1933 Act Registration No. 33-16905
1940 Act Registration No. 811-5309
As filed with the Securities and Exchange Commission on April 30, 2002
FORM N-1A
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|
Pre-Effective Amendment No. | |
Post-Effective Amendment No. 61 |X|
and/or
|
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 |X|
Amendment No. 61
FIRST AMERICAN INVESTMENT FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
800 Nicollet Mall
Minneapolis, Minnesota 55402
(Address of Principal Executive Offices) (Zip Code)
(612) 303-1606
(Registrant's Telephone Number, including Area Code)
Christopher O. Petersen
U.S. Bancorp Center
800 Nicollet Mall, J1012057
Minneapolis, Minnesota 55402
(Name and Address of Agent for Service)
It is proposed that this filing shall become effective (check appropriate box):
| | immediately upon filing pursuant to paragraph (b) of Rule 485 |X| on April 30, 2002 pursuant to paragraph (b) of Rule 485 | | 60 days after filing pursuant to paragraph (a)(1) of Rule 485 | | on (date) pursuant to paragraph (a)(1) of Rule 485 | | 75 days after filing pursuant to paragraph (a)(2) of Rule 485 | | on (date) pursuant to paragraph (a)(2) of Rule 485
[LOGO] FIRST AMERICAN FUNDS(TM) APRIL 30, 2002
PROSPECTUS
FIRST AMERICAN INVESTMENT FUNDS, INC.
ASSET CLASS -- BOND FUNDS
|
OHIO TAX FREE
FUND
CLASS A AND CLASS C SHARES
AS WITH ALL MUTUAL FUNDS, THE
SECURITIES AND EXCHANGE COMMISSION
HAS NOT APPROVED OR DISAPPROVED THE
SHARES OF THIS FUND, OR DETERMINED
IF THE INFORMATION IN THIS PROSPECTUS
IS ACCURATE OR COMPLETE. ANY
STATEMENT TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Table of
CONTENTS
Ohio Tax Free Fund 2
--------------------------------------------------------------------------------
POLICIES & SERVICES
--------------------------------------------------------------------------------
Buying Shares 4
--------------------------------------------------------------------------------
Selling Shares 8
--------------------------------------------------------------------------------
Managing Your Investment 10
--------------------------------------------------------------------------------
ADDITIONAL INFORMATION
--------------------------------------------------------------------------------
Management 11
--------------------------------------------------------------------------------
More About The Fund 12
--------------------------------------------------------------------------------
Financial Highlights 14
--------------------------------------------------------------------------------
FOR MORE INFORMATION Back Cover
--------------------------------------------------------------------------------
|
Fund Summary |
INTRODUCTION
This section of the prospectus describes the objective of the First American Ohio Tax Free Fund, summarizes the main investment strategies used by the fund in trying to achieve its objective, and highlights the risks involved with these strategies. It also provides you with information about the performance, fees, and expenses of the fund.
AN INVESTMENT IN THE FUND IS NOT A DEPOSIT OF U.S. BANK NATIONAL ASSOCIATION AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
THIS PROSPECTUS AND THE RELATED STATEMENT OF ADDITIONAL INFORMATION DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY SHARES IN THE FUND, NOR SHALL ANY SUCH SHARES BE OFFERED OR SOLD TO ANY PERSON IN ANY JURISDICTION IN WHICH AN OFFER, SOLICITATION, PURCHASE OR SALE WOULD BE UNLAWFUL UNDER THE SECURITIES LAWS OF SUCH JURISDICTION.
1 PROSPECTUS - First American Ohio Tax Free Fund Class A and Class C Shares
Fund Summary
OHIO TAX FREE FUND
OBJECTIVE
Ohio Tax Free Fund has an objective of providing maximum current income that is exempt from both federal income tax and Ohio state income tax to the extent consistent with prudent investment risk.
MAIN INVESTMENT STRATEGIES
Under normal market conditions, Ohio Tax Free Fund invests at least 80% of its net assets (plus the amount of any borrowings for investment purposes) in municipal securities that pay interest that is exempt from federal and Ohio income tax, including the federal alternative minimum tax. The fund normally may invest up to 20% of its net assets in taxable obligations, including obligations the interest on which is subject to the federal alternative minimum tax. The fund may invest in:
o "general obligation" bonds, which are backed by the full faith, credit and taxing power of the issuer.
o "revenue" bonds, which are payable only from the revenues generated by a specific project or from another specific revenue source.
o participation interests in municipal leases.
o zero coupon municipal securities, which pay no cash income to their holders until they mature.
o inverse floating rate municipal securities (up to 10% of the fund's total assets).
In selecting securities for the fund, fund managers first determine their economic outlook and the direction in which inflation and interest rates are expected to move. In selecting individual securities consistent with this outlook, fund managers evaluate factors such as credit quality, duration, maturity, yield, liquidity and portfolio diversification.
The fund only invests in securities that, at the time of purchase, are either rated investment grade or are unrated and determined to be of comparable quality by the fund's advisor. If the rating of a security is reduced after purchase, or the credit quality of an unrated security declines, the fund is not required to sell the security, but may consider doing so.
The fund will attempt to maintain the weighted average maturity of its portfolio securities at 10 to 25 years under normal market conditions.
MAIN RISKS
The price and yield of this fund will change daily due to changes in interest rates and other factors, which means you could lose money. The main risks of investing in this fund include:
INTEREST RATE RISK. Debt securities typically decrease in value when interest rates rise. This risk is usually greater for longer-term debt securities. Inverse floating rate securities may be highly volatile as interest rates rise or fall. For additional explanation of inverse floating rate securities, see "More About The Fund -- Risks."
INCOME RISK. The fund's income could decline due to falling market interest rates.
CREDIT RISK. An issuer of debt securities may not make timely principal or interest payments on its securities. The revenue bonds and municipal lease obligations in which the fund invests may entail greater credit risk than the fund's investments in general obligation bonds.
CALL RISK. Some municipal securities held by the fund may be redeemed by the issuer, or "called," prior to their stated maturity dates. If a security is redeemed during a time of declining interest rates, the fund may be unable to reinvest in securities providing as high a level of income.
RISKS OF MUNICIPAL LEASE OBLIGATIONS. Many municipal leases and contracts contain "non-appropriation" clauses that provide that the governmental issuer has no obligation to make future payments under the lease or contract unless money is appropriated for this purpose by the appropriate legislative body.
POLITICAL AND ECONOMIC RISK. Because the fund invests primarily in municipal securities issued by the state of Ohio and its political subdivisions, the fund will be particularly affected by political and economic conditions and developments in that state. See the Statement of Additional Information for details. The value of municipal securities owned by the fund also may be adversely affected by future changes in federal or state income tax laws, including rate reductions or the imposition of a flat tax.
RISKS OF NON-DIVERSIFICATION. The fund is non-diversified. This means that it may invest a larger portion of its assets in a limited number of issuers than a diversified fund. Because a relatively high percentage of the fund's assets may be invested in the securities of a limited number of issuers, the fund may be more susceptible to any single economic, political or regulatory occurrence than a diversified fund.
RISKS OF UNRATED SECURITIES. The fund may invest up to 25% of its total assets in unrated securities (not including unrated securities that have been pre-refunded with U.S. Government securities and U.S. Government agency securities). When the fund purchases unrated securities, it will depend on the advisor's analysis of credit risk more heavily than usual. If the rating of a security is reduced after purchase, or the credit quality of an unrated security declines, the fund is not required to sell the security, but may consider doing so.
FUND PERFORMANCE
Because Ohio Tax Free Fund shares were not offered prior to the date of this prospectus, no performance information is presented for these shares.
2 PROSPECTUS - First American Ohio Tax Free Fund Class A and Class C Shares
Fund Summary
OHIO TAX FREE FUND CONTINUED
FEES AND EXPENSES
As an investor, you pay fees and expenses to buy and hold shares of the fund. You pay shareholder fees directly when you buy or sell shares. You pay annual fund operating expenses indirectly since they are deducted from fund assets.
---------------------------------------------------------------------------------------------------------------- SHAREHOLDER FEES (fees paid directly from your investment) CLASS A CLASS C ---------------------------------------------------------------------------------------------------------------- MAXIMUM SALES CHARGE (LOAD) 4.25% 2.00% MAXIMUM SALES CHARGE (LOAD) IMPOSED ON PURCHASES 4.25%(1) 1.00% (AS A PERCENTAGE OF OFFERING PRICE) MAXIMUM DEFERRED SALES CHARGE (LOAD) 0.00%(2) 1.00% (AS A PERCENTAGE OF ORIGINAL PURCHASE PRICE OR REDEMPTION PROCEEDS, WHICHEVER IS LESS) ANNUAL MAINTENANCE FEE(3) $ 25 $ 25 ONLY CHARGED TO ACCOUNTS WITH BALANCES BELOW $500 ANNUAL FUND OPERATING EXPENSES(4) (expenses that are deducted from fund assets) (AS A PERCENTAGE OF AVERAGE NET ASSETS) ---------------------------------------------------------------------------------------------------------------- Management Fees 0.50% 0.50% Distribution and Service (12b-1) Fees 0.25% 0.65%(5) Other Expenses(6) 0.50% 0.50% Total Annual Fund Operating Expenses 1.25% 1.65% ---------------------------------------------------------------------------------------------------------------- |
(1)Certain investors may qualify for reduced sales charges. See "Buying Shares -- Calculating Your Share Price."
(2)Class A share investments of $1 million or more on which no front-end sales charge is paid may be subject to a 1% contingent deferred sales charge. See "Buying Shares -- Calculating Your Share Price."
(3)The fund reserves the right to charge your account an annual maintenance fee of $25 if your balance falls below $500 as a result of selling or exchanging shares. See "Policies & Services -- Selling Shares, Accounts with Low Balances."
(4)Actual expenses for the fiscal year will be lower than those shown in the table because certain service providers have contractually agreed to waive fees and reimburse other fund expenses until September 30, 2002. These fee waivers and expense reimbursements may be terminated at any time after September 30, 2002 at the discretion of the service providers. The net expenses the fund will actually pay after waivers for the fiscal year ending September 30, 2002 are:
Waiver of Fund Expenses (0.50)% (0.50)% NET EXPENSES 0.75% 1.15% |
(5)The fund's Rule 12b-1 plan provides for Class C share distribution and service fees of 1.00%. However, the distributor has contractually agreed to limit those fees to 0.65% for the current fiscal year.
(6)"Other Expenses" are based on estimated amounts for the current fiscal year.
EXAMPLE This example is intended to help you compare the cost of investing in the fund with the cost of investing in other mutual funds. It assumes that you invest $10,000 for the time periods indicated, that your investment has a 5% return each year, and that the fund's operating expenses remain the same. Although your actual costs and returns may differ, based on these assumptions your costs would be:
CLASS C CLASS C
assuming redemption assuming no redemption
CLASS A at end of each period at end of each period
--------------------------------------------------------------------------------
1 year $498 $316 $216
3 years $756 $565 $565
|
3 PROSPECTUS - First American Ohio Tax Free Fund Class A and Class C Shares
Policies & Services
BUYING SHARES
Ohio Tax Free Fund offers three different share classes. This prospectus offers Class A and Class C shares; Class Y shares are available through a separate prospectus. There are differences among the fees and expenses for each of the three classes that will affect performance. These differences result from their separate arrangements for shareholder and distribution services, not from any difference in amounts charged by the investment advisor for core investment advisory services.
Because not everyone is eligible to buy every class, determine which classes you are eligible to buy and then decide which class best suits your needs. A number of factors, including the amount of your purchase and the length of time you expect to hold your shares, should be considered before choosing a share class. Contact your investment professional for help in deciding which class would be best for you.
The following describes the features of each class:
CLASS A SHARES. Class A shares have:
o a front-end sales charge determined by the amount of your purchase. See "Calculating Your Share Price -- Class A Shares."
o annual distribution and service (12b-1) fees of 0.25%.* See "Fund Summary -- Fees and Expenses."
o reduced sales charges for larger purchases. See "Reducing Your Sales Charge."
CLASS C SHARES. Class C shares have:
o a front-end sales charge of 1.00%. See "Calculating Your Share Price -- Class C Shares."
o a 1.00% contingent deferred sales charge (CDSC) if you redeem your shares within 18 months of purchase. See "Calculating Your Share Price -- Class C Shares."
o annual distribution and service (12b-1) fees of 1.00%.* See "Fund Summary -- Fees and Expenses."
*Class C shares do not convert to Class A shares so they will continue to have higher annual expenses than Class A shares for as long as you hold them.
Because Class A shares will usually be the better choice if your investment qualifies for a reduced sales charge:
o orders for Class C shares for $1 million or more will be treated as orders for Class A shares.
o orders for Class C shares by an investor eligible to purchase Class A shares without a front-end sales charge will be treated as orders for Class A shares.
CLASS Y SHARES. Class Y shares are only available to certain accounts for which qualifying institutions act in a fiduciary, agency or custodial capacity. Class Y shares are sold without a sales charge or distribution fee.
12b-1 FEES
The fund has adopted a plan under Rule 12b-1 of the Investment Company Act that allows it to pay its distributor an annual fee for the distribution and sale of its shares and for services provided to shareholders.
For 12b-1 fees are equal to: -------------------------------------------------------------------------------- Class A shares 0.25% of average daily net assets Class C shares 1%* of average daily net assets |
Because these fees are paid out of the fund's assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.
The Class A share 12b-1 fee is a shareholder servicing fee. For Class C shares, a portion of the 12b-1 fee equal to 0.25% of average daily net assets is a shareholder servicing fee and 0.75% is a distribution fee.
The fund's distributor uses the shareholder servicing fee to compensate investment professionals, participating institutions and "one-stop" mutual fund networks (institutions) for providing ongoing services to shareholder accounts. These institutions receive shareholder servicing fees equal to 0.25% of the fund's Class A share average daily net assets and 0.15% of the fund's Class C share average daily net assets attributable to shares sold through such institutions. The fund's distributor also pays institutions which sell Class C shares a 0.50% annual distribution fee beginning one year after the shares are sold. The advisor or the distributor may pay additional fees to institutions out of their own assets in exchange for sales and/or administrative services performed on behalf of the institution's customers.
*The distributor has agreed to waive amounts equal to 0.10% of the shareholder servicing fee and 0.25% of the distribution fee for Class C shares for the current fiscal year. Therefore, the distributor will proportionately reduce the annual fee referred to above that it pays to institutions in connection with their sales of Class C shares of the fund.
