a solid economic base. The presence of several large public
works programs (MWRA, Bay Tunnel), improvements in the banking
community and lower real estate values should put the
Commonwealth in a stronger position as the national economy
recovers.
During the past few years, the current administration in
cooperation with the legislature have made steady progress in
resolving the fiscal ills facing the Commonwealth which
included budget tightening, reducing local state aid, and
employing new methods of financing projects. Because of the
significant progress, the major rating agencies upgraded the
Commonwealth to A rated status this past fall.
Connecticut Investment Risks (Connecticut Municipal Money
Market Fund)
The Connecticut Municipal Money Market Fund invests in
obligations of Connecticut issuers which results in the
Connecticut Municipal Money Market Fund's performance being
subject to risks associated with the overall conditions
present within the state. The following information is a brief
summary of the recent prevailing economic conditions and a
general summary of the state's financial status. This
information is based on official statements relating to
securities that have been offered by Connecticut issuers and
from other sources believed to be reliable but should not be
relied upon as a complete description of all relevant
information.
The State of Connecticut has experienced fiscal problems in
three of the last four years. Following a contentious budget
enactment for fiscal year 1992, the State enacted an
individual income tax while slightly reducing the sales tax.
The State has also suffered from the recent national recession
that impacted the State especially hard and continues to force
changing economic conditions in the State.
The Connecticut economy is largely composed of manufacturing
(especially defense related) and service industries (such as
insurance) that were robust and growing for much of the past
two decades. Beginning in the late 1980's, the regional
economy slowed down and entered a recession that has affected
several areas of the State's economy. Specifically, the
cutbacks in the defense and insurance industries and general
corporate restructurings due to declining profits have caused
large numbers of job losses and increased the fiscal strain on
the State and local governments.
The two major revenue sources available to cities and towns in
Connecticut are local property taxes and aid from the state.
State aid is mostly related to educational grants and human
service funds for lower income individuals. Property values
and the resulting taxes which grew significantly during the
1980's have stabilized and even fallen slightly in some areas.
Especially hard hit are those local governments with large job
losses due to cutbacks or shutdowns due to the impact to the
tax base.
The Connecticut Municipal Money Market Fund concentration in
securities issued by the State and its political subdivisions
provides a greater level of risk than a fund which is
diversified across numerous states and municipal entities. The
ability of the State or its municipalities to meet their
obligations will depend on the availability of tax and other
revenues; economic, political, and demographic conditions
within the State; and the underlying fiscal condition of the
State, and its municipalities.
The Shawmut Funds Management
Officers and Trustees
Officers and Trustees are listed with their addresses, present
positions with The Shawmut Funds, and principal occupations.
John F. Donahue@*
Federated Investors Tower
Pittsburgh, Pennsylvania
Chairman and Trustee
Chairman and Trustee, Federated Investors, Federated Advisers,
Federated Management, and Federated Research; Chairman and
Director, Federated Research Corp.; Chairman, Passport
Research, Ltd.; Director, AEtna Life and Casualty Company;
Chief Executive Officer and Director, Trustee, or Managing
General Partner of the Funds. Mr. Donahue is the father of J.
Christopher Donahue , Vice President of the Trust.
Thomas G. Bigley
28th Floor
One Oxford Centre
Pittsburgh, Pennsylvania
Trustee
Director, Oberg Manufacturing Co.; Chairman of the Board,
Children's Hospital of Pittsburgh; Director, Trustee or
Managing General Partner of the Funds; formerly, Senior
Partner, Ernst & Young LLP.
John T. Conroy, Jr.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, Florida
Trustee
President, Investment Properties Corporation; Senior Vice-
President, John R. Wood and Associates, Inc., Realtors;
President, Northgate Village Development Corporation; Partner
or Trustee in private real estate ventures in Southwest
Florida; Director, Trustee, or Managing General Partner of the
Funds; formerly, President, Naples Property Management, Inc.
William J. Copeland
One PNC Plaza - 23rd Floor
Pittsburgh, Pennsylvania
Trustee
Director and Member of the Executive Committee, Michael Baker,
Inc.; Director, Trustee, or Managing General Partner of the
Funds; formerly, Vice Chairman and Director, PNC Bank, N.A.,
and PNC Bank Corp. and Director, Ryan Homes, Inc.
James E. Dowd
571 Hayward Mill Road
Concord, Massachusetts
Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.;
Director, Trustee, or Managing General Partner of the Funds;
formerly, Director, Blue Cross of Massachusetts, Inc.
Lawrence D. Ellis, M.D.
3471 Fifth Avenue, Suite 1111
Pittsburgh, Pennsylvania
Trustee
Hematologist, Oncologist, and Internist, Presbyterian and
Montefiore Hospitals; Professor of Medicine and Trustee,
University of Pittsburgh; Director of Corporate Health,
University of Pittsburgh Medical Center; Director, Trustee, or
Managing General Partner of the Funds.
Edward L. Flaherty, Jr.@
Two Gateway Center-Suite 674
Pittsburgh, Pennsylvania
Trustee
Attorney-at-law; Henny, Koeheba, Partner, Meyer and Flaherty;
Director, Eat'N Park Restaurants, Inc., and Statewide
Settlement Agency, Inc.; Director, Trustee, or Managing
General Partner of the Funds; formerly, Counsel, Horizon
Financial, F.A., Western Region.
Edward C. Gonzales *
Federated Investors Tower
Pittsburgh, Pennsylvania
President , Treasurer and Trustee
Vice President, Treasurer, and Trustee, Federated Investors;
Vice President and Treasurer, Federated Advisers, Federated
Management, Federated Research, Federated Research Corp., and
Passport Research, Ltd.; Executive Vice President, Treasurer,
and Director, Federated Securities Corp.; Trustee, Federated
Services Company and Federated Shareholder Services; Chairman,
Treasurer, and Trustee, Federated Administrative Services;
Trustee or Director of some of the Funds; Vice President and
Treasurer of the Funds.
Peter E. Madden
225 Franklin Street
Boston, Massachusetts
Trustee
Consultant; State Representative, Commonwealth of
Massachusetts; Director, Trustee, or Managing General Partner
of the Funds; formerly, President, State Street Bank and Trust
Company and State Street Boston Corporation and Trustee, Lahey
Clinic Foundation, Inc.
Gregor F. Meyer
Two Gateway Center-Suite 674
Pittsburgh, Pennsylvania
Trustee
Attorney-at-law; Partner, Henny, Koeheba, Meyer and Flaherty;
Chairman, Meritcare, Inc.; Director, Eat'N Park Restaurants,
Inc.; Director, Trustee, or Managing General Partner of the
Funds; formerly, Vice Chairman, Horizon Financial, F.A.
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, Pennsylvania
Trustee
Professor, Foreign Policy and Management Consultant; Trustee,
Carnegie Endowment for International Peace, RAND Corporation,
Online Computer Library Center, Inc., and U.S. Space
Foundation; Chairman, Czecho Slovak Management Center;
Director, Trustee, or Managing General Partner of the Funds;
President Emeritus, University of Pittsburgh; formerly,
Chairman, National Advisory Council for Environmental Policy
and Technology.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, Pennsylvania
Trustee
Public relations/marketing consultant; Director, Trustee, or
Managing General Partner of the Funds.
J. Christopher Donahue
Federated Investors Tower
Pittsburgh, Pennsylvania
Vice President
President and Trustee, Federated Investors, Federated
Advisers, Federated Management, and Federated Research;
President and Director, Federated Research Corp.; President,
Passport Research, Ltd.; Trustee, Federated Administrative
Services, Federated Services Company, and Federated
Shareholder Services; President or Vice President of the
Funds; Director, Trustee, or Managing General Partner of some
of the Funds. Mr. Donahue is the son of John F. Donahue,
Chairman and Trustee of the Trust.
Richard B. Fisher
Federated Investors Tower
Pittsburgh, Pennsylvania
Vice President
Executive Vice President and Trustee, Federated Investors;
Director, Federated Research Corp.; Chairman and Director,
Federated Securities Corp.; President or Vice President of
some of the Funds; Director or Trustee of some of the Funds.
John W. McGonigle
Federated Investors Tower
Pittsburgh, Pennsylvania
Vice President and Secretary
Vice President, Secretary, General Counsel, and Trustee,
Federated Investors; Vice President, Secretary, and Trustee,
Federated Advisers, Federated Management, and Federated
Research; Vice President and Secretary, Federated Research
Corp. and Passport Research, Ltd.; Trustee, Federated Services
Company; Executive Vice President, Secretary, and Trustee,
Federated Administrative Services; Secretary and Trustee,
Federated Shareholder Services; Executive Vice President and
Director, Federated Securities Corp.; Vice President and
Secretary of the Funds.
Jeffrey W. Sterling
Federated Investors Tower
Pittsburgh, Pennsylvania
Vice President and Assistant Treasurer
Vice President, Federated Administrative Services; Vice
President and Assistant Treasurer of some of the Funds.
* This Trustee is deemed to be an "interested person" as
defined in the Investment Company Act of 1940, as amended.
@ Member of the Executive Committee. The Executive Committee
of the Board of Trustees handles the responsibilities of the
Board of Trustees between meetings of the Board.
The Funds
"The Funds" and "Funds" mean the following investment
companies: American Leaders Fund, Inc.; Annuity Management
Series; Arrow Funds; Automated Cash Management Trust;
Automated Government Money Trust; California Municipal Cash
Trust; Cash Trust Series II; Cash Trust Series, Inc.; DG
Investor Series; Edward D. Jones & Co. Daily Passport Cash
Trust; Federated ARMs Fund; Federated Exchange Fund, Ltd.;
Federated GNMA Trust; Federated Government Trust; Federated
Growth Trust; Federated High Yield Trust; Federated Income
Securities Trust; Federated Income Trust; Federated Index
Trust; Federated Institutional Trust; Federated Intermediate
Government Trust; Federated Master Trust; Federated Municipal
Trust; Federated Short-Intermediate Government Trust;
Federated Short-Term U.S. Government Trust; Federated Stock
Trust; Federated Tax-Free Trust; Federated U.S. Government
Bond Fund; First Priority Funds; Fixed Income Securities,
Inc.; Fortress Adjustable Rate U.S. Government Fund, Inc.;
Fortress Municipal Income Fund, Inc.; Fortress Utility Fund,
Inc.; Fund for U.S. Government Securities, Inc.; Government
Income Securities, Inc.; High Yield Cash Trust; Insight
Institutional Series, Inc.; Insurance Management Series;
Intermediate Municipal Trust; International Series, Inc.;
Investment Series Funds, Inc.; Investment Series Trust;
Liberty Equity Income Fund, Inc.; Liberty High Income Bond
Fund, Inc.; Liberty Municipal Securities Fund, Inc.; Liberty
U.S. Government Money Market Trust; Liberty Term Trust, Inc. -
1999; Liberty Utility Fund, Inc.; Liquid Cash Trust; Managed
Series Trust; The Medalist Funds: Money Market Management,
Inc.; Money Market Obligations Trust; Money Market Trust;
Municipal Securities Income Trust; New York Municipal Cash
Trust; 111 Corcoran Funds; Peachtree Funds; The Planters
Funds; Portage Funds; RIMCO Monument Funds; Short-Term
Municipal Trust; Star Funds; The Starburst Funds; The
Starburst Funds II; Stock and Bond Fund, Inc.; Sunburst Funds;
Targeted Duration Trust; Tax-Free Instruments Trust; Trademark
Funds; Trust for Financial Institutions; Trust For Government
Cash Reserves; Trust for Short-Term U.S. Government
Securities; Trust for U.S. Treasury Obligations; and World
Investment Series, Inc.
Money Market Funds Ownership
Officers and Trustees own less than 1% of a Money Market
Fund's outstanding shares.
As of December 12, 1994, the following shareholders of record
owned 5% or more of the outstanding shares of the Money Market
Fund: Olsen & Co. owned approximately 527,538,834 shares
(100%) of the Trust Shares of the Prime Money Market Fund;
Shawmut Bank (Deposit Balancing), owned approximately
63,187,088 shares (80.36%) of the Investment Shares of the
Connecticut Municipal Money Market Fund; Olsen & Co. owned
approximately 32,949,499 (100%) of the Trust Shares of the
Connecticut Municipal Money Market Fund; Olsen & Co. owned
approximately 17,269,924 shares (47.81%) of the Massachusetts
Municipal Money Market Fund; and Clement McIver, Jr. c/o
Methods Machine Tool owned approximately 2,034,778 shares
(5.63%) of the Massachusetts Municipal Money Market Fund.
Trustee Liability
The Trust's Declaration of Trust provides that the Trustees
will not be liable for errors of judgment or mistakes of fact
or law. However, they are not protected against any liability
to which they would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of their
office.
Investment Advisory Services
Adviser to the Money Market Funds
The Money Market Funds' investment adviser is Shawmut Bank,
N.A. (the "Adviser"). The Adviser shall not be liable to the
Trust, the Money Market Funds, or any shareholder of the Money
Market 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.
Because of internal controls maintained by Shawmut Bank, N.A.
to restrict the flow of non-public information, a Money Market
Fund's investments are typically made without any knowledge of
Shawmut Bank, N.A.'s or its affiliates' lending relationships
with an issuer.
Advisory Fees
For its advisory services, the Adviser receives an annual
investment advisory fee as described in the combined
prospectus.
During the fiscal year ended October 31, 1994, the Adviser
earned the following advisory fees: Connecticut Municipal
Money Market Fund, $305,260, of which $50,074 was voluntarily
waived; Massachusetts Municipal Money Market Fund, $136,636,
of which $20,737 was voluntarily waived; and Prime Money
Market Fund, $2,555,606, of which $1,060,559 was voluntarily
waived. During the period from October 4, 1993 (date of
initial public investment) to October 31, 1993, the
Connecticut Municipal Money Market Fund's adviser earned
$1,104 in investment advisory fees, all of which was
voluntarily waived. During the period from October 5, 1993
(date of initial public investment) to October 31, 1993, the
Massachusetts Municipal Money Market Fund's adviser earned
$134 in investment advisory fees, all of which was voluntarily
waived. During the period from December 14, 1992 (date of
initial public investment) to October 31, 1993, the Prime
Money Market Fund's adviser earned $1,128,024 in investment
advisory fees, of which $270,978 was voluntarily waived.
In addition, the Adviser reimbursed other operating expenses
for the fiscal years ended October 31, 1993 and 1994, for the
following Funds: Connecticut Municipal Money Market Fund,
$10,084 and $222,800, respectively, Massachusetts Municipal
Money Market Fund, $9,261 and $149,809, respectively, and
Prime Money Market Fund, $0 and $188,682, respectively.
State Expense Limitations
The Adviser has undertaken to comply with the expense
limitations established by certain states for investment
companies whose shares are registered for sale in those
states. If a Money Market Fund's normal operating
expenses (including the investment advisory fee, but not
including brokerage commissions, interest, taxes, and
extraordinary expenses) exceed 2 1/2% per year of the
first $30 million of average net assets, 2% per year of
the next $70 million of average net assets, and 1 1/2%
per year of the remaining average net assets, the Adviser
will reimburse that Money Market Fund for its expenses
over the limitation.
If Money Market Fund's monthly projected operating
expenses exceed this limitation, the investment advisory
fee paid will be reduced by the amount of the excess,
subject to an annual adjustment. If the expense
limitation is exceeded, the amount to be reimbursed by
the Adviser will be limited, in any single fiscal year,
by the amount of the investment advisory fee.
This arrangement is not part of the advisory contract and
may be amended or rescinded in the future.
Administrative Services
Federated Administrative Services, a subsidiary of Federated
Investors, provides administrative personnel and services to
the Money Market Funds for the fee set forth in the combined
prospectus. For the fiscal year ended October 31, 1994,
Federated Administrative Services earned the following
administrative fees from the Money Market Funds: Connecticut
Municipal Money Market Fund, $77,039, of which $3,405 was
voluntarily waived; Massachusetts Municipal Money Market Fund,
$50,000, none of which was voluntarily waived; and Prime Money
Market Fund, $545,008, of which $128,868 was voluntarily
waived. During the period from October 4, 1993 (date of
initial public investment) to October 31, 1993, Federated
Administrative Services earned the following fee: Connecticut
Municipal Money Market Fund, $265, all of which was
voluntarily waived. During the period from October 5, 1993
(date of initial public investment), Federated Administrative
Services earned the following fee: Massachusetts Municipal
Money Market Fund, $32, all of which was voluntarily waived.
During the period from December 14, 1992 (date of initial
public investment) to October 31, 1993, Federated
Administrative Services earned the following fee: Prime Money
Market Fund, $283,923 none of which was voluntarily waived.
Shawmut Bank, N.A., serves as custodian to the Money Market
Funds. As compensation for its services, the custodian
receives a fee based upon a sliding scale ranging from a
minimum of .011% to a maximum of .02% as a percentage of net
Fund assets, plus certain transaction costs. For the fiscal
year ended October 31, 1994, the Funds' custodian earned the
following fees: Connecticut Municipal Money Market Fund,
$12,215, all of which was voluntarily waived; Massachusetts
Municipal Money Market Fund, $12,000, all of which was
voluntarily waived; and Prime Money Market Fund, $88,732, all
of which was voluntarily waived. During the period from
October 4, 1993 (date of initial public investment) to October
31, 1993, the Connecticut Municipal Money Market Fund's
custodian earned $44, all of which was voluntarily waived.
During the period from October 5, 1993 (date of initial public
investment) to October 31, 1993, the Massachusetts Municipal
Money Market Fund's custodian earned $5, all of which was
voluntarily waived. During the period from December 14, 1992
(date of initial public investment) to October 31, 1993, the
Prime Money Market Fund's custodian earned $15,717, all of
which was voluntarily waived.
Brokerage Transactions
It is the Money Market Funds' policy with respect to the
selection of brokers and dealers in the purchase and sale of
securities to obtain the "best net realized price" on each
transaction. The Money Market Funds conduct business only with
financially sound brokers or dealers on that basis. Brokerage
commission is, however, only one element in determining "best
net realized price." The Adviser may also select brokers and
dealers who offer research and other services. These services
may be furnished directly to the Money Market Funds or to the
Adviser and may include:
oadvice as to the advisability of investing in securities;
osecurity analysis and reports;
oeconomic studies;
oindustry studies;
oreceipt of quotations for portfolio evaluations; and
osimilar 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 may be used by the
Adviser for 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.
Purchasing Shares
Shares are sold at their net asset value on days the New York
Stock Exchange and Federal Reserve Wire System are open for
business. The procedure for purchasing shares of the Money
Market Funds is explained in the prospectus under "Investing
in the Money Market Funds."
Distribution Plan
With respect to the Investment Shares classes of the
Connecticut Municipal Money Market Fund, Massachusetts
Municipal Money Market Fund, and Prime Money Market Fund, the
Trust has adopted a Plan pursuant to Rule 12b-1 which was
promulgated by the Securities and Exchange Commission pursuant
to the Investment Company Act of 1940. The Plan permits the
payment of fees to administrators (including broker/dealers
and depository institutions such as commercial banks and
savings and loan associations) for distribution and
administrative services. The Plan is designed to stimulate
administrators to provide distribution and administrative
support services to the Connecticut/Massachusetts Municipal
Money Market Funds and Prime Money Market Fund and their
shareholders. The administrative services are provided by a
representative who has knowledge of the shareholder's
particular circumstances and goals, and include, but are not
limited to: communicating account openings; communicating
account closings; entering purchase transactions; entering
redemption transactions; providing or arranging to provide
accounting support for all transactions, wiring funds and
receiving funds for Share purchases and redemptions,
confirming and reconciling all transactions, reviewing the
activity in Connecticut/Massachusetts Municipal Money Market
Funds and Prime Money Market Fund accounts, and providing
training and supervision of broker personnel; posting and
reinvesting dividends to Connecticut/Massachusetts Municipal
Money Market Funds and Prime Money Market Fund accounts or
arranging for this service to be performed by the
Connecticut/Massachusetts Municipal Money Market Funds and
Prime Money Market Fund transfer agent; and maintaining and
distributing current copies of prospectuses and shareholder
reports to the beneficial owners of Shares of the Connecticut
Municipal Money Market Fund, Massachusetts Municipal Money
Market Fund and Prime Money Market Fund and prospective
shareholders.
By adopting the Plan, the Trustees expect that the
Connecticut/Massachusetts Municipal Money Market Funds and
Prime Money Market Fund will be able to achieve a more
predictable flow of cash for investment purposes and to meet
redemptions. This will facilitate more efficient portfolio
management and assist the Connecticut/Massachusetts Municipal
Money Market Funds and Prime Money Market Fund in seeking to
achieve its investment objectives. By identifying potential
investors whose needs are served by the
Connecticut/Massachusetts Municipal Money Market Funds and
Prime Money Market Fund' objectives, and properly servicing
these accounts, the Connecticut/Massachusetts Municipal Money
Market Funds and Prime Money Market Fund may be able to curb
sharp fluctuations in rates of redemptions and sales.
Other benefits which the Connecticut/Massachusetts Municipal
Money Market Funds and Prime Money Market Fund hope to achieve
through the Plan include, but are not limited to, the
following: (1) an efficient and effective administrative
system; (2) a more efficient use of shareholder assets by
having them rapidly invested in the Connecticut/Massachusetts
Municipal Money Market Funds and Prime Money Market Fund,
through an automatic transfer of funds from a demand deposit
account to an investment account, with a minimum of delay and
administrative detail; and (3) an efficient and reliable
shareholder records system and prompt responses to shareholder
requests and inquiries concerning their accounts.
As of the date of this Statement of Additional Information,
the Massachusetts Municipal Money Market Fund is not accruing
or paying 12b-1 fees. The Massachusetts Municipal Money Market
Fund does not intend to accrue or pay 12b-1 fees until either
a separate class of shares has been created for certain
fiduciary investors for these portfolios or a determination is
made that such investors will be subject to the 12b-1 fees.
For the fiscal year ended October 31, 1994, brokers earned the
following fees from the Money Market Funds pursuant to the
Plan: Connecticut Municipal Money Market Fund, $217,698, of
which $108,849 was voluntarily waived; and Prime Money Market
Fund, $426,103, of which $213,051 was voluntarily waived.
During the period from October 4, 1993 (date of initial public
investment) to October 31, 1993, the Connecticut Municipal
Money Market Fund paid $1,104 in fees pursuant to the Plan, of
which $552 was voluntarily waived. During the period from
December 14, 1992 (date of initial public investment) to
October 31, 1993, the Prime Money Market Fund paid $20,984 in
fees pursuant to the Plan, of which $10,492 was voluntarily
waived.
Conversion to Federal Funds
It is the Money Market Funds' policy to be as fully invested
as possible so that maximum interest may be earned. To this
end, all payments from shareholders must be in federal funds
or be converted into federal funds. Shawmut Bank, N.A. acts as
the shareholder's agent in depositing checks and converting
them to federal funds.
Determining Net Asset Value
The Money Market Funds attempt to stabilize the value of a
share at $1.00. The days on which the net asset value is
calculated by the Money Market Funds are described in the
respective prospectuses for Trust Shares and Investment
Shares.
Use of the Amortized Cost Method
The Trustees have determined that the best method for
determining the value of portfolio instruments is amortized
ost. 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 Money Market Funds' use of the amortized cost
method of valuing portfolio instruments depends on their
compliance with the provisions of Rule 2a-7 ("the Rule")
promulgated by the Securities and Exchange Commission under
the Investment Company Act of 1940. Under the Rule, the Money
Market Funds 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 Money
Market Funds' respective investment objectives.
Under the Rule, the Money Market Funds are permitted to
purchase instruments which are subject to demand features or
standby commitments. As defined by the Rule, as amended, a
demand feature entitles the Money Market Funds 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 one year on no more than 30 days'
notice. A standby commitment entitles the Money Market Funds
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.
Although demand features and standby commitments are defined
as "puts" under the Rule, the Money Market Funds do not
consider them to be "puts" as that term is used in the Money
Market Funds' respective investment limitations. Demand
features and standby commitments are features which enhance an
instrument's liquidity, and the investment limitations which
proscribe puts are designed to prohibit the purchase and sale
of put and call options and are not designed to prohibit the
Money Market Funds from using techniques which enhance the
liquidity of portfolio instruments.
Monitoring Procedures
The Trustees' procedures include monitoring the
relationship between the amortized cost value per share
and the net asset value per share of each Money Market
Fund 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 for any Money Market Fund. 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 Money Market Funds limit their
investments to instruments that, in the opinion of the
Trustees, present minimal credit risks and have received
the requisite rating from one or more nationally
recognized statistical rating organizations. If the
instruments are not rated, the Trustees must determine
that they are of comparable quality. The Rule also
requires the Money Market Funds 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 a Money Market Fund.
Should the disposition of a portfolio security result in
a dollar-weighted average portfolio maturity or more than
90 days, Money Market Fund will invest its available cash
to reduce the average maturity to 90 days or less as soon
as possible.
The Money Market Funds may attempt to increase yield by
trading portfolio securities to take advantage of short-term
market variations. This policy may, from time to time, result
in high portfolio turnover. 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 a portfolio.
In periods of declining interest rates, the indicated daily
yield on shares of a 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 a Money Market 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.
Exchanging Securities for Money Market Fund Shares
Investors may exchange Connecticut/Massachusetts Municipal
securities they already own for shares of the
Connecticut/Massachusetts Municipal Money Market Funds
(respectively), or they may exchange a combination of
securities and cash for shares. An investor should forward the
securities in negotiable form with an authorized letter of
transmittal to Federated Securities Corp. The
Connecticut/Massachusetts Municipal Money Market Fund, as
appropriate will notify the investor of its acceptance and
valuation of the securities within five business days of their
receipt by State Street Bank.
The Connecticut/Massachusetts Municipal Money Market Funds
value securities in the same manner as they value their
assets. The basis of the exchange will depend upon the net
asset value of shares of the Connecticut/Massachusetts
Municipal Money Market Funds, as appropriate on the day the
securities are valued. One Share will be issued for each
equivalent amount of securities accepted.
Any interest earned on the securities prior to the exchange
will be considered in valuing the securities. All interest,
dividends, subscription, or other rights attached to the
securities become the property of the
Connecticut/Massachusetts Municipal Money Market Funds, as
appropriate along with the securities.
Tax Consequences
Exercise of this exchange privilege is treated as a sale for
federal income tax purposes. Depending upon the cost basis of
the securities exchanged for Shares, a gain or loss may be
realized by the investor.
Redeeming Shares
The Money Market Funds redeem their respective Shares at the
next computed net asset value after redemption requests are
received. Redemption procedures are explained in the
respective prospectus under "Redeeming Trust Shares" or
"Redeeming Investment Shares".
Redemption in Kind
Although the Trust intends to redeem shares in cash, it
reserves the right under certain circumstances to pay the
redemption price in whole or in part by a distribution of
securities from the Money Market Funds' respective portfolios.
Redemption in kind will be made in conformity with applicable
Securities and Exchange Commission rules, taking such
securities at the same value employed in determining net asset
value and selecting the securities in a manner the Trustees
determine to be fair and equitable.
The Trust has elected to be governed by Rule 18f-1 of the
Investment Company Act of 1940 under which the Trust is
obligated to redeem shares for any one shareholder in cash
only up to the lesser of $250,000 or 1% of a Money Market
Fund's or class of share's net asset value during any 90-day
period.
Exchange Privilege
Requirements for Exchange
Shareholders using the exchange privilege must exchange Shares
having a net asset value of at least $1,000. Before the
exchange, the shareholder must receive a prospectus of the
fund for which the exchange is being made. Further information
on the exchange privilege and prospectuses may be obtained by
calling Shawmut Bank.
Making an Exchange
Instructions for exchanges may be given in writing or by
telephone. Written instructions may require a signature
guarantee.
Tax Status
The Money Market Funds' Tax Status
The Money Market Funds will pay no federal income tax because
they expect to meet the requirements of Subchapter M of the
Internal Revenue Code, as amended, applicable to regulated
investment companies and to receive the special tax treatment
afforded to such companies. To qualify for this treatment, the
Money Market Funds must, among other requirements: derive at
least 90% of their respective gross income from dividends,
interest, and gains from the sale of securities; derive less
than 30% of their respective gross income from the sale of
securities held less than three months; invest in securities
within certain statutory limits; and distribute to their
respective shareholders at least 90% of their respective net
income earned during the year.
Federal Income Tax
Each of the Money Market Funds will be treated as a single,
separate entity for federal income tax purposes so that income
(including capital gains) and losses realized by the Trust's
other portfolios will not be combined for tax purposes with
those realized by a Money Market Fund.
Shareholders are not required to pay the federal regular
income tax on any dividends received from the
Connecticut/Massachusetts Municipal Money Market Funds that
represent net interest on tax-exempt municipal bonds.
In the case of a corporate shareholder, dividends of the
Connecticut/Massachusetts Municipal Money Market Funds which
represent interest on municipal bonds may be subject to the
20% corporate alternative minimum tax. The corporate
alternative minimum tax treats 75% of the excess of a
taxpayer's pre-tax 'adjusted current earnings' over the
taxpayer's alternative minimum taxable income as a tax
preference item. Since 'earnings and profits' generally
includes the full amount of any of a Money Market Fund's
dividend, and alternative minimum taxable income does not
include the portion of a Money Market Fund's dividend
attributable to municipal bonds which are not private activity
bonds, 75% of the difference will be included in the
calculation of the corporation's alternative minimum tax.
Dividends of any of the Money Market Funds representing net
interest income earned on some temporary investments and any
realized net short-term gains are taxed as ordinary income.
Long-term capital gains distributions are taxed as long-term
capital gains, regardless of the length of time the Money
Market Fund shares have been held by the shareholder. These
tax consequences apply whether dividends are received in cash
or as additional shares. Information on the tax status of
dividends and distributions is provided annually.
Massachusetts State Income Tax
Individual shareholders of the Massachusetts Municipal Money
Market Fund who are subject to Massachusetts income taxation
will not be required to pay Massachusetts income tax on that
portion of their dividends which is attributable to interest
earned on Massachusetts tax-free municipal obligations, gain
from the sale of certain of such obligations, interest earned
on obligations of the United States, and interest earned on
obligations of United States territories or possessions to the
extent interest on such obligations is exempt from taxation by
the state pursuant to federal law. All remaining dividends
will be subject to Massachusetts income tax.
If a shareholder of the Massachusetts Municipal Money Market
Fund is a Massachusetts business corporation or any foreign
business corporation which exercises its charter, qualifies to
do business, actually does business or owns or uses any part
of its capital, plant or other property in Massachusetts, then
it will be subject to Massachusetts excise taxation either as
a tangible property corporation or as an intangible property
corporation. If the corporate shareholder is a tangible
property corporation, it will be taxed upon its net income
allocated to Massachusetts and the value of certain tangible
property. If it is an intangible property corporation, it will
be taxed upon its net income and net worth allocated to
Massachusetts. Net income is gross income less allowable
deductions for federal income tax purposes, subject to
specified modifications. Dividends received from the
Massachusetts Municipal Money Market Fund are includable in
gross income and generally may not be deducted by a corporate
shareholder in computing its net income. The corporation's
shares in the Massachusetts Municipal Money Market Fund are
not includable in the computation of the tangible property
base of a tangible property corporation, but are includable in
the computation of the net worth base of an intangible
property corporation.
Shares of Massachusetts Municipal Money Market Fund will be
exempt from local property taxes in Massachusetts.
Other State and Local Taxes
Income from the Massachusetts Municipal Money Market Fund is
not necessarily free from state income taxes or from local
property taxes in states other than Massachusetts. State laws
differ on this issue, and shareholders are urged to consult
their own tax advisers regarding the status of their accounts
under state and local tax laws.
Shareholders' Tax Status
Unless otherwise exempt, shareholders are subject to federal
income tax on dividends received as cash or additional shares.
No portion of any income dividend paid by a Money Market Fund
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 experienced by each of the Money Market Funds
could result in an increase in dividends. Capital losses could
result in a decrease in dividends. If for some extraordinary
reason a Money Market Fund realizes net long-term capital
gains, it will distribute them at least once every 12 months.
Yield
The yields for Trust Shares of the Connecticut Municipal Money
Market Fund and Prime Money Market Fund for the seven-day
period ended October 31, 1994 were 2.74%, and 4.74%,
respectively.
The yields for Investment Shares of the Connecticut Municipal
Money Market Fund and Prime Money Market Fund for the seven-
day period ended October 31, 1994 were 2.49% and 4.49%,
respectively.
The seven-day yield for the period ended October 31, 1994 for
th e Massachusetts Municipal Money Market Fund was 2.60%.
The Money Market Funds calculate the yield for their Shares
daily, based upon the seven days ending on the day of the
calculation, called the "base period." This yield is computed
by:
odetermining 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;
odividing 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
omultiplying the base period return by 365/7.
To the extent that financial institutions and broker/dealers
charge fees in connection with services provided in
conjunction with an investment in Money Market Funds Shares,
the performance will be reduced for those shareholders paying
those fees.
Effective Yield
The effective yield for the Trust Shares of the Connecticut
Municipal Money Market Fund and the Prime Money Market Fund
for the seven-day period ended October 31, 1994 were 2.78% and
4.86%, respectively.
The effective yield for the Investment Shares of the
Connecticut Municipal Money Market Fund and the Prime Money
Market Fund for the seven-day period ended October 31, 1994
were 2.52% and 4.59%, respectively.
The effective yield for the Massachusetts Municipal Money
Market Fund for the seven-day period ended October 31, 1994
was 2.63%.
The Money Market Funds' effective yield for Shares is computed
by compounding the unannualized base period return by:
oadding 1 to the base period return;
oraising the sum to the 365/7th power; and
osubtracting 1 from the result.
Tax-Equivalent Yield
The tax-equivalent yield for the Trust Shares of the
Connecticut Municipal Money Market Fund for the period ended
October 31, 1994 was 4.06%.
The tax-equivalent yield for the Investment Shares of the
Connecticut Municipal Money Market Fund for the period ended
October 31, 1994 was 3.69%.
The Massachusetts Municipal Money Market Fund's tax-equivalent
yield for the period ended October 31, 1994 was 4.33%.
The tax-equivalent yield for the Connecticut/Massachusetts
Municipal Money Market Funds is calculated similarly to the
yield, but is adjusted to reflect the taxable yield that the
Connecticut Municipal Money Market Fund, assuming a 32.50%
combined federal and state tax rate, and Massachusetts
Municipal Money Market Fund, assuming a 40.00% combined
federal and state tax rate, would have had to earn to equal
its actual yield, assuming that income earned by the
Connecticut/Massachusetts Municipal Money Market Funds are
100% tax-exempt.
Tax-Equivalency Table-Connecticut Municipal Money Market Fund
The Connecticut Municipal Money Market Fund may use a tax-
equivalency table in advertising and sales literature. The
interest earned by the municipal bonds in the Fund's portfolio
generally remains free from federal regular income tax, and
from the regular personal income tax imposed by Connecticut.*
As the table below indicates, a "tax-free" investment is an
attractive choice for investors, particularly in times of
narrow spreads between "tax-free" and taxable yields.
TAXABLE YIELD EQUIVALENT FOR 1994
STATE OF CONNECTICUT
Federal Tax Bracket:
15.00% 28.00% 31.00% 36.00% 39.60%
Combined Federal and State:
19.50% 32.50% 35.50% 40.50% 44.10%
Joint Return: $1-38,000 $38,001-91,850$91,851-140,000$140
,001-250,000Over $250,000
Single Return: $1-22,750 $22,751-55,100$55,101-115,000$115
,001-250,000Over $250,000
Tax-Exempt
Yield Taxable Yield Equivalent
1.50% 1.86% 2.22% 2.33% 2.52% 2.68%
2.00% 2.48% 2.96% 3.10% 3.36% 3.58%
2.50% 3.11% 3.70% 3.88% 4.20% 4.47%
3.00% 3.73% 4.44% 4.65% 5.04% 5.37%
3.50% 4.35% 5.19% 5.43% 5.88% 6.26%
4.00% 4.97% 5.93% 6.20% 6.72% 7.16%
4.50% 5.59% 6.67% 6.98% 7.56% 8.05%
5.00% 6.21% 7.41% 7.75% 8.40% 8.94%
5.50% 6.83% 8.15% 8.53% 9.24% 9.84%
6.00% 7.45% 8.89% 9.30% 10.08% 10.73%
Note: The maximum marginal tax rate for each bracket was used
in calculating the taxable yield equivalent. Furthermore,
additional state and local taxes paid on comparable taxable
investments were not used to increase federal deductions.
The above chart is for illustrative purposes only and uses tax
brackets that went into effect beginning January 1, 1994. It
is not an indicator of past or future performance of either
class of Shares.
* Some portion of either class's income may be subject to the
federal alternative minimum tax and state and local regular or
alternative minimum taxes.
Tax-Equivalency Table-Massachusetts Municipal Money Market
Fund
The Massachusetts Municipal Money Market Fund may use a tax-
equivalency table in advertising and sales literature. The
interest earned by the municipal bonds in the Fund's portfolio
generally remains free from federal regular income tax, and
from the regular personal income tax imposed by
Massachusetts.* As the table below indicates, a "tax-free"
investment is an attractive choice for investors, particularly
in times of narrow spreads between "tax-free" and taxable
yield.
TAXABLE YIELD EQUIVALENT FOR 1994
COMMONWEALTH OF MASSACHUSETTS
Federal Tax Bracket:
15.00% 28.00% 31.00% 36.00% 39.60%
Combined Federal and State:
27.00% 40.00% 43.00% 48.00% 51.60%
Joint Return: $1-38,000 $38,001-91-850$91,851-140,000$140
,001-250,000Over $250,000
Single Return: $1-22,750$22,751-55,100 $55,101-115,000 $1
15,001-250,000 Over $250,000
Tax-Exempt
Yield Taxable Yield Equivalent
1.50% 2.05% 2.50% 2.63% 2.88% 3.10%
2.00% 2.74% 3.33% 3.51% 3.85% 4.13%
2.50% 3.42% 4.17% 4.39% 4.81% 5.17%
3.00% 4.11% 5.00% 5.26% 5.77% 6.20%
3.50% 4.79% 5.83% 6.14% 6.73% 7.23%
4.00% 5.48% 6.67% 7.02% 7.69% 8.26%
4.50% 6.16% 7.50% 7.89% 8.65% 9.30%
5.00% 6.85% 8.33% 8.77% 9.62% 10.33%
5.50% 7.53% 9.17% 9.65% 10.58% 11.36%
6.00% 8.22% 10.00% 10.53% 11.54% 12.40%
Note: The maximum marginal tax rate for each bracket was used
in calculating the taxable yield equivalent. Furthermore,
additional state and local taxes paid on comparable taxable
investments were not used to increase federal deductions.
The above chart is for illustrative purposes only and uses tax
brackets that went into effect beginning January 1, 1994. It
is not an indicator of past or future performance of the Fund.
* Some portion of the Fund's income may be subject to the
federal alternative minimum tax and state and local regular or
alternative minimum taxes.
Performance Comparisons
The performance of a Money Market Fund depends upon such
variables as:
oportfolio quality;
oaverage portfolio maturity;
otype of instruments in which the portfolio is invested;
ochanges in interest rates on money market instruments;
ochanges in a Money Market Fund's or either class of
Shares' expenses (as applicable); and
othe relative amount of a Money Market Fund's cash flow.
Investors may use financial publications and/or indices to
obtain a more complete view of the Money Market Funds'
performance. When comparing performance, investors should
consider all relevant factors such as the composition of any
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 Money Market Funds use
in advertising may include:
For the Connecticut/Massachusetts Municipal Money Market
Funds:
o Lipper Analytical Services, Inc., ranks funds in various
fund categories by making comparative calculations using
total return. Total return assumes the reinvestment of all
income dividends and capital gains distributions, if any.
From time to time, the Fund will quote their Lipper rankings
in the "money market instrument funds" category in
advertising and sales literature.
For the Prime Money Market Fund:
o Donoghue'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 and 12-
months-to-date investment results for the same money funds.
o Lipper Analytical Services, Inc., ranks funds in various
fund categories by making comparative calculations using
total return. Total return assumes the reinvestment of all
income dividends and capital gains distributions, if any.
From time to time, the Fund will quote its Lipper ranking in
the "money market instrument funds" category in advertising
and sales literature.
o Bank Rate Monitor National Index, Miami Beach, Florida, is a
financial reporting service which publishes weekly average
rates of 50 leading bank and thrift institution money market
deposit accounts. The rates published in the index are an
average of the personal account rates offered on the
Wednesday prior to the date of publication by ten of the
largest banks and thrifts in each of the five largest
Standard Metropolitan Statistical Areas. Account minimums
range upward from $2,500 in each institution and compounding
methods vary. If more than one rate is offered, the lowest
rate is used. Rates are subject to change at any time
specified by the institution.
Advertisements and other sales literature for a Money Market
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 the Money
Market Funds based on monthly reinvestment of dividends over a
specified period of time.
Financial Statements
The financial statements for the fiscal year ended October 31,
1994 are incorporated herein by reference to the Annual Report
of the Trust dated October 31, 1994 (File Nos. 33-48933 and
811-58437). A copy of the Annual Report may be obtained
without charge by contacting the Trust at the address located
on the back cover of the prospectus.
820482693
820482842
820482776
820482784
820482792
XXXXXXX (12/94)
PART C. OTHER INFORMATION.
Item 24. Financial Statements and Exhibits:
(a) Financial Statements: Incorporated into the Statement of
Additional Information by reference to the Trust's Annual
Report; (1-12).
(b) Exhibits:
(1) (i) Conformed copy of Declaration
of Trust of the Registrant;+
(ii) Conformed copies of Amendment
Nos. 1 through 6 to the Declaration of Trust of the
Registrant (8);
(iii) Conformed copy of Amendment No.
7 to the Declaration of Trust of the Registrant;+
(2) Copy of By-Laws of the Registrant;+
(3) Not applicable;
(4) (i) Copy of Specimen Certificate
for Shares of Beneficial Interest for Shawmut Prime
Money Market Fund-Trust Shares;+
(ii) Copy of Specimen Certificate
for Shares of Beneficial Interest for Shawmut Prime
Money Market Fund-Investment Shares;+
(iii) Copy of Specimen Certificate
for Shares of Beneficial Interest for Shawmut Fixed
Income Fund-Trust Shares;+
(iv) Copy of Specimen Certificate
for Shares of Beneficial Interest for Shawmut Fixed
Income Fund-Investment Shares;+
(v) Copy of Specimen Certificate
for Shares of Beneficial Interest for Shawmut
Intermediate Government Income Fund-Trust Shares;+
(vi) Copy of Specimen Certificate
for Shares of Beneficial Interest for Shawmut
Intermediate Government Income Fund-Investment
Shares;+
(vii) Copy of Specimen Certificate
for Shares of Beneficial Interest for Shawmut
Limited Term Income Fund-Trust Shares;+
(viii) Copy of Specimen Certificate
for Shares of Beneficial Interest for Shawmut
Limited Term Income Fund-Investment Shares;+
(ix) Copy of Specimen Certificate
for Shares of Beneficial Interest for Shawmut Small
Capitalization Equity Fund-Trust Shares;+
(x) Copy of Specimen Certificate
for Shares of Beneficial Interest for Shawmut Small
Capitalization Equity Fund-Investment Shares;+
(xi) Copy of Specimen Certificate
for Shares of Beneficial Interest for Shawmut
Growth and Income Equity Fund-Trust Shares;+
(xii) Copy of Specimen Certificate
for Shares of Beneficial Interest for Shawmut
Growth and Income Equity Fund-Investment Shares;+
(xiii) Copy of Specimen Certificate
for Shares of Beneficial Interest for Shawmut
Growth Equity Fund-Trust Shares;+
(xiv) Copy of Specimen Certificate
for Shares of Beneficial Interest for Shawmut
Growth Equity Fund-Investment Shares;+
+ All exhibits have been filed electronically.
8. Response is incorporated by reference to Registrant's
Post-Effective Amendment No. 11 on Form N-1A filed April 22,
1994 (File Nos. 33-48933 and 811-58437).