CALCULATING YOUR SHARE PRICE
Your purchase price will be based on the fund's net asset value (NAV) per share, which is generally calculated as of the close of regular trading on the New York Stock Exchange (usually 3 p.m. Central time) every day the exchange is open.
The fund's NAV is equal to the market value of its investments and other assets, less any liabilities, divided by the number of fund shares. If market prices are not readily available for an investment or if the advisor believes they are unreliable, fair value prices may be determined in good faith using methods approved by the fund's board of directors.
CLASS A SHARES. Your purchase price for Class A shares is typically the net asset value of your shares, plus a front-end sales charge. Sales charges vary depending on the amount of your
4 PROSPECTUS - First American Ohio Tax Free Fund Class A and Class C Shares
Policies & Services
BUYING SHARES CONTINUED
purchase. The fund's distributor receives the sales charge you pay and reallows a portion of the sales charge to your investment professional or participating institution.
Sales Charge Maximum
Reallowance
As a % of As a % of as a % of
Offering Net Amount Offering
Price Invested Price
--------------------------------------------------------------------------------
Less than $50,000 4.25% 4.44% 4.00%
$ 50,000 - $ 99,999 4.00% 4.17% 3.75%
$100,000 - $249,999 3.50% 3.63% 3.25%
$250,000 - $499,999 2.50% 2.56% 2.25%
$500,000 - $999,999 2.00% 2.04% 1.75%
$1 million and over 0.00% 0.00% 0.00%
|
REDUCING YOUR SALES CHARGE. As shown in the preceding tables, larger purchases of Class A shares reduce the percentage sales charge you pay. You also may reduce your sales charge in the following ways:
PRIOR PURCHASES. Prior purchases of Class A shares of any First American fund (except a money market fund) will be factored into your sales charge calculation. That is, you will receive credit for either the original purchase price or the current net asset value of the other Class A shares you hold at the time of your purchase, whichever is greater. For example, let's say you're making a $10,000 investment and you already own other Class A shares that you purchased for $25,000, but are now valued at $45,000. Since the current net asset value of your shares is greater than their purchase price, you will receive credit for their current value and your sales charge will be based on a total purchase amount of $55,000. To receive a reduced sales charge, you must notify the fund of your prior purchases. This must be done at the time of purchase, either directly with the fund in writing or by notifying your investment professional or financial institution.
PURCHASES BY RELATED ACCOUNTS. Concurrent and prior purchases of Class A shares of any First American fund by certain other accounts also will be combined to determine your sales charge. Each fund will combine purchases made by you, your spouse, and your children when it calculates the sales charge. In addition, the sales charge, if applicable, is reduced for purchases made at one time by a trustee or fiduciary for a single trust estate or a single fiduciary account. To receive a reduced sales charge, you must notify the fund of purchases by any related accounts. This must be done at the time of purchase, either directly with the fund in writing or by notifying your investment professional or financial institution.
LETTER OF INTENT. If you plan to invest $50,000 or more over a 13-month period in Class A shares of any First American fund (except the money market funds), you may reduce your sales charge by signing a non-binding letter of intent. (If you do not fulfill the letter of intent, you must pay the applicable sales charge.) In addition, if you reduce your sales charge to zero under a letter of intent and then sell your Class A shares within 18 months of their purchase, you may be charged a contingent deferred sales charge of 1%. See "For Investments of Over $1 Million." More information on these ways to reduce your sales charge appears in the Statement of Additional Information (SAI). The SAI also contains information on investors who are eligible to purchase Class A shares without a sales charge.
FOR INVESTMENTS OF OVER $1 MILLION
There is no initial sales charge on Class A share purchases of $1 million or more. However, your investment professional or financial institution may receive a commission of up to 1% on your purchase. If such a commission is paid, you will be assessed a contingent deferred sales charge (CDSC) of 1% if you sell your shares within 18 months. The fund's distributor receives any CDSC imposed when you sell your Class A shares. The CDSC is based on the value of your shares at the time of purchase or at the time of sale, whichever is less. The charge does not apply to shares you acquired by reinvesting your dividend or capital gain distributions.
To help lower your costs, shares that are not subject to a CDSC will be sold first. Other shares will then be sold in an order that minimizes your CDSC. The CDSC for Class A shares will be waived for:
o redemptions following the death or disability (as defined in the Internal Revenue Code) of a shareholder.
o redemptions that equal the minimum required distribution from an individual retirement account or other retirement plan to a shareholder who has reached the age of 70 1/2.
o redemptions through a systematic withdrawal plan, at a rate of up to 12% a year of your account's value. During the first year, the 12% annual limit will be based on the value of your account on the date the plan is established. Thereafter, it will be based on the value of your account on the preceding December 31.
o redemptions required as a result of over contribution to an IRA plan.
5 PROSPECTUS - First American Ohio Tax Free Fund Class A and Class C Shares
Policies & Services
BUYING SHARES CONTINUED
CLASS C SHARES. Your purchase price for Class C shares is their net asset value plus a front-end sales charge equal to 1% of the purchase price (1.01% of the net amount invested). If you redeem your shares within 18 months of purchase, you will be assessed a contingent deferred sales charge (CDSC) of 1% of the value of your shares at the time of purchase or at the time of sale, whichever is less. The CDSC does not apply to shares you acquired by reinvesting your dividend or capital gain distributions. Shares will be sold in the order that minimizes your CDSC.
Even though your sales charge is only 1%, the fund's distributor pays a commission equal to an additional 1% of your purchase price to your investment professional or participating institution. Furthermore, the advisor may pay its affiliated broker-dealers, U.S. Bancorp Piper Jaffray Inc. and U.S. Bancorp Investments, Inc., an additional commission of up to 1% of your purchase price. The distributor receives any CDSC imposed when you sell your Class C shares.
The CDSC for Class C shares will be waived for:
o redemptions following the death or disability (as defined in the Internal Revenue Code) of a shareholder.
o redemptions that equal the minimum required distribution from an individual retirement account or other retirement plan to a shareholder who has reached the age of 70 1/2.
o redemptions through a systematic withdrawal plan, at a rate of up to 12% a year of your account's value. During the first year, the 12% annual limit will be based on the value of your account on the date the plan is established. Thereafter, it will be based on the value of your account on the preceding December 31.
o redemptions required as a result of over contribution to an IRA plan.
HOW TO BUY SHARES
You may become a shareholder in the fund with an initial investment of $1,000 or more ($250 for a retirement plan or a Uniform Gifts to Minors Act/Uniform Transfers to Minors Act (UGMA/UTMA) account). Additional investments can be made for as little as $100 ($25 for a retirement plan or an UGMA/UTMA account). The fund has the right to waive these minimum investment requirements for employees of the fund's advisor and its affiliates. The fund also has the right to reject any purchase order.
You may buy shares on any day the New York Stock Exchange is open. However, purchases of shares may be restricted in the event of an early or unscheduled close of the New York Stock Exchange. Your shares will be priced at the next net asset value calculated after your order is accepted by the fund, plus any applicable sales charge. "Accepted" means that you placed an order with your investment professional or financial institution and it has been processed, or your payment has been received and your application is complete. To make sure that your order is accepted, follow the directions for purchasing shares given below.
BY PHONE. You may purchase shares by calling your investment professional or financial institution, if they have a sales agreement with the fund's distributor. In many cases, your order will be effective that day if received by your investment professional or financial institution by the close of regular trading on the New York Stock Exchange. In some cases, however, investment professionals or financial institutions may have different cutoff times for orders to purchase fund shares. In these cases, you will have to transmit your request by an earlier time in order for your purchase request to be effective that day. This allows your investment professional or financial institution time to process your request and transmit it to the fund. Some financial institutions may charge a fee for helping you purchase shares. Contact your investment professional or financial institution for more information.
If you are paying by wire, you may purchase shares by calling Investor Services at 800 677-FUND before the close of regular trading on the New York Stock Exchange (usually 3 p.m. Central time). All information will be taken over the telephone, and your order will be placed when the fund receives payment by wire. Wire federal funds as follows:
U.S. Bank National Association
ABA Number: 0420-00013
Account Number: 112-952-137
Credit to: First American (OHIO TAX FREE FUND, INVESTOR NAME AND INVESTOR
ACCOUNT NUMBER)
You cannot purchase shares by wire on days when federally chartered banks are closed.
BY MAIL. To purchase shares by mail, simply complete and sign a new account application, enclose a check made payable to the Ohio Tax Free Fund, and mail both to:
First American Funds
P.O. Box 3011
Milwaukee, WI 53201-3011
Overnight express mail may be sent to:
First American Funds
615 East Michigan Street
Milwaukee, WI 53202
6 PROSPECTUS - First American Ohio Tax Free Fund Class A and Class C Shares
Policies & Services
BUYING SHARES CONTINUED
After you have established an account, you may continue to purchase shares by mailing your check to First American Funds at the same address.
Please note the following:
o all purchases must be drawn on a bank located within the United States and payable in U.S. dollars to First American Funds.
o third-party checks, credit cards, credit card checks and cash are not accepted.
o if a check does not clear your bank, the fund reserves the right to cancel the purchase, and you could be liable for any losses or fees incurred.
To purchase shares as part of a savings discipline, you may add to your investment on a regular basis:
o by having $100 or more ($25 for a retirement plan or a Uniform Gifts to Minors Act/Uniform Transfers to Minors Act account) automatically withdrawn from your bank account on a periodic basis and invested in fund shares.
o through automatic monthly exchanges of your First American Fund into another First American Fund of the same class.
You may apply for participation in either of these programs through your investment professional or financial institution or by calling Investor Services at 800 677-FUND.
7 PROSPECTUS - First American Ohio Tax Free Fund Class A and Class C Shares
Policies & Services
SELLING SHARES
You may sell your shares on any day when the New York Stock Exchange is open. However redemption of shares may be restricted in the event of an early or unscheduled close of the New York Stock Exchange. Your shares will be sold at the next NAV calculated after your order is accepted by the fund, less any applicable contingent deferred sales charge. Be sure to read the section "Buying Shares" for a description of contingent deferred sales charges. To make sure that your order is accepted, follow the directions for selling shares given below.
The proceeds from your sale normally will be mailed or wired within three days, but in no event more than seven days, after your request is received in proper form.
To minimize the effect of large redemption requests, the fund reserves the right to fulfill these redemption requests by distributing readily marketable securities in the fund's portfolio, rather than paying you in cash. See "Redemption In Kind" below.
BY PHONE. If you purchased shares through an investment professional or a financial institution, simply call them to sell your shares. In many cases, your redemption will be effective that day if received by your investment professional or financial institution by the close of regular trading on the New York Stock Exchange. In some cases, however, investment professionals or financial institutions may have different cutoff times for orders to redeem fund shares. In these cases, you will have to call by an earlier time in order for your redemption to be effective that day. This allows your investment professional or financial institution time to process your request and transmit it to the fund. Contact your investment professional or financial institution directly for more information.
If you did not purchase shares through an investment professional or a financial institution, you may sell your shares by calling Investor Services at 800 677-FUND. Proceeds can be wired to your bank account (if the proceeds are at least $1,000 and you have previously supplied your bank account information to the fund) or sent to you by check. The fund reserves the right to limit telephone redemptions to $50,000 per day.
If you recently purchased your shares by check or through the Automated Clearing House (ACH), proceeds from the sale of those shares may not be available until your check or ACH payment has cleared, which may take up to 15 calendar days from the date of purchase.
BY MAIL. To sell shares by mail, send a written request to your investment professional or financial institution, or to the fund at the following address:
First American Funds
P.O. Box 3011
Milwaukee, WI 53201-3011
Overnight express mail may be sent to:
First American Funds
615 East Michigan Street
Milwaukee, WI 53202
Your request should include the following information:
o name of the fund.
o account number.
o dollar amount or number of shares redeemed.
o name on the account.
o signatures of all registered account owners.
Signatures on a written request must be guaranteed if:
o you would like the proceeds from the sale to be paid to anyone other than to the shareholder of record.
o you would like the check mailed to an address other than the address on the fund's records.
o your redemption request is for $50,000 or more.
A signature guarantee assures that a signature is genuine and protects shareholders from unauthorized account transfers. Banks, savings and loan associations, trust companies, credit unions, broker-dealers and member firms of a national securities exchange may guarantee signatures. Call your financial institution to determine if it has this capability.
Proceeds from a written redemption request will be sent to you by check unless another form of payment is requested.
If your account has a value of $5,000 or more, you may redeem a specific dollar amount from your account on a regular basis. To set up systematic withdrawals, contact your investment professional or financial institution.
You should not make systematic withdrawals if you plan to continue investing in the fund, due to sales charges and tax liabilities.
If you sell Class A shares of a First American fund (except money market fund shares on which you have not paid a sales charge), you may reinvest in Class A shares of that fund or another First American fund within 180 days without a sales charge. To reinvest in Class A shares at net asset value (without paying a sales charge), you must notify the fund directly in writing or notify your investment professional or financial institution.
Except for retirement plans and Uniform Gifts to Minors Act/Uniform Transfers to Minors Act accounts, if your account balance falls below $500 as a result of selling or exchanging shares, the fund reserves the right to either:
o deduct a $25 annual account maintenance fee, or
o close your account and send you the proceeds, less any applicable contingent deferred sales charge.
Before taking any action, however, the fund will send you written notice of the action it intends to take and give you 30 days to re-establish a minimum account balance of $500.
8 PROSPECTUS - First American Ohio Tax Free Fund Class A and Class C Shares
Policies & Services
SELLING SHARES CONTINUED
If your investment goals or your financial needs change, you may move from one First American fund to another First American fund. There is no fee to exchange shares. You may exchange your shares on any day when the New York Stock Exchange is open. However, exchanges of shares may be restricted in the event of an early or unscheduled close of the New York Stock Exchange.
Generally, you may exchange your shares only for shares of the same class. However, you may exchange your Class A shares for Class Y shares (or Class S shares if available) of the same or another First American fund if you subsequently become eligible to participate in that class (for example, by opening a fiduciary, custody or agency account with a financial institution which invests in Class Y shares or Class S shares).
Exchanges are made based on the net asset value per share of each fund at the time of the exchange. When you exchange your Class A shares for Class A shares of another First American fund, you do not have to pay a sales charge. When you exchange your Class C shares for Class C shares of another First American fund, the time you held the shares of the "old" fund will be added to the time you hold the shares of the "new" fund for purposes of determining your CDSC.