(xv) Copy of Specimen Certificates
for Shares of Beneficial Interest for Shawmut
Connecticut Intermediate Municipal Income Fund (9);
(xvi) Copy of Specimen Certificate
for Shares of Beneficial Interest for Shawmut
Massachusetts Intermediate Municipal Income Fund
(9);
(xvii) Copy of Specimen Certificate
for Shares of Beneficial Interest for Shawmut
Connecticut Municipal Money Market Fund-Trust
Shares (9);
(xviii) Copy of Specimen Certificate
for Shares of Beneficial Interest for Shawmut
Connecticut Municipal Money Market Fund-Investment
Shares (9);
(xix) Copy of Specimen Certificate
for Shares of Beneficial Interest for Shawmut
Massachusetts Municipal Money Market Fund (9);
(xx) Copy of Specimen Certificate
for Shares of Beneficial Interest for Shawmut
Quantitative Equity Fund-Trust Shares (9);
(xxi) Copy of Specimen Certificate
for Shares of Beneficial Interest for Shawmut
Quantitative Equity Fund-Investment Shares (9);
(5) (i) Conformed copy of Investment
Advisory Contract of the Regis- trant, including
conformed copies of Exhibits A through E to the
Investment Advisory Contract (8);
(ii) Conformed Copy of Exhibit F to
the Investment Advisory Contract of the Registrant
to add the Shawmut Quantitative Equity Fund to the
present Investment Advisory Contract;+
(iii) Conformed copy of Sub-Advisory
Contract between Shawmut Bank, N.A., and Marque
Millenium Group Limited, the sub-adviser to the
Shawmut Quantitative Equity Fund;+
(6) (i) Conformed copy of Distributor's Contract of
the Registrant, including conformed copies of
Exhibits A through T to the Distributor's Contract
(8);
(ii) Conformed Copy of Exhibits U and V to the
Distributor's Contract of the Registrant to add the
Shawmut Quantitative Equity Fund (Investment Shares
and Trust Shares) to the present Distributor's
Contract;+
(7) Not applicable;
(8) Conformed copy of Custody Agreement of the Registrant;+
present Custody Agreement;+
(9) (i) Conformed copy of Portfolio Accounting
and Shareholder Recordkeeping Agreement of the
Registrant;+
(ii) Conformed Copy of Agreement between
Federated Services Company and National Financial
Services Corporation with respect to omnibus
accounts;+
(10) Conformed copy of Opinion and Consent of Counsel as to
legality of shares being registered;+
(11) Conformed copy of Consent of Independent Accountants;+
(12) Not applicable;
(13) Conformed copy of Initial Capital Understanding;+
(14) Not applicable;
+ All exhibits have been filed electronically.
8. Response is incorporated by reference to Registrant's
Post-Effective Amendment No. 11 on Form N-1A filed April 22,
1994 (File Nos. 33-48933 and 811-58437).
9. Response is incorporated by reference to Registrant's
Post-Effective Amendment No. 12 on Form N-1A filed June 20,
1994 (File Nos. 33-48933 and 811-58437).
(15) (i) Conformed copy of Distribution Plan, including
conformed copies of Exhibits A through L to the
Distribution Plan (8);
(ii) Conformed Copy of Exhibit M to the
Distribution Plan to add the Shawmut Quantitative
Equity Fund (Investment Shares) to the present
Distribution Plan;+
(iii) Copy of Rule 12b-1 Agreement, through
Amendment No. 3 to Exhibit A;+
(16) (i) Copy of Schedule for Computation of Fund
Performance Data for Shawmut Prime Money Market
Fund-Trust Shares (6);
(ii) Copy of Schedule for Computation of Fund
Performance Data for Shawmut Prime Money Market
Fund-Investment Shares (6);
(iii) Copy of Schedule for Computation of Fund
Performance Data for Shawmut Intermediate
Government Income Fund-Trust Shares (6);
(iv) Copy of Schedule for Computation of Fund
Performance Data for Shawmut Intermediate
Government Income Fund-Investment Shares (6);
(v) Copy of Schedule for Computation of Fund
Performance Data for Shawmut Fixed Income Fund-
Trust Shares (6);
(vi) Copy of Schedule for Computation of Fund
Performance Data for Shawmut Fixed Income Fund-
Investment Shares (6);
(vii) Copy of Schedule for Computation of Fund
Performance Data for Shawmut Limited Term Income
Fund-Trust Shares (6);
(viii) Copy of Schedule for Computation of Fund
Performance Data for Shawmut Limited Term Income
Fund-Investment Shares (6);
(ix) Copy of Schedule for Computation of Fund
Performance Data for Shawmut Growth Equity Fund-
Trust Shares (6);
(x) Copy of Schedule for Computation of Fund
Performance Data for Shawmut Growth Equity Fund-
Investment Shares (6);
(xi) Copy of Schedule for Computation of Fund
Performance Data for Shawmut Growth and Income
Equity Fund-Trust Shares (6);
(xii) Copy of Schedule for Computation of Fund
Performance Data for Shawmut Growth and Income
Equity Fund-Investment Shares (6);
(xiii) Copy of Schedule for Computation of Fund
Performance Data for Shawmut Small Capitalization
Equity Fund-Trust Shares (6);
(xiv) Copy of Schedule for Computation of Fund
Performance Data for Shawmut Small Capitalization
Equity Fund-Investment Shares (6);
(xv) Copy of Schedule for Computation of Fund
Performance Data for Shawmut Connecticut Municipal
Money Market Fund- Investment Shares (7);
(xvi) Copy of Schedule for Computation of Fund
Performance Data for Shawmut Connecticut Municipal
Money Market Fund-Trust Shares (7);
(xvii) Copy of Schedule for Computation of Fund
Performance Data for Shawmut Massachusetts
Municipal Money Market Fund-Trust Shares (7);
+ All exhibits have been filed electronically.
6. Response is incorporated by reference to Registrant's
Post-Effective Amendment No. 3 on Form N-1A filed June 25, 1993
(File Nos. 33-48933 and 811-58437).
7. Response is incorporated by reference to Registrant's
Post-Effective Amendment No. 9 on Form N-1A filed March 31,
1994 (File Nos. 33-48933 and 811-58437).
(xviii)Copy of Schedule for Computation of Fund
Performance Data for Shawmut Connecticut
Intermediate Municipal Income Fund;+
(xix) Copy of Schedule for Computation of Fund
Performance Data for Shawmut Massachusetts
Intermediate Municipal Income Fund;+
(xx) Copy of Schedule for Computation of Fund
Performance Data for Shawmut Quantitative Equity
Fund-Trust Shares;+
(xxi) Copy of Schedule for Computation of Fund
Performance Data for Shawmut Quantitative Equity
Fund-Investment Shares;+
(17) Copy of Financial Data Schedules;+
(18) Conformed copy of Opinion and Consent of Counsel as to
Availability of Rule 485(b);+
(19) Conformed copy of Power of Attorney;(8)
+ All exhibits have been filed electronically.
8. Response is incorporated by reference to Registrant's
Post-Effective Amendment No. 11 on Form N-1A filed April 22,
1994 (File Nos. 33-48933 and 811-58437).
Item 25. Persons Controlled by or Under Common Control with
Registrant:
None
Item 26. Number of Holders of Securities:
Title of Class
Shares of beneficial interest Number of Record
Holders
(no par value) as of December 12,
1994
Shawmut Prime Money Market Fund
Trust Shares 10
Investment Shares 5,726
Shawmut Intermediate Government Income Fund
Trust Shares 7
Investment Shares 2,035
Shawmut Fixed Income Fund
Trust Shares 7
Investment Shares 1,644
Shawmut Limited Term Income Fund
Trust Shares 7
Investment Shares 719
Shawmut Growth Equity Fund
Trust Shares 7
Investment Shares 1,549
Shawmut Growth and Income Equity Fund
Trust Shares 7
Investment Shares 4,717
Shawmut Small Capitalization Equity Fund
Trust Shares 7
Investment Shares 4,956
Shawmut Connecticut Intermediate Municipal Income Fund 456
Shawmut Massachusetts Intermediate Municipal Income Fund
305
Shawmut Connecticut Municipal Money Market Fund
Trust Shares 6
Investment Shares 373
Shawmut Massachusetts Municipal Money Market Fund352
Shawmut Quantitative Equity Fund
Trust Shares 11
Investment Shares 156
Item 27. Indemnification: (1.)
1. Response is incorporated by reference to Registrant's
Initial Registration on Form N-1A filed August 25, 1992 (File
Nos. 33-48933 and 811-58437).
Item 28. Business and Other Connections of Investment Adviser:
(a) For a description of the other business of Shawmut Bank,
N.A., the Funds' investment adviser, see the section entitled
"The Shawmut Funds Information -- Management of The Shawmut
Funds" in Part A. The remaining Officers of the investment
adviser are:
Other Substantial
Business, Profession
Name Positions Vocation or Employment
Joel B. Alvord Director Director,
Shawmut Bank Connecticut
N.A., Chairman and Chief
Executive Officer, Shawmut
National Corporation
Stanley N. Bergman Director Bergman,
Horowitz & Reynolds, P.C.
Francisco L. Bonges Director Managing
Director of Public
Finance, Financial
Guarantee Insurance Co. of
New York
John T. Collins Director Chairman and
Chief Executive Officer,
the Collins Group, Inc.
David L. Eyles Vice Chairman, Director Vice
Chairman,Shawmut Bank
Connecticut N.A., and
Shawmut Bank N.A.; Vice-
Chairman-Credit and Chief
Policy Officer, Shawmut
National Corporation
Bernard M. Fox Director President and
Chief Executive Officer,
Northeast Utilities
John L. Harrington Director President,
JRY Corporation
Eileen S. Kraus Vice Chairman, Director President,
Shawmut Bank Connecticut
N.A., and Shawmut National
Corporation
Robert J. Matura Director Chairman, and
Chief Executive Officer,
Belvoir Limited
Evelyn F. Murphy Director Managing
Director, Brown, Rudnick,
Free and Gesmer, P.C.
Walter H. Monteith, Jr. Director
Chairman, Southern New
England Telecommunications
Corporation
Other Substantial
Business, Profession
Name Positions Vocation or Employment
Gunnar S. Overstrom Director, Chairman and President and
Chief
Chief Executive Officer Operating
Officer, Shawmut National
Corporation; Chairman and
Chief Executive Officer,
Shawmut Bank Connecticut
N.A.
Deborah B. Prothrow- Director Assistant
Dean for Government
Stith and Community
Programs, Harvard School
of Public Health
John G. Power Director Formerly,
Senior Vice-President, ITT
Hartford Insurance Group
S. Caesar Raboy Director Vice
President, Sun Life
Insurance Company of
Canada
Paul E. Tsongas Director Partner,
Foley, Hoag & Eliot,
Attorneys
For a description of the other business of Marque Millenium
Group Limited, the sub-adviser to the Shawmut Quantitative
Equity Fund (the "Sub-Adviser"), see the section entitled
"The Shawmut Funds Information -- Management of The Shawmut
Funds" in Part A of the Shawmut Quantitative Equity Fund.
The remaining Officers of the Sub-Adviser are:
Other Substantial
Business, Profession
Name Positions Vocation or Employment
Wilfred J. Meckel II Senior
Managing J. & W.
Seligman & Co.;
Director and Chief Member,
American and Boston
Executive Officer Stock
Exchanges; Chairman, New
York District of the
Securities Industry
Association; Director, SIA-
NY Economic Education
Foundation; President and
Director, Brown University
Club in New York.
Kenneth J. Garvey Managing Director Senior Vice
President, J. & W.
Seligman & Co.; Partner,
Centry Capital; Senior
Vice President, Lehman
Management Corp.;
Chairman, Readington
Lebanon (New Jersey)
Municipal Sewage
Authority.
Item 29. Principal Underwriters:
(a) Federated Securities Corp., the Distributor for shares
of the Registrant, also acts as principal underwriter
for the following open-end investment companies:
Alexander Hamilton Funds; American Leaders Fund,
Inc.; Annuity Management Series; Arrow Funds;
Automated Cash Management Trust; Automated Government
Money Trust; BayFunds; The Biltmore Funds; The
Biltmore Municipal Funds; California Municipal Cash
Trust; Cash Trust Series, Inc.; Cash Trust Series II;
DG Investor Series; Edward D. Jones & Co. Daily
Passport Cash Trust; Federated ARMs Fund; Federated
Exchange Fund, Ltd.; Federated GNMA Trust; Federated
Government Trust; Federated Growth Trust; Federated
High Yield Trust; Federated Income Securities Trust;
Federated Income Trust; Federated Index Trust;
Federated Institutional Trust; Federated Intermediate
Government Trust; Federated Master Trust; Federated
Municipal Trust; Federated Short-Intermediate
Government Trust; Federated Short-Term U.S.
Government Trust; Federated Stock Trust; Federated
Tax-Free Trust; Federated U.S. Government Bond Fund;
First Priority Funds; First Union Funds; Fixed Income
Securities, Inc.; Fortress Adjustable Rate U.S.
Government Fund, Inc.; Fortress Municipal Income
Fund, Inc.; Fortress Utility Fund, Inc.; Fountain
Square Funds; Fund for U.S. Government Securities,
Inc.; Government Income Securities, Inc.; High Yield
Cash Trust; Independence One Mutual Funds; Insight
Institutional Series, Inc.; Insurance Management
Series; Intermediate Municipal Trust; International
Series Inc.; Investment Series Funds, Inc.;
Investment Series Trust; Liberty Equity Income Fund,
Inc.; Liberty High Income Bond Fund, Inc.; Liberty
Municipal Securities Fund, Inc.; Liberty U.S.
Government Money Market Trust; Liberty Utility Fund,
Inc.; Liquid Cash Trust; Managed Series Trust;
Marshall Funds, Inc.; Money Market Management, Inc.;
The Medalist Funds; Money Market Obligations Trust;
Money Market Trust; The Monitor Funds; Municipal
Securities Income Trust; New York Municipal Cash
Trust; 111 Corcoran Funds; Peachtree Funds; The
Planters Funds; Portage Funds; RIMCO Monument Funds;
Short-Term Municipal Trust; SouthTrust Vulcan Funds;
Star Funds; The Starburst Funds; The Starburst Funds
II; Stock and Bond Fund, Inc.; Sunburst Funds;
Targeted Duration Trust; Tax-Free Instruments Trust;
Tower Mutual Funds; Trademark Funds; Trust for
Financial Institutions; Trust for Government Cash
Reserves; Trust for Short-Term U.S. Government
Securities; Trust for U.S. Treasury Obligations;
Vision Fiduciary Funds, Inc.; Vision Group of Funds,
Inc.; and World Investment Series, Inc.
Federated Securities Corp. also acts as principal
underwriter for the following closed-end investment
company: Liberty Term Trust, Inc.- 1999.
(b)
(1) (2) (3)
Name and Principal Positions and Offices Positions and
Offices
Business Address With Underwriter With
Registrant
Richard B. Fisher Director, Chairman, Chief Vice
President
Federated Investors Tower Executive Officer, Chief
Pittsburgh, PA 15222-3779 Operating Officer, and
Asst. Treasurer, Federated
Securities Corp.
Edward C. Gonzales Director, Executive Vice President,
Federated Investors Tower President, and Treasurer, Treasurer and
Pittsburgh, PA 15222-3779 Federated Securities Trustee
Corp.
John W. McGonigle Director, Executive Vice Vice
President and
Federated Investors Tower President, and Assistant Secretary
Pittsburgh, PA 15222-3779 Secretary, Federated
Securities Corp.
John B. Fisher President-Institutional Sales, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James F. Getz President-Broker/Dealer, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark R. Gensheimer Executive Vice President of --
Federated Investors Tower Bank/Trust
Pittsburgh, PA 15222-3779 Federated Securities Corp.
Mark W. Bloss Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Theodore Fadool, Jr. Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Bryant R. Fisher Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Christopher T. Fives Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James S. Hamilton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James M. Heaton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
H. Joseph Kennedy Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Keith Nixon Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Timothy C. Pillion Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard W. Boyd Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jane E. Broeren-Lambesis Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mary J. Combs Vice President, --
Federated Investors Tower Federated
Securities Corp.
Pittsburgh, PA 15222-3779
R. Edmond Connell, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Laura M. Deger Vice President, --
Federated Investors Tower Federated
Securities Corp.
Pittsburgh, PA 15222-3779
Jill Ehrenfeld Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark D. Fisher Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Michael D. Fitzgerald Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Joseph D. Gibbons Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
David C. Glabicki Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard C. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Scott A. Hutton Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William J. Kerns Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William E. Kugler Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Dennis M. Laffey Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Francis J. Matten, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark J. Miehl Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard C. Mihm Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
J. Michael Miller Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
R. Jeffrey Niss Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Michael P. O'Brien Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Robert D. Oehlschlager Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Solon A. Person, IV Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Robert F. Phillips Vice President, --
Federated Investors Tower Federated
Securities Corp.
Pittsburgh, PA 15222-3779
Eugene B. Reed Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Paul V. Riordan Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Charles A. Robison Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
David W. Spears Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jeffrey A. Stewart Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Thomas E. Territ Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jamie M. Teschner Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William C. Tustin Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard B. Watts Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Philip C. Hetzel Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Ernest L. Linane Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
S. Elliott Cohan Secretary, Federated Assistant
Federated Investors Tower Securities Corp. Secretary
Pittsburgh, PA 15222-3779
(c) Not applicable.
Item 30. 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:
Registrant Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Services Company Federated Investors Tower
("Transfer Agent, Dividend Pittsburgh, PA 15222-3779
Disbursing Agent, and Portfolio
Accounting Services")
Federated Administrative Services Federated Investors Tower
("Administrator") Pittsburgh, PA 15222-3779
Shawmut Bank, N.A. One Federal Street
("Adviser") Boston, MA 02211
Marque Millennium Group Limited 126 East 56th Street
("Sub-Adviser") New York, NY 10022
Shawmut Bank, N.A. One Federal Street
("Custodian") Boston, MA 02211
Item 31. Management Services: Not applicable.
Item 32. 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.
Registrant hereby undertakes to furnish each person to
whom a prospectus is delivered with a copy of the
Registrant's latest annual report to shareholders, upon
request and without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933
and the Investment Company Act of 1940, the Registrant, THE
SHAWMUT FUNDS, certifies that it meets all of the requirements
for effectiveness of this Amendment to its Registration
Statement pursuant to Fule 485(b) under the Securities Act of
1933 and has duly caused this Amendment to its Registration
Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of Pittsburgh and
Commonwealth of Pennsylvania, on the 27th day of December,
1994.
THE SHAWMUT FUNDS
BY: /s/ Robert C. Rosselot
Robert C. Rosselot, Assistant Secretary
Attorney in Fact for John F. Donahue
December 27, 1994
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/ Robert C. Rosselot
Robert C. Rosselot Attorney In Fact December 27, 1994
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
Gregor F. Meyer* Trustee
Wesley W. Posvar* Trustee
Marjorie P. Smuts* Trustee
* By Power of Attorney
-1-
Exhibit 5(iii) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
THE SHAWMUT FUNDS
SUB-ADVISORY AGREEMENT
THIS AGREEMENT is made between SHAWMUT BANK, N.A., a national
banking association (hereinafter referred to as the "Adviser"), and
MARQUE MILLENNIUM GROUP LIMITED, located in New York, New York
(hereinafter referred to as the "Sub-Adviser").
WITNESSETH:
That the parties hereto, intending to be legally bound hereby agree
as follows:
1. The Sub-Adviser hereby agrees to furnish to the Adviser in its
capacity as investment adviser to SHAWMUT QUANTITATIVE EQUITY FUND (the
"Fund"), a portfolio of The Shawmut Funds (the "Trust"), such investment
advice, statistical and other factual information, as may from time to
time be reasonably requested by the Adviser for the Fund which may be
offered in one or more classes of shares (the "Classes").
2. For its services under this Agreement, the Sub-Adviser shall
receive from the Adviser an annual fee (the "Sub-Advisory Fee"), as set
forth in Exhibit A hereto. In the event that the fee due from the Trust
to the Adviser on behalf of the Fund is reduced in order to meet expense
limitations imposed on the Fund by state securities laws or regulations,
or to meet a voluntary expense cap imposed by the Adviser, the Sub-
Advisory Fee shall be reduced by one-half of said reduction in the fee
due from the Trust to the Adviser on behalf of the Fund.
Notwithstanding any other provision of this Agreement, the Sub-
Adviser may from time to time and for such periods as it deems
appropriate, reduce its compensation (and, if appropriate, assume
expenses of the Fund or a Class of the Fund) to the extent that the
Fund's expenses exceed such lower expense limitation as the Sub-Adviser
may, by notice to the Trust on behalf of the Fund, voluntarily declare
to be effective.
3. This Agreement shall begin for the Fund on the date that the
parties execute Exhibit A to this Agreement. This Agreement shall
continue in effect for the Fund for two years from the date of its
execution and from year to year thereafter, subject to the provisions
for termination and all of the other terms and conditions hereof if: (a)
the continuation of the Adviser's agreement with the Trust shall be
specifically approved at least annually by the vote of a majority of the
Trustees of the Trust, including a majority of the Trustees who are not
parties to such advisory contract, or interested persons of any such
party (other than as Trustees of the Trust) cast in person at a meeting
called for that purpose; and (b) the Adviser shall not have notified the
Trust in writing at least sixty (60) days prior to the anniversary date
of this Agreement in any year thereafter that it does not desire to
continue to serve as the Adviser.
4. Notwithstanding any provision in this Agreement, it may be
terminated at any time without the payment of any penalty: (a) by
action of the Trustees of the Trust or by a vote of a majority of the
outstanding voting securities (as defined in Section 2(a)(42) of the
Investment Company Act of 1940, as amended) of the Fund, as a result of
sixty (60) days' written notice to the Adviser; or (b) by the Sub-
Adviser or the Adviser upon 120 days' written notice to the other party
to the Agreement.
5. This Agreement shall automatically terminate: (a) in the
event of its assignment (as defined in the Investment Company Act of
1940, as amended); or (b) in the event of termination of the investment
advisory contract by and between the Adviser and the Trust for any
reason whatsoever.
6. So long as both the Adviser and the Sub-Adviser shall be
legally qualified to act as an investment adviser to the Fund, neither
the Adviser nor the Sub-Adviser shall act as an investment adviser (as
such term is defined in the Investment Company Act of 1940, as amended)
to the Fund except as provided herein and in the investment advisory
contract by and between the Adviser and the Trust, or in such other
manner as may be expressly agreed between the Adviser and the Sub-
Adviser; provided, however, that if the Adviser or the Sub-Adviser shall
resign prior to the end of any term of this Agreement or for any reason
be unable or unwilling to serve for a successive term pursuant to the
provisions of Paragraph 3 of this Agreement or Paragraph 6 of the
investment advisory contract by and between the Adviser and the Trust,
as the case may be, the remaining party, the Sub-Adviser or the Adviser,
as the case may be, shall not be prohibited from serving as an
investment adviser to the Fund by reason of the provisions of this
Paragraph 6.
7. This Agreement may be amended from time to time by agreement
of the parties hereto, provided that such amendment shall be approved
both by the vote of a majority of Trustees of the Trust, including a
majority of Trustees who are not parties to this Agreement or interested
persons, as defined in Section 2(a)(19) of the Investment Company Act of
1940, as amended, of any such party, at a meeting called for that
purpose, and by the holders of a majority of the outstanding voting
securities (as defined in Section 2(a)(42) of the Investment Company Act
of 1940) of the Fund.
8. The Adviser and the Sub-Adviser hereby confirm and
acknowledge their respective authority to enter into this Agreement on
behalf of themselves and their affiliates, if applicable.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed on their behalf by their duly authorized officers, and
their corporate seals to be affixed hereto this 10th day of June, 1994.
ATTEST: SHAWMUT BANK, N.A.
/s/Eugene J. Schwartz By:/s/Michael J. Rothmeier
Assistant Secretary Title: Executive Vice President
ATTEST: MARQUE MILLENNIUM GROUP LIMITED
/s/Eileen Guardiano By:/s/Wilfred J. Meckel II
Secretary Title:Senior Managing Director
Exhibit A
THE SHAWMUT FUNDS
SHAWMUT QUANTITATIVE EQUITY FUND
Sub-Advisory Contract
For all services rendered by the Sub-Adviser pursuant to the Sub-
Advisory Agreement, Adviser shall pay to the Sub-Adviser a Sub-Advisory
Fee equal to one-half of the total investment advisory fee collected by
the Adviser from the above-mentioned portfolio. The Sub-Advisory Fee
shall be accrued and paid daily.
This Exhibit duly incorporates by reference the Sub-Advisory
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Exhibit to
be executed on their behalf by their duly authorized officers, and their
corporate seals to be affixed hereto this 10th day of June, 1994.
ATTEST: SHAWMUT BANK, N.A.
/s/Eugene J. Schwartz By:/s/Michael J. Rothmeier
Assistant Secretary Title: Executive Vice President
ATTEST: MARQUE MILLENNIUM GROUP LIMITED
/s/Eileen Guardiano By:/s/Wilfred J. Meckel II
Secretary Title:Senior Managing Director
Exhibit 18 under Form N-1A
Exhibit 99 under Item 601/Reg. S-K
HOUSTON, HOUSTON & DONNELLY
ATTORNEYS AT LAW
2510 CENTRE CITY TOWER
WILLIAM McC. HOUSTON PITTSBURGH, PA. 15222
FRED CHALMERS HOUSTON, JR. __________
THOMAS J. DONNELLY
JOHN F. MECK (412) 471-5828 FRED CHALMERS HOUSTON
FAX (412) 471-0736 (1914 - 1971)
MARIO SANTILLI, JR.
THEODORE M. HAMMER
December 22, 1994
The Shawmut Funds
Federated Investors Tower
Pittsburgh, PA 15222-3779
Gentlemen:
As counsel to The Shawmut Funds ("Trust") we have reviewed Post-
effective Amendment No. 12 to the Trust's Registration Statement to be filed
with the Securities and Exchange Commission under the Securities Act of 1933
(File No. 33-48933). The subject Post-effective Amendment will be filed
pursuant to Paragraph (b) of Rule 485 and become effective pursuant to said
Rule on December 31, 1994.
Our review also included an examination of other relevant portions of
the amended 1933 Act Registration Statement of the Trust and such other
documents and records deemed appropriate. On the basis of this review we are
of the opinion that Post-effective Amendment No. 12 does not contain
disclosures which would render it ineligible to become effective pursuant to
Paragraph (b) of Rule 485.
We hereby consent to the filing of this representation letter as a part
of the Trust's Registration Statement filed with the Securities and Exchange
Commission under the Securities Act of 1933 and as part of any application or
registration statement filed under the Securities Laws of the States of the
United States.
Very truly yours,
Houston, Houston & Donnelly
By: /s/ Thomas J. Donnelly
TJD:smg
-1-
Exhibit 1(i) under Form N-1A
Exhibit 3(a) under Item
601/Reg. S-K
The Shawmut Funds
Declaration of Trust
TABLE OF CONTENTS
Page
ARTICLE I. NAMES AND DEFINITIONS ............................. 1
Section 1. Name .......................................... 1
Section 2. Definitions ................................... 1
ARTICLE II. PURPOSE OF TRUST .................................. 2
ARTICLE III. BENEFICIAL INTEREST................................ 2
Section 1. Shares of Beneficial Interest ................. 2
Section 2. Ownership of Shares ........................... 3
Section 3. Investment in the Trust ....................... 3
Section 4. No Pre-emptive Rights ......................... 3
Section 5. Establishment and Designation of Series
or Class ................................... 3
ARTICLE IV. THE TRUSTEES ...................................... 5
Section 1. Management of the Trust ....................... 5
Section 2. Election of Trustees at Meeting of
Shareholders ............................... 5
Section 3. Term of Office of Trustees .................... 6
Section 4. Termination of Service and Appointment
of Trustees ................................ 6
Section 5. Number of Trustees ............................ 6
Section 6. Effect of Death, Resignation, etc. of a
Trustee .................................... 6
Section 7. Ownership of Assets ........................... 7
ARTICLE V. POWERS OF THE TRUSTEES ............................ 7
Section 1. Powers ........................................ 7
Section 2. Principal Transactions ........................ 9
Section 3. Trustees and Officers as Shareholders.......... 9
Section 4. Parties to Contract ........................... 10
Page
ARTICLE VI. TRUSTEES' EXPENSES AND COMPENSATION ............... 10
Section 1. Trustee Reimbursement ........................ 10
Section 2. Trustee Compensation ......................... 11
ARTICLE VII. INVESTMENT ADVISER, ADMINISTRATIVE SERVICES,
PRINCIPAL UNDERWRITER AND
TRANSFER AGENT ......................... 11
Section 1. Investment Adviser ........................... 11
Section 2. Administrative Services ...................... 12
Section 3. Principal Underwriter ........................ 12
Section 4. Transfer Agent ............................... 12
ARTICLE VIII. SHAREHOLDERS' VOTING POWERS AND MEETINGS ........ 12
Section 1. Voting Powers ................................ 12
Section 2. Meetings ..................................... 13
Section 3. Quorum and Required Vote ..................... 13
Section 4. Additional Provisions ........................ 13
ARTICLE IX. CUSTODIAN ......................................... 14
ARTICLE X. DISTRIBUTIONS AND REDEMPTIONS ..................... 14
Section 1. Distributions ................................ 14
Section 2. Redemptions and Repurchases .................. 14
Section 3. Net Asset Value of Shares .................... 15
Section 4. Suspension of the Right of Redemption......... 16
Section 5. Trust's Right to Redeem Shares ............... 16
ARTICLE XI. LIMITATION OF LIABILITY AND INDEMNIFICATION ....... 16
Section 1. Limitation of Personal Liability and
Indemnification of Shareholders ............ 16
Section 2. Limitation of Personal Liability of
Trustees, Officers, Employees or
Agents of the Trust ........................ 17
Section 3. Express Exculpatory Clauses and
Instruments ................................ 17
Page
ARTICLE XII. MISCELLANEOUS...................................... 17
Section 1. Trust is not a Partnership ................... 17
Section 2. Trustee Action Binding, Expert Advice,
No Bond or Surety .......................... 18
Section 3. Establishment of Record Dates ................ 18
Section 4. Termination of Trust ......................... 18
Section 5. Offices of the Trust, Filing of Copies,
Headings, Counterparts ..................... 19
Section 6. Applicable Law ............................... 19
Section 7. Amendments -- General ........................ 19
Section 8. Amendments -- Series and Classes.............. 20
Section 9. Use of Name ................................. 21
DECLARATION OF TRUST
The Shawmut Funds
Dated July 16, 1992
DECLARATION OF TRUST made July 16, 1992, by John F. Donahue, John
T. Conroy, Jr., William J. Copeland, James E. Dowd, Lawrence D. Ellis,
M.D., Edward L. Flaherty, Jr., Edward C. Gonzales, Peter E. Madden,
Gregor F. Meyer, Wesley W. Posvar, and Marjorie P. Smuts.
WHEREAS, the Trustees desire to establish a trust fund for the
investment and reinvestment of funds contributed thereto;
NOW, THEREFORE, the Trustees declare that all money and property
contributed to the trust fund hereunder shall be held and managed under
this Declaration of Trust IN TRUST as herein set forth below.
ARTICLE I
NAMES AND DEFINITIONS
Section 1. Name.
This Trust shall be known as the The Shawmut Funds.
Section 2. Definitions.
Wherever used herein, unless otherwise required by the context or
specifically provided:
(a) The terms "Affiliated Person," "Assignment,"
"Commission," "Interested Person," "Majority Shareholder Vote"
(the 67% or 50% requirement of Section 2(a)(42) of the 1940 Act,
whichever may be applicable) and "Principal Underwriter" shall
have the meanings given them in the 1940 Act, as amended from time
to time;
(b) The "Trust" refers to the The Shawmut Funds.
(c) "Class" refers to a class of Shares established and
designated under or in accordance with the provisions of Article
III;
(d) "Series" refers to a series of Shares established and
designated under or in accordance with the provisions of Article
III;
(e) "Series Company" refers to the form of a registered
open-end investment company described in Section 18(f)(2) of the
1940 Act or in any successor statutory provision;
(f) "Shareholder" means a record owner of Shares of any
Series or Class;
(g) The "Trustees" refer to the individual Trustees in
their capacity as Trustees hereunder of the Trust and their
successor or successors for the time being in office as such
Trustees;
(h) "Shares" means the equal proportionate units of
interest into which the beneficial interest in the Trust shall be
divided from time to time, or if more than one Series or Class of
Shares is authorized by the Trustees, the equal proportionate
units into which each Series or Class of Shares shall be divided
from time to time and includes fractions of Shares as well as
whole Shares; and
(i) The "1940 Act" refers to the Investment Company Act of
1940, and the Rules and Regulations thereunder, (including any
exemptions granted thereunder) as amended from time to time.
ARTICLE II
PURPOSE OF TRUST
The purpose of this Trust is to provide investors a continuous
source of managed investments by investing primarily in securities
(including options) and also in debt instruments, commodities, commodity
contracts and options thereon.
ARTICLE III
BENEFICIAL INTEREST
Section 1. Shares of Beneficial Interest.
The beneficial interest
in the Trust shall at all times be divided into transferable Shares,
without par value.
Subject to the provisions of Section 5 of this Article III, each Share
shall have voting
rights as provided in Article VIII hereof, and holders of the Shares of any
Series shall
be entitled to receive dividends, when and as declared with respect
thereto in the manner
provided in Article X, Section 1 hereof. The Shares of any Series
may be issued in two or
more Classes, as the Trustees may authorize pursuant to Article XII,
Section 8 hereof.
Unless the Trustees have authorized the issuance of Shares of a Series
in two or more
Classes, each Share of a Series shall represent an equal proportionate
interest in the
assets and liabilities of the Series with each other Share of the same
Series, none having
priority or preference over another. If the Trustees have authorized
the issuance of
Shares of a Series in two or more Classes, then the Classes may have
such variations as to
dividend, redemption, and voting rights, net asset values, expenses borne
by the Classes,
and other matters as the Trustees have authorized provided that each
Share of a Class
shall represent an equal proportionate interest in the assets and
liabilities of the
Class with each other Share of the same Class, none having priority
or preference over
another. The number of Shares authorized shall be unlimited.
The Trustees may from time
to time divide or combine the Shares of any Series or Class into a
greater or lesser
number without thereby changing the proportionate beneficial
interests in the Series or
Class.
Section 2. Ownership of Shares.
The ownership of Shares shall be recorded in the books
of the Trust or a transfer agent which books shall be maintained
separately for the Shares of each Series or Class. The Trustees
may make such rules as they consider appropriate for the transfer
of Shares and similar matters. The record books of the Trust or
any transfer agent, as the case may be, shall be conclusive as to
who are the Shareholders of each Series or Class and as to the
number of Shares of each Series or Class held from time to time by
each.
Section 3. Investment in the Trust.
The Trustees shall accept investments in the Trust
from such persons and on such terms as they may from time to time
authorize. After the date of the initial contribution of capital
(which shall occur prior to the initial public offering of
Shares), the number of Shares to represent the initial
contribution shall be considered as outstanding and the amount
received by the Trustees on account of the contribution shall be
treated as an asset of the Trust to be allocated among any Series
or Classes in the manner described in Section 5(a) of this
Article. Subsequent to such initial contribution of capital,
Shares (including Shares which may have been redeemed or
repurchased by the Trust) may be issued or sold at a price which
will net the relevant Series or Class, as the case may be, before
paying any taxes in connection with such issue or sale, not less
than the net asset value (as defined in Article X, Section 3)
thereof; provided, however, that the Trustees may in their
discretion impose a sales charge upon investments in the Trust.
Section 4. No Pre-emptive Rights.
Shareholders shall have
no pre-emptive or other right to subscribe to any additional Shares or
other securities
issued by the Trust.
Section 5. Establishment and Designation of Series or
Class.
Without limiting the
authority of the Trustees set forth in Article XII, Section 8, inter
alia, to establish
and designate any additional series or class or to modify the rights
and preferences of
any existing Series or Class, the initial series shall be, and is
established and
designated as, Shawmut Prime Money Market Fund, Shawmut Fixed Income
Fund, Shawmut Limited
Term Fund, Shawmut Intermediate Government Income Fund, Shawmut
Growth and Income Equity
Fund, Shawmut Growth Equity Fund, and Shawmut Small Capitalization
Equity Fund.
Shares of any Series or
Class established in this Section 5 shall have the following
relative rights and
preferences:
(a) Assets belonging to Series or Class. All
consideration received by the Trust for the issue or sale of
Shares of a particular Series or Class, together with all
assets in which such consideration is invested or
reinvested, all income, earnings, profits, and proceeds
thereof from whatever source derived, including, without
limitation, any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds in whatever
form the same may be, shall irrevocably belong to that
Series or Class for all purposes, subject only to the rights
of creditors, and shall be so recorded upon the books of
account of the Trust. Such consideration, assets, income,
earnings, profits and proceeds thereof, from whatever source
derived, including, without limitation, any proceeds derived
from the sale, exchange or liquidation of such assets, and
any funds or payments derived from any reinvestment of such
proceeds, in whatever form the same may be, are herein
referred to as "assets belonging to" that Series or Class.
In the event that there are any assets, income, earnings,
profits and proceeds thereof, funds or payments which are
not readily identifiable as belonging to any particular
Series or Class (collectively "General Assets"), the
Trustees shall allocate such General Assets to, between or
among any one or more of the Series or Classes established
and designated from time to time in such manner and on such
basis as they, in their sole discretion, deem fair and
equitable, and any General Assets so allocated to a
particular Series or Class shall belong to that Series or
Class. Each such allocation by the Trustees shall be
conclusive and binding upon the Shareholders of all Series
or Classes for all purposes.
(b) Liabilities Belonging to Series or Class. The
assets belonging to each particular Series or Class shall be
charged with the liabilities of the Trust in respect to that
Series or Class and all expenses, costs, charges and
reserves attributable to that Series or Class, and any
general liabilities of the Trust which are not readily
identifiable as belonging to any particular Series or Class
shall be allocated and charged by the Trustees to and among
any one or more of the Series or Classes established and
designated from time to time in such manner and on such
basis as the Trustees in their sole discretion deem fair and
equitable. The liabilities, expenses, costs, charges and
reserves so charged to a Series or Class are herein referred
to as "liabilities belonging to" that Series or Class. Each
allocation of liabilities belonging to a Series or class by
the Trustees shall be conclusive and binding upon the
Shareholders of all Series or Classes for all purposes.
(c) Dividends, Distributions, Redemptions,
Repurchases and Indemnification. Notwithstanding any other
provisions of this Declaration, including, without
limitation, Article X, no dividend or distribution
(including, without limitation, any distribution paid upon
termination of the Trust or of any Series or Class) with
respect to, nor any redemption or repurchase of the Shares
of any Series or Class shall be effected by the Trust other
than from the assets belonging to such Series or Class, nor
except as specifically provided in Section 1 of Article XI
hereof, shall any Shareholder of any particular Series or
Class otherwise have any right or claim against the assets
belonging to any other Series or Class except to the extent
that such Shareholder has such a right or claim hereunder as
a Shareholder of such other Series or Class.
(d) Voting. Notwithstanding any of the other
provisions of this Declaration, including, without
limitation, Section 1 of Article VIII, only Shareholders of
a particular Series or Class shall be entitled to vote on
any matters affecting such Series or Class. Except with
respect to matters as to which any particular Series or
Class is affected, all of the Shares of each Series or Class
shall, on matters as to which such Series or Class is
entitled to vote, vote with other Series or Classes so
entitled as a single class. Notwithstanding the foregoing,
with respect to matters which would otherwise be voted on by
two or more Series or Classes as a single class, the
Trustees may, in their sole discretion, submit such matters
to the Shareholders of any or all such Series or Classes,
separately.
(e) Fraction. Any fractional Share of a Series or
Class shall carry proportionately all the rights and
obligations of a whole Share of that Series or Class,
including rights with respect to voting, receipt of
dividends and distributions, redemption of Shares and
termination of the Trust or of any Series or Class.
(f) Exchange Privilege. The Trustees shall have the
authority to provide that the holders of Shares of any
Series or Class shall have the right to exchange said Shares
for Shares of one or more other Series or Classes in
accordance with such requirements and procedures as may be
established by the Trustees.
(g) Combination of Series or Classes. The Trustees
shall have the authority, without the approval of the
Shareholders of any Series or Class, unless otherwise
required by applicable law, to combine the assets and
liabilities belonging to a single Series or Class with the
assets and liabilities of one or more other Series or
Classes.
(h) Elimination of Series or Classes. At any time
that there are no Shares outstanding of any particular
Series or Class previously established and designated, the
Trustees may amend this Declaration of Trust to abolish that
Series or Class and to rescind the establishment and
designation thereof.
ARTICLE IV
THE TRUSTEES
Section 1. Management of the Trust.
The business and affairs of the Trust shall be managed by
the Trustees, and they shall have all powers necessary and
desirable to carry out that responsibility. A Trustee shall not
be required to be a Shareholder of the Trust.
Section 2. Election of Trustees at Meeting of Shareholders.
On a date fixed by the Trustees, which shall be subsequent
to the initial public offering of Shares, the Shareholders shall
elect Trustees. The number of Trustees shall be determined by the
Trustees pursuant to Article IV, Section 5. Until such election,
the Trustees shall be John F. Donahue, John T. Conroy, Jr.,
William J. Copeland, James E. Dowd, Lawrence D. Ellis, M.D.,
Edward L. Flaherty, Jr., Edward C. Gonzales, Peter E. Madden,
Gregor F. Meyer, Wesley W. Posvar, and Marjorie P. Smuts or such
other persons as may be hereafter appointed pursuant to Section 4
of this Article IV.
Section 3. Term of Office of Trustees.
The Trustees shall hold office during the lifetime of this
Trust, and until its termination as hereinafter provided; except
(a) that any Trustee may resign his office at any time by written
instrument signed by him and delivered to the other Trustees,
which shall take effect upon such delivery or upon such later date
as is specified therein; (b) that any Trustee may be removed at
any time by written instrument signed by at least two-thirds of
the number of Trustees prior to such removal, specifying the date
when such removal shall become effective; (c) that any Trustee who
requests in writing to be retired or who has become mentally or
physically incapacitated may be retired by written instrument
signed by a majority of the other Trustees, specifying the date of
his retirement; and (d) a Trustee may be removed at any special
meeting of Shareholders of the Trust by a vote of two-thirds of
the outstanding Shares.
Section 4. Termination of Service and Appointment of Trustees.
In case of the death, resignation, retirement, removal or
mental or physical incapacity of any of the Trustees, or in case a
vacancy shall, by reason of an increase in number, or for any
other reason, exist, the remaining Trustees shall fill such
vacancy by appointing such other person as they in their
discretion shall see fit. Such appointment shall be effected by
the signing of a written instrument by a majority of the Trustees
in office. An appointment of a Trustee may be made by the
Trustees then in office in anticipation of a vacancy to occur by
reason of retirement, resignation or increase in number of
Trustees effective at a later date, provided that said appointment
shall become effective only at or after the effective date of said
retirement, resignation or increase in number of Trustees. As
soon as any Trustee so appointed shall have accepted this Trust,
the trust estate shall vest in the new Trustee or Trustees,
together with the continuing Trustees, without any further act or
conveyance, and he shall be deemed a Trustee hereunder. Any
appointment authorized by this Section 4 is subject to the
provisions of Section 16(a) of the 1940 Act.
Section 5. Number of
Trustees.
The number of Trustees, not less than three (3) nor more
than twenty (20) serving hereunder at any time, shall be
determined by the Trustees themselves.
Whenever a vacancy in the Board of Trustees shall occur,
until such vacancy is filled or while any Trustee is physically or
mentally incapacitated, the other Trustees shall have all the
powers hereunder and the certificate signed by a majority of the
other Trustees of such vacancy, absence or incapacity, shall be
conclusive, provided, however, that no vacancy which reduces the
number of Trustees below three (3) shall remain unfilled for a
period longer than six calendar months.
Section 6. Effect of Death, Resignation, etc. of a Trustee.
The death, resignation, retirement, removal, or mental or
physical incapacity of the Trustees, or any one of them, shall not
operate to annul the Trust or to revoke any existing agency
created pursuant to the terms of this Declaration of Trust.
Section 7. Ownership of Assets.
The assets belonging to each Series or Class shall be held
separate and apart from any assets now or hereafter held in any
capacity other than as Trustee hereunder by the Trustees or any
successor Trustee. All of the assets belonging to each Series or
Class or owned by the Trust shall at all times be considered as
vested in the Trustees. No Shareholder shall be deemed to have a
severable ownership interest in any individual asset belonging to
any Series or Class or owned by the Trust or any right of
partition or possession thereof, but each Shareholder shall have a
proportionate undivided beneficial interest in a Series or Class.
ARTICLE V
POWERS OF THE TRUSTEES
Section 1. Powers.
The Trustees in all instances shall act as principals, and
are and shall be free from the control of the Shareholders. The
Trustees shall have full power and authority to do any and all
acts and to make and execute any and all contracts and instruments
that they may consider necessary or appropriate in connection with
the management of the Trust or a Series or Class. The Trustees
shall not be bound or limited by present or future laws or customs
in regard to trust investments, but shall have full authority and
power to make any and all investments which they, in their
uncontrolled discretion, shall deem proper to accomplish the
purpose of this Trust. Without limiting the foregoing, the
Trustees shall have the following specific powers and authority,
subject to any applicable limitation in this Declaration of Trust
or in the By-Laws of the Trust:
(a) To buy, and invest funds in their hands in securities
including, but not limited to, common stocks, preferred stocks,
bonds, debentures, warrants and rights to purchase securities,
options, certificates of beneficial interest, money market
instruments, notes or other evidences of indebtedness issued by
any corporation, trust or association, domestic or foreign, or
issued or guaranteed by the United States of America or any agency
or instrumentality thereof, by the government of any foreign
country, by any State of the United States, or by any political
subdivision or agency or instrumentality of any State or foreign
country, or in "when-issued" or "delayed-delivery" contracts for
any such securities, or in any repurchase agreement or reverse
repurchase agreement, or in debt instruments, commodities,
commodity contracts and options thereon, or to retain assets
belonging to each and every Series or Class in cash, and from time
to time to change the investments of the assets belonging to each
Series or Class;
(b) To adopt By-Laws of the Trust not inconsistent with
the Declaration of Trust providing for the conduct of the business
of the Trust and to amend and repeal them to the extent that they
do not reserve that right to the Shareholders;
(c) To Elect and remove such officers of the Trust and
appoint and terminate such agents of the Trust as they consider
appropriate;
(d) To appoint or otherwise engage a bank or trust company
as custodian of any assets belonging to any Series or Class
subject to any conditions set forth in this Declaration of Trust
or in the By-Laws;
(e) To appoint or otherwise engage transfer agents,
dividend disbursing agents, Shareholder servicing agents,
investment advisers, sub-investment advisers, principal
underwriters, administrative service agents, and such other agents
as the Trustees may from time to time appoint or otherwise engage;
(f) To provide for the distribution of any Shares of any
Series or Class either through a principal underwriter in the
manner hereinafter provided for or by the Trust itself, or both;
(g) To set record dates in the manner hereinafter provided
for;
(h) To delegate such authority as they consider desirable
to a committee or committees composed of Trustees, including
without limitation, an Executive Committee, or to any officers of
the Trust and to any agent, custodian or underwriter;
(i) To sell or exchange any or all of the assets belonging
to one or more Series or Classes, subject to the provisions of
Article XII, Section 4(b) hereof;
(j) To vote or give assent, or exercise any rights of
ownership, with respect to stock or other securities or property;
and to execute and deliver powers of attorney to such person or
persons as the Trustees shall deem proper, granting to such person
or persons such power and discretion with relation to securities
or property as the Trustees shall deem proper;
(k) To exercise powers and rights of subscription or
otherwise which in any manner arise out of ownership of
securities;
(l) To hold any security or property in a form not
indicating any trust, whether in bearer, unregistered or other
negotiable form; or either in its own name or in the name of a
custodian or a nominee or nominees, subject in either case to
proper safeguards according to the usual practice of Massachusetts
trust companies or investment companies;
(m) To consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or
concern, any security of which belongs to any Series or Class; to
consent to any contract, lease, mortgage, purchase, or sale of
property by such corporation or concern, and to pay calls or
subscriptions with respect to any security which belongs to any
Series or Class;
(n) To engage in and to prosecute, compound, compromise,
abandon, or adjust, by arbitration, or otherwise, any actions,
suits, proceedings, disputes, claims, demands, and things relating
to the Trust, and out of the assets belonging to any Series or
Class to pay, or to satisfy, any debts, claims or expenses
incurred in connection therewith, including those of litigation,
upon any evidence that the Trustees may deem sufficient (such
powers shall include without limitation any actions, suits,
proceedings, disputes, claims, demands and things relating to the
Trust wherein any of the Trustees may be named individually and
the subject matter of which arises by reason of business for or on
behalf of the Trust);
(o) To make distributions of income and of capital gains
to Shareholders;
(p) To borrow money;
(q) From time to time to issue and sell the Shares of any
Series or Class either for cash or for property whenever and in
such amounts as the Trustees may deem desirable, but subject to
the limitation set forth in Section 3 of Article III.
(r) To purchase insurance of any kind, including, without
limitation, insurance on behalf of any person who is or was a
Trustee, Officer, employee or agent of the Trust, or is or was
serving at the request of the Trust as a Trustee, Director,
Officer, agent or employee of another corporation, partnership,
joint venture, trust or other enterprise against any liability
asserted against him and incurred by him in any such capacity or
arising out of his status as such.
(s) To sell, exchange, lend, pledge, mortgage,
hypothecate, lease, or write options with respect to or otherwise
deal in any property rights relating to any or all of the assets
belonging to any Series or Class.
The Trustees shall have all of the powers set forth in this Section
1 with respect to all assets and liabilities of each Series and Class.
Section 2. Principal Transactions.
The Trustees shall not cause the Trust on behalf of any
Series or Class to buy any securities (other than Shares) from or
sell any securities (other than Shares) to, or lend any assets
belonging to any Series or Class to any Trustee or officer or
employee of the Trust or any firm of which any such Trustee or
officer is a member acting as principal unless permitted by the
1940 Act, but the Trust may employ any such other party or any
such person or firm or company in which any such person is an
interested person in any capacity not prohibited by the 1940 Act.
Section 3. Trustees and Officers as Shareholders.
Any Trustee, officer or other agent of the Trust or any
Series or Class may acquire, own and dispose of Shares of any
Series or Class to the same extent as if he were not a Trustee,
officer or agent; and the Trustees may issue and sell or cause to
be issued or sold Shares of any Series or Class to and buy such
Shares from any such person or any firm or company in which he is
an interested person subject only to the general limitations
herein contained as to the sale and purchase of such Shares; and
all subject to any restrictions which may be contained in the By-
Laws.
Section 4. Parties to Contract.
The Trustees may enter into any contract of the character
described in Article VII or in Article IX hereof or any other
capacity not prohibited by the 1940 Act with any corporation,
firm, trust or association, although one or more of the
shareholders, Trustees, officers, employees or agents of the Trust
or any Series or Class or their affiliates may be an officer,
director, trustee, shareholder or interested person of such other
party to the contract, and no such contract shall be invalidated
or rendered voidable by reason of the existence of any such
relationship, nor shall any person holding such relationship be
liable merely by reason of such relationship for any loss or
expense to the Trust or any Series or Class under or by reason of
said contract or accountable for any profit realized directly or
indirectly therefrom, in the absence of actual fraud. The same
person (including a firm, corporation, trust or association) may
be the other party to contracts entered into pursuant to Article
VII or Article IX or any other capacity not prohibited by the 1940
Act, and any individual may be financially interested or otherwise
an interested person of persons who are parties to any or all of
the contracts mentioned in this Section 4.
ARTICLE VI
TRUSTEES' EXPENSES AND COMPENSATION
Section 1. Trustee Reimbursement.
The Trustees shall be reimbursed from the assets belonging
to each particular Series or Class for all of such Trustees'
expenses as such expenses are allocated to and among any one or
more of the Series or Classes pursuant to Article III, Section
5(b), including, without limitation, expenses of organizing the
Trust or any Series or Class and continuing its or their
existence; fees and expenses of Trustees and Officers of the
Trust; fees for investment advisory services, administrative
services and principal underwriting services provided for in
Article VII, Sections 1, 2 and 3; fees and expenses of preparing
and printing Registration Statements under the Securities Act of
1933 and the 1940 Act and any amendments thereto; expenses of
registering and qualifying the Trust and any Series or Class and
the Shares of any Series or Class under federal and state laws and
regulations; expenses of preparing, printing and distributing
prospectuses and any amendments thereto sent to shareholders,
underwriters, broker-dealers and to investors who may be
considering the purchase of Shares; expenses of registering,
licensing or other authorization of the Trust or any Series or
Class as a broker-dealer and of its or their officers as agents
and salesmen under federal and state laws and regulations;
interest expenses, taxes, fees and commissions of every kind;
expenses of issue (including cost of share certificates),
purchases, repurchases and redemptions of Shares, including
expenses attributable to a program of periodic issue; charges and
expenses of custodians, transfer agents, dividend disbursing
agents, Shareholder servicing agents and registrars; printing and
mailing costs; auditing, accounting and legal expenses; reports to
Shareholders and governmental officers and commissions; expenses
of meetings of Shareholders and proxy solicitations therefor;
insurance expenses; association membership dues and nonrecurring
items as may arise, including all losses and liabilities by them
incurred in administering the Trust and any Series or Class,
including expenses incurred in connection with litigation,
proceedings and claims and the obligations of the Trust under
Article XI hereof and the By-Laws to indemnify its Trustees,
Officers, employees, shareholders and agents, and any contract
obligation to indemnify principal underwriters under Section 3 of
Article VII; and for the payment of such expenses, disbursements,
losses and liabilities, the Trustees shall have a lien on the
assets belonging to each Series or Class prior to any rights or
interests of the Shareholders of any Series or Class. This
section shall not preclude the Trust from directly paying any of
the aforementioned fees and expenses.
Section 2. Trustee Compensation.
The Trustees shall be entitled to compensation from the
Trust from the assets belonging to any Series or Class for their
respective services as Trustees, to be determined from time to
time by vote of the Trustees, and the Trustees shall also
determine the compensation of all Officers, consultants and agents
whom they may elect or appoint. The Trust may pay out of the
assets belonging to any Series or Class any Trustee or any
corporation, firm, trust or other entity of which a Trustee is an
interested person for services rendered in any capacity not
prohibited by the 1940 Act, and such payments shall not be deemed
compensation for services as a Trustee under the first sentence of
this Section 2 of Article VI.
ARTICLE VII
INVESTMENT ADVISER, ADMINISTRATIVE SERVICES,
PRINCIPAL UNDERWRITER AND TRANSFER_AGENT
Section 1. Investment Adviser.
Subject to a Majority Shareholder Vote by the relevant
Series or Class, the Trustees may in their discretion from time to
time enter into an investment advisory contract whereby the other
party to such contract shall undertake to furnish the Trustees
investment advisory services for such Series or Class upon such
terms and conditions and for such compensation as the Trustees may
in their discretion determine. Subject to a Majority Shareholder
Vote by the relevant Series or Class, the investment adviser may
enter into a sub-investment advisory contract to receive
investment advice and/or statistical and factual information from
the sub-investment adviser for such Series or Class upon such
terms and conditions and for such compensation as the Trustees, in
their discretion, may agree. Notwithstanding any provisions of
this Declaration of Trust, the Trustees may authorize the
investment adviser or sub-investment adviser or any person
furnishing administrative personnel and services as set forth in
Article VII, Section 2 (subject to such general or specific
instructions as the Trustees may from time to time adopt) to
effect purchases, sales or exchanges of portfolio securities
belonging to a Series or Class on behalf of the Trustees or may
authorize any officer or Trustee to effect such purchases, sales,
or exchanges pursuant to recommendations of the investment adviser
(and all without further action by the Trustees). Any such
purchases, sales and exchanges shall be deemed to have been
authorized by the Trustees. The Trustees may also authorize the
investment adviser to determine what firms shall be employed to
effect transactions in securities for the account of a Series or
Class and to determine what firms shall participate in any such
transactions or shall share in commissions or fees charged in
connection with such transactions.
Section 2. Administrative Services.
The Trustees may in their discretion from time to time
contract for administrative personnel and services whereby the
other party shall agree to provide the Trustees administrative
personnel and services to operate the Trust or a Series or Class
on a daily basis, on such terms and conditions as the Trustees may
in their discretion determine. Such services may be provided by
one or more entities.
Section 3. Principal Underwriter.
The Trustees may in their discretion from time to time enter
into an exclusive or nonexclusive contract or contracts providing
for the sale of the Shares of a Series or Class to net such Series
or Class not less than the amount provided in Article III, Section
3 hereof, whereby a Series or Class may either agree to sell the
Shares to the other party to the contract or appoint such other
party its sales agent for such shares. In either case, the
contract shall be on such terms and conditions (including
indemnification of principal underwriters allowable under
applicable law and regulation) as the Trustees may in their
discretion determine not inconsistent with the provisions of this
Article VII; and such contract may also provide for the repurchase
or sale of Shares of a Series or Class by such other party as
principal or as agent of the Trust and may provide that the other
party may maintain a market for shares of a Series or Class.
Section 4. Transfer Agent.
The Trustees may in their discretion from time to time enter
into transfer agency and shareholder services contracts whereby
the other party shall undertake to furnish a transfer agency and
shareholder services. The contracts shall be on such terms and
conditions as the Trustees may in their discretion determine not
inconsistent with the provisions of this Declaration of Trust or
of the By-Laws. Such services may be provided by one or more
entities.
ARTICLE VIII
SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 1. Voting Powers.
Subject to the provisions set forth in Article III, Section
5(d), the shareholders shall have power to vote, (i) for the
election of Trustees as provided in Article IV, Section 2; (ii)
for the removal of Trustees as provided in Article IV, Section
3(d); (iii) with respect to any investment adviser or sub-
investment adviser as provided in Article VII, Section 1; (iv)
with respect to the amendment of this Declaration of Trust as
provided in Article XII, Section 7; (v) to the same extent as the
shareholders of a Massachusetts business corporation as to whether
or not a court action, proceeding or claim should be brought or
maintained derivatively or as a class action on behalf of the
Trust or the Shareholders; and (vi) with respect to such
additional matters relating to the Trust as may be required by
law, by this Declaration of Trust, or the By-Laws of the Trust or
any regulation of the Trust or the Commission or any State, or as
the Trustees may consider desirable. Each whole Share shall be
entitled to one vote as to any matter on which it is entitled to
vote, and each fractional Share shall be entitled to a
proportionate fractional vote. There shall be no cumulative
voting in the election of Trustees. Shares may be voted in person
or by proxy. Until Shares of a Series or Class are issued, the
Trustees may exercise all rights of Shareholders of such Series or
Class with respect to matters affecting such Series or Class, and
may take any action with respect to the Trust or such Series or
Class required or permitted by law, this Declaration of Trust or
any By-Laws of the Trust to be taken by Shareholders.
Section 2. Meetings.
A Shareholders meeting shall be held as specified in Section
2 of Article IV at the principal office of the Trust or such other
place as the Trustees may designate. Special meetings of the
Shareholders may be called by the Trustees or the Chief Executive
Officer of the Trust and shall be called by the Trustees upon the
written request of Shareholders owning at least one-tenth of the
outstanding Shares of all Series and Classes entitled to vote.
Shareholders shall be entitled to at least fifteen days' notice of
any meeting.
Section 3. Quorum and Required Vote.
Except as otherwise provided by law, to constitute a quorum
for the transaction of any business at any meeting of Shareholders
there must be present, in person or by proxy, holders of more than
fifty percent of the total number of outstanding Shares of all
Series and Classes entitled to vote at such meeting. When any one
or more Series or Classes is entitled to vote as a single Series
or Class, more than fifty percent of the shares of each such
Series or Class entitled to vote shall constitute a quorum at a
Shareholder's meeting of that Series or Class. If a quorum shall
not be present for the purpose of any vote that may properly come
before the meeting, the Shares present in person or by proxy and
entitled to vote at such meeting on such matter may, by plurality
vote, adjourn the meeting from time to time to such place and time
without further notice than by announcement to be given at the
meeting until a quorum entitled to vote on such matter shall be
present, whereupon any such matter may be voted upon at the
meeting as though held when originally convened. Subject to any
applicable requirement of law or of this Declaration of Trust or
the By-Laws, a plurality of the votes cast shall elect a Trustee,
and all other matters shall be decided by a majority of the votes
cast and entitled to vote thereon.
Section 4. Additional Provisions.
The By-Laws may include further provisions for Shareholders'
votes and meetings and related matters.
ARTICLE IX
CUSTODIAN
The Trustees may, in their discretion, from time to time enter
into contracts providing for custodial and accounting services to the
Trust or any Series or Class. The contracts shall be on the terms and
conditions as the Trustees may in their discretion determine not
inconsistent with the provisions of this Declaration of Trust or of the
By-Laws. Such services may be provided by one or more entities,
including one or more sub-custodians.
ARTICLE X
DISTRIBUTIONS AND REDEMPTIONS
Section 1. Distributions.
(a) The Trustees may from time to time declare and pay
dividends to the Shareholders of any Series or Class, and the
amount of such dividends and the payment of them shall be wholly
in the discretion of the Trustees. Such dividends may be accrued
and automatically reinvested in additional Shares (or fractions
thereof) of the relevant Series or Class or paid in cash or
additional Shares of such Series or Class, all upon such terms and
conditions as the Trustees may prescribe.
(b) The Trustees may distribute in respect of any fiscal
year as dividends and as capital gains distributions,
respectively, amounts sufficient to enable any Series or Class to
qualify as a regulated investment company to avoid any liability
for federal income taxes in respect of that year.
(c) The decision of the Trustees as to what constitutes
income and what constitutes principal shall be final, and except
as specifically provided herein the decision of the Trustees as to
what expenses and charges of any Series or Class shall be charged
against principal and what against the income shall be final. Any
income not distributed in any year may be permitted to accumulate
and as long as not distributed may be invested from time to time
in the same manner as the principal funds of any Series or Class.
(d) All dividends and distributions on Shares of a
particular Series or Class shall be distributed pro rata to the
holders of that Series or Class in proportion to the number of
Shares of that Series or Class held by such holders and recorded
on the books of the Trust or its transfer agent at the date and
time of record established for that payment.
Section 2. Redemptions and Repurchases.
(a) In case any Shareholder of record of any Series or
Class at any time desires to dispose of Shares of such Series or
Class recorded in his name, he may deposit a written request (or
such other form of request as the Trustees may from time to time
authorize) requesting that the Trust purchase his Shares, together
with such other instruments or authorizations to effect the
transfer as the Trustees may from time to time require, at the
office of the Transfer Agent, and the Trust shall purchase his
Shares out of assets belonging to such Series or Class. The
purchase price shall be the net asset value of his shares reduced
by any redemption charge as the Trustees from time to time may
determine.
Payment for such Shares shall be made by the Trust to the
Shareholder of record within that time period required under the
1940 Act after the request (and, if required, such other
instruments or authorizations of transfer) is deposited, subject
to the right of the Trustees to postpone the date of payment
pursuant to Section 4 of this Article X. If the redemption is
postponed beyond the date on which it would normally occur by
reason of a declaration by the Trustees suspending the right of
redemption pursuant to Section 4 of this Article X, the right of
the Shareholder to have his Shares purchased by the Trust shall be
similarly suspended, and he may withdraw his request (or such
other instruments or authorizations of transfer) from deposit if
he so elects; or, if he does not so elect, the purchase price
shall be the net asset value of his Shares determined next after
termination of such suspension (reduced by any redemption charge),
and payment therefor shall be made within the time period required
under the 1940 Act.
(b) The Trust may purchase Shares of a Series or Class by
agreement with the owner thereof at a purchase price not exceeding
the net asset value per Share (reduced by any redemption charge)
determined (1) next after the purchase or contract of purchase is
made or (2) at some later time.
(c) The Trust may pay the purchase price (reduced by any
redemption charge) in whole or in part by a distribution in kind
of securities from the portfolio of the relevant Series or Class,
taking such securities at the same value employed in determining
net asset value, and selecting the securities in such manner as
the Trustees may deem fair and equitable.
Section 3. Net Asset Value of Shares.
The net asset value of each Share of a Series or Class
outstanding shall be determined at such time or times as may be
determined by or on behalf of the Trustees. The power and duty to
determine net asset value may be delegated by the Trustees from
time to time to one or more of the Trustees or Officers of the
Trust, to the other party to any contract entered into pursuant to
Section 1 or 2 of Article VII or to the custodian or to a transfer
agent or other person designated by the Trustees.
The net asset value of each Share of a Series or Class as of
any particular time shall be the quotient (adjusted to the nearer
cent) obtained by dividing the value, as of such time, of the net
assets belonging to such Series or Class (i.e., the value of the
assets belonging to such Series or Class less the liabilities
belonging to such Series or Class exclusive of capital and
surplus) by the total number of Shares outstanding of the Series
or Class at such time in accordance with the requirements of the
1940 Act and applicable provisions of the By-Laws of the Trust in
conformity with generally accepted accounting practices and
principles.
The Trustees may declare a suspension of the determination
of net asset value for the whole or any part of any period in
accordance with the 1940 Act.
Section 4. Suspension of the Right of Redemption.
The Trustees may declare a suspension of the right of redemption
or postpone the date of payment for the whole or any part of any
period in accordance with the 1940 Act.
Section 5. Trust's Right to Redeem Shares.
The Trust shall have the right to cause the redemption of
Shares of any Series or Class in any Shareholder's account for their
then current net asset value and promptly make payment to the
shareholder (which payment may be reduced by any applicable redemption
charge), if at any time the total investment in the account does not
have a minimum dollar value determined from time to time by the Trustees
in their sole discretion.
ARTICLE XI
LIMITATION OF LIABILITY AND INDEMNIFICATION
Section 1. Limitation of Personal Liability and
Indemnification of Shareholders.
The Trustees, officers, employees or agents of the Trust
shall have no power to bind any Shareholder of any Series or Class
personally or to call upon such Shareholder for the payment of any
sum of money or assessment whatsoever, other than such as the
Shareholder may at any time agree to pay by way of subscription to
any Shares or otherwise.
No Shareholder or former Shareholder of any Series or Class
shall be liable solely by reason of his being or having been a
Shareholder for any debt, claim, action, demand, suit, proceeding,
judgment, decree, liability or obligation of any kind, against, or
with respect to the Trust or any Series or Class arising out of
any action taken or omitted for or on behalf of the Trust or such
Series or Class, and the Trust or such Series or Class shall be
solely liable therefor and resort shall be had solely to the
property of the relevant Series or Class of the Trust for the
payment or performance thereof.
Each Shareholder or former Shareholder of any Series or
Class (or their heirs, executors, administrators or other legal
representatives or, in case of a corporate entity, its corporate
or general successor) shall be entitled to be indemnified and
reimbursed by the Trust to the full extent of such liability and
the costs of any litigation or other proceedings in which such
liability shall have been determined, including, without
limitation, the fees and disbursements of counsel if, contrary to
the provisions hereof, such Shareholder or former Shareholder of
such Series or Class shall be held to be personally liable. Such
indemnification and reimbursement shall come exclusively from the
assets of the relevant Series or Class.
The Trust shall, upon request by a Shareholder or former
Shareholder, assume the defense of any claim made against any
Shareholder for any act or obligation of the Trust or any Series
or Class and satisfy any judgment thereon.
Section 2. Limitation of Personal Liability of
Trustees, Officers, Employees or Agents of the Trust.
No Trustee, officer, employee or agent of the Trust shall
have the power to bind any other Trustee, officer, employee or
agent of the Trust personally. The Trustees, officers, employees
or agents of the Trust incurring any debts, liabilities or
obligations, or in taking or omitting any other actions for or in
connection with the Trust are, and each shall be deemed to be,
acting as Trustee, officer, employee or agent of the Trust and not
in his own individual capacity.
Trustees and officers of the Trust shall be liable for their
willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of the office of
Trustee or officer, as the case may be, and for nothing else.
Section 3. Express Exculpatory Clauses and Instruments.
The Trustees shall use every reasonable means to assure that
all persons having dealings with the Trust or any Series or Class
shall be informed that the property of the Shareholders and the
Trustees, officers, employees and agents of the Trust or any
Series or Class shall not be subject to claims against or
obligations of the Trust or any other Series or Class to any
extent whatsoever. The Trustees shall cause to be inserted in any
written agreement, undertaking or obligation made or issued on
behalf of the Trust or any Series or Class (including certificates
for Shares of any Series or Class) an appropriate reference to the
provisions of this Declaration, providing that neither the
Shareholders, the Trustees, the officers, the employees nor any
agent of the Trust or any Series or Class shall be liable
thereunder, and that the other parties to such instrument shall
look solely to the assets belonging to the relevant Series or
Class for the payment of any claim thereunder or for the
performance thereof; but the omission of such provisions from any
such instrument shall not render any Shareholder, Trustee,
officer, employee or agent liable, nor shall the Trustee, or any
officer, agent or employee of the Trust or any Series or Class be
liable to anyone for such omission. If, notwithstanding this
provision, any Shareholder, Trustee, officer, employee or agent
shall be held liable to any other person by reason of the omission
of such provision from any such agreement, undertaking or
obligation, the Shareholder, Trustee, officer, employee or agent
shall be indemnified and reimbursed by the Trust.
ARTICLE XII
MISCELLANEOUS
Section 1. Trust is not a Partnership.
It is hereby expressly declared that a trust and not a partnership
is created hereby.
Section 2. Trustee Action Binding, Expert Advice, No Bond or
Surety.
The exercise by the Trustees of their powers and discretions
hereunder shall be binding upon everyone interested. Subject to
the provisions of Article XI, the Trustees shall not be liable for
errors of judgment or mistakes of fact or law. The Trustees may
take advice of counsel or other experts with respect to the
meaning and operation of this Declaration of Trust, and subject to
the provisions of Article XI, shall be under no liability for any
act or omission in accordance with such advice or for failing to
follow such advice. The Trustees shall not be required to give
any bond as such, nor any surety if a bond is required.
Section 3. Establishment of Record Dates.
The Trustees may close the Share transfer books of the Trust
maintained with respect to any Series or Class for a period not
exceeding sixty (60) days preceding the date of any meeting of
Shareholders of the Trust or any Series or Class, or the date for
the payment of any dividend or the making of any distribution to
Shareholders, or the date for the allotment of rights, or the date
when any change or conversion or exchange of Shares of any Series
or Class shall go into effect; or in lieu of closing the Share
transfer books as aforesaid, the Trustees may fix in advance a
date, not exceeding sixty (60) days preceding the date of any
meeting of Shareholders of the Trust or any Series or Class, or
the date for the payment of any dividend or the making of any
distribution to Shareholders of any Series or Class, or the date
for the allotment of rights, or the date when any change or
conversion or exchange of Shares of any Series or Class shall go
into effect, or the last day on which the consent or dissent of
Shareholders of any Series or Class may be effectively expressed
for any purpose, as a record date for the determination of the
Shareholders entitled to notice of, and, to vote at, any such
meeting and any adjournment thereof, or entitled to receive
payment of any such dividend or distribution, or to any such
allotment of rights, or to exercise the rights in respect of any
such change, conversion or exchange of shares, or to exercise the
right to give such consent or dissent, and in such case such
Shareholders and only such Shareholders as shall be Shareholders
of record on the date so fixed shall be entitled to such notice
of, and to vote at, such meeting, or to receive payment of such
dividend or distribution, or to receive such allotment or rights,
or to exercise such rights, as the case may be, notwithstanding,
after such date fixed aforesaid, any transfer of any Shares on the
books of the Trust maintained with respect to any Series or Class.
Nothing in the foregoing sentence shall be construed as precluding
the Trustees from setting different record dates for different
Series or Classes.
Section 4. Termination of Trust.
(a) This Trust shall continue without limitation of time
but subject to the provisions of paragraphs (b), (c) and (d) of
this Section 4.
(b) The Trustees may, by majority action, with the
approval of the holders of more than fifty percent of the
outstanding Shares of each Series or Class entitled to vote and
voting separately by Series or Class, sell and convey the assets
of the Trust or any Series or Class to another trust or
corporation. Upon making provision for the payment of all
liabilities, by assumption or otherwise, the Trustees shall
distribute the remaining proceeds belonging to each Series or
Class ratably among the holders of the Shares of that Series or
Class then outstanding.
(c) Subject to a Majority Shareholder Vote by such Series
or Class, the Trustees may at any time sell and convert into money
all the assets of the Trust or any Series or Class. Upon making
provision for the payment of all outstanding obligations, taxes
and other liabilities, accrued or contingent, belonging to each
Series or Class, the Trustees shall distribute the remaining
assets belonging to each Series or Class ratably among the holders
of the outstanding Shares of that Series or Class.
(d) Upon completion of the distribution of the remaining
proceeds of the remaining assets as provided in paragraphs (b) and
(c), the Trust or the applicable Series or Class shall terminate
and the Trustees shall be discharged of any and all further
liabilities and duties hereunder or with respect thereto and the
right, title and interest of all parties shall be canceled and
discharged.
Section 5. Offices of the Trust, Filing of Copies,
Headings, Counterparts.
The Trust shall maintain a usual place of business in
Massachusetts, which, initially, shall be c/o Donnelly, Conroy &
Gelhaar, 176 Federal Street, Boston, Massachusetts 02110, and
shall continue to maintain an office at such address unless
changed by the Trustees to another location in Massachusetts. The
Trust may maintain other offices as the Trustees may from time to
time determine. The original or a copy of this instrument and of
each declaration of trust supplemental hereto shall be kept at the
office of the Trust where it may be inspected by any Shareholder.
A copy of this instrument and of each supplemental declaration of
trust shall be filed by the Trustees with the Massachusetts
Secretary of State and the Boston City Clerk, as well as any other
governmental office where such filing may from time to time be
required. Headings are placed herein for convenience of reference
only and in case of any conflict, the text of this instrument,
rather than the headings shall control. This instrument may be
executed in any number of counterparts each of which shall be
deemed an original.
Section 6. Applicable Law.
The Trust set forth in this instrument is created under and
is to be governed by and construed and administered according to
the laws of The Commonwealth of Massachusetts. The Trust shall be
of the type commonly called a Massachusetts business trust, and
without limiting the provisions hereof, the Trust may exercise all
powers which are ordinarily exercised by such a trust.
Section 7. Amendments -- General.
All rights granted to the Shareholders under this Declaration of
Trust are granted subject to the reservation of the right to amend
this Declaration of Trust as herein provided, except that no
amendment shall repeal the limitations on personal liability of
any Shareholder or Trustee or repeal the prohibition of assessment
upon the Shareholders without the express consent of each
Shareholder or Trustee involved. Subject to the foregoing, the
provisions of this Declaration of Trust (whether or not related to
the rights of Shareholders) may be amended at any time, so long as
such amendment does not adversely affect the rights of any
Shareholder with respect to which such amendment is or purports to
be applicable and so long as such amendment is not in
contravention of applicable law, including the 1940 Act, by an
instrument in writing signed by a majority of the then Trustees
(or by an officer of the Trust pursuant to the vote of a majority
of such Trustees). Any amendment to this Declaration of Trust
that adversely affects the rights of Shareholders may be adopted
at any time by an instrument signed in writing by a majority of
the then Trustees (or by any officer of the Trust pursuant to the
vote of a majority of such Trustees) when authorized to do so by
the vote the Shareholders holding a majority of the Shares
entitled to vote. Subject to the foregoing, any such amendment
shall be effective as provided in the instrument containing the
terms of such amendment or, if there is not provision therein with
respect to effectiveness, upon the execution of such instrument
and of a certificate (which may be a part of such instrument)
executed by a Trustee or officer to the effect that such amendment
has been duly adopted. Copies of the amendment to this
Declaration of Trust shall be filed as specified in Section 5 of
this Article XII. A restated Declaration of Trust, integrating
into a single instrument all of the provisions of the Declaration
of Trust which are then in effect and operative, may be executed
from time to time by a majority of the Trustees and shall be
effective upon filing as specified in Section 5 of this Article
XII.
Section 8. Amendments -- Series and Classes.
The establishment and designation of any series or class of
Shares in addition to those established and designated in Section
5 of Article III hereof shall be effective upon the execution by a
majority of the then Trustees of an amendment to this Declaration
of Trust, taking the form of a complete restatement or otherwise,
setting forth such establishment and designation and the relative
rights and preferences of any such Series or Class, or as
otherwise provided in such instrument.
Without limiting the generality of the foregoing, the
Declaration of the Trust may be amended to:
(a) create one or more Series or Classes of Shares (in
addition to any Series or Classes already existing or otherwise)
with such rights and preferences and such eligibility requirements
for investment therein as the Trustees shall determine and
reclassify any or all outstanding Shares as Shares of particular
Series or Classes in accordance with such eligibility
requirements;
(b) combine two or more Series or Classes of Shares into a
single Series or Class on such terms and conditions as the
Trustees shall determine;
(c) change or eliminate any eligibility requirements for
investment in Shares of any Series or Class, including without
limitation the power to provide for the issue of Shares of any
Series or Class in connection with any merger or consolidation of
the Trust with another trust or company or any acquisition by the
Trust of part or all of the assets of another trust or company;
(d) change the designation of any Series or Class of
Shares;
(e) change the method of allocating dividends among the
various Series and Classes of Shares;
(f) allocate any specific assets or liabilities of the
Trust or any specific items of income or expense of the Trust to
one or more Series and Classes of Shares;
(g) specifically allocate assets to any or all Series or
Classes of Shares or create one or more additional Series or
Classes of Shares which are preferred over all other Series or
Classes of Shares in respect of assets specifically allocated
thereto or any dividends paid by the Trust with respect to any net
income, however determined, earned from the investment and
reinvestment of any assets so allocated or otherwise and provide
for any special voting or other rights with respect to such Series
or Classes.
Section 9. Use of Name.
The Trust acknowledges that Shawmut National Corp. has
reserved the right to grant the non-exclusive use of the name "The
Shawmut Funds" or any derivative thereof to any other investment
company, investment company portfolio, investment
adviser, distributor, or other business enterprise, and to withdraw from
the Trust or one or more Series or Classes any right to the use of
the name "The Shawmut Funds."
IN WITNESS WHEREOF, the undersigned have executed this instrument
the day and year first above written.
/s/John F. Donahue /s/Edward C.Gonzales
John F. Donahue Edward C. Gonzales
/s/John T. Conroy, Jr. /s/Peter E. Madden
John T. Conroy, Jr. Peter E. Madden
/s/William J. Copeland /s/Gregor F. Meyer
William J. Copeland Gregor F. Meyer
/s/James E. Dowd /s/Wesley W. Posvar
James E. Dowd Wesley W. Posvar
/s/Lawrence D. Ellis, M.D. /s/Marjorie P. Smuts
Lawrence D. Ellis, M.D. Marjorie P. Smuts
/s/Edward L. Flaherty, Jr.
Edward L. Flahery, Jr.
COMMONWEALTH OF PENNSYLVANIA )
: ss:
COUNTY OF ALLEGHENY )
I hereby certify that on July 26 , 1994, before me, the
subscriber, a Notary Public of the Commonwealth of Pennsylvania, in for
the County of Allegheny, personally appeared John F. Donahue, John T.
Conroy, Jr., William J. Copeland, James E. Dowd, Lawrence D. Ellis,
M.D., Edward L. Flaherty, Jr., Edward C. Gonzales, Peter E. Madden,
Gregor F. Meyer, Wesley W. Posvar, and Marjorie P. Smuts who
acknowledged the foregoing Declaration of Trust to be their act.
Witness my hand and notarial seal the day and year above written.
/s/Cynthia L. Gorseth
Notary Public
My Commission Expires: May 1, 1992
Exhibit 1(iii) under Form N-1A
Exhibit 3(a) under Item 601/Reg. S-K
THE SHAWMUT FUNDS
Amendment No. 7
DECLARATION OF TRUST
dated July 16, 1992
THIS Declaration of Trust is amended as follows:
Strike the first paragraph of Section 5 of Article III from the
Declaration of Trust and substitute in its place the following:
"Section 5. Establishment and Designation of Series or Class.
Without limiting the authority of the Trustees set forth in
Article XII, Section 8, inter alia, to establish and
designate any additional series or class or to modify the
rights and preferences of any existing Series or Class, the
series and classes of the Trust are established and
designated as:
Shawmut Connecticut Intermediate Municipal Income
Fund
Shawmut Connecticut Municipal Money Market Fund
Investment Shares
Trust Shares
Shawmut Fixed Income Fund
Investment Shares
Trust Shares
Shawmut Growth and Income Equity Fund
Investment Shares
Trust Shares
Shawmut Growth Equity Fund
Investment Shares
Trust Shares
Shawmut Intermediate Government Income Fund
Investment Shares
Trust Shares
Shawmut Limited Term Income Fund
Investment Shares
Trust Shares
Shawmut Massachusetts Intermediate Municipal Income
Fund
Shawmut Massachusetts Municipal Money Market Fund
Shawmut Prime Money Market Fund
Investment Shares
Trust Shares
Shawmut Quantitative Equity Fund
Shawmut Small Capitalization Equity Fund
Investment Shares
Trust Shares
The undersigned Assistant Secretary of The Shawmut Funds hereby
certifies that the above stated Amendment is a true and correct
Amendment to the Declaration of Trust, as adopted by the Board of
Trustees on the 19th day of May, 1994.
WITNESS the due execution hereof this 19th day of May, 1994.
/s/Robert C. Rosselot
Robert C. Rosselot
Assistant Secretary
-1-
Exhibit 2 under Form N-1A
Exhibit 3(b) under Item 601/Reg. S-K
The Shawmut Funds
BY-LAWS
TABLE OF CONTENTS
Page
ARTICLE I: OFFICERS AND THEIR ELECTION................................ 1
Section 1 Officers .............................................
1
Section 2 Election of Officers .................................
1
Section 3 Resignations and Removals and Vacancies ..............
1
ARTICLE II: POWERS AND DUTIES OF TRUSTEES AND OFFICERS........... 1
Section 1 Trustees .............................................
1
Section 2 Chairman of the Trustees ("Chairman") ................
1
Section 3 President ............................................
1
Section 4 Vice President .......................................
2
Section 5 Secretary 2
Section 6 Treasurer ............................................
2
Section 7 Assistant Vice President .............................
2
Section 8 Assistant Secretaries and Assistant
Treasurers ......................................... 2
Section 9 Salaries ............................................ 2
ARTICLE III: POWERS AND DUTIES OF THE EXECUTIVE
AND OTHER COMMITTEES .................................... 3
Section 1 Executive and Other Committees .......................
3
Section 2 Vacancies in Executive Committee .....................
3
Section 3 Executive Committee to Report to Trustees ............
3
Section 4 Procedure of Executive Committee .....................
3
Section 5 Powers of Executive Committee ........................
3
Section 6 Compensation .........................................
3
Section 7 Informal Action by Executive Committee or
Other Committee .................................... 3
ARTICLE IV: SHAREHOLDERS' MEETINGS.................................... 4
Section 1 Special Meetings .....................................
4
Section 2 Notices ..............................................
4
Section 3 Place of Meeting .....................................
4
Section 4 Action by Consent ....................................
4
Section 5 Proxies ..............................................
4
Page
ARTICLE V: TRUSTEES' MEETINGS........................................ 4
Section 1 Number and Qualifications of Trustees ............. .4
Section 2 Special Meetings ...................................
5
Section 3 Regular Meetings ...................................
5
Section 4 Quorum and Vote ....................................
5
Section 5 Notices ............................................
5
Section 6 Place of Meeting ...................................
5
Section 7 Telephonic Meeting ................................ .5
Section 8 Special Action .....................................
5
Section 9 Action by Consent ..................................
6
Section 10 Compensation of Trustees .......................... 6
ARTICLE VI: SHARES................................................... 6
Section 1 Certificates
......................................... 6
Section 2 Transfer of Shares
................................... 6
Section 3 Equitable Interest Not Recognized
.................... 6
Section 4 Lost, Destroyed or Mutilated Certificates
............ 6
Section 5 Transfer Agent and Registrar: Regulations
............ 7
ARTICLE VII: INSPECTION OF BOOKS...................................... 7
ARTICLE VIII: AGREEMENTS, CHECKS, DRAFTS, ENDORSEMENTS, ETC.. 7
Section 1 Agreements, Etc
...................................... 7
Section 2 Checks, Drafts, Etc
.................................. 7
Section 3 Endorsements, Assignments and Transfer of
Securities ......................................... 7
Section 4 Evidence of Authority
............................... 8
ARTICLE IX: INDEMNIFICATION OF TRUSTEES AND OFFICERS
Section 1 General
.............................................. 8
Section 2 No Indemnification
................................... 8
Section 3 Conditions for Indemnification ......................
8
Section 4 Advancement of Expenses
.............................. 8
Section 5 Non-Exclusivity
...................................... 9
Page
ARTICLE X: SEAL....................................................... 9
ARTICLE XI: FISCAL YEAR............................................... 9
ARTICLE XII: AMENDMENTS.............................................. 9
ARTICLE XIII: WAIVERS OF NOTICE....................................... 9
ARTICLE XIV: REPORT TO SHAREHOLDERS.................................. 9
ARTICLE XV: BOOKS AND RECORDS........................................ 10
ARTICLE XVI: TERMS................................................... 10
The Shawmut Funds
BY-LAWS
ARTICLE I
OFFICERS AND THEIR ELECTION
Section 1. Officers. The officers of the Trust shall be a
Chairman of the Trustees, a President, one or more Vice Presidents, a
Treasurer, a Secretary and such other officers as the Trustees may from
time to time elect. It shall not be necessary for any Trustee or other
officer to be a holder of shares in any Series or Class of the Trust.
Section 2. Election of Officers. The President, Vice
President(s), Treasurer and Secretary shall be chosen annually by the
Trustees. The Chairman of the Trustees shall be chosen annually by and
from the Trustees.
Two or more offices may be held by a single person except the
offices of President and Secretary. The officers shall hold office
until their successors are chosen and qualified.
Section 3. Resignations and Removals and Vacancies. Any officer
of the Trust may resign by filing a written resignation with the
Chairman of the Trustees or with the Trustees or with the Secretary,
which shall take effect on being so filed or at such time as may be
therein specified. The Trustees may remove any officer, with or without
cause, by a majority vote of all of the Trustees. The Trustees may fill
any vacancy created in any office whether by resignation, removal or
otherwise.
ARTICLE II
POWERS AND DUTIES OF TRUSTEES AND OFFICERS
Section 1. Trustees. The business and affairs of the Trust
shall be managed by the Trustees, and they shall have all powers
necessary and desirable to carry out that responsibility.
Section 2. Chairman of the Trustees ("Chairman"). The Chairman
shall be the chief executive officer of the Trust. He shall have
general supervision over the business of the Trust and policies of the
Trust. He shall employ and define the duties of all employees of the
Trust, shall have power to discharge any such employees, shall exercise
general supervision over the affairs of the Trust and shall perform such
other duties as may be assigned to him from time to time by the
Trustees. He shall preside at the meetings of shareholders and of the
Trustees. The Chairman shall appoint a Trustee or officer to preside at
such meetings in his absence.
Section 3. President. The President, in the absence of the
Chairman, shall perform all duties and may exercise any of the powers of
the Chairman subject to the control of the other Trustees. He shall
counsel and advise the Chairman on matters of major importance and shall
perform such other duties as may be assigned to him from time to time by
the Trustees, the Chairman or the Executive Committee.
Section 4. Vice President. The Vice President (or if more than
one, the senior Vice President) in the absence of the President shall
perform all duties and may exercise any of the powers of the President
subject to the control of the Trustees. Each Vice President shall
perform such other duties as may be assigned to him from time to time by
the Trustees, the Chairman or the Executive Committee. ? ? ? Each Vice
President shall be authorized to sign documents on behalf of the Trust.