Before exchanging into any fund, be sure to read its prospectus carefully. A fund may change or cancel its exchange policies at any time. You will be notified of any changes. The funds have the right to limit exchanges to four times per year.
BY PHONE. If both funds have identical shareholder registrations, you may exchange shares by calling your investment professional, your financial institution, or by calling the funds directly. To request an exchange through the funds, call Investor Services at 800 677-FUND. Your instructions must be received before 3 p.m. Central time, or by the time specified by your investment professional or financial institution, in order for shares to be exchanged the same day.
BY MAIL. To exchange shares by written request, please follow the procedures under "Selling Shares." Be sure to include the names of both funds involved in the exchange.
You may buy, sell, or exchange shares by telephone, unless you elected on your new account application to restrict this privilege. If you wish to reinstate this option on an existing account, please call Investor Services at 800 677-FUND to request the appropriate form.
The fund and its agents will not be responsible for any losses that may result from acting on wire or telephone instructions that they reasonably believe to be genuine. The fund and its agents will each follow reasonable procedures to confirm that instructions received by telephone are genuine, which may include taping telephone conversations.
It may be difficult to reach the fund by telephone during periods of unusual market activity. If you are unable to reach the fund or its agents by telephone, please consider sending written instructions.
Generally, proceeds from redemption requests will be paid in cash. However, to minimize the effect of large redemption requests on the fund and its remaining shareholders, the fund reserves the right to pay part or all of the proceeds from a redemption request in a proportionate share of readily marketable securities in the fund instead of in cash. In selecting securities for a redemption in kind, the advisor will consider the best interests of the fund and the remaining fund shareholders, and will value these securities in accordance with the pricing methods employed to calculate the fund's net asset value per share. If you receive redemption proceeds in kind, you should expect to incur transaction costs upon the disposition of the securities received in the redemption.
9 PROSPECTUS - First American Ohio Tax Free Fund Class A and Class C Shares
Policies & Services
MANAGING YOUR INVESTMENT
SHAREHOLDER REPORTS. Shareholder reports are mailed twice a year, in November and May. They include financial statements and performance information, and on an annual basis, a message from your portfolio managers and the auditors' report.
In an attempt to reduce shareholder costs and help eliminate duplication, the fund will try to limit its mailings to one report for each address that lists one or more shareholders with the same last name. If you would like additional copies, please call Investor Services at 800 677-FUND.
STATEMENTS AND CONFIRMATIONS. Statements summarizing activity in your account are mailed quarterly. Confirmations are mailed following each purchase or sale of fund shares. Generally, the fund does not send statements for funds held in a brokerage account.
DIVIDENDS AND DISTRIBUTIONS
Dividends from the fund's net investment income are declared and paid monthly. Any capital gains are distributed at least once each year.
On the ex-dividend date for a distribution, the fund's share price is reduced by the amount of the distribution. If you buy shares just before the ex-dividend date, in effect, you "buy the dividend." You will pay the full price for the shares and then receive a portion of that price back as a distribution, all or a portion of which may be taxable (to the same extent the distribution is otherwise taxable to fund shareholders).
Dividend and capital gain distributions will be reinvested in additional shares of the fund, unless you request that distributions be reinvested in another First American fund or paid in cash. This request may be made on your new account form or by contacting your financial institution. If you request that your distributions be paid in cash but those distributions cannot be delivered because of an incorrect mailing address, the undelivered distributions and all future distributions will be reinvested in fund shares at the current NAV.
Some of the tax consequences of investing in the fund are discussed below. More information about taxes is in the Statement of Additional Information. However, because everyone's tax situation is unique, always consult your tax professional about federal, state and local tax consequences.
TAXES ON DISTRIBUTIONS. The fund intends to meet certain federal tax requirements so that distributions of tax-exempt interest income may be treated as "exempt-interest dividends." These dividends are not subject to regular federal income tax. However, the fund may invest up to 20% of its net assets in municipal securities the interest on which is subject to the alternative minimum tax. Any portion of exempt-interest dividends attributable to interest on these securities may increase some shareholders' alternative minimum tax. The fund expects that its distributions will consist primarily of exempt-interest dividends.
Distributions paid from any interest income that is not tax-exempt and from any net realized capital gains will be taxable whether you reinvest those distributions or take them in cash. Distributions of the fund's long-term net capital gains are taxable as long-term capital gains, regardless of how long you have held your shares.
TAXES ON TRANSACTIONS. The sale of fund shares, or the exchange of the fund's shares for shares of another fund, will be a taxable event and may result in a capital gain or loss. The gain or loss will be considered long-term if you have held your shares for more than one year. A gain or loss on shares held for one year or less is considered short-term and is taxed at the same rates as ordinary income.
If in redemption of his or her shares a shareholder receives a distribution of readily marketable securities instead of cash, the shareholder will be treated as receiving an amount equal to the fair market value of the securities at the time of the distribution for purposes of determining capital gain or loss on the redemption, and will also acquire a basis in the shares for federal income tax purposes equal to their fair market value.
The exchange of one class of shares for another class of shares in the same fund will not be taxable.
OHIO INCOME TAXATION. Dividends paid by Ohio Tax Free Fund will be exempt from Ohio income taxes for individuals, trusts, estates, and corporations to the extent they are derived from interest on Ohio municipal obligations.
10 PROSPECTUS - First American Ohio Tax Free Fund Class A and Class C Shares
Additional Information
MANAGEMENT
U.S. Bancorp Asset Management, Inc., is the fund's investment advisor. U.S. Bancorp Asset Management provides investment management services to individuals and institutions, including corporations, foundations, pensions and retirement plans. As of December 31, 2001, U.S. Bancorp Asset Management and its affiliates had more than $121 billion in assets under management, including investment company assets of more than $54 billion. As investment advisor, U.S. Bancorp Asset Management manages the fund's business and investment activities, subject to the authority of the fund's board of directors.
The fund has contractually agreed to pay the investment advisor a monthly fee for providing investment advisory services equal, on an annual basis, to 0.50% of average daily net assets.
DIRECT CORRESPONDENCE TO:
First American Funds
P.O. Box 1330
Minneapolis, Minnesota 55440-1330
INVESTMENT ADVISOR
U.S. Bancorp Asset Management, Inc.
800 Nicollet Mall
Minneapolis, Minnesota 55402
DISTRIBUTOR
Quasar Distributors, LLC
615 E. Michigan Street
Milwaukee, WI 53202
ADDITIONAL COMPENSATION
U.S. Bancorp Asset Management and other affiliates of U.S. Bancorp may act as fiduciary with respect to plans subject to the Employee Retirement Income Security Act of 1974 (ERISA) and other trust and agency accounts that invest in the First American funds. As described above, U.S. Bancorp Asset Management receives compensation for acting as the fund's investment advisor. U.S. Bancorp Asset Management and its affiliates also receive compensation in connection with the following:
CUSTODY SERVICES. U.S. Bank National Association (U.S. Bank) provides or compensates others to provide custody services to the fund. U.S. Bank is paid monthly fees equal, on an annual basis, to 0.01% of the fund's average daily net assets. In addition, U.S. Bank is reimbursed for its out-of-pocket expenses incurred while providing custody services to the fund.
ADMINISTRATION SERVICES. U.S. Bancorp Asset Management and its affiliate, U.S. Bancorp Fund Services, LLC (Co-Administrators), provide or compensate others to provide administrative services to the First American family of funds. These services include general administrative and accounting services, transfer agency and dividend disbursing services, blue sky services, and shareholder services. With respect to the First American open-end mutual funds, the Co-Administrators receive total fees on an annual basis, up to 0.25% of the aggregate average daily net assets of First American Investment Funds, Inc., First American Strategy Funds, Inc. and First American Insurance Portfolios, Inc., and up to 0.20% of the aggregate average daily net assets of First American Funds, Inc. The funds also pay the Co-Administrators fees based upon the number of funds and accounts maintained. In addition, the Co-Administrators are reimbursed for their out-of-pocket expenses incurred while providing administration services to the funds.
DISTRIBUTION SERVICES. Quasar Distributors, LLC, an affiliate of U.S. Bancorp Asset Management, serves as distributor of the fund and receives out of pocket expenses incurred while providing distribution and other sub-administrative services for the fund.
BROKERAGE TRANSACTIONS. When purchasing and selling portfolio securities for the fund, the fund's investment advisor may place trades through its affiliates, U.S. Bancorp Investments, Inc. and U.S. Bancorp Piper Jaffray Inc., which will earn commissions on these transactions.
SHAREHOLDER SERVICING FEES. To the extent that fund shares are held through U.S. Bancorp Asset Management, U.S. Bank or their broker-dealer affiliates, U.S. Bancorp Investments, Inc. and U.S. Bancorp Piper Jaffray Inc., those entities may receive shareholder servicing fees from the fund's distributor.
PORTFOLIO MANAGEMENT
The fund's investments are managed by a team of persons associated with U.S. Bancorp Asset Management.
11 PROSPECTUS - First American Ohio Tax Free Fund Class A and Class C Shares
Additional Information
MORE ABOUT THE FUND
OBJECTIVES
The fund's objective, which is described in the "Fund Summary" section, may be changed without shareholder approval. If the fund's objective changes, you will be notified at least 60 days in advance. Please remember: There is no guarantee that the fund will achieve its objective.
INVESTMENT STRATEGIES
The fund's main investment strategies are discussed in the "Fund Summary" section. These are the strategies that the fund's investment advisor believes are most likely to be important in trying to achieve the fund's objective. You should be aware that the fund may also use strategies and invest in securities that are not described in this prospectus, but that are described in the Statement of Additional Information (SAI). For a copy of the SAI, call Investor Services at 800 677-FUND.
INVESTMENT APPROACH. In selecting securities for the fund, fund managers first determine their economic outlook and the direction in which inflation and interest rates are expected to move. In selecting individual securities consistent with this outlook, the fund managers evaluate factors such as credit quality, yield, maturity, liquidity and portfolio diversification. Fund managers conduct research on potential and current holdings in the fund to determine whether the fund should purchase or retain a security. This is a continuing process the focus of which changes according to market conditions, the availability of various permitted investments, and cash flows into and out of the fund.
MUNICIPAL SECURITIES. Municipal securities are issued to finance public infrastructure projects such as streets and highways, schools, water and sewer systems, hospitals and airports. They also may be issued to refinance outstanding obligations as well as to obtain funds for general operating expenses and for loans to other public institutions and facilities.
The fund may invest in municipal securities such as "general obligation" bonds, "revenue" bonds, and participation interests in municipal leases. General obligation bonds are backed by the full faith, credit and taxing power of the issuer. Revenue bonds are payable only from the revenues generated by a specific project or from another specific revenue source. Participation interests in municipal leases are undivided interests in a lease, installment purchase contract or conditional sale contract entered into by a state or local government unit to acquire equipment or facilities. Municipal leases frequently have special risks which generally are not associated with general obligations bonds or revenue bonds. See "Risks of Municipal Lease Obligations."
The municipal securities in which the fund invests may include refunded bonds and zero coupon bonds. Refunded bonds may have originally been issued as general obligation or revenue bonds, but become "refunded" when they are secured by an escrow fund, usually consisting entirely of direct U.S. government obligations and/or U.S. government agency obligations. Zero coupon bonds are issued at substantial discounts from their value at maturity and pay no cash income to their holders until they mature. When held to maturity, their entire return comes from the difference between their purchase price and their maturity value.
Up to 10% of the fund's total assets may be invested in inverse floating rate municipal securities. The values of these securities, as well as zero coupon bonds, may be highly volatile as interest rates rise or fall. See "Interest Rate Risk" and "Risks of Inverse Floating Rate Securities."
TEMPORARY INVESTMENTS. In an attempt to respond to adverse market, economic, political, or other conditions, the fund may temporarily invest without limit in cash and in U.S. dollar-denominated high-quality money market instruments and other short-term securities, including securities which pay income that is subject to federal and state income tax. These investments may include money market funds advised by the fund's advisor. Because these investments may be taxable, and may result in a lower yield than would be available from investments with a lower quality or longer term, they may prevent the fund from achieving its investment objective.
PORTFOLIO TURNOVER. Fund managers may trade securities frequently, resulting, from time to time, in an annual portfolio turnover rate of over 100%. Trading of securities may produce capital gains, which are taxable to shareholders when distributed. Active trading may also increase the amount of commissions or mark-ups to broker-dealers that the fund pays when it buys and sells securities.
The main risks of investing in the fund are summarized in the "Fund Summary" section. More information about fund risks is presented below.
INTEREST RATE RISK. Debt securities in the fund will fluctuate in value with changes in interest rates. In general, debt securities will increase in value when interest rates fall and decrease in value when interest rates rise. Longer-term debt securities are generally more sensitive to interest rate changes. The fund may invest in zero coupon securities, which do not pay interest on a current basis and which may be highly volatile as interest rates rise or fall. The fund's investments in inverse floating rate municipal securities also may be highly volatile with changing interest rates. See "Risks of Inverse Floating Rate Securities."
12 PROSPECTUS - First American Ohio Tax Free Fund Class A and Class C Shares
Additional Information
MORE ABOUT THE FUND CONTINUED
INCOME RISK. The fund's income could decline due to falling market interest rates. This is because, in a falling interest rate environment, the fund generally will have to invest the proceeds from sales of fund shares, as well as the proceeds from maturing portfolio securities (or portfolio securities that have been called, see "Call Risk") in lower-yielding securities.
CREDIT RISK. The fund is subject to the risk that the issuers of debt securities held by the fund will not make payments on the securities, or that the other party to a contract (such as a repurchase agreement) will default on its obligations. There is also the risk that an issuer could suffer adverse changes in financial condition that could lower the credit quality of a security. This could lead to greater volatility in the price of the security and in shares of the fund. Also, a change in the credit quality rating of a bond could affect the bond's liquidity and make it more difficult for the fund to sell.
The fund attempts to minimize credit risk by investing in securities considered at least investment grade at the time of purchase. However, all of these securities, especially those in the lower investment grade rating categories, have credit risk. In adverse economic or other circumstances, issuers of these lower rated securities are more likely to have difficulty making principal and interest payments than issuers of higher rated securities. When the fund purchases unrated securities, it will depend on the advisor's analysis of credit risk more heavily than usual.
CALL RISK. Many municipal bonds may be redeemed at the option of the issuer, or "called," before their stated maturity date. In general, an issuer will call its bonds if they can be refinanced by issuing new bonds which bear a lower interest rate. The fund is subject to the possibility that during periods of falling interest rates, a municipal bond issuer will call its high-yielding bonds. The fund would then be forced to invest the unanticipated proceeds at lower interest rates, resulting in a decline in the fund's income.
POLITICAL AND ECONOMIC RISK. The values of municipal securities may be adversely affected by local political and economic conditions and developments. Adverse conditions in an industry significant to a local economy could have a correspondingly adverse effect on the financial condition of local issuers. Other factors that could affect municipal securities include a change in the local, state or national economy, demographic factors, ecological or environmental concerns, statutory limitations on the issuer's ability to increase taxes and other developments generally affecting the revenue of issuers (for example, legislation or court decisions reducing state aid to local governments or mandating additional services). To the extent the fund invests in the securities of issuers located in a single state, it will be disproportionately affected by political and economic conditions and developments in that state. The value of municipal securities also may be adversely affected by future changes in federal or state income tax laws, including rate reductions or the imposition of a flat tax.
RISKS OF INVERSE FLOATING RATE SECURITIES. The fund may invest up to 10% of its total assets in inverse floating rate municipal securities. These securities pay interest at a rate that varies inversely to changes in the interest rate of specified municipal securities or a specified index. The interest rate on this type of security will generally change at a multiple of any change in the reference interest rate. As a result, the values of these securities may be highly volatile as interest rates rise or fall.
RISKS OF MUNICIPAL LEASE OBLIGATIONS. The fund may purchase participation interests in municipal leases. These are undivided interests in a lease, installment purchase contract or conditional sale contract entered into by a state or local government unit to acquire equipment or facilities. Participation interests in municipal leases pose special risks because many leases and contracts contain "non-appropriation" clauses that provide that the governmental issuer has no obligation to make future payments under the lease or contract unless money is appropriated for this purpose by the appropriate legislative body. Although these kinds of obligations are secured by the leased equipment or facilities, it might be difficult and time consuming to dispose of the equipment or facilities in the event of non-appropriation, and the fund might not recover the full principal amount of the obligation.
RISKS OF ACTIVE MANAGEMENT. The fund is actively managed and its performance therefore will reflect in part the advisor's ability to make investment decisions which are suited to achieving the fund's investment objective. Due to its active management, the fund could underperform other mutual funds with similar investment objectives.
13 PROSPECTUS - First American Ohio Tax Free Fund Class A and Class C Shares
Additional Information
FINANCIAL HIGHLIGHTS
FINANCIAL HIGHLIGHTS
No information is available as the fund's shares were not offered prior to the date of this prospectus.
14 PROSPECTUS - First American Ohio Tax Free Fund Class A and Class C Shares
More information about the fund is available in the fund's Statement of Additional Information, and annual and semiannual reports, and on the First American funds' Internet Web site.
Information about the First American funds may be viewed on the funds' Internet Web site at http://www.firstamericanfunds.com.
The SAI provides more details about the fund and its policies. A current SAI is on file with the Securities and Exchange Commission (SEC) and is incorporated into this prospectus by reference (which means that it is legally considered part of this prospectus).
Additional information about the fund's investments is available in the fund's annual and semiannual reports to shareholders. In the fund's annual report, you will find a discussion of the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year.
You can obtain a free copy of the fund's SAI and/or free copies of the fund's most recent annual or semiannual reports by calling Investor Services at 800 677-FUND. The material you request will be sent by first-class mail or other means designed to ensure equally prompt delivery, within three business days of receipt of the request.
You can also obtain copies of this information, after paying a duplicating fee, by electronic request at the following email address: publicinfo@sec.gov, or by writing the SEC's Public Reference Section, Washington, D.C. 20549-0102. For more information, call 1-202-942-8090.
Information about the fund is also available on the Internet. Text-only versions of fund documents can be viewed online or downloaded from the EDGAR Database on the SEC's Internet site at http://www.sec.gov.
FIRST AMERICAN FUNDS P.O. Box 1330, Minneapolis, MN 55440-1330
U.S. Bancorp Asset Management, Inc., serves as the investment advisor to the First American Funds.
First American Funds are distributed by Quasar Distributors, LLC, which is located in Milwaukee, WI 53202, and is an affiliate of the investment advisor.
PROOHIOBONDA 1/02
SEC file number: 811-05309 [LOGO] FIRST AMERICAN FUNDS(TM)
[LOGO] FIRST AMERICAN FUNDS(TM) APRIL 30, 2002
PROSPECTUS
FIRST AMERICAN INVESTMENT FUNDS, INC.
ASSET CLASS -- BOND FUNDS
|
OHIO TAX FREE
FUND
CLASS Y SHARES
AS WITH ALL MUTUAL FUNDS, THE
SECURITIES AND EXCHANGE COMMISSION
HAS NOT APPROVED OR DISAPPROVED THE
SHARES OF THIS FUND, OR DETERMINED
IF THE INFORMATION IN THIS PROSPECTUS
IS ACCURATE OR COMPLETE. ANY
STATEMENT TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Table of
CONTENTS
Ohio Tax Free Fund 2
--------------------------------------------------------------------------------
POLICIES & SERVICES
--------------------------------------------------------------------------------
Buying and Selling Shares 4
--------------------------------------------------------------------------------
Managing Your Investment 6
--------------------------------------------------------------------------------
ADDITIONAL INFORMATION
--------------------------------------------------------------------------------
Management 7
--------------------------------------------------------------------------------
More About The Fund 8
--------------------------------------------------------------------------------
Financial Highlights 10
--------------------------------------------------------------------------------
FOR MORE INFORMATION Back Cover
--------------------------------------------------------------------------------
|
Fund Summary |
INTRODUCTION
This section of the prospectus describes the objective of the First American Ohio Tax Free Fund, summarizes the main investment strategies used by the fund in trying to achieve its objective, and highlights the risks involved with these strategies. It also provides you with information about the performance, fees, and expenses of the fund.
AN INVESTMENT IN THE FUND IS NOT A DEPOSIT OF U.S. BANK NATIONAL ASSOCIATION AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
THIS PROSPECTUS AND THE RELATED STATEMENT OF ADDITIONAL INFORMATION DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY SHARES IN THE FUND, NOR SHALL ANY SUCH SHARES BE OFFERED OR SOLD TO ANY PERSON IN ANY JURISDICTION IN WHICH AN OFFER, SOLICITATION, PURCHASE OR SALE WOULD BE UNLAWFUL UNDER THE SECURITIES LAWS OF SUCH JURISDICTION.
1 PROSPECTUS - First American Ohio Tax Free Fund Class Y Shares
Fund Summary
OHIO TAX FREE FUND
OBJECTIVE
Ohio Tax Free Fund has an objective of providing maximum current income that is exempt from both federal income tax and Ohio state income tax to the extent consistent with prudent investment risk.
MAIN INVESTMENT STRATEGIES
Under normal market conditions, Ohio Tax Free Fund invests at least 80% of its net assets (plus the amount of any borrowings for investment purposes) in municipal securities that pay interest that is exempt from federal and Ohio income tax, including the federal alternative minimum tax. The fund normally may invest up to 20% of its net assets in taxable obligations, including obligations the interest on which is subject to the federal alternative minimum tax. The fund may invest in:
o "general obligation" bonds, which are backed by the full faith, credit and taxing power of the issuer.
o "revenue" bonds, which are payable only from the revenues generated by a specific project or from another specific revenue source.
o participation interests in municipal leases.
o zero coupon municipal securities, which pay no cash income to their holders until they mature.
o inverse floating rate municipal securities (up to 10% of the fund's total assets).
In selecting securities for the fund, fund managers first determine their economic outlook and the direction in which inflation and interest rates are expected to move. In selecting individual securities consistent with this outlook, fund managers evaluate factors such as credit quality, duration, maturity, yield, liquidity and portfolio diversification.
The fund only invests in securities that, at the time of purchase, are either rated investment grade or are unrated and determined to be of comparable quality by the fund's advisor. If the rating of a security is reduced after purchase, or the credit quality of an unrated security declines, the fund is not required to sell the security, but may consider doing so.
The fund will attempt to maintain the weighted average maturity of its portfolio securities at 10 to 25 years under normal market conditions.
MAIN RISKS
The price and yield of this fund will change daily due to changes in interest rates and other factors, which means you could lose money. The main risks of investing in this fund include:
INTEREST RATE RISK. Debt securities typically decrease in value when interest rates rise. This risk is usually greater for longer-term debt securities. Inverse floating rate securities may be highly volatile as interest rates rise or fall. For additional explanation of inverse floating rate securities, see "More About The Fund -- Risks."
INCOME RISK. The fund's income could decline due to falling market interest rates.
CREDIT RISK. An issuer of debt securities may not make timely principal or interest payments on its securities. The revenue bonds and municipal lease obligations in which the fund invests may entail greater credit risk than the fund's investments in general obligation bonds.
CALL RISK. Some municipal securities held by the fund may be redeemed by the issuer, or "called," prior to their stated maturity dates. If a security is redeemed during a time of declining interest rates, the fund may be unable to reinvest in securities providing as high a level of income.
RISKS OF MUNICIPAL LEASE OBLIGATIONS. Many municipal leases and contracts contain "non-appropriation" clauses that provide that the governmental issuer has no obligation to make future payments under the lease or contract unless money is appropriated for this purpose by the appropriate legislative body.
POLITICAL AND ECONOMIC RISK. Because the fund invests primarily in municipal securities issued by the state of Ohio and its political subdivisions, the fund will be particularly affected by political and economic conditions and developments in that state. See the Statement of Additional Information for details. The value of municipal securities owned by the fund also may be adversely affected by future changes in federal or state income tax laws, including rate reductions or the imposition of a flat tax.
RISKS OF NON-DIVERSIFICATION. The fund is non-diversified. This means that it may invest a larger portion of its assets in a limited number of issuers than a diversified fund. Because a relatively high percentage of the fund's assets may be invested in the securities of a limited number of issuers, the fund may be more susceptible to any single economic, political or regulatory occurrence than a diversified fund.
RISKS OF UNRATED SECURITIES. The fund may invest up to 25% of its total assets in unrated securities (not including unrated securities that have been pre-refunded with U.S. Government securities and U.S. Government agency securities). When the fund purchases unrated securities, it will depend on the advisor's analysis of credit risk more heavily than usual. If the rating of a security is reduced after purchase, or the credit quality of an unrated security declines, the fund is not required to sell the security, but may consider doing so.
FUND PERFORMANCE
Because Ohio Tax Free Fund shares were not offered prior to the date of this prospectus, no performance information is presented for these shares.
2 PROSPECTUS - First American Ohio Tax Free Fund Class Y Shares
Fund Summary
OHIO TAX FREE FUND CONTINUED
FEES AND EXPENSES
The fund does not impose any sales charges (loads) or other fees when you buy, sell or exchange shares. However, when you hold shares of the fund you indirectly pay a portion of the fund's operating expenses. These expenses are deducted from fund assets.
----------------------------------------------------------------------------------------------- SHAREHOLDER FEES (fees paid directly from your investment) ----------------------------------------------------------------------------------------------- MAXIMUM SALES CHARGE (LOAD) IMPOSED ON PURCHASES None (AS A PERCENTAGE OF OFFERING PRICE) MAXIMUM DEFERRED SALES CHARGE (LOAD) None (AS A PERCENTAGE OF ORIGINAL PURCHASE PRICE OR REDEMPTION PROCEEDS, WHICHEVER IS LESS) ANNUAL FUND OPERATING EXPENSES(1) (expenses that are deducted from fund assets) (AS A PERCENTAGE OF AVERAGE NET ASSETS) ----------------------------------------------------------------------------------------------- Management Fees 0.50% Distribution and Service (12b-1) Fees None Other Expenses(2) 0.50% Total Annual Fund Operating Expenses 1.00% ----------------------------------------------------------------------------------------------- |
(1)Actual expenses for the fiscal year will be lower than those shown in the table because certain service providers have contractually agreed to waive fees and reimburse other fund expenses until September 30, 2002. These fee waivers and expense reimbursements may be terminated at any time after September 30, 2002 at the discretion of the service providers. The net expenses the fund will actually pay after waivers for the fiscal year ending September 30, 2002 are:
Waiver of Fund Expenses (0.50)% NET EXPENSES 0.50% |
(2)"Other Expenses" are based on estimated amounts for the current fiscal year.
EXAMPLE This example is intended to help you compare the cost of investing in the fund with the cost of investing in other mutual funds. It assumes that you invest $10,000 for the time periods indicated, that your investment has a 5% return each year, and that the fund's operating expenses remain the same. Although your actual costs and returns may differ, based on these assumptions your costs would be:
--------------------------------------------------------------------------------
1 year $51
3 years $267
3 PROSPECTUS - First American Ohio Tax Free Fund
Class Y Shares
|
Policies & Services
BUYING AND SELLING SHARES
Ohio Tax Free Fund offers three different share classes. This prospectus offers Class Y shares; Class A and Class C shares are available through a separate prospectus. There are differences among the fees and expenses for each of the three classes that will affect performance. These differences result from their separate arrangements for shareholder and distribution services, not from any difference in amounts charged by the investment advisor for core investment advisory services.
Because not everyone is eligible to buy every class, determine which classes you are eligible to buy and then decide which class best suits your needs. A number of factors, including the amount of your purchase and the length of time you expect to hold your shares, should be considered before choosing a share class. Contact your investment professional for help in deciding which class would be best for you.
The following describes the features of each class:
CLASS A SHARES. Class A shares have:
o a front-end sales charge determined by the amount of your purchase.
o annual distribution and service (12b-1) fees of 0.25%.
o reduced sales charges for larger purchases.
CLASS C SHARES. Class C shares have:
o a front-end sales charge of 1.00%.
o a 1.00% contingent deferred sales charge (CDSC) if you redeem your shares within 18 months of purchase.
o annual distribution and service (12b-1) fees of 1.00%.
CLASS Y SHARES. Class Y shares:
o are sold through banks and other financial institutions that have entered into sales agreements with the fund's distributor.
o are available to certain accounts for which the financial institution acts in a fiduciary, agency, or custodial capacity, such as certain trust accounts and investment advisory accounts.
o are typically held in an omnibus account with the transfer agent.
o do not have a front-end sales charge, deferred sales charge, or a distribution fee. However, your investment professional or financial institution may receive a commission of up to 1.25% on your purchase.
CALCULATING YOUR SHARE PRICE
Your purchase price will be equal to the fund's net asset value (NAV) per share, which is generally calculated as of the close of regular trading on the New York Stock Exchange (usually 3 p.m. Central time) every day the exchange is open.