Section 5. Secretary. The Secretary shall be the chief legal
officer of the Trust responsible for providing legal guidance to the
Trust. The Secretary shall keep or cause to be kept in books provided
for that purpose the Minutes of the Meetings of Shareholders and of the
Trustees; shall see that all Notices are duly given in accordance with
the provisions of these By-Laws and as required by law; shall be
custodian of the records and of the Seal of the Trust and see that the
Seal is affixed to all documents, the execution of which on behalf of
the Trust under its Seal is duly authorized; shall keep directly or
through a transfer agent a register of the post office address of each
shareholder of each Series or Class of the Trust, and make all proper
changes in such register, retaining and filing his authority for such
entries; shall see that the books, reports, statements, certificates and
all other documents and records required by law are properly kept and
filed; and in general shall perform all duties incident to the Office of
Secretary and such other duties as may from time to time be assigned to
him by the Trustees, Chairman or the Executive Committee.
Section 6. Treasurer. The Treasurer shall be the principal
financial and accounting officer of the Trust responsible for the
preparation and maintenance of the financial books and records of the
Trust. He shall deliver all funds and securities belonging to any
Series or Class to such custodian or sub-custodian as may be employed by
the Trust for any Series or Class. The Treasurer shall perform such
duties additional to the foregoing as the Trustees, Chairman or the
Executive Committee may from time to time designate.
Section 7. Assistant Vice President. The Assistant Vice
President or Vice Presidents of the Trust shall have such authority and
perform such duties as may be assigned to them by the Trustees, the
Executive Committee or the Chairman.
Section 8. Assistant Secretaries and Assistant Treasurers. The
Assistant Secretary or Secretaries and the Assistant Treasurer or
Treasurers shall perform the duties of the Secretary and of the
Treasurer, respectively, in the absence of those Officers and shall have
such further powers and perform such other duties as may be assigned to
them respectively by the Trustees or the Executive Committee or the
Chairman.
Section 9. Salaries. The salaries of the Officers shall be
fixed from time to time by the Trustees. No officer shall be prevented
from receiving such salary by reason of the fact that he is also a
Trustee.
ARTICLE III
POWERS AND DUTIES OF THE
EXECUTIVE AND OTHER COMMITTEES
Section 1. Executive and Other Committees. The Trustees may
elect from their own number an Executive Committee to consist of not
less than two members. The Executive Committee shall be elected by a
resolution passed by a vote of at least a majority of the Trustees then
in office. The Trustees may also elect from their own number other
committees from time to time, the number composing such committees and
the powers conferred upon the same to be determined by vote of the
Trustees.
Section 2. Vacancies in Executive Committee. Vacancies
occurring in the Executive Committee from any cause shall be filled by
the Trustees by a resolution passed by the vote of at least a majority
of the Trustees then in office.
Section 3. Executive Committee to Report to Trustees. All
action by the Executive Committee shall be reported to the Trustees at
their meeting next succeeding such action.
Section 4. Procedure of Executive Committee. The Executive
Committee shall fix its own rules of procedure not inconsistent with
these By-Laws or with any directions of the Trustees. It shall meet at
such times and places and upon such notice as shall be provided by such
rules or by resolution of the Trustees. The presence of a majority
shall constitute a quorum for the transaction of business, and in every
case an affirmative vote of a majority of all the members of the
Committee present shall be necessary for the taking of any action.
Section 5. Powers of Executive Committee. During the intervals
between the Meetings of the Trustees, the Executive Committee, except as
limited by the By-Laws of the Trust or by specific directions of the
Trustees, shall possess and may exercise all the powers of the Trustees
in the management and direction of the business and conduct of the
affairs of the Trust in such manner as the Executive Committee shall
deem to be in the best interests of the Trust, and shall have power to
authorize the Seal of the Trust to be affixed to all instruments and
documents requiring same. Notwithstanding the foregoing, the Executive
Committee shall not have the power to elect Trustees, increase or
decrease the number of Trustees, elect or remove any Officer, declare
dividends, issue shares or recommend to shareholders any action
requiring shareholder approval.
Section 6. Compensation. The members of any duly appointed
committee shall receive such compensation and/or fees as from time to
time may be fixed by the Trustees.
Section 7. Informal Action by Executive Committee or Other
Committee. Any action required or permitted to be taken at any meeting
of the Executive Committee or any other duly appointed Committee may be
taken without a meeting if a consent in writing setting forth such
action is signed by all members of such committee and such consent is
filed with the records of the Trust.
ARTICLE IV
SHAREHOLDERS' MEETINGS
Section 1. Special Meetings. A special meeting of the
shareholders of the Trust or of a particular Series or Class shall be
called by the Secretary whenever ordered by the Trustees, the Chairman
or requested in writing by the holder or holders of at least one-tenth
of the outstanding shares of the Trust or of the relevant Series or
Class, entitled to vote. If the Secretary, when so ordered or
requested, refuses or neglects for more than two days to call such
special meeting, the Trustees, Chairman or the shareholders so
requesting may, in the name of the Secretary, call the meeting by giving
notice thereof in the manner required when notice is given by the
Secretary.
Section 2. Notices. Except as above provided, notices of any
special meeting of the shareholders of the Trust or a particular Series
or Class, shall be given by the Secretary by delivering or mailing,
postage prepaid, to each shareholder entitled to vote at said meeting, a
written or printed notification of such meeting, at least fifteen days
before the meeting, to such address as may be registered with the Trust
by the shareholder.
Section 3. Place of Meeting. Meetings of the shareholders of
the Trust or a particular Series or Class, shall be held at the
principal place of business of the Trust in Pittsburgh, Pennsylvania, or
at such place within or without The Commonwealth of Massachusetts as
fixed from time to time by resolution of the Trustees.
Section 4. Action by Consent. Any action required or permitted
to be taken at any meeting of shareholders may be taken without a
meeting, if a consent in writing, setting forth such action, is signed
by all the shareholders entitled to vote on the subject matter thereof,
and such consent is filed with the records of the Trust.
Section 5. Proxies. Any shareholder entitled to vote at any
meeting of shareholders may vote either in person or by proxy. Every
proxy shall be in writing subscribed by the shareholder or his duly
authorized attorney and dated, but need not be sealed, witnessed or
acknowledged. All proxies shall be filed with and verified by the
Secretary or an Assistant Secretary of the Trust or, the person acting
as Secretary of the Meeting.
ARTICLE V
TRUSTEES' MEETINGS
Section 1. Number and Qualifications of Trustees. The number of
Trustees shall be as fixed from time to time by a majority of the
Trustees but shall be no less than three nor more than twenty. The
Trustees may from time to time increase or decrease the number of
Trustees to such number as they deem expedient, not to be less than
three nor more than twenty, however, and fill the vacancies so created.
The term of office of a Trustee shall not be affected by any decrease in
the number of Trustees made by the Trustees pursuant to the foregoing
authorization.
Section 2. Special Meetings. Special meetings of the Trustees
shall be called by the Secretary at the written request of the Chairman
or any Trustee, and if the Secretary when so requested refuses or fails
for more than twenty-four hours to call such meeting, the Chairman or
such Trustee may in the name of the Secretary call such meeting by
giving due notice in the manner required when notice is given by the
Secretary.
Section 3. Regular Meetings. Regular meetings of the Trustees
may be held without call or notice at such places and at such times as
the Trustees may from time to time determine, provided that any Trustee
who is absent when such determination is made shall be given notice of
the determination.
Section 4. Quorum and Vote. A majority of the Trustees shall
constitute a quorum for the transaction of business. The act of a
majority of the Trustees present at any meeting at which a quorum is
present shall be the act of the Trustees unless a greater proportion is
required by the Declaration of Trust or these By-Laws or applicable law.
In the absence of a quorum, a majority of the Trustees present may
adjourn the meeting from time to time until a quorum shall be present.
Notice of any adjourned meeting need not be given.
Section 5. Notices. It shall be sufficient notice of a special
meeting to send notice by mail to a Trustee at least forty-eight hours
or by telegram, telex or telecopy or other electronic fascimile
transmission method at least twenty-four hours before the meeting
addressed to the Trustee at his usual or last known business or
residence address or to give notice to such Trustee in person or by
telephone at least twenty-four hours before the meeting. Notice of a
meeting need not be given to any Trustee if a written waiver of notice,
executed by such Trustee before the meeting, is filed with the records
of the meeting, or to any Trustee who attends the meeting without
protesting the lack of notice to such Trustee prior thereto or at its
commencement. Subject to compliance with Section 15(c) of the 1940 Act,
notice or waiver of notice need not specify the purpose of any special
meeting.
Section 6. Place of Meeting. Meetings of the Trustees shall be
held at the principal place of business of the Trust in Pittsburgh,
Pennsylvania, or at such place within or without The Commonwealth of
Massachusetts as fixed from time to time by resolution of the Trustees,
or as the person or persons requesting said meeting to be called may
designate, but any meeting may adjourn to any other place.
Section 7. Telephonic Meeting. Subject to compliance with
Sections 15(c) and 32(a) of the 1940 Act, if it is impractical for the
Trustees to meet in person, the Trustees may meet by means of a
telephone conference circuit to which all Trustees are connected or of
which all Trustees shall have waived notice, which meeting shall be
deemed to have been held at a place designated by the Trustees at the
meeting.
Section 8. Special Action. When all the Trustees shall be
present at any meeting, however called, or whenever held, or shall
assent to the holding of the meeting without notice, or after the
meeting shall sign a written assent thereto on the record of such
meeting, the acts of such meeting shall be valid as if such meeting had
been regularly held.
Section 9. Action by Consent. Any action by the Trustees may be
taken without a meeting if a written consent thereto is signed by all
the Trustees and filed with the records of the Trustees' meetings. Such
consent shall be treated as a vote of the Trustees for all purposes.
Section 10. Compensation of Trustees. The Trustees may receive a
stated salary for their services as Trustees, and by resolution of
Trustees a fixed fee and expenses of attendance may be allowed for
attendance at each Meeting. Nothing herein contained shall be construed
to preclude any Trustee from serving the Trust in any other capacity, as
an officer, agent or otherwise, and receiving compensation therefor.
ARTICLE VI
SHARES
Section 1. Certificates. All certificates for shares shall be
signed by the Chairman, President or any Vice President and by the
Treasurer or Secretary or any Assistant Treasurer or Assistant Secretary
and sealed with the seal of the Trust. The signatures may be either
manual or facsimile signatures and the seal may be either facsimile or
any other form of seal. Certificates for shares for which the Trust has
appointed an independent Transfer Agent and Registrar shall not be valid
unless countersigned by such Transfer Agent and registered by such
Registrar. In case any officer who has signed any certificate ceases to
be an officer of the Trust before the certificate is issued, the
certificate may nevertheless be issued by the Trust with the same effect
as if the officer had not ceased to be such officer as of the date of
its issuance. Share certificates of each Series or Class shall be in
such form not inconsistent with law or the Declaration of Trust or these
By-Laws as may be determined by the Trustees.
Section 2. Transfer of Shares. The shares of each Series and
Class of the Trust shall be transferable, so as to affect the rights of
the Trust or any Series or Class, only by transfer recorded on the books
of the Trust or its transfer agent, in person or by attorney.
Section 3. Equitable Interest Not Recognized. The Trust shall
be entitled to treat the holder of record of any share or shares of a
Series or Class as the absolute owner thereof and shall not be bound to
recognize any equitable or other claim or interest in such share or
shares of a Series or Class on the part of any other person except as
may be otherwise expressly provided by law.
Section 4. Lost, Destroyed or Mutilated Certificates. In case
any certificate for shares is lost, mutilated or destroyed, the Trustees
may issue a new certificate in place thereof upon indemnity to the
relevant Series or Class against loss and upon such other terms and
conditions as the Trustees may deem advisable.
Section 5. Transfer Agent and Registrar: Regulations. The
Trustees shall have power and authority to make all such rules and
regulations as they may deem expedient concerning the issuance, transfer
and registration of certificates for shares and may appoint a Transfer
Agent and/or Registrar of certificates for shares of each Series or
Class, and may require all such share certificates to bear the signature
of such Transfer Agent and/or of such Registrar.
ARTICLE VII
INSPECTION OF BOOKS
The Trustees shall from time to time determine whether and to what
extent, and at what times and places, and under what conditions and
regulations the accounts and books of the Trust maintained on behalf of
each Series and Class or any of them shall be open to the inspection of
the shareholders of any Series or Class; and no shareholder shall have
any right of inspecting any account or book or document of the Trust
except that, to the extent such account or book or document relates to
the Series or Class in which he is a Shareholder or the Trust generally,
such Shareholder shall have such right of inspection as conferred by
laws or authorized by the Trustees or by resolution of the Shareholders
of the relevant Series or Class.
ARTICLE VIII
AGREEMENTS, CHECKS, DRAFTS, ENDORSEMENTS, ETC.
Section 1. Agreements, Etc. The Trustees or the Executive
Committee may authorize any Officer or Agent of the Trust to enter into
any Agreement or execute and deliver any instrument in the name of the
Trust on behalf of any Series or Class, and such authority may be
general or confined to specific instances; and, unless so authorized by
the Trustees or by the Executive Committee or by these By-Laws, no
Officer, Agent or Employee shall have any power or authority to bind the
Trust by any Agreement or engagement or to pledge its credit or to
render it liable pecuniarily for any purpose or for any amount.
Section 2. Checks, Drafts, Etc. All checks, drafts, or orders
for the payment of money, notes and other evidences of indebtedness
shall be signed by such Officers, Employees, or Agents, as shall from
time to time be designated by the Trustees or the Executive Committee,
or as may be specified in or pursuant to the agreement between the Trust
on behalf of any Series or Class and the custodian appointed, pursuant
to the provisions of the Declaration of Trust.
Section 3. Endorsements, Assignments and Transfer of Securities.
All endorsements, assignments, stock powers, other instruments of
transfer or directions for the transfer of portfolio securities, whether
or not registered in nominee form, or belonging to any Series or Class
shall be made by such Officers, Employees, or Agents as may be
authorized by the Trustees or the Executive Committee.
Section 4. Evidence of Authority. Anyone dealing with the Trust
shall be fully justified in relying on a copy of a resolution of the
Trustees or of any committee thereof empowered to act in the premises
which is certified as true by the Secretary or an Assistant Secretary
under the seal of the Trust.
ARTICLE IX
INDEMNIFICATION OF TRUSTEES AND OFFICERS
Section 1. General. Every person who is or has been a Trustee or
officer of the Trust and persons who serve at the Trust's request as
director, officer, trustee, partner or fiduciary of another corporation,
partnership, joint venture, trust or other enterprise shall be
indemnified by the Trust (or the appropriate Series or Class, where such
Trustee or officer is acting on behalf of or with respect to a single
Series or Class) to the fullest extent permitted by law against
liability and all expenses, including amounts incurred in satisfaction
of judgments, settlements, compromises, fines, penalties, and counsel
fees reasonable incurred or paid by him in connection with any debt,
claim, action, demand, suit or proceeding of any kind, whether civil or
criminal, in which he becomes involved as a party or otherwise by virtue
of his being or having been a Trustee or officer of the Trust or his
serving or having served as a director, officer, trustee, partner or
fiduciary of another corporation, partnership, joint venture, trust or
other enterprise at the request of the Trust; provided that the Trust
shall indemnify any such person seeking indemnification in connection
with a proceeding initiated by such person only if such proceeding was
authorized by the Board of Trustees.
Section 2. No Indemnification. No indemnification shall be
provided hereunder to a Trustee or officer against any liability to the
Trust or any Series or Class or the Shareholders of any Series or Class
by reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of his office.
Section 3. Conditions for Indemnification. Except as provided
in Section 4 hereof, in the absence of a final decision on the merits by
a court or other body before which such proceeding was brought, an
indemnification payment will not be made, unless a reasonable
determination based upon a factual review has been made by a majority
vote of a quorum of non-party trustees who are not interested persons of
the Trust, or by independent legal counsel in a written opinion that the
indemnitee was not liable for an act of willful misfeasance, bad faith,
gross negligence, or reckless disregard of duties.
Section 4. Advancement of Expenses. The Trust shall pay the
expenses incurred in the defense of a proceeding in advance of its final
disposition (upon undertaking for repayment unless it is ultimately
determined that indemnification is appropriate) if at least one of the
following conditions is fulfilled: (i) the indemnitee provides security
for his undertaking, (ii) the Trust or any relevant Series or Class is
insured against any loss arising by reason of any lawful advance or
(iii) a majority of a quorum of disinterested non-party trustees or
independent legal counsel in a written opinion makes a factual
determination that there is reason to believe the indemnitee will be
entitled to indemnification.
Section 5. Non-Exclusivity. Nothing contained in this Article
shall affect any rights to indemnification to which Trustees, officers
or any other persons may be entitled by contract or otherwise under law,
nor the power of the Trust to purchase and maintain insurance on their
behalf.
ARTICLE X
SEAL
The seal of the Trust shall consist of a flat-faced die with the
word "Massachusetts", together with the name of the Trust and the year
of its organization cut or engraved thereon but, unless otherwise
required by the Trustees, the seal shall not be necessary to be placed
on, and its absence shall not impair the validity of, any document,
instrument or other paper executed and delivered by or on behalf of the
Trust.
ARTICLE XI
FISCAL YEAR
The fiscal year of the Trust and each Series or Class shall be as
designated from time to time by the Trustees.
ARTICLE XII
AMENDMENTS
These By-Laws may be amended by a majority vote of all of the
Trustees.
ARTICLE XIII
WAIVERS OF NOTICE
Whenever any notice whatever is required to be given under the
provisions of any statute of The Commonwealth of Massachusetts, or under
the provisons of the Declaration of Trust or these By-Laws, a waiver
thereof in writing, signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be deemed
equivalent thereto. A notice shall be deemed to have been given if
telegraphed, cabled, or sent by wireless when it has been delivered to a
representative of any telegraph, cable or wireless company with
instructions that it be telegraphed, cabled, or sent by wireless. Any
notice shall be deemed to be given if mailed at the time when the same
shall be deposited in the mail.
ARTICLE XIV
REPORT TO SHAREHOLDERS
The Trustees shall at least semi-annually submit to the
shareholders of each Series or Class a written financial report of the
transactions of that Series or Class including financial statements
which shall at least annually be certified by independent public
accountants.
ARTICLE XV
BOOKS AND RECORDS
The books and records of the Trust and any Series or Class,
including the stock ledger or ledgers, may be kept in or outside The
Commonwealth of Massachusetts at such office or agency of the Trust as
may from time to time be determined by the Trustees.
ARTICLE XVI
TERMS
Terms defined in the Declaration of Trust and not otherwise defined
herein are used herein with the meanings set forth or referred to in the
Declaration of Trust.
Exhibit 4(i) under Form N-1A
Exhibit 3(c) under Item 601/Reg. S-K
THE SHAWMUT FUNDS
SHAWMUT PRIME MONEY MARKET FUND
(Trust Shares)
PORTFOLIO
Number Shares
_____ _____
Account No. Alpha Code Organized Under the See Reverse Side For
Laws of the Commonwealth Certain Definitions
of Massachusetts
THIS IS TO CERTIFY THAT is the owner of
CUSIP 820482 84 2
Fully Paid and Non-Assessable Shares of Beneficial Interest of SHAWMUT PRIME
MONEY MARKET FUND-TRUST SHARES of THE SHAWMUT FUNDS hereafter called the
"Trust," transferable on the books of the Trust by the owner, in person or by
duly authorized attorney, upon surrender of this Certificate properly
endorsed.
The shares represented hereby are issued and shall be held subject to
the provisions of the Declaration of Trust and By-Laws of the Trust, and all
amendments thereto, all of which the holder by acceptance hereof assents.
This Certificate is not valid unless countersigned by the Transfer
Agent.
IN WITNESS WHEREOF, the Trust has caused this Certificate to be signed
in its name by its proper officers and to be sealed with its Seal.
Dated: THE SHAWMUT FUNDS
Seal
1992
Massachusetts
/s/ Edward C. Gonzales /s/ John F. Donahue
Treasurer Chairman
Countersigned: Federated Services
Company (Pittsburgh)
Transfer Agent
By:
Authorized Signature
The following abbreviations, when used in the inscription on the face of this
Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT-...Custodian...
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act.............................
in common (State)
Additional abbreviations may also be used though not in the above list.
For value received__________ hereby sell, assign, and transfer unto
Please insert social security or other
identifying number of assignee
______________________________________
_____________________________________________________________________________
(Please print or typewrite name and address, including zip code, of assignee)
_____________________________________________________________________________
_____________________________________________________________________________
______________________________________________________________________ shares
of beneficial interest represented by the within Certificate, and do hereby
irrevocably constitute and appoint __________________________________________
_______________________________________________________________ _Attorney
to transfer the said shares on the books of the within named Trust with full
power of substitution in the premises.
Dated______________________
NOTICE:______________________________
The signature to this assignment must
correspond with the name as written upon
the face of the certificate in every
particular, without alteration or
enlargement or any change whatever.
All persons dealing with THE SHAWMUT FUNDS, a Massachusetts business trust,
must look solely to the Trust property for the enforcement of any claim
against the Trust, as the Trustees, officers, agents or shareholders of the
Trust assume no personal liability whatsoever for obligations entered into on
behalf of the Trust.
THIS SPACE MUST NOT BE COVERED IN ANY WAY
DOCUMENT DESCRIPTION - SPECIMEN STOCK CERTIFICATE
Page One
A. The Certificate is outlined by an (color) one-half inch border.
B. The number in the upper left-hand corner and the number of shares in
the upper right-hand corner are outlined by octagonal boxes.
C. The cusip number in the middle right-hand area of the page is boxed.
D. The Massachusetts corporate seal appears in the bottom middle of the
page.
Page Two
The social security or other identifying number of the assignee
appears in a box in the top-third upper-left area of the page.
Exhibit 4(ii) under Form N-1A
Exhibit 3(c) under Item 601/Reg. S-K
THE SHAWMUT FUNDS
SHAWMUT PRIME MONEY MARKET FUND
(Investment Shares)
PORTFOLIO
Number Shares
_____ _____
Account No. Alpha Code Organized Under the See Reverse Side For
Laws of the Commonwealth Certain Definitions
of Massachusetts
THIS IS TO CERTIFY THAT is the owner of
CUSIP 820482 69 3
Fully Paid and Non-Assessable Shares of Beneficial Interest of SHAWMUT PRIME
MONEY MARKET FUND-INVESTMENT SHARES of THE SHAWMUT FUNDS hereafter called the
"Trust," transferable on the books of the Trust by the owner, in person or by
duly authorized attorney, upon surrender of this Certificate properly
endorsed.
The shares represented hereby are issued and shall be held subject to
the provisions of the Declaration of Trust and By-Laws of the Trust, and all
amendments thereto, all of which the holder by acceptance hereof assents.
This Certificate is not valid unless countersigned by the Transfer
Agent.
IN WITNESS WHEREOF, the Trust has caused this Certificate to be signed
in its name by its proper officers and to be sealed with its Seal.
Dated: THE SHAWMUT FUNDS
Seal
1992
Massachusetts
/s/ Edward C. Gonzales /s/ John F. Donahue
Treasurer Chairman
Countersigned: Federated Services
Company (Pittsburgh)
Transfer Agent
By:
Authorized Signature
The following abbreviations, when used in the inscription on the face of this
Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT-...Custodian...
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act.............................
in common (State)
Additional abbreviations may also be used though not in the above list.
For value received__________ hereby sell, assign, and transfer unto
Please insert social security or other
identifying number of assignee
______________________________________
_____________________________________________________________________________
(Please print or typewrite name and address, including zip code, of assignee)
_____________________________________________________________________________
_____________________________________________________________________________
______________________________________________________________________ shares
of beneficial interest represented by the within Certificate, and do hereby
irrevocably constitute and appoint __________________________________________
_________________________________________________________________Attorney
to transfer the said shares on the books of the within named Trust with full
power of substitution in the premises.
Dated______________________
NOTICE:______________________________
The signature to this assignment must
correspond with the name as written upon
the face of the certificate in every
particular, without alteration or
enlargement or any change whatever.
All persons dealing with THE SHAWMUT FUNDS, a Massachusetts business trust,
must look solely to the Trust property for the enforcement of any claim
against the Trust, as the Trustees, officers, agents or shareholders of the
Trust assume no personal liability whatsoever for obligations entered into on
behalf of the Trust.
THIS SPACE MUST NOT BE COVERED IN ANY WAY
DOCUMENT DESCRIPTION - SPECIMEN STOCK CERTIFICATE
Page One
A. The Certificate is outlined by an (color) one-half inch border.
B. The number in the upper left-hand corner and the number of shares in
the upper right-hand corner are outlined by octagonal boxes.
C. The cusip number in the middle right-hand area of the page is boxed.
D. The Massachusetts corporate seal appears in the bottom middle of the
page.
Page Two
The social security or other identifying number of the assignee
appears in a box in the top-third upper-left area of the page.
Exhibit 4(iii) under Form N-1A
Exhibit 3(c) under Item 601/Reg. S-K
THE SHAWMUT FUNDS
SHAWMUT FIXED INCOME FUND
(Trust Shares)
PORTFOLIO
Number Shares
_____ _____
Account No. Alpha Code Organized Under the See Reverse Side For
Laws of the Commonwealth Certain Definitions
of Massachusetts
THIS IS TO CERTIFY THAT is the owner of
CUSIP 820482 80 0
Fully Paid and Non-Assessable Shares of Beneficial Interest of SHAWMUT FIXED
INCOME FUND-TRUST SHARES of THE SHAWMUT FUNDS hereafter called the "Trust,"
transferable on the books of the Trust by the owner, in person or by duly
authorized attorney, upon surrender of this Certificate properly endorsed.
The shares represented hereby are issued and shall be held subject to
the provisions of the Declaration of Trust and By-Laws of the Trust, and all
amendments thereto, all of which the holder by acceptance hereof assents.
This Certificate is not valid unless countersigned by the Transfer
Agent.
IN WITNESS WHEREOF, the Trust has caused this Certificate to be signed
in its name by its proper officers and to be sealed with its Seal.
Dated: THE SHAWMUT FUNDS
Seal
1992
Massachusetts
/s/ Edward C. Gonzales /s/ John F. Donahue
Treasurer Chairman
Countersigned: Federated Services
Company (Pittsburgh)
Transfer Agent
By:
Authorized Signature
The following abbreviations, when used in the inscription on the face of this
Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT-...Custodian...
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act.............................
in common (State)
Additional abbreviations may also be used though not in the above list.
For value received__________ hereby sell, assign, and transfer unto
Please insert social security or other
identifying number of assignee
______________________________________
_____________________________________________________________________________
(Please print or typewrite name and address, including zip code, of assignee)
_____________________________________________________________________________
_____________________________________________________________________________
______________________________________________________________________ shares
of beneficial interest represented by the within Certificate, and do hereby
irrevocably constitute and appoint __________________________________________
__________________________________________________________________Attorney
to transfer the said shares on the books of the within named Trust with full
power of substitution in the premises.
Dated______________________
NOTICE:______________________________
The signature to this assignment must
correspond with the name as written upon
the face of the certificate in every
particular, without alteration or
enlargement or any change whatever.
All persons dealing with THE SHAWMUT FUNDS, a Massachusetts business trust,
must look solely to the Trust property for the enforcement of any claim
against the Trust, as the Trustees, officers, agents or shareholders of the
Trust assume no personal liability whatsoever for obligations entered into on
behalf of the Trust.
THIS SPACE MUST NOT BE COVERED IN ANY WAY
DOCUMENT DESCRIPTION - SPECIMEN STOCK CERTIFICATE
Page One
A. The Certificate is outlined by an (color) one-half inch border.
B. The number in the upper left-hand corner and the number of shares in
the upper right-hand corner are outlined by octagonal boxes.
C. The cusip number in the middle right-hand area of the page is boxed.
D. The Massachusetts corporate seal appears in the bottom middle of the
page.
Page Two
The social security or other identifying number of the assignee
appears in a box in the top-third upper-left area of the page.
Exhibit 4(iv) under Form N-1A
Exhibit 3(c) under Item 601/Reg. S-K
THE SHAWMUT FUNDS
SHAWMUT FIXED INCOME FUND
(Investment Shares)
PORTFOLIO
Number Shares
_____ _____
Account No. Alpha Code Organized Under the See Reverse Side For
Laws of the Commonwealth Certain Definitions
of Massachusetts
THIS IS TO CERTIFY THAT is the owner of
CUSIP 820482 10 7
Fully Paid and Non-Assessable Shares of Beneficial Interest of SHAWMUT FIXED
INCOME FUND-INVESTMENT SHARES of THE SHAWMUT FUNDS hereafter called the
"Trust," transferable on the books of the Trust by the owner, in person or by
duly authorized attorney, upon surrender of this Certificate properly
endorsed.
The shares represented hereby are issued and shall be held subject to
the provisions of the Declaration of Trust and By-Laws of the Trust, and all
amendments thereto, all of which the holder by acceptance hereof assents.
This Certificate is not valid unless countersigned by the Transfer
Agent.
IN WITNESS WHEREOF, the Trust has caused this Certificate to be signed
in its name by its proper officers and to be sealed with its Seal.
Dated: THE SHAWMUT FUNDS
Seal
1992
Massachusetts
/s/ Edward C. Gonzales /s/ John F. Donahue
Treasurer Chairman
Countersigned: Federated Services
Company (Pittsburgh)
Transfer Agent
By:
Authorized Signature
The following abbreviations, when used in the inscription on the face of this
Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT-...Custodian...
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act.............................
in common (State)
Additional abbreviations may also be used though not in the above list.
For value received__________ hereby sell, assign, and transfer unto
Please insert social security or other
identifying number of assignee
______________________________________
_____________________________________________________________________________
(Please print or typewrite name and address, including zip code, of assignee)
_____________________________________________________________________________
_____________________________________________________________________________
______________________________________________________________________ shares
of beneficial interest represented by the within Certificate, and do hereby
irrevocably constitute and appoint __________________________________________
__________________________________________________________________Attorney
to transfer the said shares on the books of the within named Trust with full
power of substitution in the premises.
Dated______________________
NOTICE:______________________________
The signature to this assignment must
correspond with the name as written upon
the face of the certificate in every
particular, without alteration or
enlargement or any change whatever.
All persons dealing with THE SHAWMUT FUNDS, a Massachusetts business trust,
must look solely to the Trust property for the enforcement of any claim
against the Trust, as the Trustees, officers, agents or shareholders of the
Trust assume no personal liability whatsoever for obligations entered into on
behalf of the Trust.
THIS SPACE MUST NOT BE COVERED IN ANY WAY
DOCUMENT DESCRIPTION - SPECIMEN STOCK CERTIFICATE
Page One
A. The Certificate is outlined by an (color) one-half inch border.
B. The number in the upper left-hand corner and the number of shares in
the upper right-hand corner are outlined by octagonal boxes.
C. The cusip number in the middle right-hand area of the page is boxed.
D. The Massachusetts corporate seal appears in the bottom middle of the
page.
Page Two
The social security or other identifying number of the assignee
appears in a box in the top-third upper-left area of the page.
Exhibit 4(v) under Form N-1A
Exhibit 3(c) under Item 601/Reg. S-K
THE SHAWMUT FUNDS
SHAWMUT INTERMEDIATE GOVERNMENT INCOME FUND
(Trust Shares)
PORTFOLIO
Number Shares
_____ _____
Account No. Alpha Code Organized Under the See Reverse Side For
Laws of the Commonwealth Certain Definitions
of Massachusetts
THIS IS TO CERTIFY THAT is the owner of
CUSIP 820482 86 7
Fully Paid and Non-Assessable Shares of Beneficial Interest of SHAWMUT
INTERMEDIATE GOVERNMENT INCOME FUND-TRUST SHARES of THE SHAWMUT FUNDS
hereafter called the "Trust," transferable on the books of the Trust by the
owner, in person or by duly authorized attorney, upon surrender of this
Certificate properly endorsed.
The shares represented hereby are issued and shall be held subject to
the provisions of the Declaration of Trust and By-Laws of the Trust, and all
amendments thereto, all of which the holder by acceptance hereof assents.
This Certificate is not valid unless countersigned by the Transfer
Agent.
IN WITNESS WHEREOF, the Trust has caused this Certificate to be signed
in its name by its proper officers and to be sealed with its Seal.
Dated: THE SHAWMUT FUNDS
Seal
1992
Massachusetts
/s/ Edward C. Gonzales /s/ John F. Donahue
Treasurer Chairman
Countersigned: Federated Services
Company (Pittsburgh)
Transfer Agent
By:
Authorized Signature
The following abbreviations, when used in the inscription on the face of this
Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT-...Custodian...
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act.............................
in common (State)
Additional abbreviations may also be used though not in the above list.
For value received__________ hereby sell, assign, and transfer unto
Please insert social security or other
identifying number of assignee
______________________________________
_____________________________________________________________________________
(Please print or typewrite name and address, including zip code, of assignee)
_____________________________________________________________________________
_____________________________________________________________________________
______________________________________________________________________ shares
of beneficial interest represented by the within Certificate, and do hereby
irrevocably constitute and appoint __________________________________________
__________________________________________________________________Attorney
to transfer the said shares on the books of the within named Trust with full
power of substitution in the premises.
Dated______________________
NOTICE:______________________________
The signature to this assignment must
correspond with the name as written upon
the face of the certificate in every
particular, without alteration or
enlargement or any change whatever.
All persons dealing with THE SHAWMUT FUNDS, a Massachusetts business trust,
must look solely to the Trust property for the enforcement of any claim
against the Trust, as the Trustees, officers, agents or shareholders of the
Trust assume no personal liability whatsoever for obligations entered into on
behalf of the Trust.
THIS SPACE MUST NOT BE COVERED IN ANY WAY
DOCUMENT DESCRIPTION - SPECIMEN STOCK CERTIFICATE
Page One
A. The Certificate is outlined by an (color) one-half inch border.
B. The number in the upper left-hand corner and the number of shares in
the upper right-hand corner are outlined by octagonal boxes.
C. The cusip number in the middle right-hand area of the page is boxed.
D. The Massachusetts corporate seal appears in the bottom middle of the
page.
Page Two
The social security or other identifying number of the assignee
appears in a box in the top-third upper-left area of the page.
Exhibit 4(vi) under Form N-1A
Exhibit 3(c) under Item 601/Reg. S-K
THE SHAWMUT FUNDS
SHAWMUT INTERMEDIATE GOVERNMENT INCOME FUND
(Investment Shares)
PORTFOLIO
Number Shares
_____ _____
Account No. Alpha Code Organized Under the See Reverse Side For
Laws of the Commonwealth Certain Definitions
of Massachusetts
THIS IS TO CERTIFY THAT is the owner of
CUSIP 820482 40 4
Fully Paid and Non-Assessable Shares of Beneficial Interest of SHAWMUT
INTERMEDIATE GOVERNMENT INCOME FUND-INVESTMENT SHARES of THE SHAWMUT FUNDS
hereafter called the "Trust," transferable on the books of the Trust by the
owner, in person or by duly authorized attorney, upon surrender of this
Certificate properly endorsed.
The shares represented hereby are issued and shall be held subject to
the provisions of the Declaration of Trust and By-Laws of the Trust, and all
amendments thereto, all of which the holder by acceptance hereof assents.
This Certificate is not valid unless countersigned by the Transfer
Agent.
IN WITNESS WHEREOF, the Trust has caused this Certificate to be signed
in its name by its proper officers and to be sealed with its Seal.
Dated: THE SHAWMUT FUNDS
Seal
1992
Massachusetts
/s/ Edward C. Gonzales /s/ John F. Donahue
Treasurer Chairman
Countersigned: Federated Services
Company (Pittsburgh)
Transfer Agent
By:
Authorized Signature
The following abbreviations, when used in the inscription on the face of this
Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT-...Custodian...
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act.............................
in common (State)
Additional abbreviations may also be used though not in the above list.
For value received__________ hereby sell, assign, and transfer unto
Please insert social security or other
identifying number of assignee
______________________________________
_____________________________________________________________________________
(Please print or typewrite name and address, including zip code, of assignee)
_____________________________________________________________________________
_____________________________________________________________________________
______________________________________________________________________ shares
of beneficial interest represented by the within Certificate, and do hereby
irrevocably constitute and appoint __________________________________________
__________________________________________________________________Attorney
to transfer the said shares on the books of the within named Trust with full
power of substitution in the premises.
Dated______________________
NOTICE:______________________________
The signature to this assignment must
correspond with the name as written upon
the face of the certificate in every
particular, without alteration or
enlargement or any change whatever.
All persons dealing with THE SHAWMUT FUNDS, a Massachusetts business trust,
must look solely to the Trust property for the enforcement of any claim
against the Trust, as the Trustees, officers, agents or shareholders of the
Trust assume no personal liability whatsoever for obligations entered into on
behalf of the Trust.
THIS SPACE MUST NOT BE COVERED IN ANY WAY
DOCUMENT DESCRIPTION - SPECIMEN STOCK CERTIFICATE
Page One
A. The Certificate is outlined by an (color) one-half inch border.
B. The number in the upper left-hand corner and the number of shares in
the upper right-hand corner are outlined by octagonal boxes.
C. The cusip number in the middle right-hand area of the page is boxed.
D. The Massachusetts corporate seal appears in the bottom middle of the
page.
Page Two
The social security or other identifying number of the assignee
appears in a box in the top-third upper-left area of the page.
Exhibit 4(vii) under Form N-1A
Exhibit 3(c) under Item 601/Reg. S-K
THE SHAWMUT FUNDS
SHAWMUT LIMITED TERM INCOME FUND
(Trust Shares)
PORTFOLIO
Number Shares
_____ _____
Account No. Alpha Code Organized Under the See Reverse Side For
Laws of the Commonwealth Certain Definitions
of Massachusetts
THIS IS TO CERTIFY THAT is the owner of
CUSIP 820482 85 9
Fully Paid and Non-Assessable Shares of Beneficial Interest of SHAWMUT
LIMITED TERM INCOME FUND-TRUST SHARES of THE SHAWMUT FUNDS hereafter called
the "Trust," transferable on the books of the Trust by the owner, in person
or by duly authorized attorney, upon surrender of this Certificate properly
endorsed.
The shares represented hereby are issued and shall be held subject to
the provisions of the Declaration of Trust and By-Laws of the Trust, and all
amendments thereto, all of which the holder by acceptance hereof assents.
This Certificate is not valid unless countersigned by the Transfer
Agent.
IN WITNESS WHEREOF, the Trust has caused this Certificate to be signed
in its name by its proper officers and to be sealed with its Seal.
Dated: THE SHAWMUT FUNDS
Seal
1992
Massachusetts
/s/ Edward C. Gonzales /s/ John F. Donahue
Treasurer Chairman
Countersigned: Federated Services
Company (Pittsburgh)
Transfer Agent
By:
Authorized Signature
The following abbreviations, when used in the inscription on the face of this
Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT-...Custodian...
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act.............................
in common (State)
Additional abbreviations may also be used though not in the above list.
For value received__________ hereby sell, assign, and transfer unto
Please insert social security or other
identifying number of assignee
______________________________________
_____________________________________________________________________________
(Please print or typewrite name and address, including zip code, of assignee)
_____________________________________________________________________________
_____________________________________________________________________________
______________________________________________________________________ shares
of beneficial interest represented by the within Certificate, and do hereby
irrevocably constitute and appoint __________________________________________
__________________________________________________________________Attorney
to transfer the said shares on the books of the within named Trust with full
power of substitution in the premises.
Dated______________________
NOTICE:______________________________
The signature to this assignment must
correspond with the name as written upon
the face of the certificate in every
particular, without alteration or
enlargement or any change whatever.
All persons dealing with THE SHAWMUT FUNDS, a Massachusetts business trust,
must look solely to the Trust property for the enforcement of any claim
against the Trust, as the Trustees, officers, agents or shareholders of the
Trust assume no personal liability whatsoever for obligations entered into on
behalf of the Trust.
THIS SPACE MUST NOT BE COVERED IN ANY WAY
DOCUMENT DESCRIPTION - SPECIMEN STOCK CERTIFICATE
Page One
A. The Certificate is outlined by an (color) one-half inch border.
B. The number in the upper left-hand corner and the number of shares in
the upper right-hand corner are outlined by octagonal boxes.
C. The cusip number in the middle right-hand area of the page is boxed.
D. The Massachusetts corporate seal appears in the bottom middle of the
page.
Page Two
The social security or other identifying number of the assignee
appears in a box in the top-third upper-left area of the page.
Exhibit 4(viii) under Form N-1A
Exhibit 3(c) under Item 601/Reg. S-K
THE SHAWMUT FUNDS
SHAWMUT LIMITED TERM INCOME FUND
(Investment Shares)
PORTFOLIO
Number Shares
_____ _____
Account No. Alpha Code Organized Under the See Reverse Side For
Laws of the Commonwealth Certain Definitions
of Massachusetts
THIS IS TO CERTIFY THAT is the owner of
CUSIP 820482 50 3
Fully Paid and Non-Assessable Shares of Beneficial Interest of SHAWMUT
LIMITED TERM INCOME FUND-INVESTMENT SHARES of THE SHAWMUT FUNDS hereafter
called the "Trust," transferable on the books of the Trust by the owner, in
person or by duly authorized attorney, upon surrender of this Certificate
properly endorsed.
The shares represented hereby are issued and shall be held subject to
the provisions of the Declaration of Trust and By-Laws of the Trust, and all
amendments thereto, all of which the holder by acceptance hereof assents.
This Certificate is not valid unless countersigned by the Transfer
Agent.
IN WITNESS WHEREOF, the Trust has caused this Certificate to be signed
in its name by its proper officers and to be sealed with its Seal.
Dated: THE SHAWMUT FUNDS
Seal
1992
Massachusetts
/s/ Edward C. Gonzales /s/ John F. Donahue
Treasurer Chairman
Countersigned: Federated Services
Company (Pittsburgh)
Transfer Agent
By:
Authorized Signature
The following abbreviations, when used in the inscription on the face of this
Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT-...Custodian...
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act.............................
in common (State)
Additional abbreviations may also be used though not in the above list.
For value received__________ hereby sell, assign, and transfer unto
Please insert social security or other
identifying number of assignee
______________________________________
_____________________________________________________________________________
(Please print or typewrite name and address, including zip code, of assignee)
_____________________________________________________________________________
_____________________________________________________________________________
______________________________________________________________________ shares
of beneficial interest represented by the within Certificate, and do hereby
irrevocably constitute and appoint __________________________________________
__________________________________________________________________Attorney
to transfer the said shares on the books of the within named Trust with full
power of substitution in the premises.
Dated______________________
NOTICE:______________________________
The signature to this assignment must
correspond with the name as written upon
the face of the certificate in every
particular, without alteration or
enlargement or any change whatever.
All persons dealing with THE SHAWMUT FUNDS, a Massachusetts business trust,
must look solely to the Trust property for the enforcement of any claim
against the Trust, as the Trustees, officers, agents or shareholders of the
Trust assume no personal liability whatsoever for obligations entered into on
behalf of the Trust.
THIS SPACE MUST NOT BE COVERED IN ANY WAY
DOCUMENT DESCRIPTION - SPECIMEN STOCK CERTIFICATE
Page One
A. The Certificate is outlined by an (color) one-half inch border.
B. The number in the upper left-hand corner and the number of shares in
the upper right-hand corner are outlined by octagonal boxes.
C. The cusip number in the middle right-hand area of the page is boxed.
D. The Massachusetts corporate seal appears in the bottom middle of the
page.
Page Two
The social security or other identifying number of the assignee
appears in a box in the top-third upper-left area of the page.
Exhibit 4(ix) under Form N-1A
Exhibit 3(c) under Item 601/Reg. S-K
THE SHAWMUT FUNDS
SHAWMUT SMALL CAPITALIZATION EQUITY FUND
(Trust Shares)
PORTFOLIO
Number Shares
_____ _____
Account No. Alpha Code Organized Under the See Reverse Side For
Laws of the Commonwealth Certain Definitions
of Massachusetts
THIS IS TO CERTIFY THAT is the owner of
CUSIP 820482 83 4
Fully Paid and Non-Assessable Shares of Beneficial Interest of SHAWMUT SMALL
CAPITALIZATION EQUITY FUND-TRUST SHARES of THE SHAWMUT FUNDS hereafter called
the "Trust," transferable on the books of the Trust by the owner, in person
or by duly authorized attorney, upon surrender of this Certificate properly
endorsed.