The fund's NAV is equal to the market value of its investments and other assets, less any liabilities, divided by the number of fund shares. If market prices are not readily available for an investment or if the advisor believes they are unreliable, fair value prices may be determined in good faith using methods approved by the fund's board of directors.
HOW TO BUY AND SELL SHARES
You may purchase or sell shares by calling your financial institution. When purchasing shares, payment must be made by wire transfer, which can be arranged by your financial institution. Shares may be purchased or sold on days when the New York Stock Exchange is open. Wire federal funds as follows:
U.S. Bank National Association
ABA Number: 0420-00013
Account Number: 112-952-137
Credit to: First American (OHIO TAX FREE FUND, INVESTOR NAME AND INVESTOR
ACCOUNT NUMBER)
Purchase orders and redemption requests must be received by your financial institution by the time specified by the institution to be assured same day processing. In order for shares to be purchased at that day's price, the fund must receive your purchase order by 3:00 p.m. Central time. In order for shares to be sold at that day's price, the fund must receive your redemption request by 3:00 p.m. Central time. It is the responsibility of your financial institution to promptly transmit orders to the fund. Purchase orders and redemption requests may be restricted in the event of an early or unscheduled close of the New York Stock Exchange.
If the fund receives your redemption request by 3:00 p.m. Central time, payment of your redemption proceeds will ordinarily be made by wire on the next business day. It is possible, however, that payment could be delayed by up to seven days.
To minimize the effect of large redemption requests, the fund reserves the right to fulfill these redemption requests by distributing readily marketable securities in the fund's portfolio, rather than paying you in cash. See "Redemption In Kind" below.
4 PROSPECTUS - First American Ohio Tax Free Fund Class Y Shares
Policies & Services
BUYING AND SELLING SHARES CONTINUED
If your investment goals or your financial needs change, you may exchange your shares for Class Y shares of another First American fund. Exchanges are made at the net asset value per share of each fund at the time of the exchange. There is no fee to exchange shares. If you are no longer eligible to hold Class Y shares, for example, if you decide to discontinue your fiduciary, agency or custodian account, you may exchange your shares for Class A shares at net asset value. Class A shares have higher expenses than Class Y shares.
To exchange your shares, call your financial institution. In order for your shares to be exchanged the same day, you must call your financial institution by the time specified by the institution and your exchange order must be received by the fund by 3:00 p.m. Central time. It is the responsibility of your financial institution to promptly transmit your exchange order to the fund.
Before exchanging into any fund, be sure to read its prospectus carefully. A fund may change or cancel its exchange policies at any time. You will be notified of any changes. The funds have the right to limit exchanges to four times per year.
Generally, proceeds from redemption requests will be paid in cash. However, to minimize the effect of large redemption requests on the fund and its remaining shareholders, the fund reserves the right to pay part or all of the proceeds from a redemption request in a proportionate share of readily marketable securities in the fund instead of cash. In selecting securities for a redemption in kind, the advisor will consider the best interests of the fund and the remaining fund shareholders, and will value these securities in accordance with the pricing methods employed to calculate the fund's net asset value per share. If you receive redemption proceeds in kind, you should expect to incur transaction costs upon disposition of the securities received in the redemption.
5 PROSPECTUS - First American Ohio Tax Free Fund Class Y Shares
Policies & Services
MANAGING YOUR INVESTMENT
SHAREHOLDER REPORTS. Shareholder reports are mailed twice a year, in November and May. They include financial statements and performance information and on an annual basis, a message from your portfolio managers and the auditors' report.
In an attempt to reduce shareholder costs and help eliminate duplication, the fund will try to limit its mailings to one report for each address that lists one or more shareholders with the same last name. If you would like additional copies, please call Investor Services at 800 677-FUND.
STATEMENTS AND CONFIRMATIONS. Statements summarizing activity in your account are mailed quarterly. Confirmations are mailed following each purchase or sale of fund shares. Generally, the fund does not send statements to individuals who have their shares held in an omnibus account.
DIVIDENDS AND DISTRIBUTIONS
Dividends from the fund's net investment income are declared and paid monthly. Any capital gains are distributed at least once each year.
On the ex-dividend date for a distribution, the fund's share price is reduced by the amount of the distribution. If you buy shares just before the ex-dividend date, in effect, you "buy the dividend." You will pay the full price for the shares and then receive a portion of that price back as a distribution, all or a portion of which may be taxable (to the same extent the distribution is otherwise taxable to fund shareholders).
Dividend and capital gain distributions will be reinvested in additional shares of the fund, unless you request that distributions be reinvested in another First American fund or paid in cash. This request may be made on your new account form or by contacting your financial institution. If you request that your distributions be paid in cash but those distributions cannot be delivered because of an incorrect mailing address, the undelivered distributions and all future distributions will be reinvested in fund shares at the current NAV.
Some of the tax consequences of investing in the fund are discussed below. More information about taxes is in the Statement of Additional Information. However, because everyone's tax situation is unique, always consult your tax professional about federal, state and local tax consequences.
TAXES ON DISTRIBUTIONS. The fund intends to meet certain federal tax requirements so that distributions of tax-exempt interest income may be treated as "exempt-interest dividends." These dividends are not subject to regular federal income tax. However, the fund may invest up to 20% of its net assets in municipal securities, the interest on which is subject to the alternative minimum tax. Any portion of exempt-interest dividends attributable to interest on these securities may increase some shareholders' alternative minimum tax. The fund expects that its distributions will consist primarily of exempt-interest dividends.
Distributions paid from any interest income that is not tax-exempt and from any net realized capital gains will be taxable whether you reinvest those distributions or take them in cash. Distributions of the fund's long-term net capital gains are taxable as long-term gains, regardless of how long you have held your shares.
TAXES ON TRANSACTIONS. The sale of fund shares, or the exchange of the fund's shares for shares of another fund, will be a taxable event and may result in a capital gain or loss. The gain or loss will be considered long-term if you have held your shares for more than one year. A gain or loss on shares held for one year or less is considered short-term and is taxed at the same rates as ordinary income.
If in redemption of his or her shares a shareholder receives a distribution of readily marketable securities instead of cash, the shareholder will be treated as receiving an amount equal to the fair market value of the securities at the time of the distribution for purposes of determining capital gain or loss on the redemption, and will also acquire a basis in the shares for federal income tax purposes equal to their fair market value.
The exchange of one class of shares for another class of shares in the same fund will not be taxable.
OHIO INCOME TAXATION. Dividends paid by Ohio Tax Free Fund will be exempt from Ohio income taxes for individuals, trusts, estates, and corporations to the extent they are derived from interest on Ohio municipal obligations.
6 PROSPECTUS - First American Ohio Tax Free Fund Class Y Shares
Additional Information
MANAGEMENT
U.S. Bancorp Asset Management, Inc., is the fund's investment advisor. U.S. Bancorp Asset Management provides investment management services to individuals and institutions, including corporations, foundations, pensions and retirement plans. As of December 31, 2001, U.S. Bancorp Asset Management and its affiliates had more than $121 billion in assets under management, including investment company assets of more than $54 billion. As investment advisor, U.S. Bancorp Asset Management manages the fund's business and investment activities, subject to the authority of the fund's board of directors.
The fund has contractually agreed to pay the investment advisor a monthly fee for providing investment advisory services equal, on an annual basis, to 0.50% of average daily net assets.
DIRECT CORRESPONDENCE TO:
First American Funds
P.O. Box 1330
Minneapolis, Minnesota 55440-1330
INVESTMENT ADVISOR
U.S. Bancorp Asset Management, Inc.
800 Nicollet Mall
Minneapolis, Minnesota 55402
DISTRIBUTOR
Quasar Distributors, LLC
615 E. Michigan Street
Milwaukee, WI 53202
ADDITIONAL COMPENSATION
U.S. Bancorp Asset Management and other affiliates of U.S. Bancorp may act as fiduciary with respect to plans subject to the Employee Retirement Income Security Act of 1974 (ERISA) and other trust and agency accounts that invest in the First American funds. As described above, U.S. Bancorp Asset Management receives compensation for acting as the fund's investment advisor. U.S. Bancorp Asset Management and its affiliates also receive compensation in connection with the following:
CUSTODY SERVICES. U.S. Bank National Association (U.S. Bank) provides or compensates others to provide custody services to the fund. U.S. Bank is paid monthly fees equal, on an annual basis, to 0.01% of the fund's average daily net assets. In addition, U.S. Bank is reimbursed for its out-of-pocket expenses incurred while providing custody services to the fund.
ADMINISTRATION SERVICES. U.S. Bancorp Asset Management and its affiliate, U.S. Bancorp Fund Services, LLC (Co-Administrators), provide or compensate others to provide administrative services to the First American family of funds. These services include general administrative and accounting services, transfer agency and dividend disbursing services, blue sky services, and shareholder services. With respect to the First American open-end mutual funds, the Co-Administrators receive total fees on an annual basis of up to 0.25% of the aggregate average daily net assets of First American Investment Funds, Inc., First American Strategy Funds, Inc. and First American Insurance Portfolios, Inc., and up to 0.20% of the aggregate average daily net assets of First American Funds, Inc. The funds also pay the Co-Administrators fees based upon the number of funds and accounts maintained. In addition, the Co-Administrators are reimbursed for their out-of-pocket expenses incurred while providing administration services to the funds.
DISTRIBUTION SERVICES. Quasar Distributors, LLC, an affiliate of U.S. Bancorp Asset Management, serves as distributor of the fund and receives out of pocket expenses incurred while providing distribution and other sub-administrative services for the fund.
BROKERAGE TRANSACTIONS. When purchasing and selling portfolio securities for the fund, the fund's investment advisor may place trades through its affiliates, U.S. Bancorp Investments, Inc. and U.S. Bancorp Piper Jaffray Inc., which will earn commissions on these transactions.
SHAREHOLDER SERVICING FEES. To the extent that fund shares are held through U.S. Bancorp Asset Management, U.S. Bank or their broker-dealer affiliates, U.S. Bancorp Investments, Inc. and U.S. Bancorp Piper Jaffray Inc., those entities may receive shareholder servicing fees from the fund's distributor.
PORTFOLIO MANAGEMENT
The fund's investments are managed by a team of persons associated with U.S. Bancorp Asset Management.
7 PROSPECTUS - First American Ohio Tax Free Fund Class Y Shares
Additional Information
MORE ABOUT THE FUND
OBJECTIVES
The fund's objective, which is described in the "Fund Summary" section, may be changed without shareholder approval. If the fund's objective changes, you will be notified at least 60 days in advance. Please remember: There is no guarantee that the fund will achieve its objective.
INVESTMENT STRATEGIES
The fund's main investment strategies are discussed in the "Fund Summary" section. These are the strategies that the fund's investment advisor believes are most likely to be important in trying to achieve the fund's objective. You should be aware that the fund may also use strategies and invest in securities that are not described in this prospectus, but that are described in the Statement of Additional Information (SAI). For a copy of the SAI, call Investor Services at 800 677-FUND.
INVESTMENT APPROACH. In selecting securities for the fund, fund managers first determine their economic outlook and the direction in which inflation and interest rates are expected to move. In selecting individual securities consistent with this outlook, the fund managers evaluate factors such as credit quality, yield, maturity, liquidity, and portfolio diversification. Fund managers conduct research on potential and current holdings in the fund to determine whether the fund should purchase or retain a security. This is a continuing process the focus of which changes according to market conditions, the availability of various permitted investments, and cash flows into and out of the fund.
MUNICIPAL SECURITIES. Municipal securities are issued to finance public infrastructure projects such as streets and highways, schools, water and sewer systems, hospitals and airports. They also may be issued to refinance outstanding obligations as well as to obtain funds for general operating expenses and for loans to other public institutions and facilities.
The fund may invest in municipal securities such as "general obligation" bonds, "revenue" bonds, and participation interests in municipal leases. General obligation bonds are backed by the full faith, credit and taxing power of the issuer. Revenue bonds are payable only from the revenues generated by a specific project or from another specific revenue source. Participation interests in municipal leases are undivided interests in a lease, installment purchase contract or conditional sale contract entered into by a state or local government unit to acquire equipment or facilities. Municipal leases frequently have special risks which generally are not associated with general obligations bonds or revenue bonds. See "Risks of Municipal Lease Obligations."
The municipal securities in which the fund invests may include refunded bonds and zero coupon bonds. Refunded bonds may have originally been issued as general obligation or revenue bonds, but become "refunded" when they are secured by an escrow fund, usually consisting entirely of direct U.S. government obligations and/or U.S. government agency obligations. Zero coupon bonds are issued at substantial discounts from their value at maturity and pay no cash income to their holders until they mature. When held to maturity, their entire return comes from the difference between their purchase price and their maturity value.
Up to 10% of the fund's total assets may be invested in inverse floating rate municipal securities. The values of these securities, as well as zero coupon bonds, may be highly volatile as interest rates rise or fall. See "Interest Rate Risk" and "Risks of Inverse Floating Rate Securities."
TEMPORARY INVESTMENTS. In an attempt to respond to adverse market, economic, political, or other conditions, the fund may temporarily invest without limit in cash and in U.S. dollar-denominated high-quality money market instruments and other short-term securities, including securities which pay income that is subject to federal and state income tax. These investments may include money market funds advised by the fund's advisor. Because these investments may be taxable, and may result in a lower yield than would be available from investments with a lower quality or longer term, they may prevent the fund from achieving its investment objective.
PORTFOLIO TURNOVER. Fund managers may trade securities frequently, resulting, from time to time, in an annual portfolio turnover rate of over 100%. Trading of securities may produce capital gains, which are taxable to shareholders when distributed. Active trading may also increase the amount of commissions or mark-ups to broker-dealers that the fund pays when it buys and sells securities.
The main risks of investing in the fund are summarized in "Fund Summary." More information about fund risks is presented below.
INTEREST RATE RISK. Debt securities in the fund will fluctuate in value with changes in interest rates. In general, debt securities will increase in value when interest rates fall and decrease in value when interest rates rise. Longer-term debt securities are generally more sensitive to interest rate changes. The fund may invest in zero coupon securities, which do not pay interest on a current basis and which may be highly volatile as interest rates rise or fall. The fund's investments in inverse floating rate municipal securities also may be highly volatile with changing interest rates. See "Risks of Inverse Floating Rate Securities."
8 PROSPECTUS - First American Ohio Tax Free Fund Class Y Shares
Additional Information
MORE ABOUT THE FUND CONTINUED
INCOME RISK. The fund's income could decline due to falling market interest rates. This is because, in a falling interest rate environment, the fund generally will have to invest the proceeds from sales of fund shares, as well as the proceeds from maturing portfolio securities (or portfolio securities that have been called, see "Call Risk") in lower-yielding securities.