The shares represented hereby are issued and shall be held subject to
the provisions of the Declaration of Trust and By-Laws of the Trust, and all
amendments thereto, all of which the holder by acceptance hereof assents.
This Certificate is not valid unless countersigned by the Transfer
Agent.
IN WITNESS WHEREOF, the Trust has caused this Certificate to be signed
in its name by its proper officers and to be sealed with its Seal.
Dated: THE SHAWMUT FUNDS
Seal
1992
Massachusetts
/s/ Edward C. Gonzales /s/ John F. Donahue
Treasurer Chairman
Countersigned: Federated Services
Company (Pittsburgh)
Transfer Agent
By:
Authorized Signature
The following abbreviations, when used in the inscription on the face of this
Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT-...Custodian...
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act.............................
in common (State)
Additional abbreviations may also be used though not in the above list.
For value received__________ hereby sell, assign, and transfer unto
Please insert social security or other
identifying number of assignee
______________________________________
_____________________________________________________________________________
(Please print or typewrite name and address, including zip code, of assignee)
_____________________________________________________________________________
_____________________________________________________________________________
______________________________________________________________________ shares
of beneficial interest represented by the within Certificate, and do hereby
irrevocably constitute and appoint __________________________________________
__________________________________________________________________Attorney
to transfer the said shares on the books of the within named Trust with full
power of substitution in the premises.
Dated______________________
NOTICE:______________________________
The signature to this assignment must
correspond with the name as written upon
the face of the certificate in every
particular, without alteration or
enlargement or any change whatever.
All persons dealing with THE SHAWMUT FUNDS, a Massachusetts business trust,
must look solely to the Trust property for the enforcement of any claim
against the Trust, as the Trustees, officers, agents or shareholders of the
Trust assume no personal liability whatsoever for obligations entered into on
behalf of the Trust.
THIS SPACE MUST NOT BE COVERED IN ANY WAY
DOCUMENT DESCRIPTION - SPECIMEN STOCK CERTIFICATE
Page One
A. The Certificate is outlined by an (color) one-half inch border.
B. The number in the upper left-hand corner and the number of shares in
the upper right-hand corner are outlined by octagonal boxes.
C. The cusip number in the middle right-hand area of the page is boxed.
D. The Massachusetts corporate seal appears in the bottom middle of the
page.
Page Two
The social security or other identifying number of the assignee
appears in a box in the top-third upper-left area of the page.
Exhibit 4(x) under Form N-1A
Exhibit 3(c) under Item 601/Reg. S-K
THE SHAWMUT FUNDS
SHAWMUT SMALL CAPITALIZATION EQUITY FUND
(Investment Shares)
PORTFOLIO
Number Shares
_____ _____
Account No. Alpha Code Organized Under the See Reverse Side For
Laws of the Commonwealth Certain Definitions
of Massachusetts
THIS IS TO CERTIFY THAT is the owner of
CUSIP 820482 70 1
Fully Paid and Non-Assessable Shares of Beneficial Interest of SHAWMUT SMALL
CAPITALIZATION EQUITY FUND-INVESTMENT SHARES of THE SHAWMUT FUNDS hereafter
called the "Trust," transferable on the books of the Trust by the owner, in
person or by duly authorized attorney, upon surrender of this Certificate
properly endorsed.
The shares represented hereby are issued and shall be held subject to
the provisions of the Declaration of Trust and By-Laws of the Trust, and all
amendments thereto, all of which the holder by acceptance hereof assents.
This Certificate is not valid unless countersigned by the Transfer
Agent.
IN WITNESS WHEREOF, the Trust has caused this Certificate to be signed
in its name by its proper officers and to be sealed with its Seal.
Dated: THE SHAWMUT FUNDS
Seal
1992
Massachusetts
/s/ Edward C. Gonzales /s/ John F. Donahue
Treasurer Chairman
Countersigned: Federated Services
Company (Pittsburgh)
Transfer Agent
By:
Authorized Signature
The following abbreviations, when used in the inscription on the face of this
Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT-...Custodian...
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act.............................
in common (State)
Additional abbreviations may also be used though not in the above list.
For value received__________ hereby sell, assign, and transfer unto
Please insert social security or other
identifying number of assignee
______________________________________
_____________________________________________________________________________
(Please print or typewrite name and address, including zip code, of assignee)
_____________________________________________________________________________
_____________________________________________________________________________
______________________________________________________________________ shares
of beneficial interest represented by the within Certificate, and do hereby
irrevocably constitute and appoint __________________________________________
__________________________________________________________________Attorney
to transfer the said shares on the books of the within named Trust with full
power of substitution in the premises.
Dated______________________
NOTICE:______________________________
The signature to this assignment must
correspond with the name as written upon
the face of the certificate in every
particular, without alteration or
enlargement or any change whatever.
All persons dealing with THE SHAWMUT FUNDS, a Massachusetts business trust,
must look solely to the Trust property for the enforcement of any claim
against the Trust, as the Trustees, officers, agents or shareholders of the
Trust assume no personal liability whatsoever for obligations entered into on
behalf of the Trust.
THIS SPACE MUST NOT BE COVERED IN ANY WAY
DOCUMENT DESCRIPTION - SPECIMEN STOCK CERTIFICATE
Page One
A. The Certificate is outlined by an (color) one-half inch border.
B. The number in the upper left-hand corner and the number of shares in
the upper right-hand corner are outlined by octagonal boxes.
C. The cusip number in the middle right-hand area of the page is boxed.
D. The Massachusetts corporate seal appears in the bottom middle of the
page.
Page Two
The social security or other identifying number of the assignee
appears in a box in the top-third upper-left area of the page.
Exhibit 4(xi) under Form N-1A
Exhibit 3(c) under Item 601/Reg. S-K
THE SHAWMUT FUNDS
SHAWMUT GROWTH AND INCOME EQUITY FUND
(Trust Shares)
PORTFOLIO
Number Shares
_____ _____
Account No. Alpha Code Organized Under the See Reverse Side For
Laws of the Commonwealth Certain Definitions
of Massachusetts
THIS IS TO CERTIFY THAT is the owner of
CUSIP 820482 87 5
Fully Paid and Non-Assessable Shares of Beneficial Interest of SHAWMUT GROWTH
AND INCOME EQUITY FUND-TRUST SHARES of THE SHAWMUT FUNDS hereafter called the
"Trust," transferable on the books of the Trust by the owner, in person or by
duly authorized attorney, upon surrender of this Certificate properly
endorsed.
The shares represented hereby are issued and shall be held subject to
the provisions of the Declaration of Trust and By-Laws of the Trust, and all
amendments thereto, all of which the holder by acceptance hereof assents.
This Certificate is not valid unless countersigned by the Transfer
Agent.
IN WITNESS WHEREOF, the Trust has caused this Certificate to be signed
in its name by its proper officers and to be sealed with its Seal.
Dated: THE SHAWMUT FUNDS
Seal
1992
Massachusetts
/s/ Edward C. Gonzales /s/ John F. Donahue
Treasurer Chairman
Countersigned: Federated Services
Company (Pittsburgh)
Transfer Agent
By:
Authorized Signature
The following abbreviations, when used in the inscription on the face of this
Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT-...Custodian...
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act.............................
in common (State)
Additional abbreviations may also be used though not in the above list.
For value received__________ hereby sell, assign, and transfer unto
Please insert social security or other
identifying number of assignee
______________________________________
_____________________________________________________________________________
(Please print or typewrite name and address, including zip code, of assignee)
_____________________________________________________________________________
_____________________________________________________________________________
______________________________________________________________________ shares
of beneficial interest represented by the within Certificate, and do hereby
irrevocably constitute and appoint __________________________________________
__________________________________________________________________Attorney
to transfer the said shares on the books of the within named Trust with full
power of substitution in the premises.
Dated______________________
NOTICE:______________________________
The signature to this assignment must
correspond with the name as written upon
the face of the certificate in every
particular, without alteration or
enlargement or any change whatever.
All persons dealing with THE SHAWMUT FUNDS, a Massachusetts business trust,
must look solely to the Trust property for the enforcement of any claim
against the Trust, as the Trustees, officers, agents or shareholders of the
Trust assume no personal liability whatsoever for obligations entered into on
behalf of the Trust.
THIS SPACE MUST NOT BE COVERED IN ANY WAY
DOCUMENT DESCRIPTION - SPECIMEN STOCK CERTIFICATE
Page One
A. The Certificate is outlined by an (color) one-half inch border.
B. The number in the upper left-hand corner and the number of shares in
the upper right-hand corner are outlined by octagonal boxes.
C. The cusip number in the middle right-hand area of the page is boxed.
D. The Massachusetts corporate seal appears in the bottom middle of the
page.
Page Two
The social security or other identifying number of the assignee
appears in a box in the top-third upper-left area of the page.
Exhibit 4(xii) under Form N-1A
Exhibit 3(c) under Item 601/Reg. S-K
THE SHAWMUT FUNDS
SHAWMUT GROWTH AND INCOME EQUITY FUND
(Investment Shares)
PORTFOLIO
Number Shares
_____ _____
Account No. Alpha Code Organized Under the See Reverse Side For
Laws of the Commonwealth Certain Definitions
of Massachusetts
THIS IS TO CERTIFY THAT is the owner of
CUSIP 820482 30 5
Fully Paid and Non-Assessable Shares of Beneficial Interest of SHAWMUT GROWTH
AND INCOME EQUITY FUND-INVESTMENT SHARES of THE SHAWMUT FUNDS hereafter
called the "Trust," transferable on the books of the Trust by the owner, in
person or by duly authorized attorney, upon surrender of this Certificate
properly endorsed.
The shares represented hereby are issued and shall be held subject to
the provisions of the Declaration of Trust and By-Laws of the Trust, and all
amendments thereto, all of which the holder by acceptance hereof assents.
This Certificate is not valid unless countersigned by the Transfer
Agent.
IN WITNESS WHEREOF, the Trust has caused this Certificate to be signed
in its name by its proper officers and to be sealed with its Seal.
Dated: THE SHAWMUT FUNDS
Seal
1992
Massachusetts
/s/ Edward C. Gonzales /s/ John F. Donahue
Treasurer Chairman
Countersigned: Federated Services
Company (Pittsburgh)
Transfer Agent
By:
Authorized Signature
The following abbreviations, when used in the inscription on the face of this
Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT-...Custodian...
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act.............................
in common (State)
Additional abbreviations may also be used though not in the above list.
For value received__________ hereby sell, assign, and transfer unto
Please insert social security or other
identifying number of assignee
______________________________________
_____________________________________________________________________________
(Please print or typewrite name and address, including zip code, of assignee)
_____________________________________________________________________________
_____________________________________________________________________________
______________________________________________________________________ shares
of beneficial interest represented by the within Certificate, and do hereby
irrevocably constitute and appoint __________________________________________
__________________________________________________________________Attorney
to transfer the said shares on the books of the within named Trust with full
power of substitution in the premises.
Dated______________________
NOTICE:______________________________
The signature to this assignment must
correspond with the name as written upon
the face of the certificate in every
particular, without alteration or
enlargement or any change whatever.
All persons dealing with THE SHAWMUT FUNDS, a Massachusetts business trust,
must look solely to the Trust property for the enforcement of any claim
against the Trust, as the Trustees, officers, agents or shareholders of the
Trust assume no personal liability whatsoever for obligations entered into on
behalf of the Trust.
THIS SPACE MUST NOT BE COVERED IN ANY WAY
DOCUMENT DESCRIPTION - SPECIMEN STOCK CERTIFICATE
Page One
A. The Certificate is outlined by an (color) one-half inch border.
B. The number in the upper left-hand corner and the number of shares in
the upper right-hand corner are outlined by octagonal boxes.
C. The cusip number in the middle right-hand area of the page is boxed.
D. The Massachusetts corporate seal appears in the bottom middle of the
page.
Page Two
The social security or other identifying number of the assignee
appears in a box in the top-third upper-left area of the page.
Exhibit 4(xiii) under Form N-1A
Exhibit 3(c) under Item 601/Reg. S-K
THE SHAWMUT FUNDS
SHAWMUT GROWTH EQUITY FUND
(Trust Shares)
PORTFOLIO
Number Shares
_____ _____
Account No. Alpha Code Organized Under the See Reverse Side For
Laws of the Commonwealth Certain Definitions
of Massachusetts
THIS IS TO CERTIFY THAT is the owner of
CUSIP 820482 88 3
Fully Paid and Non-Assessable Shares of Beneficial Interest of SHAWMUT GROWTH
EQUITY FUND-TRUST SHARES of THE SHAWMUT FUNDS hereafter called the "Trust,"
transferable on the books of the Trust by the owner, in person or by duly
authorized attorney, upon surrender of this Certificate properly endorsed.
The shares represented hereby are issued and shall be held subject to
the provisions of the Declaration of Trust and By-Laws of the Trust, and all
amendments thereto, all of which the holder by acceptance hereof assents.
This Certificate is not valid unless countersigned by the Transfer
Agent.
IN WITNESS WHEREOF, the Trust has caused this Certificate to be signed
in its name by its proper officers and to be sealed with its Seal.
Dated: THE SHAWMUT FUNDS
Seal
1992
Massachusetts
/s/ Edward C. Gonzales /s/ John F. Donahue
Treasurer Chairman
Countersigned: Federated Services
Company (Pittsburgh)
Transfer Agent
By:
Authorized Signature
The following abbreviations, when used in the inscription on the face of this
Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT-...Custodian...
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act.............................
in common (State)
Additional abbreviations may also be used though not in the above list.
For value received__________ hereby sell, assign, and transfer unto
Please insert social security or other
identifying number of assignee
______________________________________
_____________________________________________________________________________
(Please print or typewrite name and address, including zip code, of assignee)
_____________________________________________________________________________
_____________________________________________________________________________
______________________________________________________________________ shares
of beneficial interest represented by the within Certificate, and do hereby
irrevocably constitute and appoint __________________________________________
__________________________________________________________________Attorney
to transfer the said shares on the books of the within named Trust with full
power of substitution in the premises.
Dated______________________
NOTICE:______________________________
The signature to this assignment must
correspond with the name as written upon
the face of the certificate in every
particular, without alteration or
enlargement or any change whatever.
All persons dealing with THE SHAWMUT FUNDS, a Massachusetts business trust,
must look solely to the Trust property for the enforcement of any claim
against the Trust, as the Trustees, officers, agents or shareholders of the
Trust assume no personal liability whatsoever for obligations entered into on
behalf of the Trust.
THIS SPACE MUST NOT BE COVERED IN ANY WAY
DOCUMENT DESCRIPTION - SPECIMEN STOCK CERTIFICATE
Page One
A. The Certificate is outlined by an (color) one-half inch border.
B. The number in the upper left-hand corner and the number of shares in
the upper right-hand corner are outlined by octagonal boxes.
C. The cusip number in the middle right-hand area of the page is boxed.
D. The Massachusetts corporate seal appears in the bottom middle of the
page.
Page Two
The social security or other identifying number of the assignee
appears in a box in the top-third upper-left area of the page.
Exhibit 4(xiv) under Form N-1A
Exhibit 3(c) under Item 601/Reg. S-K
THE SHAWMUT FUNDS
SHAWMUT GROWTH EQUITY FUND
(Investment Shares)
PORTFOLIO
Number Shares
_____ _____
Account No. Alpha Code Organized Under the See Reverse Side For
Laws of the Commonwealth Certain Definitions
of Massachusetts
THIS IS TO CERTIFY THAT is the owner of
CUSIP 820482 20 6
Fully Paid and Non-Assessable Shares of Beneficial Interest of SHAWMUT GROWTH
EQUITY FUND-INVESTMENT SHARES of THE SHAWMUT FUNDS hereafter called the
"Trust," transferable on the books of the Trust by the owner, in person or by
duly authorized attorney, upon surrender of this Certificate properly
endorsed.
The shares represented hereby are issued and shall be held subject to
the provisions of the Declaration of Trust and By-Laws of the Trust, and all
amendments thereto, all of which the holder by acceptance hereof assents.
This Certificate is not valid unless countersigned by the Transfer
Agent.
IN WITNESS WHEREOF, the Trust has caused this Certificate to be signed
in its name by its proper officers and to be sealed with its Seal.
Dated: THE SHAWMUT FUNDS
Seal
1992
Massachusetts
/s/ Edward C. Gonzales /s/ John F. Donahue
Treasurer Chairman
Countersigned: Federated Services
Company (Pittsburgh)
Transfer Agent
By:
Authorized Signature
The following abbreviations, when used in the inscription on the face of this
Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT-...Custodian...
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act.............................
in common (State)
Additional abbreviations may also be used though not in the above list.
For value received__________ hereby sell, assign, and transfer unto
Please insert social security or other
identifying number of assignee
______________________________________
_____________________________________________________________________________
(Please print or typewrite name and address, including zip code, of assignee)
_____________________________________________________________________________
_____________________________________________________________________________
______________________________________________________________________ shares
of beneficial interest represented by the within Certificate, and do hereby
irrevocably constitute and appoint __________________________________________
__________________________________________________________________Attorney
to transfer the said shares on the books of the within named Trust with full
power of substitution in the premises.
Dated______________________
NOTICE:______________________________
The signature to this assignment must
correspond with the name as written upon
the face of the certificate in every
particular, without alteration or
enlargement or any change whatever.
All persons dealing with THE SHAWMUT FUNDS, a Massachusetts business trust,
must look solely to the Trust property for the enforcement of any claim
against the Trust, as the Trustees, officers, agents or shareholders of the
Trust assume no personal liability whatsoever for obligations entered into on
behalf of the Trust.
THIS SPACE MUST NOT BE COVERED IN ANY WAY
DOCUMENT DESCRIPTION - SPECIMEN STOCK CERTIFICATE
Page One
A. The Certificate is outlined by an (color) one-half inch border.
B. The number in the upper left-hand corner and the number of shares in
the upper right-hand corner are outlined by octagonal boxes.
C. The cusip number in the middle right-hand area of the page is boxed.
D. The Massachusetts corporate seal appears in the bottom middle of the
page.
Page Two
The social security or other identifying number of the assignee
appears in a box in the top-third upper-left area of the page.
-1-
Exhibit 5(ii) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
EXHIBIT F
to the
Investment Advisory Contract
Shawmut Quantitative Equity Fund
For all services rendered by the Adviser hereunder, the above-
named Portfolio(s) of the Trust shall pay to the Adviser and the Adviser
agrees to accept as full compensation for all services rendered
hereunder, an annual investment advisory fee equal to the average daily
net assets of the Portfolio(s), as designated below:
Portfolio Fee
Shawmut Quantitative Equity Fund 1.00% of average daily net
assets
The portion of the fees based upon the average daily net assets of
the Portfolio(s) shall be accrued daily. The advisory fee so accrued
shall be paid to the Adviser daily.
Witness the due execution hereof effective the 1st day of June,
1994.
Attest: Shawmut Bank, N.A.
/s/Anne S. Ames By: /s/Donald C. Berry, Jr.
Secretary Vice President
Attest: The Shawmut Funds
/s/John W. McGonigle By: /s/Edward C. Gonzales
John W. McGonigle, Secretary Edward C. Gonzales, President
-1-
Exhibit 5(iii) under Form N-1A
Exhibit 10 under Item 601/Reg.
S-K
THE SHAWMUT FUNDS
SUB-ADVISORY AGREEMENT
THIS AGREEMENT is made between SHAWMUT BANK, N.A., a national
banking association (hereinafter referred to as the "Adviser"), and
MARQUE MILLENNIUM GROUP LIMITED, located in New York, New York
(hereinafter referred to as the "Sub-Adviser").
WITNESSETH:
That the parties hereto, intending to be legally bound hereby agree
as follows:
1. The Sub-Adviser hereby agrees to furnish to the Adviser in its
capacity as investment adviser to SHAWMUT QUANTITATIVE EQUITY FUND (the
"Fund"), a portfolio of The Shawmut Funds (the "Trust"), such investment
advice, statistical and other factual information, as may from time to
time be reasonably requested by the Adviser for the Fund which may be
offered in one or more classes of shares (the "Classes").
2. For its services under this Agreement, the Sub-Adviser shall
receive from the Adviser an annual fee (the "Sub-Advisory Fee"), as set
forth in Exhibit A hereto. In the event that the fee due from the Trust
to the Adviser on behalf of the Fund is reduced in order to meet expense
limitations imposed on the Fund by state securities laws or regulations,
or to meet a voluntary expense cap imposed by the Adviser, the Sub-
Advisory Fee shall be reduced by one-half of said reduction in the fee
due from the Trust to the Adviser on behalf of the Fund.
Notwithstanding any other provision of this Agreement, the Sub-
Adviser may from time to time and for such periods as it deems
appropriate, reduce its compensation (and, if appropriate, assume
expenses of the Fund or a Class of the Fund) to the extent that the
Fund's expenses exceed such lower expense limitation as the Sub-Adviser
may, by notice to the Trust on behalf of the Fund, voluntarily declare
to be effective.
3. This Agreement shall begin for the Fund on the date that the
parties execute Exhibit A to this Agreement. This Agreement shall
continue in effect for the Fund for two years from the date of its
execution and from year to year thereafter, subject to the provisions
for termination and all of the other terms and conditions hereof if: (a)
the continuation of the Adviser's agreement with the Trust shall be
specifically approved at least annually by the vote of a majority of the
Trustees of the Trust, including a majority of the Trustees who are not
parties to such advisory contract, or interested persons of any such
party (other than as Trustees of the Trust) cast in person at a meeting
called for that purpose; and (b) the Adviser shall not have notified the
Trust in writing at least sixty (60) days prior to the anniversary date
of this Agreement in any year thereafter that it does not desire to
continue to serve as the Adviser.
4. Notwithstanding any provision in this Agreement, it may be
terminated at any time without the payment of any penalty: (a) by
action of the Trustees of the Trust or by a vote of a majority of the
outstanding voting securities (as defined in Section 2(a)(42) of the
Investment Company Act of 1940, as amended) of the Fund, as a result of
sixty (60) days' written notice to the Adviser; or (b) by the Sub-
Adviser or the Adviser upon 120 days' written notice to the other party
to the Agreement.
5. This Agreement shall automatically terminate: (a) in the
event of its assignment (as defined in the Investment Company Act of
1940, as amended); or (b) in the event of termination of the investment
advisory contract by and between the Adviser and the Trust for any
reason whatsoever.
6. So long as both the Adviser and the Sub-Adviser shall be
legally qualified to act as an investment adviser to the Fund, neither
the Adviser nor the Sub-Adviser shall act as an investment adviser (as
such term is defined in the Investment Company Act of 1940, as amended)
to the Fund except as provided herein and in the investment advisory
contract by and between the Adviser and the Trust, or in such other
manner as may be expressly agreed between the Adviser and the Sub-
Adviser; provided, however, that if the Adviser or the Sub-Adviser shall
resign prior to the end of any term of this Agreement or for any reason
be unable or unwilling to serve for a successive term pursuant to the
provisions of Paragraph 3 of this Agreement or Paragraph 6 of the
investment advisory contract by and between the Adviser and the Trust,
as the case may be, the remaining party, the Sub-Adviser or the Adviser,
as the case may be, shall not be prohibited from serving as an
investment adviser to the Fund by reason of the provisions of this
Paragraph 6.
7. This Agreement may be amended from time to time by agreement
of the parties hereto, provided that such amendment shall be approved
both by the vote of a majority of Trustees of the Trust, including a
majority of Trustees who are not parties to this Agreement or interested
persons, as defined in Section 2(a)(19) of the Investment Company Act of
1940, as amended, of any such party, at a meeting called for that
purpose, and by the holders of a majority of the outstanding voting
securities (as defined in Section 2(a)(42) of the Investment Company Act
of 1940) of the Fund.
8. The Adviser and the Sub-Adviser hereby confirm and
acknowledge their respective authority to enter into this Agreement on
behalf of themselves and their affiliates, if applicable.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed on their behalf by their duly authorized officers, and
their corporate seals to be affixed hereto this 10th day of June, 1994.
ATTEST: SHAWMUT BANK, N.A.
/s/Eugene J. Schwartz By:/s/Michael J. Rothmeier
Assistant Secretary Title: Executive Vice President
ATTEST: MARQUE MILLENNIUM GROUP LIMITED
/s/Eileen Guardiano By:/s/Wilfred J. Meckel II
Secretary Title:Senior Managing Director
Exhibit A
THE SHAWMUT FUNDS
SHAWMUT QUANTITATIVE EQUITY FUND
Sub-Advisory Contract
For all services rendered by the Sub-Adviser pursuant to the Sub-
Advisory Agreement, Adviser shall pay to the Sub-Adviser a Sub-Advisory
Fee equal to one-half of the total investment advisory fee collected by
the Adviser from the above-mentioned portfolio. The Sub-Advisory Fee
shall be accrued and paid daily.
This Exhibit duly incorporates by reference the Sub-Advisory
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Exhibit to
be executed on their behalf by their duly authorized officers, and their
corporate seals to be affixed hereto this 10th day of June, 1994.
ATTEST: SHAWMUT BANK, N.A.
/s/Eugene J. Schwartz By:/s/Michael J. Rothmeier
Assistant Secretary Title: Executive Vice President
ATTEST: MARQUE MILLENNIUM GROUP LIMITED
/s/Eileen Guardiano By:/s/Wilfred J. Meckel II
Secretary Title:Senior Managing Director
-1-
Exhibit 6(ii) under Form N-1A
Exhibit 1 under Item 601/Reg.
S-K
EXHIBIT U
THE SHAWMUT FUNDS
Shawmut Quantitative Equity Fund - Investment Shares
The following provisions are hereby incorporated and made part of
the Distribution Agreement dated the 25th day of November, 1992, between
The Shawmut Funds and Federated Securities Corp. with respect to the
Portfolios set forth above:
1. The Trust hereby appoints FSC to engage in activities
principally intended to result in the sale of shares of the Portfolios.
Pursuant to this appointment FSC is authorized to select a group of
brokers ("Brokers") to sell shares of the above-listed Portfolios
("Shares"), at the current offering price thereof as described and set
forth in the Prospectuses of the Trust, and to render administrative
support services to the Trust and its shareholders. In addition, FSC is
authorized to select a group of Administrators ("Administrators") to
render administrative support services to the Trust and its shareholders
of the above-listed Portfolios.
2. Administrative support services may include, but are not
limited to, the following functions: (1) account openings: the Broker or
Administrator communicates account openings via computer terminals
located on the Broker or Administrator's premises, through a toll-free
telephone number or otherwise; (2) account closings: the Broker or
Administrator similarly communicates account closings; (3) purchase
transactions: the Broker or Administrator similarly communicates
purchase transactions; (4) redemption transactions: the Broker or
Administrator similarly communicates redemption transactions; (5)
transmittal of funds: the Broker or Administrator wires funds and
receives funds for Trust share purchases and redemptions; (6)
reconciliation activities: the Broker or Administrator confirms and
reconciles all transactions and reviews the activity in the Trust's
accounts; (7) training: the Broker or Administrator provides training
and supervision of its personnel; (8) interest posting: the Broker or
Administrator posts and reinvests dividends and other distributions to
shareholders; (9) prospectus and shareholder reports: the Broker or
Administrator maintains and distributes current copies of prospectuses,
statements of additional information and shareholder reports; (10)
advertisements: the Broker or Administrator advertises the availability
of its services and products; (11) design services: the Broker or
Administrator provides assistance in the design of materials to send to
customers and in the the development of methods of making such materials
accessible to customers; (12) consultation services: the Broker or
Administrator provides information about the product needs of customers;
and (13) information services: the Broker or Administrator responds to
customers' and potential customers' questions about the Trust.
3. During the term of this Agreement, the Trust may in its
discretion, but is not obligated to, pay FSC for services pursuant to
this Agreement, a monthly fee computed at an annual rate not to exceed
0.50% of the average aggregate net asset value of the Portfolios of the
Trust listed above, held during the month. For the month in which this
Agreement becomes effective or terminates, there shall be an appropriate
proration of any fee payable on the basis of the number of days that the
Agreement is in effect during the month.
4. FSC will enter into separate written agreements with various
firms to provide certain of the services in Paragraph One herein. FSC,
in its sole discretion, may pay Brokers and Administrators a periodic
fee in respect of Shares owned from time to time by their clients or
customers. The schedules of such fees and the basis upon which such
fees will be paid shall be determined from time to time by FSC in its
sole discretion.
5. FSC will prepare reports to the Board of Trustees of the
Trust on a quarterly basis showing amounts paid to the various firms and
the purpose for such payments.
In consideration of the mutual covenants set forth in the
Distribution Agreement dated November 25, 1992 between The Shawmut Funds
and Federated Securities Corp., The Shawmut Funds executes and delivers
this Exhibit on behalf of the Portfolios first set forth in this
Exhibit.
Witness the due execution hereof this 1st day of June, 1994.
THE SHAWMUT FUNDS
Attest: /s/John W. McGonigle By: /s/Edward C. Gonzales
Its: Secretary Its: President
FEDERATED SECURITIES CORP.
Attest: /s/S. Elliott Cohan By: John W. McGonigle
Its: Secretary Its: Executive Vice President
Exhibit V
THE SHAWMUT FUNDS
Shawmut Quantitative Equity Fund - Trust Shares
In consideration of the mutual covenants set forth in the
Distribution Agreement dated November 25, 1992, between The Shawmut
Funds and Federated Securities Corp., The Shawmut Funds executes and
delivers this Exhibit on behalf of the Funds, and with respect to the
separate Classes of Shares thereof, first set forth in this Exhibit.
Witness the due execution hereof this 1st day of June, 1994.
THE SHAWMUT FUNDS
Attest: /s/John W. McGonigle By: /s/Edward C. Gonzales
Its: Secretary Its: President
FEDERATED SECURITIES CORP.
Attest: /s/S. Elliott Cohan By: /s/John W. McGonigle
Its: Secretary Its: Executive Vice President
-1-
Exhibit 8(i) under Form N-lA
Exhibit 10 under Item 60l/Reg.
S-K
CUSTODY AGREEMENT
THIS AGREEMENT, is made effective as of November 25, 1992, by and
between The Shawmut Funds (the "Trust"), a business trust organized
under the laws of the Commonwealth of Massachusetts and Shawmut Bank,
N.A., a banking company organized under the laws of the Commonwealth of
Massachusetts (the "Custodian").
WITNESSETH:
WHEREAS, the Trust is an open-end management series investment
company registered under the Investment Company Act of 1940, as amended
(the "1940 Act"); and
WHEREAS, the Trust desires to retain the Custodian to serve as the
Trust's custodian to its existing series: Shawmut Prime Money Market
Fund, Shawmut Limited Term Income Fund, Shawmut Intermediate Government
Income Fund, Shawmut Fixed Income Fund, Shawmut Growth and Income Equity
Fund, Shawmut Growth Equity Fund, and Shawmut Small Capitalization
Equity Fund (such series, together with all other series subsequently
established by the Trust and made subject to this Agreement in
accordance with Section 3.22 being herein referred to as the "Funds")
and the Custodian is willing to furnish such services;
NOW THEREFORE, in consideration of the mutual agreements herein
made, the Trust and the Custodian hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following
meanings:
1.1 "Authorized Person" means any Officer or other person duly
authorized by resolution of the Board of Trustees to give Proper
Instructions on behalf of the Funds and named in Exhibit B hereto or in
such resolutions of the Board of Trustees, certified by an Officer, as
may be received by the Custodian from time to time. The Trust will
provide the Custodian with authenticated specimen signatures of each
Authorized Person.
1.2 "Board of Trustees" means the Trustees from time to time
serving under the Trust's Declaration of Trust, dated July 16, 1992, as
from time to time amended.
1.3 "Securities System" means a federal book-entry system as
provided in Subpart O of Treasury Circular No. 300, CFR 306, in Subpart
B of 31 CFR Part 350, or in such book-entry regulations of federal
agencies as are substantially in the form of such Subpart O, the
Depository Trust Company ("DTC"), Participants Trust Company and
(provided that Custodian shall have received a copy of a resolution of
the Board of Trustees, certified by an Officer, specifically approving
the use of such clearing agency as a depository for the Funds) any other
clearing agency registered with the Securities and Exchange Commission
("SEC") under Section 17A of the Securities Exchange Act of 1934 ("1934
Act"), which acts as a system for the central handling of Securities
where all securities of any particular class or series of an issuer
deposited within the system are treated as fungible and may be
transferred or pledged by bookkeeping entry without physical delivery of
the Securities.
1.4 "Business Day" means any day recognized as a settlement day by
The New York Stock Exchange, Inc. and any other day for which the Trust
computes the net asset value of a Fund.
1.5 "NASD" means The National Association of Securities Dealers,
Inc.
1.6 "Officer" means the Chairman, President, any Vice President,
the Secretary, any Assistant Secretary, the Treasurer, or any Assistant
Treasurer of the Trust.
1.7 "Fund Custody Account" means any of the accounts in the name
of the Trust, which are provided for in Section 3.2 below.
1.8 "Proper Instructions" means:
(i) a writing (including, without limitation, a facsimile
transmission or tested telex) constituting a request, direction,
instruction or certification signed or initiated by or on behalf of
a Fund by one or more Authorized Persons or reasonably believed by
the Custodian to have been signed by such Authorized Persons;
(ii) a telephonic or other oral communication by one or more
Authorized Persons or reasonably believed by the Custodian to have
been communicated by such Authorized Persons; or
(iii) communications transmitted electronically through
the Institutional Delivery System (IDS), or any other similar
electronic instruction system acceptable to Custodian and approved
by resolutions of the Board of Trustees, a copy of which, certified
by an Officer, shall have been delivered to the Custodian.
The Trust shall cause all Proper Instructions in the form of oral
communications to be promptly confirmed in writing, as specified in
clause (i) of this paragraph. In the event that an oral communication
is not so confirmed, or in the event that a written confirmation differs
from the related oral communication, the Trust will hold the Custodian
harmless and without liability for any claims or losses in connection
with such oral communication. Proper Instructions may be in the form of
standing instructions. In respect of trades reported on the Trust's
behalf through DTC, instructions from DTC (whether in a DTC report or
otherwise), shall be Proper Instructions.
1.9 "Securities" include, without limitation, common and preferred
stocks, bonds, call options, put options, debentures, notes, bank
certificates of deposit, bankers' acceptances, mortgage-backed
securities, other money market instruments or other obligations, and any
certificates, receipts, warrants or other instruments or documents
representing rights to receive, purchase or subscribe for the same, or
evidencing or representing any other rights or interests therein, or any
similar property or assets that the Custodian has the facilities to
clear and to service.
1.10 "Shares" means, with respect to a Fund, the units of
beneficial interest issued by the Trust on account of such Fund.
ARTICLE II
APPOINTMENT OF CUSTODIAN
2.1 Appointment. The Trust hereby constitutes and appoints the
Custodian as custodian for the term and subject to the provisions of
this Agreement.
2.2 Acceptance. The Custodian hereby accepts appointment as such
custodian and agrees to perform the duties thereof as hereinafter set
forth.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
3.1 Segregation. All Securities and non-cash property held by
the Custodian for the account of a Fund, except Securities maintained in
a Securities System pursuant to Section 3.6 herein, shall be physically
segregated from other Securities and non-cash property in the possession
of the Custodian (including the Securities and non-cash property of
another Fund) and shall be identified as subject to this Agreement.
3.2 Fund Custody Accounts. As to each Fund, the Custodian shall
open and maintain a custody account or accounts in the name of the Trust
coupled with the name of such Fund, subject only to draft or order of
the Custodian, in which the Custodian shall enter and carry all
Securities, cash and other assets of such Fund which are delivered to
it.
3.3 Appointment of Sub-custodians. In its discretion, the
Custodian may appoint, and at any time remove, any domestic bank or
trust company which is qualified to act as a custodian under the 1940
Act, as sub-custodian to hold Securities and cash of the Funds and to
carry out such other provisions of this Agreement as it may determine,
and may also open and maintain one or more banking accounts with such a
bank or trust company (any such accounts to be in the name of the
Custodian on behalf of its customers and subject only to its draft or
order pursuant to the terms of this Agreement), provided, however, that
the Custodian shall have no more or less responsibility or liability to
the Trust on account of any actions or omissions of such Sub-custodian
so employed than any such sub-custodian has to the Custodian.
3.4 Appointment of Agents. The Custodian may at any time or times
in its discretion appoint (and may at any time remove) any other bank or
trust company which is itself qualified under the Investment Company Act
of 1940, as amended, to act as a custodian, as its agent to carry out
such of the provisions of this Article 3 as the Custodian may from time
to time direct; provided, however, that the appointment of any agent
shall not relieve the Custodian of its responsibilities or liabilities
hereunder.
3.5 Delivery of Assets to Custodian. The Trust shall deliver, or
cause to be delivered, to the Custodian all of the Funds' Securities,
cash and other assets, including (a) all payment of income, payments of
principal and capital distributions received by the Funds with respect
to such Securities, cash or other assets owned by the Funds at any time
during the period of this Agreement, and (b) all cash received by the
Funds for the issuance, at any time during such period, of Shares. The
Custodian shall not be responsible for such Securities, cash or other
assets until actually received by it.
3.6 Securities Systems. The Custodian may deposit and/or maintain
Securities of the Funds in a Securities System, subject to the following
provisions:
(a) Prior to a deposit of Securities of the Funds in any
Securities System, the Trust shall deliver to the Custodian a
resolution of the Board of Trustees, certified by an Officer,
authorizing and instructing the Custodian on an on-going basis
to deposit in such Securities System all Securities eligible
for deposit therein and to make use of such Securities System
to the extent possible and practical in connection with its
performance hereunder, including, without limitation, in
connection with settlements of purchases and sales of
Securities, loans of Securities, and deliveries and returns of
collateral consisting of Securities. So long as such
Securities System shall continue to be employed for the
deposit of Securities of the Funds, the Trust shall annually
re-adopt such resolution and deliver a copy thereof, certified
by an Officer, to the Custodian.
(b) Securities of the Funds kept in a Securities System shall be
kept in an account ("Depository Account") of the Custodian in
such Securities System which includes only assets held by the
Custodian as a fiduciary, custodian or otherwise for
customers.
(c) The records of the Custodian with respect to Securities of a
Fund maintained in a Securities System shall, by book-entry,
identify such Securities as belonging to such Fund.
(d) If Securities purchased by a Fund are to be held in a
Securities System, the Custodian shall pay for such Securities
upon (i) receipt of advice from the Securities System that
such Securities have been transferred to the Depository
Account, and (ii) the making of any entry on the records of
the Custodian to reflect such payment and transfer for the
account of such Fund. If Securities sold by a Fund are held
in a Securities System, the Custodian shall transfer such
Securities upon (i) receipt of advice from the Securities
System that payment for such Securities has been transferred
to the Depository Account, and (ii) the making of an entry on
the records of the custodian to reflect such transfer and
payment for the account of such Fund.
(e) Upon request, the Custodian shall provide the Trust with
copies of any report (obtained by the Custodian from a
Securities System in which Securities of the Funds are kept)
on the internal accounting controls and procedures for
safeguarding Securities deposited in such Securities System.
(f) Anything to the contrary in this Agreement notwithstanding,
the Custodian shall not be liable to the Trust for any loss or
damage to a Fund resulting from the use by the Custodian of a
Securities System, unless such loss or damage is caused by or
results from the gross negligence or willful misconduct on the
part of the Custodian or its agents or any of its (or their)
employees, other than its Securities System.
3.7 Collection of Income. Subject to the provisions of Section
3.15, the Custodian shall collect on a timely basis all income and other
payments with respect to registered securities held hereunder to which
each Fund shall be entitled either by law or pursuant to custom in the
securities business, and shall collect on a timely basis all income and
other payments with respect to bearer securities if, on the date of
payment by the issuer, such securities are held by the custodian or its
agent thereof and shall credit such income, as collected, to each Fund's
custodian account. Without limiting the generality of the foregoing,
the Custodian shall detach and present for payment all coupons and other
income items requiring presentation as and when they become due and
shall collect interest when due on securities held hereunder. The
collection of income due the Funds on Securities loaned pursuant to the
provisions of Section 3.9(j) shall be the responsibility of the Trust.
The Custodian will have no duty or responsibility in connection
therewith, other than to provide the Trust with such information or data
as may be necessary to assist the Trust in arranging for the timely
delivery to the Custodian of the income of which each Fund is properly
entitled.
The Custodian shall promptly notify the Trust whenever income due
on Securities is not collected in due course and will provide the Trust
with monthly reports of the status of past due income. Except as set
forth herein, the Custodian shall not be required to enforce collection,
by legal means or otherwise, of any money or property due and payable
with respect to Securities held for a Fund if such Securities are in
default or payment is not made after due demand or presentation.
3.8 Disbursement of Moneys from Fund Custody Accounts. Upon
receipt of Proper Instructions, the Custodian shall disburse moneys from
a Fund Custody Account but only in the following cases:
(a) For the purchase of Securities for the Fund but only (i) in
the case of Securities (other than options on Securities,
futures contracts and options on future contracts), against
the delivery to the Custodian (or any sub-custodian or agent
appointed pursuant to Sections 3.3 and 3.4, respectively,
above) of such Securities to be registered as provided in
Section 3.15 below in proper form for transfer, or if the
purchase of such Securities is effected through a Securities
System, in accordance with the conditions set forth in Section
3.6 above; (ii) in the case of options on Securities, against
delivery to the Custodian (or such sub-custodian) of such
receipts as are required by the customs prevailing among
dealers in such options; (iii) in the case of futures
contracts and options on futures contracts, against delivery
to the Custodian (or such sub-custodian) of evidence of title
thereto in favor of the Fund or any nominee referred to in
Section 3.15 below; and (iv) in the case of repurchase or
reverse repurchase agreements entered into between the Trust
and any other party, against delivery of the purchased
Securities either in certificate form or through an entry
crediting the Custodian's account at a Securities System with
such Securities;
(b) In connection with the conversion, exchange or surrender, as
set forth in Section 3.9(f) below, of Securities owned by the
Fund;
(c) For the payment of any dividends or capital gain distributions
declared by the Fund;
(d) In payment of the redemption price of Shares as provided in
Section 5.1 below;
(e) For the payment of any expense or liability incurred by the
Fund, including but not limited to the following payments for
the account of the Fund: interest; taxes; administration,
investment management, investment advisory, accounting,
auditing, transfer agent, custodian, trustee and legal fees;
and other operating expenses of the Fund; in all cases,
whether or not such expenses are to be in whole or in part
capitalized or treated as deferred expenses;
(f) For transfer in accordance with the provisions of any
agreement among the Trust, the Custodian and a broker-dealer
registered under the 1934 Act and a member of the NASD,
relating to compliance with rules of The Options Clearing
Corporation and of any registered national securities exchange
(or of any similar organization or organizations) regarding
escrow or other arrangements in connection with transactions
by the Fund;
(g) For transfer in accordance with the provisions of any
agreement among the Trust, the Custodian, and a futures
commission merchant registered under the Commodity Exchange
Act, relating to compliance with the rules of the Commodity
Futures Trading Commission and/or any contract market (or any
similar organization or organizations) regarding account
deposits in connection with transactions by the Fund;
(h) For the funding of any uncertificated time deposit or other
interest-bearing account with any banking institution
(including the Custodian), which deposit or account has a term
of one year or less; and
(i) For any other proper purposes, but only upon receipt, in
addition to Proper Instructions, of a copy of a resolution of
the Board of Trustees, certified by an Officer, specifying the
amount and purpose of such payment, declaring such purpose to
be a proper corporate purpose, and naming the person or
persons to whom such payment is to be made.
3.9 Delivery of Securities from Fund Custody Accounts. Upon
receipt of Proper Instructions, the Custodian shall release and deliver
Securities from a Fund Custody Account but only in the following cases:
(a) Upon the sale of Securities for the account of the Fund but
only against receipt of payment therefor;
(b) In the case of a sale effected through a Securities System, in
accordance with the provisions of Section 3.6 above;
(c) To an Offeror's depository agent in connection with tender or
other similar offers for Securities of the Fund;
(d) To the issuer thereof or its agent when such securities are
called, redeemed, retired, or otherwise become payable;
provided that, in any such case, the cash or other
consideration is to be delivered to the Custodian;
(e) To the issuer thereof or its agent (i) for transfer into the
name of the Fund, the Custodian or any sub- custodian or agent
appointed pursuant to Sections 3.3 and 3.4, respectively,
above, or of any nominee or nominees of any of the foregoing,
or (ii) for exchange for a different number of certificates or
other evidence representing the same aggregate face amount or
number of units; provided that, in any such case, the new
Securities are to be delivered to the Custodian;
(f) To the broker selling Securities or its clearing agent, for
examination in accordance with the "street delivery" custom;
provided that in any such case, the Custodian shall have no
responsibility or liability for any loss arising from the
delivery of such securities prior to receiving payment for
such securities except as may arise from the Custodian's own
negligence or willful misconduct;
(g) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, readjustment of the
securities, reorganization or readjustment of the issuer of
such Securities, or pursuant to any deposit agreement,
including surrender or receipt of underlying Securities in
connection with the issuance or cancellation of depository
receipts; provided that, in any such case, the new Securities
and cash, if any, are to be delivered to the Custodian;
(h) Upon receipt of payment therefor pursuant to any repurchase or
reverse repurchase agreement entered into by a Fund;
(i) In the case of warrants, rights or similar Securities, upon
the exercise thereof, the surrender thereof in the exercise of
such warrants, rights or similar securities or the surrender
of interim receipts or temporary securities; provided that, in
any such case, the new Securities and cash, if any, are to be
delivered to the Custodian;
(j) For delivery in connection with any loans of Securities of the
Fund, but only against receipt of such collateral as the Trust
shall have specified to the Custodian in Proper Instructions;
except that in connection with any loans for which collateral
is to be credited to the Custodian's account in the book-entry
system authorized by the U.S. Department of the Treasury, the
Custodian will not be held liable or responsible for the
delivery of securities owned by the Fund prior to the receipt
of such collateral;
(k) For delivery as security in connection with any borrowings by
the Fund requiring a pledge of assets by such Fund, but only
against receipt by the Custodian of the amounts borrowed;
(l) Pursuant to any authorized plan of liquidation,
reorganization, merger, consolidation or recapitalization of
the Trust or a Fund;
(m) For delivery in accordance with the provisions of any
agreement among the Trust on behalf of a Fund, the Custodian
and a broker-dealer registered under the 1934 Act and a member
of the NASD, relating to compliance with the rules of The
Options Clearing Corporation and of any registered national
securities exchange (or of any similar organization or
organizations) regarding escrow or other arrangements in
connection with transactions by the Fund;
(n) For delivery in accordance with the provisions of any
agreement among the Trust on behalf of a Fund, the Custodian,
and a futures commission merchant registered under the
Commodity Exchange Act, relating to compliance with the rules
of the Commodity Futures Trading commission and/or any
contract market (or any similar organization or organizations)
regarding account deposits in connection with transactions by
the Fund; or
(o) Upon receipt of instructions from the transfer agent for a
Fund, for delivery to such transfer agent or to the holders of
Shares in connection with distributions in kind, in
satisfaction of requests by holders of Shares for repurchase
redemption;
(p) For any other proper corporate purposes, but only upon
receipt, in addition to Proper Instructions, of a copy of a
resolution of the Board of Trustees, certified by an Officer,
specifying the Securities to be delivered, setting forth the
purpose for which such delivery is to be made, declaring such
purpose to be a proper corporate purpose, and naming the
person or persons to whom delivery of such Securities shall be
made.
3.10 Bank Accounts. The Custodian may open and maintain a separate
bank account or accounts in the name of each Fund, subject only to draft
or order by the Custodian acting pursuant to the terms of this
Agreement, and shall hold in such account or accounts, subject to the
provisions hereof, all cash received by it from or for the account of
each Fund, other than cash maintained in a joint repurchase account with
other affiliated funds or by a particular Fund in a bank account
established and used in accordance with Rule 17f-3 under the 1940 Act.
Funds held by the Custodian for a Fund may be deposited by it to its
credit as Custodian in the Banking Department of the Custodian or in
such other banks or trust companies as it may in its discretion deem
necessary or desirable; provided, however, that every such bank or trust
company shall be qualified to act as a custodian under the 1940 Act and
that each such bank or trust company and the funds to be deposited with
each such bank or trust company shall be approved by the vote of a
majority of the Board of Trustees of the Trust. Such funds shall be
deposited by the Custodian in its capacity as Custodian for the Fund and
shall be withdrawable by the Custodian only in that capacity. If
requested by the Trust, the Custodian shall furnish the Trust, not later
than twenty (20) days after the last business day of each month, an
internal reconciliation of the closing balance as of that day in all
accounts described in this section to the balance shown on the daily
cash report for that day rendered to the Trust.
3.11 Payments for Shares. The Custodian shall make such
arrangements with the transfer agent of each Fund, as will enable the
Custodian to receive the cash consideration due to each Fund and will
deposit into each Fund's Custody Account such payments as are received
from the transfer agent. The Custodian will provide timely notification
to the Trust and the transfer agent of any receipt by it of payments for
Shares of the respective Fund.
3.12 Availability of Federal Funds. Upon mutual agreement between
the Trust and the Custodian, the Custodian shall make federal funds
available to the Funds as of specified times agreed upon from time to
time by the Trust and the Custodian in the amount of checks, clearing
house funds, and other non-federal funds received in payment for Shares
of the Funds which are deposited into the Funds' Custody Accounts.
3.13 Actions Not Requiring Proper Instructions. The Custodian may,
in its discretion and without express authority from the Trust or any
Fund:
(a) Make payments to itself or others for minor expenses of
handling Securities or other similar items relating to its
duties under this Agreement, provided that all such payments
shall be accounted for to the Fund;
(b) Endorse for collection, in the name of the Fund, checks,
drafts and other negotiable instruments;
(c) Surrender interim receipts or Securities in temporary form for
Securities in definitive form; and
(d) In general, and except as otherwise directed in Proper
Instructions, attend to all non-discretionary details in
connection with sale, exchange, substitution, purchase,
transfer and other dealings with Securities and assets of the
Fund.
3.14 Ownership Certificates for Tax Purposes. The Custodian
shall execute any necessary declarations or certificates of ownership
under the federal income tax laws or the laws or regulations of any
other taxing authority now or hereafter in effect.
3.15 Registration and Transfer of Securities. All Securities held
for a Fund that are issued or issuable only in bearer form shall be held
by the Custodian in that form, provided that any such Securities shall
be held in a Securities System if eligible therefor. All other
Securities held for a Fund may be registered in the name of such Fund,
the Custodian, or any sub- custodian or agent appointed pursuant to
Sections 3.3 and 3.4, respectively, above, or in the name of any nominee
of any of them, or in the name of a Securities System or any nominee
thereof. All securities accepted by the Custodian on behalf of the Fund
under the terms of this Agreement shall be in "street name" or other
good deliverable form. If, however, the Fund directs the Custodian to
maintain securities in "street name", the Custodian shall utilize its
best efforts only to timely collect income due the Fund on such
securities and to notify the Fund on a best efforts basis only of
relevant corporate actions including, without limitation, pendency of
calls, maturities, tender or exchange offers. The Trust shall furnish
to the Custodian appropriate instruments to enable the Custodian to hold
or deliver in proper form for transfer, or to register in the name of
any of the nominees hereinabove referred to or in the name of a
Securities System, any Securities registered in the name of a Fund.
3.16 Records. The Custodian shall create and maintain all records
relating to its activities and obligations under this Contract in such
manner as will meet the obligations of the Fund under the 1940 Act, with
particular attention to Section 31 thereof and Rules 31a-1 and 31a-2
thereunder. All such records shall be the property of the Fund and
shall at all times during the regular business hours of the Custodian be
open for inspection by duly authorized officers, employees or agents of
the Fund and employees and agents of the SEC. The Custodian shall, at
the Fund's request, supply the Fund with a tabulation of securities
owned by the Fund and held by the Custodian and shall, when requested to
do so by the Fund and for such compensation as shall be agreed upon
between the Fund and the Custodian, include certificate numbers of
securities held in physical possession in such tabulations.
3.17 Fund Reports by Custodian. The Custodian shall furnish the
Trust with a daily activity statement by Fund and a summary of all
transfers to or from each Fund Custody Account on the day following such
transfers. At least monthly and from time to time, the Custodian shall
furnish the Trust with a detailed statement, by Fund, of the Securities
and moneys held for the Funds under this Agreement.
3.18 Other Reports by Custodian. The Custodian shall provide the
Trust, at such times as the Trust may reasonably require, with reports
by independent public accountants for each Fund on the accounting
system, internal accounting control and procedures for safeguarding
securities, future contracts and options on future contracts including
securities deposited and/or maintained in a Securities System, relating
to the services provided by the Custodian for the Fund under this
Agreement; such reports shall be of sufficient scope and in sufficient
detail as may reasonably be required by the Trust to provide reasonable
assurance that any material inadequacies would be disclosed by such
examination, and, if there are no such inadequacies, the reports shall
so state.
3.19 Proxies and Other Materials. The Custodian shall cause all
proxies relating to Securities which are not registered in the name of a
Fund, to be promptly executed by the registered holder of such
Securities, without indication of the manner in which such proxies are
to be voted, and shall promptly deliver to the trust such proxies, all
proxy soliciting materials and all notices to such Securities.
3.20 Information on Corporate Actions. Subject to the provisions
of Section 3.15, the Custodian shall transmit promptly to the Trust all
written information (including, without limitation, pendency of calls
and maturities of securities and expirations of rights in connection
therewith and notices of exercise of call and put options written by the
Trust, on behalf of a Fund and the maturity of futures contracts
purchased or sold by the Trust on behalf of a Fund) received by the
Custodian from issuers of the Securities being held for the Funds. With
respect to tender or exchange offers, the Custodian shall transmit
promptly to the Trust all written information received by the Custodian
from the issuers of the Securities whose tender or exchange offer is
sought from the party (or his agents) making the tender offer. If the
Trust on behalf of a Fund desires to take action with respect to any
tender offer, exchange offer, or any other similar transaction, the
Trust shall notify the Custodian at least three business days prior to
the date on which the Custodian is to take such action.
3.22 Additional Series. In the event that the Trust establishes
one or more series in addition to and with respect to which it desires
to have the Custodian render services as Custodian under the terms set
forth in this Agreement, it shall so notify the Custodian in writing,
and if the Custodian shall agree in writing to provide such services,
such series shall become a Fund hereunder, subject to such fees as the
parties may agree.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
4.1 Purchase of Securities. Promptly upon each purchase of
Securities for a Fund, Proper Instructions shall be delivered to the
Custodian, specifying (a) the Fund for which the purchase was made, (b)
the name of the issuer or writer of such Securities, and the title or
other description thereof, (c) the number of shares, principal amount
(and accrued interest if any) or other units purchased, (d) the date of
purchase and settlement, (e) the purchase price per unit, (f) the total
amount payable upon such purchase, and (g) the name of the broker/dealer
or financial institution to whom such amount is payable. The Custodian
shall, upon receipt of such Securities purchased by a Fund, pay out of
the moneys held for the Fund in the relevant Fund Custody Account the
total amount specified in such Proper Instructions to the person named
therein. The Custodian shall not be under any obligation to pay out
moneys to cover the cost of a purchase of Securities for a Fund, if in
the relevant Fund Custody Account there is insufficient cash available
to the Fund for which such purchase was made.
4.2 Liability for Payment in Advance of Receipt of
Securities Purchased. Except as provided in this Agreement, in any and
every case where payment for the purchase of Securities for a Fund is
made by the Custodian in advance of receipt of the securities purchased
but in the absence of Proper Instructions to so pay in advance, the
Custodian shall be liable to the Trust, on behalf of the Fund, for such
Securities to the same extent as if the Securities had been received by
the Custodian.
4.3 Sale of Securities. Promptly upon each sale of Securities by
a Fund, Proper Instructions shall be delivered to the Custodian,
specifying (a) the Fund for which the sale was made, (b) the name of the
issuer or writer of such Securities, and the title or other description
thereof, (c) the number of shares, principal amount (and accrued
interest, if any), or other units sold, (d) the date of sale and
settlement (e) the sale price per unit, (f) the total amount payable
upon such sale, and (g) the person to whom such Securities are to be
delivered. Upon receipt of the total amount payable to the Fund as
specified in such Proper Instructions, the Custodian shall deliver such
Securities to the person specified in such Proper Instructions. Subject
to the foregoing, the Custodian may accept payment in such form as shall
be satisfactory to it, and may deliver Securities and arrange for
payment in accordance with the customs prevailing among dealers in
Securities.
4.4 Payment for Securities Sold. In its sole discretion and from
time to time, the Custodian may credit the relevant Fund Custody
Account, prior to actual receipt of final payment thereof, with (i)
proceeds from the sale of Securities which it has been instructed to
deliver against payment, (ii) proceeds from the redemption of Securities
or other assets of the Fund, and (iii) income from cash, Securities or
other assets of the Fund. Any such credit shall be conditional upon
actual receipt by Custodian of final payment and may be reversed if
final payment is not actually received in full. The Custodian may, in
its sole discretion and from time to time, permit a Fund to use funds so
credited to its Fund Custody Account in anticipation of actual receipt
of final payment. Any such funds shall be repayable immediately upon
demand made by the Custodian at any time prior to the actual receipt of
all final payments in anticipation of which funds were credited to the
Fund Custody Account.
4.5 Advances by Custodian for Settlement. The Custodian may, in
its sole discretion and from time to time, advance funds to the Trust to
facilitate the settlement of a Fund's transactions in its Fund Custody
Account. Any such advance shall be repayable immediately upon demand
made by Custodian.
ARTICLE V
REDEMPTION OF FUND SHARES
5.1 Transfer of Funds. From such funds as may be available for
the purpose in the relevant Fund Custody Account, and upon receipt of
Proper Instructions specifying that the funds are required to redeem
Shares of a Fund, the Custodian shall wire each amount specified in such
Proper Instructions to or through such bank as the Trust may designate
with respect to such amount in such Proper Instructions.
5.2 No Duty Regarding Paying Banks. The Custodian shall not be
under any obligation to effect payment or distribution by any bank
designated in Proper Instructions given pursuant to Section 5.1 above of
any amount paid by the Custodian to such bank in accordance with such
Proper Instructions.
ARTICLE VI
SEGREGATED ACCOUNTS
Upon receipt of Proper Instructions, the Custodian shall establish
and maintain a segregated account or accounts for and on behalf of a
Fund, into which account or accounts may be transferred cash and/or
Securities, including Securities maintained in a Depository Account,
(a) in accordance with the provisions of any agreement among the
Trust on behalf of a Fund, the Custodian and a broker-dealer
registered under the 1934 Act and a member of the NASD (or any
futures commission merchant registered under the Commodity
Exchange Act), relating to compliance with the rules of The
Options Clearing Corporation and of any registered national
securities exchange (or the Commodity Futures Trading
commission or any registered contract market), or of any
similar organization or organizations, regarding escrow or
other arrangements in connection with transactions by a Fund,
(b) for purposes of segregating cash or Securities in connection
with securities options purchased or written by the Trust, on
behalf of a Fund or in connection with financial futures
contracts (or options thereon) purchased or sold by a Fund,
(c) which constitute collateral for loans of Securities made by a
Fund,
(d) for purposes of compliance by the Funds with requirements
under the 1940 Act for the maintenance of segregated accounts
by registered investment companies in connection with reverse
repurchase agreements, and when-issued, delayed delivery and
firm commitment transactions, and other similar transactions,
and
(e) for other proper corporate purposes, but only upon receipt of,
in addition of Proper Instructions, a certified copy of a
resolution of the Board of Trustees, certified by an Officer,
setting forth the purpose or purposes of such segregated
account and declaring such purposes to be proper corporate
purposes.
Each segregated account established under this Article VI shall be
established and maintained for a single Fund only. All Proper
Instructions relating to a segregated account shall specify the Fund
involved.
ARTICLE VII
CONCERNING THE CUSTODIAN
7.1 Standard of Care. The Custodian shall be held to a standard
of care of a "prudent man" in carrying out the provisions of this
Agreement. The Custodian shall be entitled to rely on and may act upon
advice of counsel (who may be counsel for the Trust) on all matters, and
shall be without liability for any action reasonably taken or omitted
pursuant to such advice. Subject to the limitations set forth in this
Agreement, the Custodian shall be kept indemnified by the Trust and be
without liability for any action taken or omitted to be taken by it in
carrying out the terms and provisions of this Agreement in accordance
with the above standards.
7.2 No Responsibility for Title. So long as and to the extent
that it is in the exercise of reasonable care, the Custodian shall not
be responsible for the title, validity or genuineness of any property or
evidence of title thereto received or delivered by it pursuant to this
Agreement.
7.3 Reliance Upon Documents and Instructions. The Custodian shall
be entitled to rely upon any certificate, notice or other instrument in
writing received by it and reasonably believed by it to be genuine. The
Custodian shall be entitled to rely upon any Proper Instructions
actually received by it pursuant to this Agreement.
7.4 Express Duties Only. The Custodian shall have no duties or
obligations whatsoever except such duties and obligations as are
specifically set forth in this Agreement, and no covenant or obligation
shall be implied in this Agreement against the Custodian.
7.5 Co-operation. The Custodian shall cooperate with and supply
necessary information, by Fund, to the entity or entities appointed by
the Trust to keep the books of account of the Funds and/or compute the
value of the assets of the Funds. The Custodian shall take all such
reasonable actions as the Trust may from time to time request to enable
the Trust to obtain, from year to year, favorable opinions from the
Trust's independent accountants with respect to the Custodian's
activities hereunder in connection with (a) the preparation of the
Trust's report on Form N-1A and Form N-SAR and any other reports
required by the Securities and Exchange Commission, and (b) the
fulfillment by the Trust of any other requirements of the SEC.
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification. The Trust shall indemnify and hold harmless
the Custodian, any sub-custodian appointed pursuant to Section 3.3
above, or any agent, and any nominee of the Custodian or of such sub-
custodian from and against any loss, damage, cost, expense (including
attorneys' fees and disbursements), liability (including, without
limitation, liability arising under the Securities Act of 1933, the 1934
Act, the 1940 Act, and any state securities and/or banking laws) or
claim arising directly or indirectly (a) from the fact that Securities
are registered in the name of any such nominee, or (b) from any action
or inaction by the Custodian or such sub-custodian (i) at the request or
direction of or in reliance on the advice of the Trust, or (ii) upon
Proper Instructions, or (c) generally, from the performance of its
obligations under this Agreement or any sub-custody agreement with a sub-
custodian appointed pursuant to Section 3.3 above or, in the case of any
such sub-custodian, from the performance of its obligations under such
sub-custody agreement, provided that neither the Custodian nor any such
sub-custodian shall be indemnified and held harmless from and against
any such loss, damage, cost, expense, liability or claim arising from
the Custodian's or such sub-custodian's failure to act in accordance
with the standard of care set forth in Section 7.1.
8.2 Indemnity to be Provided. If the Trust requests the Custodian
to take any action with respect to Securities, which action involves the
payment of money or which action may, in the opinion of the Custodian,
result in the Custodian or its nominee becoming liable for the payment
of money or incurring liability of some other form, the Custodian shall
not be required to take such action until the Trust shall have provided
indemnity therefor to the Custodian in an amount and form satisfactory
to the Custodian.
8.3 Security. If the Custodian advances cash or Securities to a
Fund for any purpose, either at the Trust's request or as otherwise
contemplated in this Agreement, or in the event that the Custodian or
its nominee incurs, in connection with its performance under this
Agreement, any loss, damage, cost expense (including attorneys' fees and
disbursements), liability or claim (except such as may arise from its or
its nominee's negligence, bad faith, or willful misconduct), then, in
any such event, property not to exceed 10% of the Fund's gross assets at
any time held for the account of such Fund shall be security therefor,
and should such Fund fail promptly to repay or indemnify the Custodian,
the Custodian shall be entitled to utilize available cash of such Fund
and to dispose of other assets of such Fund to the extent necessary to
obtain reimbursement or indemnification.
ARTICLE IX
EFFECTIVE PERIOD; TERMINATION
9.1 Effective Period. This Agreement shall become effective as of
its execution and shall continue in full force and effect until
terminated as hereinafter provided.
9.2 Termination. Either party hereto may terminate this
Agreement, with respect to one or more Funds, by giving to the other
party a notice in writing specifying the date of such termination, which
shall be not less than ninety (90) days after the date of the giving of
such notice. The notice shall specify the Funds to which the
termination relates ("Terminated Funds"). If a successor custodian for
one or more Terminated Funds shall have been appointed by the Board of
Trustees, the Custodian shall, upon receipt of a notice of acceptance by
the successor custodian, on such specified date of termination (a)
deliver directly to the successor custodian all Securities (other than
Securities held in a Securities System) and cash then owned by the
Terminated Funds and held by the Custodian as custodian, and (b)
transfer any Securities held in a Securities System to an account of or
for the benefit of the Funds at the successor custodian, provided that
the Trust on behalf of the Terminated Funds shall have paid to the
Custodian all fees, expenses and other amounts to the payment or
reimbursement of which it shall then be entitled. Upon such delivery
and transfer, the Custodian shall be relieved of all obligations under
this Agreement with respect to the Terminated Funds. The Trust may at
any time immediately terminate this Agreement in the event of the
appointment of a conservator or receiver for the Custodian by regulatory
authorities in the Commonwealth of Massachusetts or upon the happening
of a like event at the direction of an appropriate regulatory agency or
court of competent jurisdiction.
9.3 Failure to Appoint Successor Custodian. If a successor
custodian is not designated by the Trust on or before the date of
termination specified pursuant to Section 9.2 above, then the Custodian
shall have the right to deliver to a bank or trust company of its own
selection, which is (a) a "Bank" as defined in the 1940 Act, (b) has
aggregate capital, surplus and undivided profits as shown on its then
most recent published report of not less than $25 million, and (c) is
doing business in New York, New York, all Securities, cash and other
property held by Custodian under this Agreement and to transfer to an
account of or for the identified Funds at such bank or trust company all
Securities of the Funds held in a Securities System. Upon such delivery
and transfer, such bank or trust company shall be the successor
custodian for the Terminated Funds under this Agreement and the
Custodian shall be relieved of all obligations with respect to such
Funds under this Agreement. If, after reasonable inquiry, Custodian
cannot find a successor custodian as contemplated in this Section 9.3,
then Custodian shall have the right to deliver to the Trust all
Securities and cash of the Terminated Funds and to transfer any
Securities held in a Securities System to an account of or for the
Trust. Thereafter, the Trust shall be deemed to be its own custodian
with respect to the Securities, cash and other assets of the Terminated
Funds and the Custodian shall be relieved of all obligations under this
Agreement.
9.4 Continuing Obligations. Nothing contained in this Article IX
shall be construed to excuse the Trust from payment of all charges due
and payable to the Custodian. The provisions of section 13.2,
"References to Custodian", Article VII, "Concerning the Custodian" and
Article VIII, "Indemnification" shall survive the termination or
expiration of this Agreement for any reason.
ARTICLE X
COMPENSATION OF CUSTODIAN
The Custodian shall be entitled to compensation as agreed upon from
time to time by the Trust and the Custodian. The fees and other charges
in effect on the date hereof and applicable to the Funds are set forth
in Exhibit C attached hereto.
ARTICLE XI
LIMITATION OF LIABILITY
It is expressly agreed that the obligations of the Trust hereunder
shall not be binding upon any of the Trustees, shareholders, nominees,
officers, agents or employees of the Trust personally, but shall bind
only the trust property of the Trust as provided in the Trust's
Declaration of Trust, dated July 16, 1992, as from time to time amended.
The execution and delivery of this Agreement have been authorized by the
Trustees, and this Agreement has been signed and delivered by an
authorized officer of the Trust, acting as such, and neither such
authorization by the Trustees nor such execution and delivery by such
officer shall be deemed to have been made by any of them individually or
to impose any liability on any of them personally, but shall bind only
the trust property of the Trust as provided in the above-mentioned
Agreement and Declaration of Trust.
ARTICLE XII
NOTICES
Unless otherwise specified herein, all demands, notices,
instructions, and other communications to be given hereunder shall be in
writing and shall be sent or delivered to the recipient at the address
set forth after its name herein below:
To the Trust:
The Shawmut Funds
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Attention: Secretary
To the Custodian:
Shawmut Bank, N.A.
One Federal Street
Boston, Massachusetts 02211
Attn: David M. Goldsholl
Senior Vice President
Telephone: 617-556-4714
or at such other address as either party shall have provided to the
other by notice given in accordance with this Article XII. Writing shall
include transmission by or through teletype, facsimile, central
processing unit connection, on-line terminal and magnetic tape.
ARTICLE XIII
MISCELLANEOUS
13.1 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of
Massachusetts.
13.2 References to Custodian. The Trust shall not circulate any
printed matter which contains any reference to Custodian without the
prior written approval of Custodian, excepting printed matter contained
in the prospectus or statement of additional information for a Fund and
such other printed matter as merely identifies Custodian as custodian
for a Fund. The Trust shall submit printed matter requiring approval to
Custodian in draft form, allowing sufficient time for review by
Custodian and its counsel prior to any deadline for printing.
13.3 No Waiver. No failure by either party hereto to exercise, and
no delay by such party in exercising, any right hereunder shall operate
as a waiver thereof. The exercise by either party hereto of any right
hereunder shall not preclude the exercise of any other right, and the
remedies provided herein are cumulative and not exclusive of any
remedies provided at law or in equity.
13.4 Amendments. This Agreement cannot be changed orally and no
amendment to this Agreement shall be effective unless evidenced by an
instrument in writing executed by the parties hereto.
13.5 Counterparts. This Agreement may be executed in one or more
counterparts, and by the parties hereto on separate counterparts, each
of which shall be deemed an original but all of which together shall
constitute but one and the same instrument.
13.6 Severability. If any provision of this Agreement shall be
invalid, illegal or unenforceable in any respect under any applicable
law, the validity, legality and enforceability of the remaining
provisions shall not be affected or impaired thereby.
13.7 Successors and Assigns. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, that this
Agreement shall not be assignable by either party hereto without the
written consent of the other party hereto.
13.8 Headings. The headings of sections in this Agreement are for
convenience of reference only and shall not affect the meaning or
construction of any provision of this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed an delivered in its name and on its behalf by
its representatives thereunto duly authorized, all as of the day and
year first above written.
ATTEST: THE SHAWMUT FUNDS
/s/John W. McGonigle By:/s/Edward C. Gonzales
Secretary President
ATTEST: SHAWMUT BANK, N.A.
/s/Joseph P. Sullivan By:/s/David Goldsholl
Secretary Vice President
EXHIBIT A
to the
Custody Agreement
THE SHAWMUT FUNDS
FUNDS
The Shawmut Funds (the "Trust") consists of the following
portfolios (the "Funds") effective as of the dates set forth below:
Shawmut Prime Money Market Fund December 1, 1992
Shawmut Limited Term Income Fund December 1, 1992
Shawmut Intermediate Government Income Fund December 1, 1992
Shawmut Fixed Income Fund December 1, 1992
Shawmut Growth and Income Equity Fund December 1, 1992
Shawmut Growth Equity Fund December 1, 1992
Shawmut Small Capitalization Equity Fund December 1, 1992
Amendment No. 1
to
EXHIBIT A
to the
Custody Agreement
THE SHAWMUT FUNDS
FUNDS
The Shawmut Funds (the "Trust") consists of the following
portfolios (the "Funds") effective as of the dates set forth below:
Shawmut Prime Money Market Fund December 1, 1992
Shawmut Limited Term Income Fund December 1, 1992
Shawmut Intermediate Government Income Fund December 1, 1992
Shawmut Fixed Income Fund December 1, 1992
Shawmut Growth and Income Equity Fund December 1, 1992
Shawmut Growth Equity Fund December 1, 1992
Shawmut Small Capitalization Equity Fund December 1, 1992
Shawmut Connecticut Intermediate Municipal
Income Fund May 11, 1993
Shawmut Massachusetts Intermediate Municipal
Income Fund May 11, 1993
Amendment No. 2
to
EXHIBIT A
to the
Custody Agreement
THE SHAWMUT FUNDS
FUNDS
The Shawmut Funds (the "Trust") consists of the following
portfolios (the "Funds") effective as of the dates set forth below:
Shawmut Prime Money Market Fund December 1, 1992
Shawmut Limited Term Income Fund December 1, 1992
Shawmut Intermediate Government Income Fund December 1, 1992
Shawmut Fixed Income Fund December 1, 1992
Shawmut Growth and Income Equity Fund December 1, 1992
Shawmut Growth Equity Fund December 1, 1992
Shawmut Small Capitalization Equity Fund December 1, 1992
Shawmut Connecticut Intermediate Municipal
Income Fund May 11, 1993
Shawmut Massachusetts Intermediate Municipal
Income Fund May 11, 1993
Shawmut Connecticut Municipal
Money Market Fund September 12, 1993
Shawmut Massachusetts Municipal Money
Market Fund September 12, 1993
Amendment No. 3
to
EXHIBIT A
to the
Custody Agreement
THE SHAWMUT FUNDS
FUNDS
The Shawmut Funds (the "Trust") consists of the following
portfolios (the "Funds") effective as of the dates set forth below:
Shawmut Prime Money Market Fund December 1, 1992
Shawmut Limited Term Income Fund December 1, 1992
Shawmut Intermediate Government Income Fund December 1, 1992
Shawmut Fixed Income Fund December 1, 1992
Shawmut Growth and Income Equity Fund December 1, 1992
Shawmut Growth Equity Fund December 1, 1992
Shawmut Small Capitalization Equity Fund December 1, 1992
Shawmut Connecticut Intermediate Municipal
Income Fund May 11, 1993
Shawmut Massachusetts Intermediate Municipal
Income Fund May 11, 1993
Shawmut Connecticut Municipal
Money Market Fund September 12, 1993
Shawmut Massachusetts Municipal Money
Market Fund September 12, 1993
Shawmut Quantitative Equity Fund June 1, 1994
EXHIBIT B
to the
Custody Agreement
THE SHAWMUT FUNDS
AUTHORIZED PERSONS
The attached "Custody Agreement: Authorization and Proper
Instructions" is incorporated into this Exhibit B by reference.
EXHIBIT C
to the
Custody Agreement
THE SHAWMUT FUNDS
COMPENSATION
For the services to be provided to the Trust pursuant to the Custody
Agreement, the Trust shall pay the custodian an annual fee calculated
based upon the average daily net assets of each series and payable
monthly as follows:
$0 to $250 million - 2.0 b.p.
$250 million to 500 million - 1.5 b.p.
Over $500 million - 1.1 b.p.
The minimum fee shall be $1,000 per month for each portfolio of the
Trust.
Transaction Fees
Clearance and Settlement - Customer InPut
Sec. AMS CTC/FED Book Entry B/S $ 8.25/trade
Sec. AMS Physicals B/S 18.00/trade
Sec. AMS Short Term B/S 18.00/trade
Sec. AMS PTC B/S 14.00/trade
Clearance and Settlement
Sec. DTC Purchase $12.00/trade
Sec. DTC Sale 12.00/trade
Sec. FED Book Entry Purchase 12.00/trade
Sec. FED Book Entry Sale 12.00/trade
Sec. GNMA/PTC Pur/Sale 18.00/trade
Sec. GNMA/Gov. Bkd Pur/Sale 24.00/trade
Sec. GNMA/Gov. Bkd. Prin/Int. Coll. 15.00/issue paid/month
Sec. GNMA/Gov. PTC P/I 7.50/issue paid/month
Sec. Short Term Purchase 24.00/trade
Sec. Short Term Sale 24.00/trade
Sec. Physical Purchase 24.00/trade
Sec. Physical Sale 24.00/trade
Other Clearance Services
Sec. DTC Deposit $15.00/deposit
Sec. DTC Transfers/Withdrawal 15.00/transaction
Sec. FED Book Entry Deposits 15.00/deposit
Sec. FED Book Entry Trans/With 25.00/transaction
Sec. GNMA/Gov. Bkd Photocopies 6.00/copy
Sec. GNMA/Gov. Bkd Registrations 25.00/reg.
Sec. Late Trade Cancel/Correct 25.00 add'l/trade
Sec. Late Trades 50.00 add'l/trade
Sec. Options DTC 15.00/transaction
Sec. Options Physical 25.00/transaction
Sec. Loans DTC 15.00/loan del/rec.
Sec. Loans Physical 25.00/loan del/rec.
Sec. Corporate Actions-DTC 25.00/issue
Sec. Corporate Actions-Physicals 75.00/issue
Out of pocket expenses including telephone, legal, postage and
insurance, telex, telecopier, supplies, stationery and forms.
FSCO Services Provider New Contract1 December 1, 1994
Exhibit 9(i) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
AGREEMENT
for
FUND ACCOUNTING,
SHAREHOLDER RECORDKEEPING,
and
CUSTODY SERVICES PROCUREMENT
AGREEMENT made as of the 1st day of December , 1994, by and between
those investment companies listed on Exhibit 1 as may be amended from
time to time, having their principal office and place of business at
Federated Investors Tower, Pittsburgh, PA 15222-3779 (the "Trust"), on
behalf of the portfolios (individually referred to herein as a "Fund" and
collectively as "Funds") of the Trust, and FEDERATED SERVICES COMPANY, a
Delaware business trust, having its principal office and place of
business at Federated Investors Tower, Pittsburgh, Pennsylvania 15222-
3779 (the "Company").
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended
(the "1940 Act"), with authorized and issued shares of capital stock or
beneficial interest ("Shares"); and
WHEREAS, the Trust may desire to retain the Company to provide certain
pricing, accounting and recordkeeping services for each of the Funds,
including any classes of shares issued by any Fund ("Classes") if so
indicated on Exhibit 1, and the Company is willing to furnish such
services; and
WHEREAS, the Trust may desire to appoint the Company as its transfer
agent, dividend disbursing agent if so indicated on Exhibit 1, and agent
in connection with certain other activities, and the Company desires to
accept such appointment; and
WHEREAS, the Trust may desire to appoint the Company as its agent to
select, negotiate and subcontract for custodian services from an approved
list of qualified banks if so indicated on Exhibit 1, and the Company
desires to accept such appointment; and
WHEREAS, from time to time the Trust may desire and may instruct the
Company to subcontract for the performance of certain of its duties and
responsibilities hereunder to State Street Bank and Trust Company or
another agent (the "Agent"); and
WHEREAS, the words Trust and Fund may be used interchangeably for
those investment companies consisting of only one portfolio;
NOW THEREFORE, in consideration of the premises and mutual covenants
herein contained, and intending to be legally bound hereby, the parties
hereto agree as follows:
SECTION ONE: Fund Accounting.
Article 1. Appointment.
The Trust hereby appoints the Company to provide certain pricing and
accounting services to the Funds, and/or the Classes, for the period and
on the terms set forth in this Agreement. The Company accepts such
appointment and agrees to furnish the services herein set forth in return
for the compensation as provided in Article 3 of this Section.
Article 2. The Company's Duties.
Subject to the supervision and control of the Trust's Board of
Trustees or Directors ("Board"), the Company will assist the Trust with
regard to fund accounting for the Trust, and/or the Funds, and/or the
Classes, and in connection therewith undertakes to perform the following
specific services;
A. Value the assets of the Funds using: primarily, market quotations,
including the use of matrix pricing, supplied by the independent
pricing services selected by the Company in consultation with the
adviser, or sources selected by the adviser, and reviewed by the
board; secondarily, if a designated pricing service does not
provide a price for a security which the Company believes should
be available by market quotation, the Company may obtain a price
by calling brokers designated by the investment adviser of the
fund holding the security, or if the adviser does not supply the
names of such brokers, the Company will attempt on its own to
find brokers to price those securities; thirdly, for securities
for which no market price is available, the Pricing Committee of
the Board will determine a fair value in good faith. Consistent
with Rule 2a-4 of the 40 Act, estimates may be used where
necessary or appropriate. The Company's obligations with regard
to the prices received from outside pricing services and
designated brokers or other outside sources, is to exercise
reasonable care in the supervision of the pricing agent. The
Company is not the guarantor of the securities prices received
from such agents and the Company is not liable to the Fund for
potential errors in valuing a Fund's assets or calculating the
net asset value per share of such Fund or Class when the
calculations are based upon such prices. All of the above
sources of prices used as described are deemed by the Company to
be authorized sources of security prices. The Company provides
daily to the adviser the securities prices used in calculating
the net asset value of the fund, for its use in preparing
exception reports for those prices on which the adviser has
comment. Further, upon receipt of the exception reports
generated by the adviser, the Company diligently pursues
communication regarding exception reports with the designated
pricing agents.
B. Determine the net asset value per share of each Fund and/or Class,
at the time and in the manner from time to time determined by the
Board and as set forth in the Prospectus and Statement of
Additional Information ("Prospectus") of each Fund;
C. Calculate the net income of each of the Funds, if any;
D. Calculate capital gains or losses of each of the Funds resulting
from sale or disposition of assets, if any;
E. Maintain the general ledger and other accounts, books and
financial records of the Trust, including for each Fund, and/or
Class, as required under Section 31(a) of the 1940 Act and the
Rules thereunder in connection with the services provided by the
Company;
F. Preserve for the periods prescribed by Rule 31a-2 under the 1940
Act the records to be maintained by Rule 31a-1 under the 1940 Act
in connection with the services provided by the Company. The
Company further agrees that all such records it maintains for the
Trust are the property of the Trust and further agrees to
surrender promptly to the Trust such records upon the Trust's
request;
G. At the request of the Trust, prepare various reports or other
financial documents required by federal, state and other
applicable laws and regulations; and
H. Such other similar services as may be reasonably requested by the
Trust.
Article 3. Compensation and Allocation of Expenses.
A. The Funds will compensate the Company for its services rendered
pursuant to Section One of this Agreement in accordance with the
fees agreed upon from time to time between the parties hereto.
Such fees do not include out-of-pocket disbursements of the
Company for which the Funds shall reimburse the Company upon
receipt of a separate invoice. Out-of-pocket disbursements shall
include, but shall not be limited to, the items agreed upon
between the parties from time to time.
B. The Fund and/or the Class, and not the Company, shall bear the
cost of: custodial expenses; membership dues in the Investment
Company Institute or any similar organization; transfer agency
expenses; investment advisory expenses; costs of printing and
mailing stock certificates, Prospectuses, reports and notices;
administrative expenses; interest on borrowed money; brokerage
commissions; taxes and fees payable to federal, state and other
governmental agencies; fees of Trustees or Directors of the
Trust; independent auditors expenses; Federated Administrative
Services and/or Federated Administrative Services, Inc. legal and
audit department expenses billed to Federated Services Company
for work performed related to the Trust, the Funds, or the
Classes; law firm expenses; or other expenses not specified in
this Article 3 which may be properly payable by the Funds and/or
classes.
C. The compensation and out-of-pocket expenses shall be accrued by
the Fund and shall be paid to the Company no less frequently than
monthly, and shall be paid daily upon request of the Company.
The Company will maintain detailed information about the
compensation and out-of-pocket expenses by Fund and Class.
D. Any schedule of compensation agreed to hereunder, as may be
adjusted from time to time, shall be dated and signed by a duly
authorized officer of the Trust and/or the Funds and a duly
authorized officer of the Company.
E. The fee for the period from the effective date of this Agreement
with respect to a Fund or a Class to the end of the initial month
shall be prorated according to the proportion that such period
bears to the full month period. Upon any termination of this
Agreement before the end of any month, the fee for such period
shall be prorated according to the proportion which such period
bears to the full month period. For purposes of determining fees
payable to the Company, the value of the Fund's net assets shall
be computed at the time and in the manner specified in the Fund's
Prospectus.
F. The Company, in its sole discretion, may from time to time
subcontract to, employ or associate with itself such person or
persons as the Company may believe to be particularly suited to
assist it in performing services under this Section One. Such
person or persons may be third-party service providers, or they
may be officers and employees who are employed by both the
Company and the Funds. The compensation of such person or
persons shall be paid by the Company and no obligation shall be
incurred on behalf of the Trust, the Funds, or the Classes in
such respect.
SECTION TWO: Shareholder Recordkeeping.
Article 4. Terms of Appointment.
Subject to the terms and conditions set forth in this Agreement, the
Trust hereby appoints the Company to act as, and the Company agrees to
act as, transfer agent and dividend disbursing agent for each Fund's
Shares, and agent in connection with any accumulation, open-account or
similar plans provided to the shareholders of any Fund
("Shareholder(s)"), including without limitation any periodic investment
plan or periodic withdrawal program.
As used throughout this Agreement, a "Proper Instruction" means a
writing signed or initialed by one or more person or persons as the Board
shall have from time to time authorized. Each such writing shall set
forth the specific transaction or type of transaction involved. Oral
instructions will be deemed to be Proper Instructions if (a) the Company
reasonably believes them to have been given by a person previously
authorized in Proper Instructions to give such instructions with respect
to the transaction involved, and (b) the Trust, or the Fund, and the
Company promptly cause such oral instructions to be confirmed in writing.
Proper Instructions may include communications effected directly between
electro-mechanical or electronic devices provided that the Trust, or the
Fund, and the Company are satisfied that such procedures afford adequate
safeguards for the Fund's assets. Proper Instructions may only be
amended in writing.
Article 5. Duties of the Company.
The Company shall perform the following services in accordance with
Proper Instructions as may be provided from time to time by the Trust as
to any Fund:
A. Purchases
(1) The Company shall receive orders and payment for the
purchase of shares and promptly deliver payment and
appropriate documentation therefore to the custodian of the
relevant Fund, (the "Custodian"). The Company shall notify
the Fund and the Custodian on a daily basis of the total
amount of orders and payments so delivered.
(2) Pursuant to purchase orders and in accordance with the
Fund's current Prospectus, the Company shall compute and
issue the appropriate number of Shares of each Fund and/or
Class and hold such Shares in the appropriate Shareholder
accounts.
(3) For certificated Funds and/or Classes, if a Shareholder or
its agent requests a certificate, the Company, as Transfer
Agent, shall countersign and mail by first class mail, a
certificate to the Shareholder at its address as set forth
on the transfer books of the Funds, and/or Classes, subject
to any Proper Instructions regarding the delivery of
certificates.
(4) In the event that any check or other order for the purchase
of Shares of the Fund and/or Class is returned unpaid for
any reason, the Company shall debit the Share account of
the Shareholder by the number of Shares that had been
credited to its account upon receipt of the check or other
order, promptly mail a debit advice to the Shareholder, and
notify the Fund and/or Class of its action. In the event
that the amount paid for such Shares exceeds proceeds of
the redemption of such Shares plus the amount of any
dividends paid with respect to such Shares, the Fund
and/the Class or its distributor will reimburse the Company
on the amount of such excess.
B. Distribution
(1) Upon notification by the Funds of the declaration of any
distribution to Shareholders, the Company shall act as
Dividend Disbursing Agent for the Funds in accordance with
the provisions of its governing document and the then-
current Prospectus of the Fund. The Company shall prepare
and mail or credit income, capital gain, or any other
payments to Shareholders. As the Dividend Disbursing
Agent, the Company shall, on or before the payment date of
any such distribution, notify the Custodian of the
estimated amount required to pay any portion of said
distribution which is payable in cash and request the
Custodian to make available sufficient funds for the cash
amount to be paid out. The Company shall reconcile the
amounts so requested and the amounts actually received with
the Custodian on a daily basis. If a Shareholder is
entitled to receive additional Shares by virtue of any such
distribution or dividend, appropriate credits shall be made
to the Shareholder's account, for certificated Funds and/or
Classes, delivered where requested; and
(2) The Company shall maintain records of account for each Fund
and Class and advise the Trust, each Fund and Class and its
Shareholders as to the foregoing.
C. Redemptions and Transfers
(1) The Company shall receive redemption requests and redemption
directions and, if such redemption requests comply with the
procedures as may be described in the Fund Prospectus or
set forth in Proper Instructions, deliver the appropriate
instructions therefor to the Custodian. The Company shall
notify the Funds on a daily basis of the total amount of
redemption requests processed and monies paid to the
Company by the Custodian for redemptions.