CREDIT RISK. The fund is subject to the risk that the issuers of debt securities held by the fund will not make payments on the securities, or that the other party to a contract (such as a repurchase agreement) will default on its obligations. There is also the risk that an issuer could suffer adverse changes in financial condition that could lower the credit quality of a security. This could lead to greater volatility in the price of the security and in shares of the fund. Also, a change in the credit quality rating of a bond could affect the bond's liquidity and make it more difficult for the fund to sell.
The fund attempts to minimize credit risk by investing in securities considered at least investment grade at the time of purchase. However, all of these securities, especially those in the lower investment grade rating categories, have credit risk. In adverse economic or other circumstances, issuers of these lower rated securities are more likely to have difficulty making principal and interest payments than issuers of higher rated securities. When the fund purchases unrated securities, it will depend on the advisor's analysis of credit risk more heavily than usual.
CALL RISK. Many municipal bonds may be redeemed at the option of the issuer, or "called," before their stated maturity date. In general, an issuer will call its bonds if they can be refinanced by issuing new bonds which bear a lower interest rate. The fund is subject to the possibility that during periods of falling interest rates, a municipal bond issuer will call its high-yielding bonds. The fund would then be forced to invest the unanticipated proceeds at lower interest rates, resulting in a decline in the fund's income.
POLITICAL AND ECONOMIC RISK. The values of municipal securities may be adversely affected by local political and economic conditions and developments. Adverse conditions in an industry significant to a local economy could have a correspondingly adverse effect on the financial condition of local issuers. Other factors that could affect municipal securities include a change in the local, state or national economy, demographic factors, ecological or environmental concerns, statutory limitations on the issuer's ability to increase taxes and other developments generally affecting the revenue of issuers (for example, legislation or court decisions reducing state aid to local governments or mandating additional services). To the extent the fund invests in the securities of issuers located in a single state, it will be disproportionately affected by political and economic conditions and developments in that state. The value of municipal securities also may be adversely affected by future changes in federal or state income tax laws, including rate reductions or the imposition of a flat tax.
RISKS OF INVERSE FLOATING RATE SECURITIES. The fund may invest up to 10% of its total assets in inverse floating rate municipal securities. These securities pay interest at a rate that varies inversely to changes in the interest rate of specified municipal securities or a specified index. The interest rate on this type of security will generally change at a multiple of any change in the reference interest rate. As a result, the values of these securities may be highly volatile as interest rates rise or fall.
RISKS OF MUNICIPAL LEASE OBLIGATIONS. The fund may purchase participation interests in municipal leases. These are undivided interests in a lease, installment purchase contract or conditional sale contract entered into by a state or local government unit to acquire equipment or facilities. Participation interests in municipal leases pose special risks because many leases and contracts contain "non-appropriation" clauses that provide that the governmental issuer has no obligation to make future payments under the lease or contract unless money is appropriated for this purpose by the appropriate legislative body. Although these kinds of obligations are secured by the leased equipment or facilities, it might be difficult and time consuming to dispose of the equipment or facilities in the event of non-appropriation, and the fund might not recover the full principal amount of the obligation.
RISKS OF ACTIVE MANAGEMENT. The fund is actively managed and its performance therefore will reflect in part the advisor's ability to make investment decisions which are suited to achieving the fund's investment objective. Due to its active management, the fund could underperform other mutual funds with similar investment objectives.
9 PROSPECTUS - First American Ohio Tax Free Fund Class Y Shares
Additional Information
FINANCIAL HIGHLIGHTS
FINANCIAL HIGHLIGHTS
No information is available as the fund's shares were not offered prior to the date of this prospectus.
10 PROSPECTUS - First American Ohio Tax Free Fund Class Y Shares
More information about the fund is available in the fund's Statement of Additional Information and annual and semiannual reports.
The SAI provides more details about the fund and its policies. A current SAI is on file with the Securities and Exchange Commission (SEC) and is incorporated into this prospectus by reference (which means that it is legally considered part of this prospectus).
Additional information about the fund's investments is available in the fund's annual and semiannual reports to shareholders. In the fund's annual report, you will find a discussion of the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year.
You can obtain a free copy of the fund's SAI and/or free copies of the fund's most recent annual or semiannual reports by calling Investor Services at 800 677-FUND. The material you request will be sent by first-class mail or other means designed to ensure equally prompt delivery, within three business days of receipt of the request.
You can also obtain copies of this information, after paying a duplicating fee, by electronic request at the following email address: publicinfo@sec.gov, or by writing the SEC's Public Reference Section, Washington, D.C. 20549-0102. For more information, call 1-202-942-8090.
Information about the fund is also available on the Internet. Text-only versions of fund documents can be viewed online or downloaded from the EDGAR Database on the SEC's Internet site at http://www.sec.gov.
FIRST AMERICAN FUNDS P.O. Box 1330, Minneapolis, MN 55440-1330
U.S. Bancorp Asset Management, Inc., serves as the investment advisor to the First American Funds.
First American Funds are distributed by Quasar Distributors, LLC, which is located in Milwaukee, WI 53202, and is an affiliate of the investment advisor.
PROOHIOBONDY 1/02
SEC file number: 811-05309 [LOGO] FIRST AMERICAN FUNDS(TM)
FIRST AMERICAN INVESTMENT FUNDS, INC.
STATEMENT OF ADDITIONAL INFORMATION
DATED APRIL 30, 2002
OHIO TAX FREE FUND
This Statement of Additional Information relates to the Class A, Class C and Class Y Shares of the Ohio Tax Free Fund (the "Fund"), which is a series of First American Investment Funds, Inc. ("FAIF"). This Statement of Additional Information is not a prospectus, but should be read in conjunction with the Fund's current Prospectuses dated April 30, 2002. This Statement of Additional Information is incorporated into the Fund's Prospectuses by reference. To obtain copies of a Prospectus at no charge, write the Fund's distributor, Quasar Distributors, LLC, 615 East Michigan Street, Milwaukee, WI 53202, or call Investor Services at 800 677-FUND. Please retain this Statement of Additional Information for future reference.
TABLE OF CONTENTS
PAGE
----
GENERAL INFORMATION............................................................1
ADDITIONAL INFORMATION CONCERNING FUND INVESTMENTS.............................2
Short-Term Investments................................................2
When-Issued and Delayed Delivery Transactions.........................3
Lending of Portfolio Securities.......................................3
Options Transactions..................................................4
Futures and Options on Futures........................................5
Municipal Bonds and Other Municipal Obligations.......................6
Temporary Taxable Investments.........................................7
Inverse Floating Rate Municipal Obligations...........................8
Zero Coupon Securities................................................8
Interest Rate Transactions............................................8
Closed-End Investment Companies.......................................8
Special Factors Affecting Ohio Tax Free Fund..........................8
CFTC Information.....................................................12
INVESTMENT RESTRICTIONS.......................................................12
FUND NAME.....................................................................14
DIRECTORS AND OFFICERS OF THE FUND............................................14
Independent Directors................................................14
Interested Director(s)...............................................16
Officers.............................................................16
Standing Committees of the Board of Directors........................19
Fund Shares Owned by the Directors...................................19
Approval of Investment Advisory Contract.............................20
Compensation.........................................................20
Sales Loads..........................................................22
CODE OF ETHICS................................................................22
INVESTMENT ADVISORY AND OTHER SERVICES FOR THE FUND...........................22
Investment Advisor...................................................22
Administrators.......................................................23
Distributor..........................................................23
Custodian and Auditors...............................................25
PORTFOLIO TRANSACTIONS AND ALLOCATION OF BROKERAGE............................25
CAPITAL STOCK.................................................................27
NET ASSET VALUE AND PUBLIC OFFERING PRICE.....................................27
FUND PERFORMANCE..............................................................27
TAXATION......................................................................30
REDUCING SALES CHARGES........................................................31
Class A Sales Charge.................................................31
Sales of Class A Shares at Net Asset Value...........................32
|
ADDITIONAL INFORMATION ABOUT SELLING SHARES...................................33
By Telephone.........................................................33
By Mail..............................................................33
Redemptions Before Purchase Instruments Clear........................34
RATINGS.......................................................................34
Ratings of Corporate Debt Obligations and Municipal Bonds............34
Ratings of Municipal Notes...........................................36
Ratings of Commercial Paper..........................................37
|
GENERAL INFORMATION
First American Investment Funds, Inc. ("FAIF") was incorporated in the State of Maryland on August 20, 1987 under the name "SECURAL Mutual Funds, Inc." The Board of Directors and shareholders, at meetings held January 10, 1991, and April 2, 1991, respectively, approved amendments to the Articles of Incorporation providing that the name "SECURAL Mutual Funds, Inc." be changed to "First American Investment Funds, Inc."
FAIF is organized as a series fund and currently issues its shares in 45 series. Each series of shares represents a separate investment portfolio with its own investment objective and policies (in essence, a separate mutual fund). This Statement of Additional Information relates to one series of FAIF, Ohio Tax Free Fund (the "Fund") which is a non-diversified investment company
Shareholders may purchase shares of the Fund through three separate classes, Class A, Class C and Class Y, which provide for variations in distribution costs, shareholder servicing fees, voting rights and dividends. To the extent permitted by the Investment Company Act of 1940 (the "1940 Act"), the Fund may also provide for variations in other costs among the classes although they have no present intention to do so. In addition, a sales load is imposed on the sale of Class A and Class C Shares of the Fund. Except for differences among the classes pertaining to distribution costs and shareholder servicing fees, each share of the Fund represents an equal proportionate interest in that Fund.
The Articles of Incorporation and Bylaws of FAIF provide that meetings of shareholders be held as determined by the Board of Directors and as required by the 1940 Act. Maryland corporation law requires a meeting of shareholders to be held upon the written request of shareholders holding 10% or more of the voting shares of FAIF, with the cost of preparing and mailing the notice of such meeting payable by the requesting shareholders. The 1940 Act requires a shareholder vote for all amendments to fundamental investment policies and restrictions, for approval of all investment advisory contracts and amendments thereto, and for all amendments to Rule 12b-1 distribution plans.
This Statement of Additional Information may also refer to affiliated investment companies, including: First American Funds, Inc. ("FAF"); First American Strategy Funds, Inc. ("FASF"); First American Insurance Portfolios, Inc. ("FAIP"); and nine separate closed-end funds (American Strategic Income Portfolio Inc., American Strategic Income Portfolio Inc. II, American Strategic Income Portfolio Inc. III, American Municipal Income Portfolio Inc., Minnesota Municipal Income Portfolio Inc., American Select Portfolio Inc., American Municipal Term Trust Inc. III, Minnesota Municipal Term Trust Inc. II, and American Income Fund, Inc.) collectively referred to as the First American Closed-End Funds ("FACEF").
ADDITIONAL INFORMATION CONCERNING FUND INVESTMENTS
The main investment strategies of the Fund are set forth in the Fund's Prospectus. Additional information concerning main investment strategies of the Fund, and other investment strategies which may be used by the Fund, is set forth below. The Fund has attempted to identify investment strategies that will be employed in pursuing its investment objective. However, in the absence of an affirmative limitation, the Fund may utilize any strategy or technique that is consistent with its investment objective. The Fund does not anticipate that any such strategy or technique would exceed 5% of the Fund's assets absent specific identification of that practice. Additional information concerning the Fund's investment restrictions is set forth below under "Investment Restrictions."
If a percentage limitation on investments by the Fund stated in this section or in "Investment Restrictions" below is adhered to at the time of an investment, a later increase or decrease in percentage resulting from changes in asset value will not be deemed to violate the limitation except in the case of the limitations on borrowing. Although the Fund is limited to investing in securities that have specified ratings, or unrated securities of comparable quality, it is not required to sell a security if its rating is reduced or its credit quality declines after purchase, but the Fund may consider doing so. However, in no event will more than 5% of the Fund's net assets be invested in non-investment grade securities. Descriptions of the rating categories of Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc. and Moody's Investors Service, Inc. are contained in "Ratings" below.
SHORT-TERM INVESTMENTS
The Fund can invest in a variety of short-term instruments such as rated commercial paper and variable amount master demand notes; United States dollar-denominated time and savings deposits (including certificates of deposit); bankers' acceptances; obligations of the United States Government or its agencies or instrumentalities; repurchase agreements collateralized by eligible investments of the Fund; securities of other mutual funds that invest primarily in debt obligations with remaining maturities of 13 months or less (which investments also are subject to the advisory fee); and other similar high-quality short-term United States dollar-denominated obligations. The other mutual funds in which the Fund may so invest include money market funds advised by U.S. Bancorp Asset Management, Inc., the Fund's investment advisor ("U.S. Bancorp Asset Management" or the "Advisor"), subject to certain restrictions contained in an exemptive order issued by the Securities and Exchange Commission ("SEC") with respect thereto.
The Fund may also invest in Eurodollar Certificates of Deposit issued by foreign branches of United States or foreign banks; Eurodollar Time Deposits, which are United States dollar-denominated deposits in foreign branches of United States or foreign banks; and Yankee Certificates of Deposit, which are United States dollar-denominated certificates of deposit issued by United States branches of foreign banks and held in the United States. In each instance, the Fund may only invest in bank instruments issued by an institution which has capital, surplus and undivided profits of more than $100 million or the deposits of which are insured by the Bank Insurance Fund or the Savings Association Insurance Fund.
Short-term investments and repurchase agreements may be entered into on a joint basis by the Fund and other funds advised by the Advisor to the extent permitted by an exemptive order issued by the Securities and Exchange Commission with respect to the Fund. A brief description of certain kinds of short-term instruments follows:
COMMERCIAL PAPER. Commercial paper consists of unsecured promissory notes issued by corporations. Issues of commercial paper normally have maturities of less than nine months and fixed rates of return. Subject to the limitations described in the Prospectuses, the Fund may purchase tax-exempt commercial consisting of issues rated at the time of purchase within the two highest rating categories by Standard & Poor's Rating Services, a division of the McGraw-Hill Companies, Inc. ("Standard & Poor's") or Moody's Investors Service, Inc. ("Moody's"), or which have been assigned an equivalent rating by another nationally recognized statistical rating organization. The Fund also may invest in commercial paper that is not rated but that is determined by the Advisor to be of comparable quality to instruments that are so rated. For a description of the rating categories of Standard & Poor's and Moody's, see "Ratings."