(2) At the appropriate time upon receiving redemption proceeds
from the Custodian with respect to any redemption, the
Company shall pay or cause to be paid the redemption
proceeds in the manner instructed by the redeeming
Shareholders, pursuant to procedures described in the then-
current Prospectus of the Fund.
(3) If any certificate returned for redemption or other request
for redemption does not comply with the procedures for
redemption approved by the Fund, the Company shall promptly
notify the Shareholder of such fact, together with the
reason therefor, and shall effect such redemption at the
price applicable to the date and time of receipt of
documents complying with said procedures.
(4) The Company shall effect transfers of Shares by the
registered owners thereof.
(5) The Company shall identify and process abandoned accounts
and uncashed checks for state escheat requirements on an
annual basis and report such actions to the Fund.
D. Recordkeeping
(1) The Company shall record the issuance of Shares of each
Fund, and/or Class, and maintain pursuant to applicable
rules of the Securities and Exchange Commission ("SEC") a
record of the total number of Shares of the Fund and/or
Class which are authorized, based upon data provided to it
by the Fund, and issued and outstanding. The Company shall
also provide the Fund on a regular basis or upon reasonable
request with the total number of Shares which are
authorized and issued and outstanding, but shall have no
obligation when recording the issuance of Shares, except as
otherwise set forth herein, to monitor the issuance of such
Shares or to take cognizance of any laws relating to the
issue or sale of such Shares, which functions shall be the
sole responsibility of the Funds.
(2) The Company shall establish and maintain records pursuant to
applicable rules of the SEC relating to the services to be
performed hereunder in the form and manner as agreed to by
the Trust or the Fund to include a record for each
Shareholder's account of the following:
(a) Name, address and tax identification number (and
whether such number has been certified);
(b) Number of Shares held;
(c) Historical information regarding the account,
including dividends paid and date and price for all
transactions;
(d) Any stop or restraining order placed against the
account;
(e) Information with respect to withholding in the case of
a foreign account or an account for which withholding
is required by the Internal Revenue Code;
(f) Any dividend reinvestment order, plan application,
dividend address and correspondence relating to the
current maintenance of the account;
(g) Certificate numbers and denominations for any
Shareholder holding certificates;
(h) Any information required in order for the Company to
perform the calculations contemplated or required by
this Agreement.
(3) The Company shall preserve any such records required to be
maintained pursuant to the rules of the SEC for the periods
prescribed in said rules as specifically noted below. Such
record retention shall be at the expense of the Company,
and such records may be inspected by the Fund at reasonable
times. The Company may, at its option at any time, and
shall forthwith upon the Fund's demand, turn over to the
Fund and cease to retain in the Company's files, records
and documents created and maintained by the Company
pursuant to this Agreement, which are no longer needed by
the Company in performance of its services or for its
protection. If not so turned over to the Fund, such
records and documents will be retained by the Company for
six years from the year of creation, during the first two
of which such documents will be in readily accessible form.
At the end of the six year period, such records and
documents will either be turned over to the Fund or
destroyed in accordance with Proper Instructions.
E. Confirmations/Reports
(1) The Company shall furnish to the Fund periodically the
following information:
(a) A copy of the transaction register;
(b) Dividend and reinvestment blotters;
(c) The total number of Shares issued and outstanding in
each state for "blue sky" purposes as determined
according to Proper Instructions delivered from time
to time by the Fund to the Company;
(d) Shareholder lists and statistical information;
(e) Payments to third parties relating to distribution
agreements, allocations of sales loads, redemption
fees, or other transaction- or sales-related
payments;
(f) Such other information as may be agreed upon from time
to time.
(2) The Company shall prepare in the appropriate form, file with
the Internal Revenue Service and appropriate state
agencies, and, if required, mail to Shareholders, such
notices for reporting dividends and distributions paid as
are required to be so filed and mailed and shall withhold
such sums as are required to be withheld under applicable
federal and state income tax laws, rules and regulations.
(3) In addition to and not in lieu of the services set forth
above, the Company shall:
(a) Perform all of the customary services of a transfer
agent, dividend disbursing agent and, as relevant,
agent in connection with accumulation, open-account
or similar plans (including without limitation any
periodic investment plan or periodic withdrawal
program), including but not limited to: maintaining
all Shareholder accounts, mailing Shareholder reports
and Prospectuses to current Shareholders, withholding
taxes on accounts subject to back-up or other
withholding (including non-resident alien accounts),
preparing and filing reports on U.S. Treasury
Department Form 1099 and other appropriate forms
required with respect to dividends and distributions
by federal authorities for all Shareholders,
preparing and mailing confirmation forms and
statements of account to Shareholders for all
purchases and redemptions of Shares and other
conformable transactions in Shareholder accounts,
preparing and mailing activity statements for
Shareholders, and providing Shareholder account
information; and
(b) provide a system which will enable the Fund to monitor
the total number of Shares of each Fund and/or Class
sold in each state ("blue sky reporting"). The Fund
shall by Proper Instructions (i) identify to the
Company those transactions and assets to be treated
as exempt from the blue sky reporting for each state
and (ii) verify the classification of transactions
for each state on the system prior to activation and
thereafter monitor the daily activity for each state.
The responsibility of the Company for each Fund's
and/or Class's state blue sky registration status is
limited solely to the recording of the initial
classification of transactions or accounts with
regard to blue sky compliance and the reporting of
such transactions and accounts to the Fund as
provided above.
F. Other Duties
(1) The Company shall answer correspondence from Shareholders
relating to their Share accounts and such other
correspondence as may from time to time be addressed to the
Company;
(2) The Company shall prepare Shareholder meeting lists, mail
proxy cards and other material supplied to it by the Fund
in connection with Shareholder Meetings of each Fund;
receive, examine and tabulate returned proxies, and certify
the vote of the Shareholders;
(3) The Company shall establish and maintain facilities and
procedures for safekeeping of stock certificates, check
forms and facsimile signature imprinting devices, if any;
and for the preparation or use, and for keeping account of,
such certificates, forms and devices.
Article 6. Duties of the Trust.
A. Compliance
The Trust or Fund assume full responsibility for the preparation,
contents and distribution of their own and/or their classes'
Prospectus and for complying with all applicable requirements of
the Securities Act of 1933, as amended (the "1933 Act"), the 1940
Act and any laws, rules and regulations of government authorities
having jurisdiction.
B. Share Certificates
The Trust shall supply the Company with a sufficient supply of
blank Share certificates and from time to time shall renew such
supply upon request of the Company. Such blank Share
certificates shall be properly signed, manually or by facsimile,
if authorized by the Trust and shall bear the seal of the Trust
or facsimile thereof; and notwithstanding the death, resignation
or removal of any officer of the Trust authorized to sign
certificates, the Company may continue to countersign
certificates which bear the manual or facsimile signature of such
officer until otherwise directed by the Trust.
C. Distributions
The Fund shall promptly inform the Company of the declaration of
any dividend or distribution on account of any Fund's shares.
Article 7. Compensation and Expenses.
A. Annual Fee
For performance by the Company pursuant to Section Two of this
Agreement, the Trust and/or the Fund agree to pay the Company an
annual maintenance fee for each Shareholder account as agreed
upon between the parties and as may be added to or amended from
time to time. Such fees may be changed from time to time subject
to written agreement between the Trust and the Company. Pursuant
to information in the Fund Prospectus or other information or
instructions from the Fund, the Company may sub-divide any Fund
into Classes or other sub-components for recordkeeping purposes.
The Company will charge the Fund the same fees for each such
Class or sub-component the same as if each were a Fund.
B. Reimbursements
In addition to the fee paid under Article 7A above, the Trust
and/or Fund agree to reimburse the Company for out-of-pocket
expenses or advances incurred by the Company for the items agreed
upon between the parties, as may be added to or amended from time
to time. In addition, any other expenses incurred by the Company
at the request or with the consent of the Trust and/or the Fund,
will be reimbursed by the appropriate Fund.
C. Payment
The compensation and out-of-pocket expenses shall be accrued by
the Fund and shall be paid to the Company no less frequently than
monthly, and shall be paid daily upon request of the Company.
The Company will maintain detailed information about the
compensation and out-of-pocket expenses by Fund and Class.
D. Any schedule of compensation agreed to hereunder, as may be
adjusted from time to time, shall be dated and signed by a duly
authorized officer of the Trust and/or the Funds and a duly
authorized officer of the Company.
Article 8. Assignment of Shareholder Recordkeeping.
Except as provided below, no right or obligation under this Section
Two may be assigned by either party without the written consent of the
other party.
A. This Agreement shall inure to the benefit of and be binding upon
the parties and their respective permitted successors and
assigns.
B. The Company may without further consent on the part of the Trust
subcontract for the performance hereof with (A) State Street Bank
and its subsidiary, Boston Financial Data Services, Inc., a
Massachusetts Trust ("BFDS"), which is duly registered as a
transfer agent pursuant to Section 17A(c)(1) of the Securities
Exchange Act of 1934, as amended, or any succeeding statute
("Section 17A(c)(1)"), or (B) a BFDS subsidiary duly registered
as a transfer agent pursuant to Section 17A(c)(1), or (C) a BFDS
affiliate, or (D) such other provider of services duly registered
as a transfer agent under Section 17A(c)(1) as Company shall
select; provided, however, that the Company shall be as fully
responsible to the Trust for the acts and omissions of any
subcontractor as it is for its own acts and omissions; or
C. The Company shall upon instruction from the Trust subcontract for
the performance hereof with an Agent selected by the Trust, other
than BFDS or a provider of services selected by Company, as
described in (2) above; provided, however, that the Company shall
in no way be responsible to the Trust for the acts and omissions
of the Agent.
SECTION THREE: Custody Services Procurement
Article 9. Appointment.
The Trust hereby appoints Company as its agent to evaluate and obtain
custody services from a financial institution that (i) meets the criteria
established in Section 17(f) of the 1940 Act and (ii) has been approved
by the Board as eligible for selection by the Company as a custodian (the
"Eligible Custodian"). The Company accepts such appointment.
Article 10. The Company and Its Duties.
Subject to the review, supervision and control of the Board, the
Company shall:
A. evaluate the nature and the quality of the custodial services
provided by the Eligible Custodian;
B. employ the Eligible Custodian to serve on behalf of the Trust as
Custodian of the Trust's assets substantially on the terms set
forth as the form of agreement in Exhibit 2;
C. negotiate and enter into agreements with the Custodians for the
benefit of the Trust, with the Trust as a party to each such
agreement. The Company shall not be a party to any agreement
with any such Custodian;
D. establish procedures to monitor the nature and the quality of the
services provided by the Custodians;
E. continuously monitor the nature and the quality of services
provided by the Custodians; and
F. periodically provide to the Trust (i) written reports on the
activities and services of the Custodians; (ii) the nature and
amount of disbursement made on account of the Trust with respect
to each custodial agreement; and (iii) such other information as
the Board shall reasonably request to enable it to fulfill its
duties and obligations under Sections 17(f) and 36(b) of the 1940
Act and other duties and obligations thereof.
Article 11. Fees and Expenses.
A. Annual Fee
For the performance by the Company pursuant to Section Three of
this Agreement, the Trust and/or the Fund agree to pay the
Company an annual fee as agreed upon between the parties.
B. Reimbursements
In addition to the fee paid under Section 11A above, the Trust
and/or Fund agree to reimburse the Company for out-of-pocket
expenses or advances incurred by the Company for the items agreed
upon between the parties, as may be added to or amended from time
to time. In addition, any other expenses incurred by the Company
at the request or with the consent of the Trust and/or the Fund,
will be reimbursed by the appropriate Fund.
C. Payment
The compensation and out-of-pocket expenses shall be accrued by
the Fund and shall be paid to the Company no less frequently than
monthly, and shall be paid daily upon request of the Company.
The Company will maintain detailed information about the
compensation and out-of-pocket expenses by Fund.
D. Any schedule of compensation agreed to hereunder, as may be
adjusted from time to time, shall be dated and signed by a duly
authorized officer of the Trust and/or the Funds and a duly
authorized officer of the Company.
Article 12. Representations.
The Company represents and warrants that it has obtained all required
approvals from all government or regulatory authorities necessary to
enter into this arrangement and to provide the services contemplated in
Section Three of this Agreement.
SECTION FOUR: General Provisions.
Article 13. Documents.
A. In connection with the appointment of the Company under this
Agreement, the Trust shall file with the Company the following
documents:
(1) A copy of the Charter and By-Laws of the Trust and all
amendments thereto;
(2) A copy of the resolution of the Board of the Trust
authorizing this Agreement;
(3) Specimens of all forms of outstanding Share certificates of
the Trust or the Funds in the forms approved by the Board
of the Trust with a certificate of the Secretary of the
Trust as to such approval;
(4) All account application forms and other documents relating
to Shareholders accounts; and
(5) A copy of the current Prospectus for each Fund.
B. The Fund will also furnish from time to time the following
documents:
(1) Each resolution of the Board of the Trust authorizing the
original issuance of each Fund's, and/or Class's Shares;
(2) Each Registration Statement filed with the SEC and
amendments thereof and orders relating thereto in effect
with respect to the sale of Shares of any Fund, and/or
Class;
(3) A certified copy of each amendment to the governing document
and the By-Laws of the Trust;
(4) Certified copies of each vote of the Board authorizing
officers to give Proper Instructions to the Custodian and
agents for fund accountant, custody services procurement,
and shareholder recordkeeping or transfer agency services;
(5) Specimens of all new Share certificates representing Shares
of any Fund, accompanied by Board resolutions approving
such forms;
(6) Such other certificates, documents or opinions which the
Company may, in its discretion, deem necessary or
appropriate in the proper performance of its duties; and
(7) Revisions to the Prospectus of each Fund.
Article 14. Representations and Warranties.
A. Representations and Warranties of the Company
The Company represents and warrants to the Trust that:
(1) It is a business trust duly organized and existing and in
good standing under the laws of the State of Delaware.
(2) It is duly qualified to carry on its business in the State
of Delaware.
(3) It is empowered under applicable laws and by its charter and
by-laws to enter into and perform this Agreement.
(4) All requisite corporate proceedings have been taken to
authorize it to enter into and perform its obligations
under this Agreement.
(5) It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties
and obligations under this Agreement.
(6) It is in compliance with federal securities law requirements
and in good standing as a transfer agent.
B. Representations and Warranties of the Trust
The Trust represents and warrants to the Company that:
(1) It is an investment company duly organized and existing and
in good standing under the laws of its state of
organization;
(2) It is empowered under applicable laws and by its Charter and
By-Laws to enter into and perform its obligations under
this Agreement;
(3) All corporate proceedings required by said Charter and By-
Laws have been taken to authorize it to enter into and
perform its obligations under this Agreement;
(4) The Trust is an open-end investment company registered under
the 1940 Act; and
(5) A registration statement under the 1933 Act will be
effective, and appropriate state securities law filings
have been made and will continue to be made, with respect
to all Shares of each Fund being offered for sale.
Article 15. Standard of Care and Indemnification.
A. Standard of Care
The Company shall be held to a standard of reasonable care in
carrying out the provisions of this Contract. The Company shall be
entitled to rely on and may act upon advice of counsel (who may be
counsel for the Trust) on all matters, and shall be without
liability for any action reasonably taken or omitted pursuant to
such advice, provided that such action is not in violation of
applicable federal or state laws or regulations, and is in good
faith and without negligence.
B. Indemnification by Trust
The Company shall not be responsible for and the Trust or Fund
shall indemnify and hold the Company, including its officers,
directors, shareholders and their agents employees and
affiliates, harmless against any and all losses, damages, costs,
charges, counsel fees, payments, expenses and liabilities arising
out of or attributable to:
(1) The acts or omissions of any Custodian, Adviser, Sub-adviser
or other party contracted by or approved by the Trust or
Fund,
(2) The reliance on or use by the Company or its agents or
subcontractors of information, records and documents in
proper form which
(a) are received by the Company or its agents or
subcontractors and furnished to it by or on behalf of
the Fund, its Shareholders or investors regarding the
purchase, redemption or transfer of Shares and
Shareholder account information;
(b) are received by the Company from independent pricing
services or sources for use in valuing the assets of
the Funds; or
(c) are received by the Company or its agents or
subcontractors from Advisers, Sub-advisers or other
third parties contracted by or approved by the Trust
of Fund for use in the performance of services under
this Agreement;
(d) have been prepared and/or maintained by the Fund or
its affiliates or any other person or firm on behalf
of the Trust.
(3) The reliance on, or the carrying out by the Company or its
agents or subcontractors of Proper Instructions of the
Trust or the Fund.
(4) The offer or sale of Shares in violation of any requirement
under the federal securities laws or regulations or the
securities laws or regulations of any state that such
Shares be registered in such state or in violation of any
stop order or other determination or ruling by any federal
agency or any state with respect to the offer or sale of
such Shares in such state.
Provided, however, that the Company shall not be protected
by this Article 15.A. from liability for any act or
omission resulting from the Company's willful misfeasance,
bad faith, negligence or reckless disregard of its duties
of failure to meet the standard of care set forth in 15.A.
above.
C. Reliance
At any time the Company may apply to any officer of the Trust or
Fund for instructions, and may consult with legal counsel with
respect to any matter arising in connection with the services to
be performed by the Company under this Agreement, and the Company
and its agents or subcontractors shall not be liable and shall be
indemnified by the Trust or the appropriate Fund for any action
reasonably taken or omitted by it in reliance upon such
instructions or upon the opinion of such counsel provided such
action is not in violation of applicable federal or state laws or
regulations. The Company, its agents and subcontractors shall be
protected and indemnified in recognizing stock certificates which
are reasonably believed to bear the proper manual or facsimile
signatures of the officers of the Trust or the Fund, and the
proper countersignature of any former transfer agent or
registrar, or of a co-transfer agent or co-registrar.
D. Notification
In order that the indemnification provisions contained in this
Article 15 shall apply, upon the assertion of a claim for which
either party may be required to indemnify the other, the party
seeking indemnification shall promptly notify the other party of
such assertion, and shall keep the other party advised with
respect to all developments concerning such claim. The party who
may be required to indemnify shall have the option to participate
with the party seeking indemnification in the defense of such
claim. The party seeking indemnification shall in no case
confess any claim or make any compromise in any case in which the
other party may be required to indemnify it except with the other
party's prior written consent.
Article 16. Termination of Agreement.
This Agreement may be terminated by either party upon one hundred
twenty (120) days written notice to the other. Should the Trust exercise
its rights to terminate, all out-of-pocket expenses associated with the
movement of records and materials will be borne by the Trust or the
appropriate Fund. Additionally, the Company reserves the right to charge
for any other reasonable expenses associated with such termination. The
provisions of Article 15 shall survive the termination of this Agreement.
Article 17. Amendment.
This Agreement may be amended or modified by a written agreement
executed by both parties.
Article 18. Interpretive and Additional Provisions.
In connection with the operation of this Agreement, the Company and
the Trust may from time to time agree on such provisions interpretive of
or in addition to the provisions of this Agreement as may in their joint
opinion be consistent with the general tenor of this Agreement. Any such
interpretive or additional provisions shall be in a writing signed by
both parties and shall be annexed hereto, provided that no such
interpretive or additional provisions shall contravene any applicable
federal or state regulations or any provision of the Charter. No
interpretive or additional provisions made as provided in the preceding
sentence shall be deemed to be an amendment of this Agreement.
Article 19. Governing Law.
This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts
Article 20. Notices.
Except as otherwise specifically provided herein, Notices and other
writings delivered or mailed postage prepaid to the Trust at Federated
Investors Tower, Pittsburgh, Pennsylvania, 15222-3779, or to the Company
at Federated Investors Tower, Pittsburgh, Pennsylvania, 15222-3779, or to
such other address as the Trust or the Company may hereafter specify,
shall be deemed to have been properly delivered or given hereunder to the
respective address.
Article 21. Counterparts.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original.
Article 22. Limitations of Liability of Trustees and Shareholders of
the Trust.
The execution and delivery of this Agreement have been authorized by
the Trustees of the Trust and signed by an authorized officer of the
Trust, acting as such, and neither such authorization by such Trustees
nor such execution and delivery by such officer shall be deemed to have
been made by any of them individually or to impose any liability on any
of them personally, and the obligations of this Agreement are not binding
upon any of the Trustees or Shareholders of the Trust, but bind only the
appropriate property of the Fund, or Class, as provided in the
Declaration of Trust.
Article 23. Limitations of Liability of Trustees and Shareholders of
the Company.
The execution and delivery of this Agreement have been authorized by
the Trustees of the Company and signed by an authorized officer of the
Company, acting as such, and neither such authorization by such Trustees
nor such execution and delivery by such officer shall be deemed to have
been made by any of them individually or to impose any liability on any
of them personally, and the obligations of this Agreement are not binding
upon any of the Trustees or Shareholders of the Company, but bind only
the property of the Company as provided in the Declaration of Trust.
Article 24. Assignment.
This Agreement and the rights and duties hereunder shall not be
assignable with respect to the Trust or the Funds by either of the
parties hereto except by the specific written consent of the other party.
Article 25. Merger of Agreement.
This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject
hereof whether oral or written.
Article 26. Successor Agent.
If a successor agent for the Trust shall be appointed by the Trust,
the Company shall upon termination of this Agreement deliver to such
successor agent at the office of the Company all properties of the Trust
held by it hereunder. If no such successor agent shall be appointed, the
Company shall at its office upon receipt of Proper Instructions deliver
such properties in accordance with such instructions.
In the event that no written order designating a successor agent or
Proper Instructions shall have been delivered to the Company on or before
the date when such termination shall become effective, then the Company
shall have the right to deliver to a bank or trust company, which is a
"bank" as defined in the 1940 Act, of its own selection, having an
aggregate capital, surplus, and undivided profits, as shown by its last
published report, of not less than $2,000,000, all properties held by the
Company under this Agreement. Thereafter, such bank or trust company
shall be the successor of the Company under this Agreement.
Article 27. Force Majeure.
The Company shall have no liability for cessation of services
hereunder or any damages resulting therefrom to the Fund as a result of
work stoppage, power or other mechanical failure, natural disaster,
governmental action, communication disruption or other impossibility of
performance.
Article 28. Assignment; Successors.
This Agreement shall not be assigned by either party without the prior
written consent of the other party, except that either party may assign
to a successor all of or a substantial portion of its business, or to a
party controlling, controlled by, or under common control with such
party. Nothing in this Article 28 shall prevent the Company from
delegating its responsibilities to another entity to the extent provided
herein.
Article 29. Severability.
In the event any provision of this Agreement is held illegal, void or
unenforceable, the balance shall remain in effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed in their names and on their behalf under their seals by and
through their duly authorized officers, as of the day and year first
above written.
ATTEST: INVESTMENT COMPANIES (listed on Exhibit 1)
/s/ John W. McGonigle_______ By:__/s/ John F. Donahue___
John W. McGonigle John F. Donahue
Secretary Chairman
ATTEST: FEDERATED SERVICES COMPANY
/s/ Jeannette Fisher-Garber By:_/s/ James J. Dolan_____
Jeannette Fisher-Garber James J. Dolan
Secretary President
Exhibit 1
The Shawmut Funds
Shawmut Connecticut Intermediate Municipal Income Fund
Shawmut Connecticut Municipal Money Market Fund
Investment Shares
Trust Shares
Shawmut Fixed Income Fund
Investment Shares
Trust Shares
Shawmut Growth and Income Equity Fund
Investment Shares
Trust Shares
Shawmut Growth Equity Fund
Investment Shares
Trust Shares
Shawmut Intermediate Municipal Income Fund
Investment Shares
Trust Shares
Shawmut Limited Term Income Fund
Investment Shares
Trust Shares
Shawmut Massachusetts Intermediate Municipal Income Fund
Shawmut Massachusetts Municipal Money Market Fund
Shawmut Prime Money Market Fund
Investment Shares
Trust Shares
Shawmut Quantitative Equity Fund
Investment Shares
Trust Shares
Shawmut Small Capitalization Equity Fund
Investment Shares
Trust Shares
-1-
Exhibit 9(ii)under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
AGREEMENT
This Agreement confirms the understanding between Federated
Services Company, transfer agent ("TA") and National Financial Services
Corporation ("NFSC") with respect to NFSC's opening and maintenance of
omnibus accounts (the "Accounts") in the following funds (the "Funds")
for which TA acts as a Transfer agent:
Fund Name: Cusip:
Shawmut Connecticut Intermediate
Municipal Income Fund 820482 82 6
Shawmut Connecticut Municipal
Money Market Fund
Investment Shares 820482 77 6
Trust Shares 820482 78 4
Shawmut Fixed Income Fund
Investment Shares 820482 10 7
Trust Shares 820482 80 0
Shawmut Growth Equity Fund
Investment Shares 820482 20 6
Trust Shares 820482 88 3
Shawmut Growth and Income
Equity Fund
Investment Shares 820482 30 5
Trust Shares 820482 87 5
Shawmut Intermediate Government
Income Fund
Investment Shares 820482 40 4
Trust Shares 820482 86 7
Shawmut Limited Term Income Fund
Investment Shares 820482 50 3
Trust Shares 820482 85 9
Shawmut Massachusetts Intermediate
Municipal Income Fund 820482 81 8
Shawmut Massachusetts Money
Market Fund 820482 79 2
Shawmut Prime Money Market Fund
Investment Shares 820482 69 3
Trust Shares 820482 84 2
Shawmut Quantitative Equity Fund
Investment Shares 820482 76 8
Trust Shares 820482 75 0
Shawmut Small Capitalization Equity Fund
Investment Shares 820482 70 1
Trust Shares 820482 83 4
TA is aware that the purpose of the Accounts is to enable NFSC to
perform various sub-accounting functions on behalf of the beneficial
owners of the Funds, which functions include, but are not limited to:
(1) investments into and redemptions from the Funds, (2) accrual of
daily dividends, (3) monthly payment of accrued dividends, (4) tax
reporting, and (5) issuing customer confirmations and statements.
As the record registrant of each Fund Account, NFSC is confident
that it will receive on a timely basis from TA all information and other
entitlements available to shareholders generally under the terms of the
applicable prospectus and applicable laws. Additionally, however, the
ability of NFSC to successfully complete its sub-accounting
responsibilities to the beneficial owners is necessarily dependent upon
TA providing certain operational support as well as the timely
transmission of certain data to NFSC . Specifically, NFSC must receive
from TA the following:
(1) Each Funds daily dividend factor per share ("Mil Rate").
The daily Mil Rate for each Fund must be received in writing by 4:00
P.M. EST for each day such Mil Rate is, or should have been, calculated
and disseminated. Further, TA will provide to NFSC an individual Mil
Rate on each Friday for each of the ensuing weekend days, and for the
holidays listed in Exhibit A, will provide a Mil Rate for the holiday on
the preceding business day.
(2) Written confirmation of NFSC's net purchase or redemption in
each Fund each business day prior to 4:00 P.M. EST that day.
(3) Written confirmation of NFSC's closing share balance in each
Fund each business day prior to 4:00 P.M. EST that day.
(4) Monthly statements summarizing all activity for each
Account.
(5) On any business day for which NFSC has a net redemption of
shares in any Fund, a wire through the Federal Reserve System in the
amount of the redemption, prior to the close of business on that day.
(6) All necessary information for NFSC to provide year-end tax
reporting to all beneficiary owners. This information includes:
alternative minimum tax information with respect to Funds investing in
municipal securities; income percentage breakdowns by State for Funds
investing in municipal securities; income percentage breakdowns by
issuer for Funds investing in U.S. government securities; and any other
information agreed upon in writing between NFSC and TA.
(7) Additionally TA agrees to provide NFSC or Shawmut Bank,
N.A., adviser to the Funds, with all legally required Fund
communications, such as prospectuses, shareholder reports, and proxy
statements, in such quantities as may be requested to distribute such
documents to the beneficial owners of the Funds. NFSC will provide
necessary mailing information to TA to support these mailings.
NFSC and TA each agree to indemnify the other from liabilities to
beneficial shareholders of the Omnibus accounts or to each other for
payments made to beneficial shareholders and reasonable costs and
expenses resulting from actions by such shareholders arising out of the
negligence or misconduct of NFSC or TA. TA will use its best efforts to
assure that the daily dividend factor provided to NFSC will be the same
factor as will be used by the Fund to calculate the Omnibus dividend
payment. If TA discovers that a daily dividend factor given to NFSC is
incorrect, at a time that is too late for NFSC to use the correct factor
for that day, then, as soon as practicable after discovery of the error,
TA will incorporate accounting adjustments in a future day's daily
dividend factor provided to NFSC to reconcile any differential between
the Fund's declared daily dividend and the erroneous dividend amount.
TA understands and agrees that if TA does not provide a daily dividend
factor for any Fund in time for NFSC to use that day's daily dividend
factor, then NFSC may use the prior day's daily dividend factor.
This Agreement may be terminated by either NFSC or TA upon 30 days
written notice to the other party to this Agreement
IN WITNESS WHEREOF, NFSC and TA, by their duly appointed
authorized officers, have executed this Agreement as of October 24,
1994.
NATIONAL FINANCIAL SERVICES
CORPORATION
By:/s/Robert P. Mazzaselli
Title: Executive Vice President
FEDERATED SERVICES COMPANY
By:/s/James J. Dolan
Title: President
Exhibit 10 under Form N-1A
Exhibit 5 under Item 601/Reg. S-K
HOUSTON, HOUSTON & DONNELLY
ATTORNEYS AT LAW
2510 CENTRE CITY TOWER
WILLIAM McC. HOUSTON PITTSBURGH, PA. 15222
FRED CHALMERS HOUSTON, JR. __________
THOMAS J. DONNELLY
JOHN F. MECK (412) 471-5828 FRED CHALMERS HOUSTON
FAX (412) 471-0736 (1914 - 1971)
MARIO SANTILLI, JR.
THEODORE M. HAMMER
October 21, 1992
The Trustees of
The Shawmut Funds
Federated Investors Tower
Pittsburgh, PA 15222-3779
Gentlemen:
The Shawmut Funds ("Trust") proposes to offer and sell seven
separate series of Shares of Beneficial Interest representing interests
in separate portfolios of securities known as Shawmut Prime Money Market
Fund, Shawmut Intermediate Government Income Fund, Shawmut Fixed Income
Fund, Shawmut Limited Term Income Fund, Shawmut Growth Equity Fund,
Shawmut Growth and Income Equity Fund and Shawmut Small Capitalization
Equity Fund (all such shares of beneficial interest being herein
referred to as "Shares") in the manner and on the terms set forth in its
Registration Statement filed with the Securities and Exchange Commission
under the Securities Act of 1933, as amended.
As counsel we have participated in the organization of the Trust,
its registration under the Investment Company Act of 1940 and the
preparation and filing of its Registration Statement under the
Securities Act of 1933. We have examined and are familiar with the
provisions of the written Declaration of Trust dated July 16, 1992,
("Declaration of Trust"), the Bylaws of the Trust and such other
documents and records deemed relevant. We have also reviewed questions
of law and consulted with counsel thereon as deemed necessary or
appropriate by us for the purposes of this opinion.
Based on the foregoing, it is our opinion that:
1. The Trust is duly organized and validly existing pursuant to
the Declaration of Trust.
2. The Shares which are currently being registered by the
amended Registration Statement referred to above may be legally and
validly issued from time to time in accordance with the Declaration of
Trust upon receipt of consideration sufficient to comply with the
provisions of Article III, Section 3 of the Declaration of Trust and
subject to compliance with the Securities Act of 1933, as amended, the
Investment Company Act of 1940, as amended, and applicable state laws
regulating the sale of securities. Such Shares, when so issued, will be
fully paid and non-assessable.
We consent to your filing this opinion as an exhibit to the
amended Registration Statement referred to above and to any application
or registration statement filed under the securities laws of any of the
States of the United States. We further consent to the reference to our
firm under the caption Legal Counsel in the prospectuses filed as a part
of such amended Registration Statement, applications and registration
statements.
Very truly yours,
HOUSTON, HOUSTON & DONNELLY
By: /s/Thomas J. Donnelly
TJD:heh
Exhibit 13 under Form N-1A
Exhibit 99 under Item 601/Reg. S-K
FEDERATED ADMINISTRATIVE SERVICES
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
October 26, 1992
The Shawmut Funds
Federated Investors Tower
Pittsburgh, PA 15222-3779
Gentlemen:
Federated Administrative Services agrees to purchase 100,000
shares of Shawmut Prime Money Market Fund (a portfolio of The Shawmut
Funds) at the cost of $1.00 each. These shares are purchased for
investment purposes and Federated Administrative Services has no present
intention of redeeming these shares.
Very truly yours,
/s/ Byron F. Bowman
Byron F. Bowman
Vice President
BFB/mbs
1
Exhibit 15(ii) under Form N-1A
Exhibit 1 under Item 601/Reg.
S-K
EXHIBIT M
to the
Plan of Distribution
THE SHAWMUT FUNDS
Shawmut Quantitative Equity Fund - Investment Shares
This Plan is adopted by The Shawmut Funds with respect to the
Shares of the Portfolios of the Trust set forth above.
In compensation for the services provided pursuant to this Plan,
FSC will be paid a monthly fee computed at the annual rate of 0.50 of 1%
of the average aggregate net asset value of the Shares of each Portfolio
of the Trust held during the month.
Witness the due execution hereof this 1st day of June, 1994.
The Shawmut Funds
By:/s/Edward C. Gonzales
President
-1-
Exhibit 15(iii) under Form N-1A
Exhibit 1 under Item 601/Reg. S-K
BROKER'S RULE 12b-1 AGREEMENT
This Agreement is made between the financial institution executing
this Agreement (the "Broker") and Federated Securities Corp. ("FSC") for
the mutual funds or portfolios (referred to individually as the "Fund"
and collectively as the "Funds") or classes thereof for which FSC serves
as distributor of shares of beneficial interest or capital stock
("Shares") and which have adopted a Rule 12b-1 Plan ("Plan") and
approved this form of agreement pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended (the "1940 Act"). In
consideration of the mutual covenants hereinafter contained, it is
hereby agreed by and between the parties hereto as follows:
1. FSC hereby appoints the Broker to render or cause to be
rendered sales and administrative support services to the Funds and
their shareholders.
2. The services to be provided under Paragraph 1 may include,
but are not limited to, the following:
(a) communicating Fund account openings to FSC through
computer terminals located on the Broker's premises
("computer terminals"), through a toll-free telephone
number or otherwise;
(b) communicating Fund account closings to FSC through
the computer terminals, through a toll-free telephone
number or otherwise;
(c) entering Fund purchase transactions through the
computer terminals, through a toll-free telephone number
or otherwise;
(d) entering Fund redemption transactions through the
computer terminals, through a toll-free telephone number
or otherwise;
(e) electronically transferring and receiving funds for
Fund purchases and redemptions;
(f) confirming and reconciling all such transactions and
reviewing the activity in Fund accounts;
(g) posting and reinvesting dividends and other
distributions to shareholders;
(h) maintaining and distributing current copies of
prospectuses, statements of additional information and
shareholder reports of the Funds;
(i) advertising the availability of its services and
products with respect to the Funds;
(j) providing assistance and review in designing
materials to send to customers and potential customers and
developing methods of making such materials accessible to
customers and potential customers;
(k) providing information about the product needs of
customers; and
(l) providing training and supervision of its personnel
with respect to the foregoing;
(m) responding to customers' and potential customers'
questions about the Funds.
The services listed above are illustrative. The Broker is not required
to perform each service and may at any time perform either more or fewer
services than described above.
3. During the term of this Agreement, FSC will pay the Broker
fees for each Fund as set forth in a written schedule delivered to the
Broker pursuant to this Agreement. The fee schedule may be changed by
FSC pursuant to Paragraph 9 of this Agreement. For the payment period
in which this Agreement becomes effective or terminates, there shall be
an appropriate proration of the fee on the basis of the number of days
that this Agreement is in effect during the quarter.
4. With respect to each Fund, this Agreement shall continue in
effect for one year from the date of its execution, and thereafter for
successive periods of one year if the form of this Agreement is approved
at least annually by the Directors or Trustees of the Fund, including a
majority of the members of the Board of Directors or Trustees of the
Fund who are not interested persons of the Fund and have no direct or
indirect financial interest in the operation of the Fund's Plan or in
any related documents to the Plan ("Disinterested Directors or
Trustees") cast in person at a meeting called for that purpose.
5. Notwithstanding Paragraph 4, this Agreement may be
terminated as follows:
(a) by FSC at any time, without the payment of any
penalty, by the vote of a majority of the Disinterested
Directors or Trustees of the particular Fund or by a vote
of a majority of the outstanding voting securities of the
Fund or portfolio or class thereof as defined in the 1940
Act, on not more than sixty (60) days' written notice to
the Broker;
(b) automatically in the event of the Agreement's
assignment as defined in the 1940 Act or upon the
termination of the "Administrative Support and
Distributor's Contract" or "Distributor's Contract" or
"Distribution Agreement" between the Fund and FSC; and
(c) by either party to the Agreement without cause by
giving the other party at least sixty (60) days' written
notice of its intention to terminate.
6. The termination of this Agreement with respect to any one
Fund will not cause the Agreement's termination with respect to any
other Fund.
7. The Broker agrees to provide FSC or its designee such
customer information as is reasonably necessary to monitor sales of
Shares and ensure Shares are properly and duly registered with
applicable state securities authorities. The Broker also agrees to
obtain any taxpayer identification number certification from its
customers required under Section 3406 of the Internal Revenue Code, and
any applicable Treasury regulations, and to provide FSC or its designee
with timely written notice of any failure to obtain such taxpayer
identification number certification in order to enable the
implementation of any required backup withholding.
8. This Agreement supersedes any prior service agreements
between the parties for the Funds.
9. This Agreement may be amended by FSC from time to time by
the following procedure. FSC will mail a copy of the amendment to the
Broker's address, as shown below. If the Broker does not object to the
amendment within thirty (30) days after its receipt, the amendment will
become part of the Agreement. The Broker's objection must be in writing
and be received by FSC within such thirty (30) days.
10. This Agreement shall be construed in accordance with the
laws of the State of Connecticut; provided, however that nothing herein
shall be construed in a manner inconsistent with the 1940 Act or any
rule or regulation promulgated by the Securities and Exchange Commission
thereunder.
SHAWMUT BROKERAGE, INC.
777 Main Street
Hartford, Connecticut 06115
Date: November 25, 1992 By: /s/David A. Rioux
Title: President
FEDERATED SECURITIES CORP.
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Date: November 25, 1992 By:/s/Richard B. Fisher
Richard B. Fisher, President
THE SHAWMUT FUNDS
__________________________
EXHIBIT A to 12b-1 Agreement with
Federated Securities Corp. ("FSC")
Portfolios
FSC will pay the Broker fees for the following mutual funds,
portfolios or classes thereof (the "Funds") effective as of the dates
set forth below:
Name Date
Shawmut Prime Money Market Fund December 1, 1992
Shawmut Limited Term Income Fund December 1, 1992
Shawmut Intermediate Government Income Fund December 1, 1992
Shawmut Fixed Income Fund December 1, 1992
Shawmut Growth and Income Equity Fund December 1, 1992
Shawmut Growth Equity Fund December 1, 1992
Shawmut Small Capitalization Equity Fund December 1, 1992
Administrative Fees
1. During the term of this Agreement, FSC will pay Broker a
monthly fee in respect of each Fund. This fee will be computed at the
annual rate of 0.50% of the average net asset value of Shares held
during the month in accounts for which the Broker provides services
under this Agreement.
2. For the monthly period in which the Agreement becomes
effective or terminates, there shall be an appropriate proration of any
fee payable on the basis of the number of days that the Agreement is in
effect during the month.
THE SHAWMUT FUNDS
__________________________
AMENDMENT NO. 1 to EXHIBIT A
to 12b-1 Agreement with
Federated Securities Corp. ("FSC")
Portfolios
FSC will pay the Broker fees for the following mutual funds,
portfolios or classes thereof (the "Funds") effective as of the dates
set forth below:
Name Date
Shawmut Prime Money Market Fund
Investment Shares December 1, 1992
Shawmut Connecticut Municipal Income Fund May 11, 1993
Shawmut Massachusetts Municipal Income Fund May 11, 1993
Shawmut Limited Term Income Fund
Investment Shares December 1, 1992
Shawmut Intermediate Government Income Fund
Investment Shares December 1, 1992
Shawmut Fixed Income Fund Investment Shares December 1, 1992
Shawmut Growth and Income Equity Fund
Investment Shares December 1, 1992
Shawmut Growth Equity Fund Investment Shares December 1, 1992
Shawmut Small Capitalization Equity Fund
Investment Shares December 1, 1992
Administrative Fees
1. During the term of this Agreement, FSC will pay Broker a
monthly fee in respect of each Fund. This fee will be computed at the
annual rate of 0.50% of the average net asset value of Shares held
during the month in accounts for which the Broker provides services
under this Agreement.
2. For the monthly period in which the Agreement becomes
effective or terminates, there shall be an appropriate proration of any
fee payable on the basis of the number of days that the Agreement is in
effect during the month.
THE SHAWMUT FUNDS
__________________________
AMENDMENT NO. 2 to EXHIBIT A
to 12b-1 Agreement with
Federated Securities Corp. ("FSC")
Portfolios
FSC will pay the Broker fees for the following mutual funds,
portfolios or classes thereof (the "Funds") effective as of the dates
set forth below:
Name Date
Shawmut Prime Money Market Fund
Investment Shares December 1, 1992
Shawmut Connecticut Municipal Income Fund May 11, 1993
Shawmut Connecticut Municipal Money
Market Fund September 12, 1993
Shawmut Massachusetts Municipal Income Fund May 11, 1993
Shawmut Massachusetts Municipal Money
Market Fund September 12, 1993
Shawmut Limited Term Income Fund
Investment Shares December 1, 1992
Shawmut Intermediate Government Income Fund
Investment Shares December 1, 1992
Shawmut Fixed Income Fund Investment Shares December 1, 1992
Shawmut Growth and Income Equity Fund
Investment Shares December 1, 1992
Shawmut Growth Equity Fund Investment Shares December 1, 1992
Shawmut Small Capitalization Equity Fund
Investment Shares December 1, 1992
Administrative Fees
1. During the term of this Agreement, FSC will pay Broker a
monthly fee in respect of each Fund. This fee will be computed at the
annual rate of 0.50% of the average net asset value of Shares held
during the month in accounts for which the Broker provides services
under this Agreement.
2. For the monthly period in which the Agreement becomes
effective or terminates, there shall be an appropriate proration of any
fee payable on the basis of the number of days that the Agreement is in
effect during the month.
THE SHAWMUT FUNDS
__________________________
AMENDMENT NO. 3 to EXHIBIT A
to 12b-1 Agreement with
Federated Securities Corp. ("FSC")
Portfolios
FSC will pay the Broker fees for the following mutual funds,
portfolios or classes thereof (the "Funds") effective as of the dates
set forth below:
Name Date
Shawmut Connecticut Municipal Income Fund May 11, 1993
Shawmut Connecticut Municipal Money
Market Fund September 12, 1993
Shawmut Fixed Income Fund Investment Shares December 1, 1992
Shawmut Growth and Income Equity Fund
Investment Shares December 1, 1992
Shawmut Growth Equity Fund Investment Shares December 1, 1992
Shawmut Intermediate Government Income Fund
Investment Shares December 1, 1992
Shawmut Limited Term Income Fund
Investment Shares December 1, 1992
Shawmut Massachusetts Municipal Income Fund May 11, 1993
Shawmut Massachusetts Municipal Money
Market Fund September 12, 1993
Shawmut Prime Money Market Fund
Investment Shares December 1, 1992
Shawmut Quantitative Equity Fund June 1, 1994
Shawmut Small Capitalization Equity Fund
Investment Shares December 1, 1992
Administrative Fees
1. During the term of this Agreement, FSC will pay Broker a
monthly fee in respect of each Fund. This fee will be computed at the
annual rate of 0.50% of the average net asset value of Shares held
during the month in accounts for which the Broker provides services
under this Agreement.
2. For the monthly period in which the Agreement becomes
effective or terminates, there shall be an appropriate proration of any
fee payable on the basis of the number of days that the Agreement is in
effect during the month.