BANKERS' ACCEPTANCES. Bankers' acceptances are credit instruments evidencing the obligation of a bank to pay a draft drawn on it by a customer. These instruments reflect the obligation both of the bank and of the drawer to pay the full amount of the instrument upon maturity.
VARIABLE AMOUNT MASTER DEMAND NOTES. Variable amount master demand notes are unsecured demand notes that permit the indebtedness thereunder to vary and provide for periodic adjustments in the interest rate according to the terms of the instrument. Because master demand notes are direct lending arrangements between the Fund and the issuer, they are not normally traded. Although there is no secondary market in the notes, the Fund may demand payment of principal and accrued interest at any time. While the notes are not typically rated by credit rating agencies, issuers of variable amount master demand notes (which are normally manufacturing, retail, financial, and other business concerns) must satisfy the same criteria as set forth above for commercial paper. The Advisor or the applicable Fund's investment sub-advisor will consider the earning power, cash flow and other liquidity ratios of the issuers of such notes and will continuously monitor their financial status and ability to meet payment on demand.
VARIABLE RATE DEMAND OBLIGATIONS. Variable rate demand obligations ("VRDO") are securities in which the interest rate is adjusted at pre-designated periodic intervals. VRDOs may include a demand feature which is a put that entitles the holder to receive the principal amount of the underlying security or securities and which may be exercised either at any time on no more than 30 days' notice or at specified intervals not exceeding 397 calendar days on no more than 30 days' notice.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may purchase securities on a when-issued or delayed delivery basis. When such a transaction is negotiated, the purchase price is fixed at the time the purchase commitment is entered, but delivery of and payment for the securities take place at a later date. The Fund will not accrue income with respect to securities purchased on a when-issued or delayed delivery basis prior to their stated delivery date. Pending delivery of the securities, the Fund will maintain in a segregated account cash or liquid high-grade securities in an amount sufficient to meet its purchase commitments.
The purchase of securities on a when-issued or delayed delivery basis exposes the Fund to risk because the securities may decrease in value prior to delivery. In addition, the Fund's purchase of securities on a when-issued or delayed delivery basis while remaining substantially fully invested could increase the amount of the Fund's total assets that are subject to market risk, resulting in increased sensitivity of net asset value to changes in market prices. A seller's failure to deliver securities to the Fund could prevent the Fund from realizing a price or yield considered to be advantageous.
When the Fund agrees to purchase securities on a when-issued or delayed delivery basis, the Fund's custodian will maintain in a segregated account cash or liquid securities in an amount sufficient to meet the Fund's purchase commitments. It may be expected that the Fund's net assets will fluctuate to a greater degree when it sets aside securities to cover such purchase commitments than when it sets aside cash. In addition, because the Fund will set aside cash or liquid securities to satisfy its purchase commitments in the manner described above, its liquidity and the ability of the Advisor to manage it might be affected in the event its commitments to purchase when-issued or delayed delivery securities ever exceeded 25% of the value of its total assets. Under normal market conditions, however, the Fund's commitments to purchase when-issued or delayed delivery securities will not exceed 25% of the value of its total assets.
LENDING OF PORTFOLIO SECURITIES
In order to generate additional income, the Fund may lend portfolio securities representing up to one-third of the value of its total assets to broker-dealers, banks or other institutional borrowers of securities. As with other extensions of credit, there may be risks of delay in recovery of the securities or even loss of rights in the collateral should the borrower of the
securities fail financially. However, the Fund will only enter into loan arrangements with broker-dealers, banks, or other institutions which the Advisor has determined are creditworthy under guidelines established by the Board of Directors. The Fund will pay a portion of the income earned on the lending transaction to the placing broker and may pay administrative and custodial fees in connection with these loans.
The Advisor may act as securities lending agent for the Fund and receive separate compensation for such services, subject to compliance with conditions contained in an SEC exemptive order permitting the Advisor to provide such services and receive such compensation. The Advisor currently receives fees equal to 40% of the Fund's income from securities lending transactions.
In these loan arrangements, the Fund will receive collateral in the form of cash, United States government securities or other high-grade debt obligations equal to at least 100% of the value of the securities loaned. This collateral must be valued daily by the Advisor and, if the market value of the loaned securities increases, the borrower must furnish additional collateral to the lending Fund. During the time portfolio securities are on loan, the borrower pays the lending Fund any dividends or interest paid on the securities. Loans are subject to termination at any time by the lending Fund or the borrower. While a Fund does not have the right to vote securities on loan, it would terminate the loan and regain the right to vote if that were considered important with respect to the investment.
OPTIONS TRANSACTIONS
Options transactions will be undertaken for the purpose of reducing risk to the Fund; that is, for "hedging" purposes. Options on futures contracts are discussed below under "-- Futures and Options on Futures."
OPTIONS ON SECURITIES. The Fund may purchase put and call options on securities it owns or has the right to acquire. A put option on a security gives the purchaser of the option the right (but not the obligation) to sell, and the writer of the option the obligation to buy, the underlying security at a stated price (the "exercise price") at any time before the option expires. A call option on a security gives the purchaser the right (but not the obligation) to buy, and the writer the obligation to sell, the underlying security at the exercise price at any time before the option expires. The purchase price for a put or call option is the "premium" paid by the purchaser for the right to sell or buy.
The Fund may purchase put options to hedge against a decline in the value of its portfolio. By using put options in this way, the Fund would reduce any profit it might otherwise have realized in the underlying security by the amount of the premium paid for the put option and by transaction costs. In similar fashion, the Fund may purchase call options to hedge against an increase in the price of securities that the Fund anticipates purchasing in the future. The premium paid for the call option plus any transaction costs will reduce the benefit, if any, realized by the Fund upon exercise of the option, and, unless the price of the underlying security rises sufficiently, the option may expire unexercised.
OPTIONS ON INTEREST RATE INDICES. The Fund may purchase put and call options on interest rate indices. An option on an interest rate index gives the holder the right to receive, upon exercise of the option, an amount of cash if the closing value of the interest rate index upon which the option is based is greater than, in the case of a call, or less than, in the case of a put, the exercise price of the option. This amount of cash is equal to the difference between the closing price of the index and the exercise price of the option expressed in dollars times a specified multiple (the "multiplier"). The writer of the option is obligated, for the premium received, to make delivery of this amount. Unlike interest rate futures options contracts, settlements for interest rate index options are always in cash. Gain or loss depends on interest rate movements with respect to specific financial instruments. As with stock index options, the multiplier for interest rate index options determines the total dollar value per contract of each point in the difference between the exercise price of an option and the current value of the underlying interest rate index. Options on different interest rate indices may have different multipliers.
LIMITATIONS. The Fund will not invest more than 5% of the value of its total assets in purchased options, provided that options which are "in the money" at the time of purchase may be excluded from this 5% limitation. A call option is "in the money" if the exercise price is lower than the current market price of the underlying security or index, and a put option is "in the money" if the exercise price is higher than the current market price. The Fund's loss exposure in purchasing an option is limited to the sum of the premium paid and the commission or other transaction expenses associated with acquiring the option.
The use of purchased put and call options involves certain risks. These include the risk of an imperfect correlation between market prices of securities held by a Fund and the prices of options, and the risk of limited liquidity in the event that the Fund seeks to close out an options position before expiration by entering into an offsetting transaction.
FUTURES AND OPTIONS ON FUTURES
The Fund may engage in futures transactions and options on futures transactions, including interest rate index futures and options thereon.
A futures contract on a security obligates one party to purchase, and the other to sell, a specified security at a specified price on a date certain in the future. A futures contract on an index obligates the seller to deliver, and entitles the purchaser to receive, an amount of cash equal to a specific dollar amount times the difference between the value of the index at the expiration date of the contract and the index value specified in the contract. The acquisition of put and call options on futures contracts will, respectively, give the Fund the right (but not the obligation), for a specified exercise price, to sell or to purchase the underlying futures contract at any time during the option period.
At the same time a futures contract is purchased or sold, the Fund generally must allocate cash or securities as a deposit payment ("initial deposit"). It is expected that the initial deposit would be approximately 1-1/2% to 5% of a contract's face value. Daily thereafter, the futures contract is valued and the payment of "variation margin" may be required, since each day the Fund would provide or receive cash that reflects any decline or increase in the contract's value. Futures transactions also involve brokerage costs and require the Fund to segregate liquid assets, such as cash, United States Government securities or other liquid high grade debt obligations equal to at least 100% of its performance under such contracts.
The Fund may use futures contracts and options on futures in an effort to hedge against market risks.
Aggregate initial margin deposits for futures contracts, and premiums paid for related options, may not exceed 5% of the Fund's total assets, and the value of securities that are the subject of such futures and options (both for receipt and delivery) may not exceed 1/3 of the market value of the Fund's total assets. Futures transactions will be limited to the extent necessary to maintain the Fund's qualification as a regulated investment company under the Code.
Where the Fund is permitted to purchase options on futures, its potential loss is limited to the amount of the premiums paid for the options. As stated above, this amount may not exceed 5% of the Fund's total assets. Where the Fund is permitted to enter into futures contracts obligating it to purchase securities, currency or an index in the future at a specified price, the Fund could lose 100% of its net assets in connection therewith if it engaged extensively in such transactions and if the market value or index value of the subject securities, currency or index at the delivery or settlement date fell to zero for all contracts into which the Fund was permitted to enter.
Futures transactions involve brokerage costs and require the Fund to segregate assets to cover contracts that would require it to purchase securities or currencies. The Fund may lose the expected benefit of futures transactions if interest rates, exchange rates or securities prices move in an unanticipated manner. Such unanticipated changes may also result in poorer overall performance than if the Fund had not entered into any futures transactions. In addition, the value of the Fund's futures positions may not prove to be perfectly or even highly correlated with the value of its portfolio securities or foreign currencies, limiting the Fund's ability to hedge effectively against interest
rate, exchange rate and/or market risk and giving rise to additional risks. There is no assurance of liquidity in the secondary market for purposes of closing out futures positions.
MUNICIPAL BONDS AND OTHER MUNICIPAL OBLIGATIONS
The Fund invests in municipal bonds and other municipal obligations. These bonds and other obligations are issued by the states and by their local and special-purpose political subdivisions. The term "municipal bond" includes short-term municipal notes issued by the states and their political subdivisions.
MUNICIPAL BONDS. The two general classifications of municipal bonds are "general obligation" bonds and "revenue" bonds. General obligation bonds are secured by the governmental issuer's pledge of its faith, credit and taxing power for the payment of principal and interest upon a default by the issuer of its principal and interest payment obligations. They are usually paid from general revenues of the issuing governmental entity. Revenue bonds, on the other hand, are usually payable only out of a specific revenue source rather than from general revenues. Revenue bonds ordinarily are not backed by the faith, credit or general taxing power of the issuing governmental entity. The principal and interest on revenue bonds for private facilities are typically paid out of rents or other specified payments made to the issuing governmental entity by a private company which uses or operates the facilities. Examples of these types of obligations are industrial revenue bond and pollution control revenue bonds. Industrial revenue bonds are issued by governmental entities to provide financing aid to community facilities such as hospitals, hotels, business or residential complexes, convention halls and sport complexes. Pollution control revenue bonds are issued to finance air, water and solids pollution control systems for privately operated industrial or commercial facilities.
Revenue bonds for private facilities usually do not represent a pledge of the credit, general revenues or taxing powers of issuing governmental entity. Instead, the private company operating the facility is the sole source of payment of the obligation. Sometimes, the funds for payment of revenue bonds come solely from revenue generated by operation of the facility. Revenue bonds which are not backed by the credit of the issuing governmental entity frequently provide a higher rate of return than other municipal obligations, but they entail greater risk than obligations which are guaranteed by a governmental unit with taxing power. Federal income tax laws place substantial limitations on industrial revenue bonds, and particularly certain specified private activity bonds issued after August 7, 1986. In the future, legislation could be introduced in Congress which could further restrict or eliminate the income tax exemption for interest on debt obligations in which the Fund may invest.
REFUNDED BONDS. The Fund may not invest more than 25% of its assets in unrated securities. Investments in refunded bonds are excluded from this limitation. Refunded bonds may have originally been issued as general obligation or revenue bonds, but become refunded when they are secured by an escrow fund, usually consisting entirely of direct U.S. government obligations and/or U.S. government agency obligations sufficient for paying the bondholders. For the purposes of excluding refunded bonds from the 25% limitation on unrated securities, there are two types of refunded bonds: pre-refunded bonds and escrowed-to-maturity ("ETM") bonds.
The escrow fund for a pre-refunded municipal bond may be structured so that the refunded bonds are to be called at the first possible date or a subsequent call date established in the original bond debenture. The call price usually includes a premium from one to three percent above par. This type of structure usually is used for those refundings that either reduce the issuer's interest payment expenses or change the debt maturity schedule. In escrow funds for ETM refunded municipal bonds, the maturity schedules of the securities in the escrow funds match the regular debt-service requirements on the bonds as originally stated in the bond indentures.
DERIVATIVE MUNICIPAL SECURITIES. The Fund may also acquire derivative municipal securities, which are custodial receipts of certificates underwritten by securities dealers or banks that evidence ownership of future interest payments, principal payments or both on certain municipal securities. The underwriter of these certificates or receipts typically purchases municipal securities and deposits them in an irrevocable trust or custodial account with a
custodian bank, which then issues receipts or certificates that evidence ownership of the periodic unmatured coupon payments and the final principal payment on the obligation.
The principal and interest payments on the municipal securities underlying custodial receipts may be allocated in a number of ways. For example, payments may be allocated such that certain custodial receipts may have variable or floating interest rates and others may be stripped securities which pay only the principal or interest due on the underlying municipal securities. The Fund may invest up to 10% of its total assets in custodial receipts which have inverse floating interest rates.
MUNICIPAL LEASES. The Fund also may purchase participation interests in municipal leases. Participation interests in municipal leases are undivided interests in a lease, installment purchase contract or conditional sale contract entered into by a state or local governmental unit to acquire equipment or facilities. Municipal leases frequently have special risks which generally are not associated with general obligation bonds or revenue bonds.