Shawmut Conn. Muni Income Yield = 2{( $35,360.79 - $3,336.98 )+1)^6-1}=
Computation of SEC Yield 861,672 * $9.51 - 0.01680 )
As of: October 31, 1994
SEC Yield = 4.74%
Dividend and/or Interest
Inc for the 30 days ended $35,360.79
Net Expenses for $3,336.98
the Period
Avg Daily Shares
Outstanding and entitled
to receive dividends 861,672
Maxium offering price $9.51
per share as of 10-31-94
Undistributed net income 0.01680
Tax Equivalent Yield
(assumes individual
does not itemize
on Federal Return)
100 % minus the Federal
taxable % (100%-28%=72%)
30 SEC yield / by the tax
equiv % (0.00% / 72.0%)= 6.58%
Schedule for Computation Initial
of Fund Performance Data Invest of: $1,000
Offering
Shawmut Conn. Muni Income Price/
$10.20
Return Since Inception
ending 10/31/94 NAV= $10.00
FYE: October 31
Begin Capital Reinvest
DECLARED: MONTHLY Reinvest Period Dividend Gain Price
PAID: MONTHLY Dates Shares /Share /Share /Share
6/16/93 98.000 0.000 0.0000 $10.20
7/19/93 98.000 0.037 0.0000 $10.09
8/17/93 98.359 0.033 0.0000 $10.14
9/17/93 98.679 0.033 0.0000 $10.29
10/18/93 98.996 0.031 0.0000 $10.33
11/17/93 99.293 0.031 0.0000 $10.13
12/17/93 99.597 0.031 0.0083 $10.21
1/18/94 99.980 0.032 0.0000 $10.27
2/17/94 100.292 0.032 0.0000 $10.16
3/17/94 100.608 0.033 0.0000 $9.92
4/18/94 100.942 0.033 0.0000 $9.56
5/17/94 101.291 0.033 0.0000 $9.61
6/17/94 101.639 0.033 0.0000 $9.74
7/18/94 101.983 0.034 0.0000 $9.63
8/17/94 102.343 0.034 0.0000 $9.67
9/19/94 102.703 0.034 0.0000 $9.59
10/17/94 103.067 0.036 0.0000 $9.47
10/31/94 103.459 0.000 0.0000 $9.51
Ending Total
Period Ending Invest
Shares Price Value
98.000 $10.20 $999.60
98.359 $10.09 $992.45
98.679 $10.14 $1,000.61
98.996 $10.29 $1,018.67
99.293 $10.33 $1,025.70
99.597 $10.13 $1,008.92
99.980 $10.21 $1,020.80
100.292 $10.27 $1,030.00
100.608 $10.16 $1,022.17
100.942 $9.92 $1,001.35
101.291 $9.56 $968.34
101.639 $9.61 $976.75
101.983 $9.74 $993.31
102.343 $9.63 $985.56
102.703 $9.67 $993.14
103.067 $9.59 $988.41
103.459 $9.47 $979.75
103.459 $9.51 $983.89
$1,000 (1+T) = End Value
T = -1.61%
Shawmut Mass. Muni Income Yield = 2{( $29,504.73 - $2,718.89 )+1)^6-1}=
Computation of SEC Yield 701,451 * $9.50 - 0.01730 )
As of: October 31, 1994
SEC Yield = 4.88%
Dividend and/or Interest
Inc for the 30 days ended $29,504.73
Net Expenses for $2,718.89
the Period
Avg Daily Shares
Outstanding and entitled
to receive dividends 701,451
Maxium offering price $9.50
per share as of 10-31-94
Undistributed net income 0.01730
Tax Equivalent Yield
(assumes individual
does not itemize
on Federal Return)
100 % minus the Federal
taxable % (100%-28%=72%)
30 SEC yield / by the tax
equiv % (0.00% / 72.0%)= 6.78%
Schedule for Computation Initial
of Fund Performance Data Invest of: $1,000
Offering
Shawmut Mass. Muni Income Price/
$10.20
Return Since Inception
ending 10/31/94 NAV= $10.00
FYE: October 31
Begin Capital Reinvest
DECLARED: MONTHLY Reinvest Period Dividend Gain Price
PAID: MONTHLY Dates Shares /Share /Share /Share
6/16/93 98.000 0.000 0.0000 $10.20
7/19/93 98.000 0.034 0.0000 $10.10
8/17/93 98.330 0.031 0.0000 $10.13
9/17/93 98.631 0.034 0.0000 $10.28
10/18/93 98.957 0.034 0.0000 $10.37
11/17/93 99.281 0.034 0.0000 $10.19
12/17/93 99.613 0.034 0.0000 $10.28
1/18/94 99.942 0.034 0.0000 $10.34
2/17/94 100.271 0.034 0.0000 $10.21
3/17/94 100.605 0.034 0.0000 $9.94
4/18/94 100.949 0.034 0.0000 $9.55
5/17/94 101.308 0.034 0.0000 $9.62
6/17/94 101.666 0.034 0.0000 $9.74
7/18/94 102.021 0.035 0.0000 $9.64
8/17/94 102.392 0.036 0.0000 $9.68
9/19/94 102.772 0.037 0.0000 $9.59
10/17/94 103.169 0.037 0.0000 $9.48
10/31/94 103.572 0.000 0.0000 $9.50
Ending Total
Period Ending Invest
Shares Price Value
98.000 $10.20 $999.60
98.330 $10.10 $993.13
98.631 $10.13 $999.13
98.957 $10.28 $1,017.28
99.281 $10.37 $1,029.55
99.613 $10.19 $1.015.05
99.942 $10.28 $1,027.41
100.271 $10.34 $1,036.80
100.605 $10.21 $1,027.17
100.949 $9.94 $1,003.43
101.308 $9.55 $967.49
101.666 $9.62 $978.03
102.021 $9.74 $993.69
102.392 $9.64 $987.06
102.772 $9.68 $994.84
103.169 $9.59 $989.39
103.572 $9.48 $981.86
103.572 $9.50 $983.93
$1,000 (1+T) = End Value
T = -1.61%
Schedule for Computation Initial
of Fund Performance Data Invest of: $1,000
Offering
Shawmut Quantitative Equity Price/
Trust Shares $10.03
Return Since Inception
ending 10/31/94 NAV= $10.03
FYE: October 31
Begin Capital Reinvest
DECLARED: QUARTERLY Reinvest Period Dividend Gain Price
PAID: QUARTERLY Dates Shares /Share /Share /Share
8/4/94 99.701 0.000 0.0000 $10.03
9/19/94 99.701 0.065 0.0000 $10.10
10/31/94 100.343 0.000 0.0000 $10.06
Ending Total
Period Ending Invest
Shares Price Value
99.701 $10.03 $1,000.00
100.343 $10.10 $1,013.46
100.343 $10.06 $1,009.45
$1,000 (1+T) = End Value
T = 0.94%
Schedule for Computation Initial
of Fund Performance Data Invest of: $1,000
Offering
Shawmut Quantitative Equity Price/
Investment Shares $10.03
Return Since Inception
ending 10/31/94 NAV= $10.45
FYE: October 31
Begin Capital Reinvest
DECLARED: QUARTERLY Reinvest Period Dividend Gain Price
PAID: QUARTERLY Dates Shares /Share /Share /Share
8/4/94 99.701 0.000 0.0000 $10.03
9/19/94 99.701 0.065 0.0000 $10.10
10/31/94 100.343 0.000 0.0000 $10.06
Ending Total
Period Ending Invest
Shares Price Value
99.701 $10.03 $1,000.00
100.343 $10.10 $1,013.46
100.343 $10.06 $1,009.45
$1,000 (1+T) = End Value
T = 0.94%
Shawmut Quantitative Equity Yield = 2{( $1,033.82 - $458.01 )+1)^6-1}=
Computation of SEC Yield 31,658 * $10.48 - 0.03030 )
As of: October 31, 1994
Investment Shares SEC Yield = 2.10%
Dividend and/or Interest
Inc for the 30 days ended $1,033.82
Net Expenses for $458.01
the Period
Avg Daily Shares
Outstanding and entitled
to receive dividends 31,658
Maxium offering price $10.48
per share as of 10-31-94
Undistributed net income 0.03030
Tax Equivalent Yield
(assumes individual
does not itemize
on Federal Return)
100 % minus the Federal
taxable % (100%-28%=72%)
30 SEC yield / by the tax
equiv % (0.00% / 72.0%)= 2.92%
Shawmut Quantitative Equity Yield = 2{($10,288.60 - $3,907.01 )+1)^6-1}=
Computation of SEC Yield 315,066 * $10.06 - 0.03030 )
As of: October 31, 1994
Trust Shares SEC Yield = 2.44%
Dividend and/or Interest
Inc for the 30 days ended $10,288.60
Net Expenses for $3,907.01
the Period
Avg Daily Shares
Outstanding and entitled
to receive dividends 315,066
Maxium offering price $10.06
per share as of 10-31-94
Undistributed net income 0.03030
Tax Equivalent Yield
(assumes individual
does not itemize
on Federal Return)
100 % minus the Federal
taxable % (100%-28%=72%)
30 SEC yield / by the tax
equiv % (0.00% / 72.0%)= 3.39%
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> SHAWMUT CONNECTICUT MUNI MM FUND INVMNT SHS
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1994
<PERIOD-END> OCT-31-1994
<INVESTMENTS-AT-COST> 114,535,988
<INVESTMENTS-AT-VALUE> 114,535,988
<RECEIVABLES> 719,527
<ASSETS-OTHER> 2,619
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 115,258,134
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 241,330
<TOTAL-LIABILITIES> 241,330
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 115,016,804
<SHARES-COMMON-STOCK> 80,662,788
<SHARES-COMMON-PRIOR> 6,581,913
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 80,662,788
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,691,516
<OTHER-INCOME> 0
<EXPENSES-NET> 430,388
<NET-INVESTMENT-INCOME> 1,261,128
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 1,261,128
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 868,567
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 214,871,629
<NUMBER-OF-SHARES-REDEEMED> 107,282,901
<SHARES-REINVESTED> 846,013
<NET-CHANGE-IN-ASSETS> 108,434,741
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 305,260
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 827,731
<AVERAGE-NET-ASSETS> 61,076,566
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> .020
<PER-SHARE-GAIN-APPREC> .000
<PER-SHARE-DIVIDEND> .020
<PER-SHARE-DISTRIBUTIONS> .000
<RETURNS-OF-CAPITAL> .000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 78
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> .000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> SHAWMUT CONNECTICUT MUNI MM FUND TRUST SHS
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1994
<PERIOD-END> OCT-31-1994
<INVESTMENTS-AT-COST> 114,535,988
<INVESTMENTS-AT-VALUE> 114,535,988
<RECEIVABLES> 719,527
<ASSETS-OTHER> 2,619
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 115,258,134
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 241,330
<TOTAL-LIABILITIES> 241,330
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 115,016,804
<SHARES-COMMON-STOCK> 34,354,016
<SHARES-COMMON-PRIOR> 150
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 34,354,016
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,691,516
<OTHER-INCOME> 0
<EXPENSES-NET> 430,388
<NET-INVESTMENT-INCOME> 1,261,128
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 1,261,128
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 392,561
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 214,871,629
<NUMBER-OF-SHARES-REDEEMED> 107,282,901
<SHARES-REINVESTED> 846,013
<NET-CHANGE-IN-ASSETS> 108,434,741
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 305,260
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 827,731
<AVERAGE-NET-ASSETS> 61,076,566
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> .020
<PER-SHARE-GAIN-APPREC> .000
<PER-SHARE-DIVIDEND> .020
<PER-SHARE-DISTRIBUTIONS> .000
<RETURNS-OF-CAPITAL> .000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 53
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> .000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> SHAWMUT FIXED INCOME FUND INVESTMENT SHARES
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1994
<PERIOD-END> OCT-31-1994
<INVESTMENTS-AT-COST> 96,682,875
<INVESTMENTS-AT-VALUE> 89,428,052
<RECEIVABLES> 1,669,645
<ASSETS-OTHER> 32,237
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 91,129,934
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 247,420
<TOTAL-LIABILITIES> 247,420
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 99,123,210
<SHARES-COMMON-STOCK> 903,200
<SHARES-COMMON-PRIOR> 905,195
<ACCUMULATED-NII-CURRENT> 161,460
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,147,333)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (7,254,823)
<NET-ASSETS> 8,414,173
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 7,054,582
<OTHER-INCOME> 0
<EXPENSES-NET> 957,788
<NET-INVESTMENT-INCOME> 6,096,794
<REALIZED-GAINS-CURRENT> (1,341,646)
<APPREC-INCREASE-CURRENT> (10,853,861)
<NET-CHANGE-FROM-OPS> (6,098,713)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 559,260
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 25,515,479
<NUMBER-OF-SHARES-REDEEMED> 25,238,719
<SHARES-REINVESTED> 951,432
<NET-CHANGE-IN-ASSETS> (11,152,054)
<ACCUMULATED-NII-PRIOR> 52,770
<ACCUMULATED-GAINS-PRIOR> 483,546
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 789,707
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,215,942
<AVERAGE-NET-ASSETS> 98,719,828
<PER-SHARE-NAV-BEGIN> 10.550
<PER-SHARE-NII> .600
<PER-SHARE-GAIN-APPREC> (1.220)
<PER-SHARE-DIVIDEND> .560
<PER-SHARE-DISTRIBUTIONS> .050
<RETURNS-OF-CAPITAL> .000
<PER-SHARE-NAV-END> 9.320
<EXPENSE-RATIO> 119
<AVG-DEBT-OUTSTANDING> 4,613,255
<AVG-DEBT-PER-SHARE> .459
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 4
<NAME> SHAWMUT FIXED INCOME FUND TRUST SHARES
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1994
<PERIOD-END> OCT-31-1994
<INVESTMENTS-AT-COST> 96,682,875
<INVESTMENTS-AT-VALUE> 89,428,052
<RECEIVABLES> 1,669,645
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<SHARES-COMMON-STOCK> 8,850,245
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<EXPENSES-NET> 957,788
<NET-INVESTMENT-INCOME> 6,096,794
<REALIZED-GAINS-CURRENT> (1,341,646)
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<NUMBER-OF-SHARES-SOLD> 25,515,479
<NUMBER-OF-SHARES-REDEEMED> 25,238,719
<SHARES-REINVESTED> 951,432
<NET-CHANGE-IN-ASSETS> (11,152,054)
<ACCUMULATED-NII-PRIOR> 52,770
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<GROSS-EXPENSE> 1,215,942
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<PER-SHARE-NAV-BEGIN> 10.550
<PER-SHARE-NII> .620
<PER-SHARE-GAIN-APPREC> (1.220)
<PER-SHARE-DIVIDEND> .580
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<EXPENSE-RATIO> 94
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<AVG-DEBT-PER-SHARE> .459
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 5
<NAME> SHAWMUT GROWTH AND INC EQUITY FUND INVMNT SHS
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1994
<PERIOD-END> OCT-31-1994
<INVESTMENTS-AT-COST> 172,745,846
<INVESTMENTS-AT-VALUE> 181,946,208
<RECEIVABLES> 3,502,415
<ASSETS-OTHER> 53,565
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 185,502,188
<PAYABLE-FOR-SECURITIES> 6,151,473
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 279,583
<TOTAL-LIABILITIES> 6,431,056
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 162,378,516
<SHARES-COMMON-STOCK> 1,994,587
<SHARES-COMMON-PRIOR> 1,522,869
<ACCUMULATED-NII-CURRENT> 304,092
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 7,188,162
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 9,200,362
<NET-ASSETS> 22,244,098
<DIVIDEND-INCOME> 5,171,312
<INTEREST-INCOME> 588,124
<OTHER-INCOME> 0
<EXPENSES-NET> 1,841,893
<NET-INVESTMENT-INCOME> 3,917,543
<REALIZED-GAINS-CURRENT> 7,261,816
<APPREC-INCREASE-CURRENT> 4,439,073
<NET-CHANGE-FROM-OPS> 15,618,432
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 357,326
<DISTRIBUTIONS-OF-GAINS> 459,878
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 45,022,703
<NUMBER-OF-SHARES-REDEEMED> 41,634,892
<SHARES-REINVESTED> 4,732,196
<NET-CHANGE-IN-ASSETS> 15,701,552
<ACCUMULATED-NII-PRIOR> 20,964
<ACCUMULATED-GAINS-PRIOR> 4,324,678
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<GROSS-ADVISORY-FEES> 1,720,866
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,279,480
<AVERAGE-NET-ASSETS> 172,001,548
<PER-SHARE-NAV-BEGIN> 10.690
<PER-SHARE-NII> .220
<PER-SHARE-GAIN-APPREC> .720
<PER-SHARE-DIVIDEND> .200
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<RETURNS-OF-CAPITAL> .000
<PER-SHARE-NAV-END> 11.150
<EXPENSE-RATIO> 129
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> .000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 6
<NAME> SHAWMUT GROWTH AND INC EQUITY FUND TRUST SHS
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1994
<PERIOD-END> OCT-31-1994
<INVESTMENTS-AT-COST> 172,745,846
<INVESTMENTS-AT-VALUE> 181,946,208
<RECEIVABLES> 3,502,415
<ASSETS-OTHER> 53,565
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 185,502,188
<PAYABLE-FOR-SECURITIES> 6,151,473
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 279,583
<TOTAL-LIABILITIES> 6,431,056
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 162,378,516
<SHARES-COMMON-STOCK> 14,062,271
<SHARES-COMMON-PRIOR> 13,757,710
<ACCUMULATED-NII-CURRENT> 304,092
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 7,188,162
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 9,200,362
<NET-ASSETS> 156,827,034
<DIVIDEND-INCOME> 5,171,312
<INTEREST-INCOME> 588,124
<OTHER-INCOME> 0
<EXPENSES-NET> 1,841,893
<NET-INVESTMENT-INCOME> 3,917,543
<REALIZED-GAINS-CURRENT> 7,261,816
<APPREC-INCREASE-CURRENT> 4,439,073
<NET-CHANGE-FROM-OPS> 15,618,432
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3,281,259
<DISTRIBUTIONS-OF-GAINS> 3,938,454
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 45,022,703
<NUMBER-OF-SHARES-REDEEMED> 41,634,892
<SHARES-REINVESTED> 4,732,196
<NET-CHANGE-IN-ASSETS> 15,701,552
<ACCUMULATED-NII-PRIOR> 20,964
<ACCUMULATED-GAINS-PRIOR> 4,324,678
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<GROSS-ADVISORY-FEES> 1,720,866
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,279,480
<AVERAGE-NET-ASSETS> 172,001,548
<PER-SHARE-NAV-BEGIN> 10.690
<PER-SHARE-NII> .250
<PER-SHARE-GAIN-APPREC> .720
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<PER-SHARE-NAV-END> 11.150
<EXPENSE-RATIO> 104
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> .000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 7
<NAME> SHAWMUT MASSACHUSETTS INTER. MUNI. INCOME FUND
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1994
<PERIOD-END> OCT-31-1994
<INVESTMENTS-AT-COST> 6,988,164
<INVESTMENTS-AT-VALUE> 6,483,174
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<TOTAL-ASSETS> 6,604,587
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<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 36,589
<TOTAL-LIABILITIES> 36,589
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 7,108,014
<SHARES-COMMON-STOCK> 705,262
<SHARES-COMMON-PRIOR> 389,354
<ACCUMULATED-NII-CURRENT> 7,392
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (42,418)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (504,990)
<NET-ASSETS> 6,567,998
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 281,014
<OTHER-INCOME> 0
<EXPENSES-NET> 29,405
<NET-INVESTMENT-INCOME> 251,609
<REALIZED-GAINS-CURRENT> (42,418)
<APPREC-INCREASE-CURRENT> (573,616)
<NET-CHANGE-FROM-OPS> (364,425)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 248,443
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 431,195
<NUMBER-OF-SHARES-REDEEMED> 129,428
<SHARES-REINVESTED> 14,141
<NET-CHANGE-IN-ASSETS> 2,558,577
<ACCUMULATED-NII-PRIOR> 2,437
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
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<GROSS-ADVISORY-FEES> 40,530
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 243,897
<AVERAGE-NET-ASSETS> 5,774,539
<PER-SHARE-NAV-BEGIN> 10.300
<PER-SHARE-NII> .420
<PER-SHARE-GAIN-APPREC> (.990)
<PER-SHARE-DIVIDEND> .420
<PER-SHARE-DISTRIBUTIONS> .000
<RETURNS-OF-CAPITAL> .000
<PER-SHARE-NAV-END> 9.310
<EXPENSE-RATIO> 51
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> .000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 8
<NAME> SHAWMUT CONNECTICUT INTER. MUNI. INCOME FUND
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1994
<PERIOD-END> OCT-31-1994
<INVESTMENTS-AT-COST> 8,464,034
<INVESTMENTS-AT-VALUE> 7,905,598
<RECEIVABLES> 131,257
<ASSETS-OTHER> 2,756
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 8,039,611
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 38,099
<TOTAL-LIABILITIES> 38,099
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 8,723,515
<SHARES-COMMON-STOCK> 858,269
<SHARES-COMMON-PRIOR> 711,685
<ACCUMULATED-NII-CURRENT> 16,598
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (180,165)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (558,436)
<NET-ASSETS> 8,001,512
<DIVIDEND-INCOME> 624
<INTEREST-INCOME> 390,937
<OTHER-INCOME> 0
<EXPENSES-NET> 40,337
<NET-INVESTMENT-INCOME> 351,224
<REALIZED-GAINS-CURRENT> (180,165)
<APPREC-INCREASE-CURRENT> (631,282)
<NET-CHANGE-FROM-OPS> (460,223)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 336,798
<DISTRIBUTIONS-OF-GAINS> 6,714
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 473,934
<NUMBER-OF-SHARES-REDEEMED> 348,269
<SHARES-REINVESTED> 20,919
<NET-CHANGE-IN-ASSETS> 713,668
<ACCUMULATED-NII-PRIOR> 426
<ACCUMULATED-GAINS-PRIOR> 6,714
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 58,691
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 258,513
<AVERAGE-NET-ASSETS> 8,312,261
<PER-SHARE-NAV-BEGIN> 10.240
<PER-SHARE-NII> .420
<PER-SHARE-GAIN-APPREC> (.930)
<PER-SHARE-DIVIDEND> .400
<PER-SHARE-DISTRIBUTIONS> .010
<RETURNS-OF-CAPITAL> .000
<PER-SHARE-NAV-END> 9.320
<EXPENSE-RATIO> 48
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> .000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 9
<NAME> SHAWMUT MASSACHUSETTS MUNI MM FUND
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1994
<PERIOD-END> OCT-31-1994
<INVESTMENTS-AT-COST> 31,424,613
<INVESTMENTS-AT-VALUE> 31,424,613
<RECEIVABLES> 169,024
<ASSETS-OTHER> 1,084
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 31,594,721
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<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 78,293
<TOTAL-LIABILITIES> 78,293
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 31,516,428
<SHARES-COMMON-STOCK> 31,516,428
<SHARES-COMMON-PRIOR> 1,236,883
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 31,516,428
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 682,198
<OTHER-INCOME> 0
<EXPENSES-NET> 143,739
<NET-INVESTMENT-INCOME> 538,459
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 538,459
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 538,459
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 74,726,599
<NUMBER-OF-SHARES-REDEEMED> 44,730,008
<SHARES-REINVESTED> 282,954
<NET-CHANGE-IN-ASSETS> 30,279,545
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 136,636
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 327,148
<AVERAGE-NET-ASSETS> 26,959,549
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> .020
<PER-SHARE-GAIN-APPREC> .000
<PER-SHARE-DIVIDEND> .020
<PER-SHARE-DISTRIBUTIONS> .000
<RETURNS-OF-CAPITAL> .000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 53
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> .000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 10
<NAME> SHAWMUT PRIME MONEY MKT FUND INVMNT SHARES
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1994
<PERIOD-END> OCT-31-1994
<INVESTMENTS-AT-COST> 657,480,013
<INVESTMENTS-AT-VALUE> 657,480,013
<RECEIVABLES> 783,812
<ASSETS-OTHER> 114,651
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 658,378,476
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,867,980
<TOTAL-LIABILITIES> 2,867,980
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 655,510,496
<SHARES-COMMON-STOCK> 156,191,746
<SHARES-COMMON-PRIOR> 28,758,313
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 156,191,746
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 20,520,973
<OTHER-INCOME> 0
<EXPENSES-NET> 2,386,704
<NET-INVESTMENT-INCOME> 18,134,269
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 18,134,269
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3,011,453
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,358,180,192
<NUMBER-OF-SHARES-REDEEMED> 991,654,083
<SHARES-REINVESTED> 2,374,749
<NET-CHANGE-IN-ASSETS> 368,900,858
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,555,606
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4,082,313
<AVERAGE-NET-ASSETS> 511,200,977
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> .030
<PER-SHARE-GAIN-APPREC> .000
<PER-SHARE-DIVIDEND> .030
<PER-SHARE-DISTRIBUTIONS> .000
<RETURNS-OF-CAPITAL> .000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 68
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> .000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 11
<NAME> SHAWMUT PRIME MONEY MARKET FUND TRUST SHARES
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1994
<PERIOD-END> OCT-31-1994
<INVESTMENTS-AT-COST> 657,480,013
<INVESTMENTS-AT-VALUE> 657,480,013
<RECEIVABLES> 783,812
<ASSETS-OTHER> 114,651
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 658,378,476
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,867,980
<TOTAL-LIABILITIES> 2,867,980
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 655,510,496
<SHARES-COMMON-STOCK> 499,318,750
<SHARES-COMMON-PRIOR> 257,851,325
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 499,318,750
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 20,520,973
<OTHER-INCOME> 0
<EXPENSES-NET> 2,386,704
<NET-INVESTMENT-INCOME> 18,134,269
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 18,134,269
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 15,122,816
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,358,180,192
<NUMBER-OF-SHARES-REDEEMED> 991,654,083
<SHARES-REINVESTED> 2,374,749
<NET-CHANGE-IN-ASSETS> 368,900,858
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,555,606
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4,082,313
<AVERAGE-NET-ASSETS> 511,200,977
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> .030
<PER-SHARE-GAIN-APPREC> .000
<PER-SHARE-DIVIDEND> .030
<PER-SHARE-DISTRIBUTIONS> .000
<RETURNS-OF-CAPITAL> .000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 43
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> .000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 12
<NAME> SHAWMUT GROWTH EQUITY FUND INVESTMENT SHARES
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1994
<PERIOD-END> OCT-31-1994
<INVESTMENTS-AT-COST> 20,504,902
<INVESTMENTS-AT-VALUE> 22,291,248
<RECEIVABLES> 893,673
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<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 23,325,007
<PAYABLE-FOR-SECURITIES> 414,804
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 93,859
<TOTAL-LIABILITIES> 508,663
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 21,205,610
<SHARES-COMMON-STOCK> 546,967
<SHARES-COMMON-PRIOR> 441,546
<ACCUMULATED-NII-CURRENT> 20,356
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (195,968)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,786,346
<NET-ASSETS> 5,845,866
<DIVIDEND-INCOME> 323,828
<INTEREST-INCOME> 40,525
<OTHER-INCOME> 0
<EXPENSES-NET> 295,329
<NET-INVESTMENT-INCOME> 69,024
<REALIZED-GAINS-CURRENT> (165,719)
<APPREC-INCREASE-CURRENT> 974,203
<NET-CHANGE-FROM-OPS> 877,508
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,090
<DISTRIBUTIONS-OF-GAINS> 93,684
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 181,094
<NUMBER-OF-SHARES-REDEEMED> 84,829
<SHARES-REINVESTED> 9,156
<NET-CHANGE-IN-ASSETS> (2,601,748)
<ACCUMULATED-NII-PRIOR> 6,566
<ACCUMULATED-GAINS-PRIOR> 448,318
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 239,796
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 532,159
<AVERAGE-NET-ASSETS> 23,992,414
<PER-SHARE-NAV-BEGIN> 10.490
<PER-SHARE-NII> .010
<PER-SHARE-GAIN-APPREC> .390
<PER-SHARE-DIVIDEND> .002
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<RETURNS-OF-CAPITAL> .000
<PER-SHARE-NAV-END> 10.690
<EXPENSE-RATIO> 143
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> .000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 13
<NAME> SHAWMUT GROWTH EQUITY FUND TRUST SHARES
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1994
<PERIOD-END> OCT-31-1994
<INVESTMENTS-AT-COST> 20,504,902
<INVESTMENTS-AT-VALUE> 22,291,248
<RECEIVABLES> 893,673
<ASSETS-OTHER> 140,086
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 23,325,007
<PAYABLE-FOR-SECURITIES> 414,804
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 93,859
<TOTAL-LIABILITIES> 508,663
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 21,205,610
<SHARES-COMMON-STOCK> 1,587,369
<SHARES-COMMON-PRIOR> 1,980,846
<ACCUMULATED-NII-CURRENT> 20,356
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (195,968)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,786,346
<NET-ASSETS> 16,970,478
<DIVIDEND-INCOME> 323,828
<INTEREST-INCOME> 40,525
<OTHER-INCOME> 0
<EXPENSES-NET> 295,329
<NET-INVESTMENT-INCOME> 69,024
<REALIZED-GAINS-CURRENT> (165,719)
<APPREC-INCREASE-CURRENT> 974,203
<NET-CHANGE-FROM-OPS> 877,508
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 58,158
<DISTRIBUTIONS-OF-GAINS> 384,883
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 250,398
<NUMBER-OF-SHARES-REDEEMED> 681,047
<SHARES-REINVESTED> 37,172
<NET-CHANGE-IN-ASSETS> (2,601,748)
<ACCUMULATED-NII-PRIOR> 6,566
<ACCUMULATED-GAINS-PRIOR> 448,318
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 239,796
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 532,159
<AVERAGE-NET-ASSETS> 23,992,414
<PER-SHARE-NAV-BEGIN> 10.490
<PER-SHARE-NII> .037
<PER-SHARE-GAIN-APPREC> .390
<PER-SHARE-DIVIDEND> .032
<PER-SHARE-DISTRIBUTIONS> .196
<RETURNS-OF-CAPITAL> .000
<PER-SHARE-NAV-END> 10.690
<EXPENSE-RATIO> 118
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> .000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 14
<NAME> SHAWMUT INTER GOV'T INCOME FUND INVMNT SHARES
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1994
<PERIOD-END> OCT-31-1994
<INVESTMENTS-AT-COST> 72,084,440
<INVESTMENTS-AT-VALUE> 67,619,326
<RECEIVABLES> 3,682,721
<ASSETS-OTHER> 24,200
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 71,326,247
<PAYABLE-FOR-SECURITIES> 2,618,374
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 124,530
<TOTAL-LIABILITIES> 2,742,904
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 74,448,055
<SHARES-COMMON-STOCK> 1,177,115
<SHARES-COMMON-PRIOR> 1,346,680
<ACCUMULATED-NII-CURRENT> 116,201
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,515,799)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (4,465,114)
<NET-ASSETS> 68,583,343
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 5,034,451
<OTHER-INCOME> 0
<EXPENSES-NET> 811,266
<NET-INVESTMENT-INCOME> 4,223,185
<REALIZED-GAINS-CURRENT> (1,629,372)
<APPREC-INCREASE-CURRENT> (5,747,623)
<NET-CHANGE-FROM-OPS> (3,153,810)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 678,800
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,658,285
<NUMBER-OF-SHARES-REDEEMED> 5,749,122
<SHARES-REINVESTED> 587,902
<NET-CHANGE-IN-ASSETS> (7,627,868)
<ACCUMULATED-NII-PRIOR> 30,746
<ACCUMULATED-GAINS-PRIOR> (54,371)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 615,460
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,021,159
<AVERAGE-NET-ASSETS> 76,508,392
<PER-SHARE-NAV-BEGIN> 10.260
<PER-SHARE-NII> .520
<PER-SHARE-GAIN-APPREC> (.920)
<PER-SHARE-DIVIDEND> .490
<PER-SHARE-DISTRIBUTIONS> .000
<RETURNS-OF-CAPITAL> .000
<PER-SHARE-NAV-END> 9.370
<EXPENSE-RATIO> 126
<AVG-DEBT-OUTSTANDING> 1,901,718
<AVG-DEBT-PER-SHARE> .240
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 15
<NAME> SHAWMUT INTER GOV'T INCOME FUND TRUST SHARES
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1994
<PERIOD-END> OCT-31-1994
<INVESTMENTS-AT-COST> 72,084,440
<INVESTMENTS-AT-VALUE> 67,619,326
<RECEIVABLES> 3,682,721
<ASSETS-OTHER> 24,200
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 71,326,247
<PAYABLE-FOR-SECURITIES> 2,618,374
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 124,530
<TOTAL-LIABILITIES> 2,742,904
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 74,448,055
<SHARES-COMMON-STOCK> 6,143,929
<SHARES-COMMON-PRIOR> 6,083,389
<ACCUMULATED-NII-CURRENT> 116,201
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,515,799)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (4,465,114)
<NET-ASSETS> 68,583,343
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 5,034,451
<OTHER-INCOME> 0
<EXPENSES-NET> 811,266
<NET-INVESTMENT-INCOME> 4,223,185
<REALIZED-GAINS-CURRENT> (1,629,372)
<APPREC-INCREASE-CURRENT> (5,747,623)
<NET-CHANGE-FROM-OPS> (3,153,810)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3,318,862
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 17,669,269
<NUMBER-OF-SHARES-REDEEMED> 16,642,730
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (7,627,868)
<ACCUMULATED-NII-PRIOR> 30,746
<ACCUMULATED-GAINS-PRIOR> (54,371)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 615,460
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,021,159
<AVERAGE-NET-ASSETS> 76,508,392
<PER-SHARE-NAV-BEGIN> 10.260
<PER-SHARE-NII> .540
<PER-SHARE-GAIN-APPREC> (.920)
<PER-SHARE-DIVIDEND> .510
<PER-SHARE-DISTRIBUTIONS> .000
<RETURNS-OF-CAPITAL> .000
<PER-SHARE-NAV-END> 9.370
<EXPENSE-RATIO> 101
<AVG-DEBT-OUTSTANDING> 1,901,718
<AVG-DEBT-PER-SHARE> .240
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 16
<NAME> SHAWMUT LIMITED TERM INCOME FUND INVMNT SHARES
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1994
<PERIOD-END> OCT-31-1994
<INVESTMENTS-AT-COST> 63,583,277
<INVESTMENTS-AT-VALUE> 61,595,825
<RECEIVABLES> 967,142
<ASSETS-OTHER> 24,453
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 62,587,420
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 180,997
<TOTAL-LIABILITIES> 180,977
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 66,292,431
<SHARES-COMMON-STOCK> 763,700
<SHARES-COMMON-PRIOR> 385,813
<ACCUMULATED-NII-CURRENT> 112,160
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (2,010,716)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (1,987,452)
<NET-ASSETS> 62,406,423
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 4,294,323
<OTHER-INCOME> 0
<EXPENSES-NET> 721,885
<NET-INVESTMENT-INCOME> 3,572,438
<REALIZED-GAINS-CURRENT> (1,963,565)
<APPREC-INCREASE-CURRENT> (2,193,724)
<NET-CHANGE-FROM-OPS> (584,851)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 288,271
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 27,063,722
<NUMBER-OF-SHARES-REDEEMED> 35,273,732
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (8,451,032)
<ACCUMULATED-NII-PRIOR> 1,003
<ACCUMULATED-GAINS-PRIOR> (310,753)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 546,634
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 893,139
<AVERAGE-NET-ASSETS> 68,455,970
<PER-SHARE-NAV-BEGIN> 10.000
<PER-SHARE-NII> .490
<PER-SHARE-GAIN-APPREC> (.580)
<PER-SHARE-DIVIDEND> .460
<PER-SHARE-DISTRIBUTIONS> .000
<RETURNS-OF-CAPITAL> .000
<PER-SHARE-NAV-END> 9.450
<EXPENSE-RATIO> 128
<AVG-DEBT-OUTSTANDING> 2,053,280
<AVG-DEBT-PER-SHARE> .250
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 17
<NAME> SHAWMUT LIMITED TERM INCOME FUND TRUST SHARES
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1994
<PERIOD-END> OCT-31-1994
<INVESTMENTS-AT-COST> 63,583,277
<INVESTMENTS-AT-VALUE> 61,595,825
<RECEIVABLES> 967,142
<ASSETS-OTHER> 24,453
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 62,587,420
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 180,997
<TOTAL-LIABILITIES> 180,977
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 66,292,431
<SHARES-COMMON-STOCK> 5,838,074
<SHARES-COMMON-PRIOR> 6,698,128
<ACCUMULATED-NII-CURRENT> 112,160
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (2,010,716)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (1,987,452)
<NET-ASSETS> 62,406,423
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 4,294,323
<OTHER-INCOME> 0
<EXPENSES-NET> 721,885
<NET-INVESTMENT-INCOME> 3,572,438
<REALIZED-GAINS-CURRENT> (1,963,565)
<APPREC-INCREASE-CURRENT> (2,193,724)
<NET-CHANGE-FROM-OPS> (584,851)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3,054,920
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,814,416
<NUMBER-OF-SHARES-REDEEMED> 2,299,425
<SHARES-REINVESTED> 172,029
<NET-CHANGE-IN-ASSETS> (8,451,032)
<ACCUMULATED-NII-PRIOR> 1,003
<ACCUMULATED-GAINS-PRIOR> (310,753)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 546,634
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 893,139
<AVERAGE-NET-ASSETS> 68,455,970
<PER-SHARE-NAV-BEGIN> 10.000
<PER-SHARE-NII> .520
<PER-SHARE-GAIN-APPREC> (.590)
<PER-SHARE-DIVIDEND> .480
<PER-SHARE-DISTRIBUTIONS> .000
<RETURNS-OF-CAPITAL> .000
<PER-SHARE-NAV-END> 9.450
<EXPENSE-RATIO> 103
<AVG-DEBT-OUTSTANDING> 2,053,280
<AVG-DEBT-PER-SHARE> .250
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 18
<NAME> SHAWMUT QUANTITATIVE EQUITY FUND INVMNT SHARES
<PERIOD-TYPE> 4-MOS
<FISCAL-YEAR-END> OCT-31-1994
<PERIOD-END> OCT-31-1994
<INVESTMENTS-AT-COST> 3,549,178
<INVESTMENTS-AT-VALUE> 3,556,437
<RECEIVABLES> 17,288
<ASSETS-OTHER> 2,042
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,575,767
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 39,500
<TOTAL-LIABILITIES> 39,500
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,527,653
<SHARES-COMMON-STOCK> 37,301
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 1,355
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 7,259
<NET-ASSETS> 375,349
<DIVIDEND-INCOME> 2,638
<INTEREST-INCOME> 32,681
<OTHER-INCOME> 0
<EXPENSES-NET> 12,603
<NET-INVESTMENT-INCOME> 22,716
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 7,259
<NET-CHANGE-FROM-OPS> 29,975
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,294
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 37,310
<NUMBER-OF-SHARES-REDEEMED> 135
<SHARES-REINVESTED> 126
<NET-CHANGE-IN-ASSETS> 3,536,267
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 8,318
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 71,918
<AVERAGE-NET-ASSETS> 3,400,957
<PER-SHARE-NAV-BEGIN> 10.030
<PER-SHARE-NII> .070
<PER-SHARE-GAIN-APPREC> .030
<PER-SHARE-DIVIDEND> .070
<PER-SHARE-DISTRIBUTIONS> .000
<RETURNS-OF-CAPITAL> .000
<PER-SHARE-NAV-END> 10.060
<EXPENSE-RATIO> 175
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> .000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 19
<NAME> SHAWMUT QUANTITATIVE EQUITY FUND TRUST SHARES
<PERIOD-TYPE> 4-MOS
<FISCAL-YEAR-END> OCT-31-1994
<PERIOD-END> OCT-31-1994
<INVESTMENTS-AT-COST> 3,549,178
<INVESTMENTS-AT-VALUE> 3,556,437
<RECEIVABLES> 17,288
<ASSETS-OTHER> 2,042
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,575,767
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 39,500
<TOTAL-LIABILITIES> 39,500
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,527,653
<SHARES-COMMON-STOCK> 314,297
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 1,355
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 7,259
<NET-ASSETS> 3,160,918
<DIVIDEND-INCOME> 2,638
<INTEREST-INCOME> 32,681
<OTHER-INCOME> 0
<EXPENSES-NET> 12,603
<NET-INVESTMENT-INCOME> 22,716
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 7,259
<NET-CHANGE-FROM-OPS> 29,975
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 20,748
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 319,168
<NUMBER-OF-SHARES-REDEEMED> 5,000
<SHARES-REINVESTED> 129
<NET-CHANGE-IN-ASSETS> 3,536,267
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 8,318
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 71,918
<AVERAGE-NET-ASSETS> 3,400,957
<PER-SHARE-NAV-BEGIN> 10.030
<PER-SHARE-NII> .070
<PER-SHARE-GAIN-APPREC> .030
<PER-SHARE-DIVIDEND> .070
<PER-SHARE-DISTRIBUTIONS> .000
<RETURNS-OF-CAPITAL> .000
<PER-SHARE-NAV-END> 10.060
<EXPENSE-RATIO> 150
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> .000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 20
<NAME> SHAWMUT SMALL CAP EQUITY FUND INVMNT SHARES
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1994
<PERIOD-END> OCT-31-1994
<INVESTMENTS-AT-COST> 118,593,038
<INVESTMENTS-AT-VALUE> 123,017,234
<RECEIVABLES> 222,697
<ASSETS-OTHER> 32,988
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 123,272,919
<PAYABLE-FOR-SECURITIES> 1,112,791
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 491,310
<TOTAL-LIABILITIES> 1,604,101
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 111,012,560
<SHARES-COMMON-STOCK> 1,787,767
<SHARES-COMMON-PRIOR> 1,339,205
<ACCUMULATED-NII-CURRENT> 13,090
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 6,218,972
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4,424,196
<NET-ASSETS> 121,668,818
<DIVIDEND-INCOME> 1,103,843
<INTEREST-INCOME> 325,478
<OTHER-INCOME> 0
<EXPENSES-NET> 1,300,603
<NET-INVESTMENT-INCOME> 128,718
<REALIZED-GAINS-CURRENT> 6,221,566
<APPREC-INCREASE-CURRENT> (4,130,546)
<NET-CHANGE-FROM-OPS> 2,219,738
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 33
<DISTRIBUTIONS-OF-GAINS> 466,043
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 638,429
<NUMBER-OF-SHARES-REDEEMED> 233,644
<SHARES-REINVESTED> 43,778
<NET-CHANGE-IN-ASSETS> 6,272,834
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 3,369,998
<OVERDISTRIB-NII-PRIOR> 7,435
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,180,502
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,672,140
<AVERAGE-NET-ASSETS> 118,157,154
<PER-SHARE-NAV-BEGIN> 11.210
<PER-SHARE-NII> (.010)
<PER-SHARE-GAIN-APPREC> .180
<PER-SHARE-DIVIDEND> .000
<PER-SHARE-DISTRIBUTIONS> .320
<RETURNS-OF-CAPITAL> .000
<PER-SHARE-NAV-END> 11.060
<EXPENSE-RATIO> 131
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> .000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 21
<NAME> SHAWMUT SMALL CAP EQUITY FUND TRUST SHARES
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1994
<PERIOD-END> OCT-31-1994
<INVESTMENTS-AT-COST> 118,593,038
<INVESTMENTS-AT-VALUE> 123,017,234
<RECEIVABLES> 222,697
<ASSETS-OTHER> 32,988
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<TOTAL-ASSETS> 123,272,919
<PAYABLE-FOR-SECURITIES> 1,112,791
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 491,310
<TOTAL-LIABILITIES> 1,604,101
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 111,012,560
<SHARES-COMMON-STOCK> 9,207,012
<SHARES-COMMON-PRIOR> 8,952,892
<ACCUMULATED-NII-CURRENT> 13,090
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 6,218,972
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4,424,196
<NET-ASSETS> 121,668,818
<DIVIDEND-INCOME> 1,103,843
<INTEREST-INCOME> 325,478
<OTHER-INCOME> 0
<EXPENSES-NET> 1,300,603
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