Municipal leases and installment purchase or conditional sales contracts (which usually provide for title to the leased asset to pass to the governmental issuer upon payment of all amounts due under the contract) have evolved as a means for governmental issuers to acquire property and equipment without meeting the constitutional and statutory requirements for the issuance of municipal debt. The debt issuance limitations are deemed to be inapplicable because of the inclusion in many leases and contracts of "non-appropriation" clauses that provide that the governmental issuer has no obligation to make future payments under the lease or contract unless money is appropriated for this purpose by the appropriate legislative body on a yearly or other periodic basis. Although these kinds of obligations are secured by the leased equipment or facilities, the disposition of the pledged property in the event of non-appropriation or foreclosure might, in some cases, prove difficult and time-consuming. In addition, disposition upon non-appropriation or foreclosure might not result in recovery by the Fund of the full principal amount represented by an obligation.
In light of these concerns, the Fund has adopted and follows procedures for determining whether municipal lease obligations purchased by the Fund are liquid and for monitoring the liquidity of municipal lease securities held in the Fund's portfolio. These procedures require that a number of factors be used in evaluating the liquidity of a municipal lease security, including the frequency of trades and quotes for the security, the number of dealers willing to purchase or sell the security and the number of other potential purchasers, the willingness of dealers to undertake to make a market in security, the nature of the marketplace in which the security trades, and other factors which the Advisor may deem relevant. As set forth in "Investment Restrictions" below, the Fund is subject to limitations on the percentage of illiquid securities it can hold.
TEMPORARY TAXABLE INVESTMENTS
The Fund may make temporary taxable investments. Temporary taxable investments will include only the following types of obligations maturing within 13 months from the date of purchase: (i) obligations of the United States Government, its agencies and instrumentalities (including zero coupon securities); (ii) commercial paper rated not less than A-1 by Standard & Poor's or P-1 by Moody's or which has been assigned an equivalent rating by another nationally recognized statistical rating organization; (iii) other short-term debt securities issued or guaranteed by corporations having outstanding debt rated not less than BBB by Standard & Poor's or Baa by Moody's or which have been assigned an equivalent rating by another nationally recognized statistical rating organization; (iv) certificates of deposit of domestic commercial banks subject to regulation by the United States Government or any of its agencies or instrumentalities, with assets of $500 million or more based on the most recent published reports; and (v) repurchase agreements with domestic banks or securities dealers involving any of the securities which the Fund is permitted to hold.
INVERSE FLOATING RATE MUNICIPAL OBLIGATIONS
The Fund may invest up to 10% of its total assets in inverse floating rate municipal obligations. An inverse floating rate obligation entitles the holder to receive interest at a rate which changes in the opposite direction from, and in the same magnitude as or in a multiple of, changes in a specified index rate. Although an inverse floating rate municipal obligation would tend to increase portfolio income during a period of generally decreasing market interest rates, its value would tend to decline during a period of generally increasing market interest rates. In addition, its decline in value may be greater than for a fixed-rate municipal obligation, particularly if the interest rate borne by the floating rate municipal obligation is adjusted by a multiple of changes in the specified index rate. For these reasons, inverse floating rate municipal obligations have more risk than more conventional fixed-rate and floating rate municipal obligations.
ZERO COUPON SECURITIES
The Fund may invest in zero coupon municipal obligations. Zero coupon securities pay no cash income to their holders until they mature and are issued at substantial discounts from their value at maturity. When held to maturity, their entire return comes from the difference between their purchase price and their maturity value. Because interest on zero coupon securities is not paid on a current basis, the values of securities of this type are subject to greater fluctuations than are the value of securities that distribute income regularly and may be more speculative than such securities. Accordingly, the values of these securities may be highly volatile as interest rates rise or fall.
INTEREST RATE TRANSACTIONS
The Fund may purchase or sell interest rate caps and floors to preserve a return or a spread on a particular investment or portion of its portfolio or for other non-speculative purposes. The purchase of an interest rate cap entitles the purchaser, to the extent a specified index exceeds a predetermined interest rate, to receive payments of interest on a contractually-based principal amount from the party selling such interest rate cap. The purchase of an interest rate floor entitles the purchaser, to the extent a specified index falls below a predetermined interest rate, to receive payments of interest on a contractually-based principal amount from the party selling such interest rate floor.
CLOSED-END INVESTMENT COMPANIES
The Fund may invest up to 10% of its total assets in common or preferred securities of closed-end investment companies that invest in municipal bonds and other municipal obligations. Shares of certain closed-end investment companies may at times be acquired only at market prices representing premiums to their net asset values. In the event that shares acquired at a premium subsequently decline in price relative to their net asset value or the value of portfolio investments held by such closed-end companies declines, the Fund and its shareholders may experience a loss. If the Fund acquires shares of closed-end investment companies, Fund shareholders would bear both their proportionate share of the expenses in the Fund (including management and advisory fees) and, indirectly, the expenses of such closed-end investment companies.
SPECIAL FACTORS AFFECTING OHIO TAX FREE FUND
Except during temporary defensive periods, the Fund will invest most of its total assets in securities issued by or on behalf of (or in certificates of participation in lease-purchase obligations of) the State of Ohio, political subdivisions of the State, or agencies or instrumentalities of the State or its political subdivisions (Ohio Obligations). The Fund is therefore susceptible to general or particular economic, political or regulatory factors that may affect issuers of Ohio Obligations. This information is derived from sources that are generally available to investors and is based in part on information obtained from various State and local agencies in Ohio. No independent verification has been made of any of the following information. It should be noted that the creditworthiness of obligations issued by local Ohio issuers may be unrelated to the creditworthiness of obligations issued by the State of Ohio, and that there is no obligation on the part of Ohio to make payment on such local obligations in the event of such default. Also note that the information does not apply to "conduit" obligations on which the public issuer itself has no financial responsibility.
There may be specific factors that at particular times apply in connection with investment in particular Ohio Obligations or in those obligations of particular Ohio issuers. However, the information below is intended only as a general summary, and is not intended as a discussion of any specific factors that may affect any particular obligation or issuer.
EMPLOYMENT. Over the 1998-2008 period, the Ohio economy is projected to create nearly 740,000 new jobs. The number of jobs is anticipated to rise from 5.915 million in 1998 to 6.654 million by 2008. For analytical purposes, industries fall into the goods-producing or the service-producing sector. The divisions within the goods-producing sector are agricultural production, forestry, and fishing; mining; construction; and manufacturing. In the service-producing sector, the divisions are transportation, communication, and utilities; wholesale trade; retail trade; finance, insurance, and real estate; services; and government. Service-producing industries will account for virtually all of the job growth. Only construction is expected to add jobs in the goods-producing sector.
Manufacturing in Ohio is projected to maintain its share of total output, but increased productivity in this sector will likely result in a slight decline in employment. The services sector, led by business and health services, will provide two-thirds of the total job growth. The fastest growing industry is expected to be computer and data processing services. Demand for residential care and home health care will increase because of the growth of the older population. Large numbers of jobs are also projected in retail trade and local government. Eating and drinking places, and miscellaneous retail will account for two-thirds of the job growth in retail trade. There are some industries that are expected to have both a high rate of growth and a large number of annual openings. The biggest challenge for Ohio's employers will remain that of finding skilled, well-trained workers as the overall demand for labor continues to exceed the supply in the foreseeable future.
Professional, paraprofessional and technical occupations represent the largest major occupational category, and they are also projected to grow at the fastest rate. This occupational group is expected to add 250,100 jobs over the 1998-2008 period. The next largest increase is anticipated for service workers with 133,700 jobs. These two groups--on opposite ends of the educational attainment and earnings spectrum--are expected to provide more than half of the total job growth. Service and professional occupations, particularly in the fields of health, business, and education, dominate the lists of occupations gaining the most employment or growing the fastest. The other groups expected to grow faster than average are managers and sales occupations. Administrative support occupations, including clerical, are projected to grow much slower than the average, reflecting the continuing impact of office automation. Precision production, craft, and repair occupations; and operators, fabricators, and laborers are projected to grow more slowly than average due to continuing advances in technology, changes in production methods, and an overall decline in manufacturing employment. New job growth is one component of occupational demand, but a larger source of job openings is replacement needs. Most job openings result from the need to replace workers who leave the labor force or transfer to another occupation. Therefore, even declining occupations may provide substantial opportunities for employment.
Within Ohio, the two occupations with the most annual openings are retail salespersons and cashiers. Three of the next five occupations with the most annual openings are related to eating and drinking places. The other occupations that make up the top ten are general office clerks; general managers and top executives; registered nurses; janitors and cleaners; and secondary school teachers. Health occupations will account for many jobs for Ohioans, in large part because of the need to care for an aging population with a longer life expectancy.
Education will play a bigger role in the Ohio workplace. Growth rates over the 1998-2008 period will range from 5.9 percent for occupations requiring long-term on-the job training to 26.0 percent for occupations requiring an associate degree. All categories that generally require postsecondary vocational training or higher are projected to grow faster than the 12.5 percent average for all occupations. Workers with higher levels of education or training usually will have more options in the job market and better prospects for obtaining
higher paying jobs. Occupations projected to grow the slowest are, in general, those requiring long-term on-the-job training (over 12 months) for a worker to achieve average job performance. Such jobs are primarily production occupations concentrated in manufacturing industries. In Ohio and throughout the nation, jobs in manufacturing industries are declining. From 1988 to 1998, Ohio lost 14,000 manufacturing jobs. The loss of an additional 8,200 jobs is projected through 2008.
LABOR FORCE. The projections for the Ohio work force to 2008 show that the service-producing sector of the economy will continue to grow. Ohio's employment situation will get tighter as the supply of labor grows at a slower rate than the demand for workers. The demographic composition of the labor force will be changing as the baby boom generation, most of which will remain in the labor force, ages. The changing industrial structure of the economy will be affecting the distribution of jobs by occupation. Information about such change is important to people making decisions about their own future or the future of the company where they work.
Ohio ranks seventh in the country in gross state product, the value of output produced by a state, and accounts for 4.0 percent of the U.S. Gross Domestic Product. Demand for many goods and services is based largely on consumption expenditures by the local population. For example, employment in grocery stores, restaurants, bookstores, hospitals, and similar establishments depends on the needs and wants of people living in the area who have money to spend. So population and income are two of the primary local factors determining economic trends. Ohio's population has been increasing for the past decade and will continue to rise, but at a slower rate than the U.S. population. Although Ohio income will decline as a share of national income because of the slower growth in population, per capita income relative to the U.S. is expected to remain steady, according to the Bureau of Economic Analysis.
The future supply of workers is projected to increase by 560,000 over the 1998-2008 period, from 5.678 million to 6.238 million. This represents an increase of 9.9 percent; up from the 6.6 percent increase over the previous 10-year period, 1988-98. The growth rate in Ohio's labor force will surpass that of the working-age population because of a general rise in the labor force participation rate. However, Ohio's labor market is expected to grow tighter as industry demand for workers grows at a faster rate than supply. Labor force participation is expected to continue to rise from 66.3 percent of the working-age population in 1998 to 68.8 percent by 2008. Men's participation will remain at about the same level and a moderate increase in women's participation will continue. Because of these trends, women's share of the Ohio labor force is projected to increase from 47.1 percent to 48.9 percent over the 10-year period. Despite this, men will supply more than four out of ten labor force entrants over the 1998-2008 time-span.
The demographic composition of the labor force is expected to change as Ohio's population ages. The bulk of Ohio's labor force will be in the 25-54 age group by 2008 with the oldest baby-boomers in the 55-64 age group. Most workers in the labor force in 1998, about four out of five, will remain in Ohio's labor force in 2008. The labor force 55 years of age and older will grow faster than the younger labor force as the baby-boom generation continues to age. The number of workers aged 55 to 64 years old will increase 328,000 and those 65 and older will increase 18,000. The number of young people, in the 16-24 year old age group, in Ohio's labor force is expected to increase by 160,000. The labor force 35-to-44 years of age is expected to decline by almost 200,000, reflecting the decrease in births in the late 1960s and early 1970s.
UNEMPLOYMENT RATE. Ohio's seasonally adjusted unemployment rate was 4.2% in August 2001, unchanged from 4.2% in July 2001. The U.S. seasonally adjusted unemployment rate was 4.9% in August, up from 4.5% in July. Not seasonally adjusted, the August unemployment rate was 4.0% for Ohio, and 4.9% for the U.S. The Ohio Department of Job and Family Services (ODJFS), a state agency that compiles the Ohio unemployment rate from federal data, reported "Ohio's unemployment rate held steady in August as there were offsetting forces in the state's economy." A decrease in unemployment compensation claims was counteracted by a modest decline in employment. It should be noted that the tragic events of September 11, 2001 are not reflected in these numbers The number of workers unemployed in August was 250,000, down from 251,000 in July. However, the number of unemployed has increased by 11,000 over the course of the year from 239,000.
BUDGET. For fiscal year 2001, total General Revenue Fund (GRF) sources were below the estimate used at the beginning of the fiscal year by $222.1 million or 1.0 percent, while total GRF tax receipts were below the estimate by $328.6 million or 2.1 percent. The weaker than expected revenue picture was primarily impacted by lower receipts from the sales and use tax and the personal income tax. The State ended the second year of its biennial budget period on June 30, 2001 with a GRF budgetary fund balance of $219.4 million. The ending fund balance was for the most part, the result of lower-than-budgeted disbursements from the General Revenue Fund. In fiscal year 2001, total spending on State programs was below the estimate used at the beginning of the year by $421.4 million or 1.9 percent. Most of this underspending occurred in the disbursements category for primary and secondary education, general government and various human services programs.
Governor Taft proposes GRF recommendations of $21.8 billion in FY 2002 (a 1.6% increase over estimated FY 2001 spending) and $23.0 billion in FY 2003 (a 5.5% increase over FY 2002). The Governor's recommendations for all funds are $44.2 billion in FY 2002 (a 3.8% increase over comparable estimated FY 2001 spending) and $45.7 billion in FY 2003 (a 3.6% increase over FY 2002). The total proposed budget for the FY 2002-2003 biennium is $89.9 billion, which includes a $44.9 billion General Revenue Fund (GRF) budget.
The Governor's four broad goals for the state of 1) enabling every child to succeed, 2) promoting prosperity, 3) caring for those in need, and 4) promoting public health and public safety, were used as a basis for formulating the FY 2002-2003 biennial budget. Within this framework Governor Taft's first funding priority was education. While Ohio's fiscal condition remains stable, the state faces a difficult budget environment characterized by lower than projected revenues in the current fiscal year, a slowing economy, increasing Medicaid costs, and school funding issues raised by the Ohio Supreme Court. The budget recommended by Governor Taft is balanced and does not include new taxes. It provides increases for primary and secondary education, higher education, economic development and technology, healthcare, and other priority programs. Given the budget environment and allocation of resources for the Governor's priorities, some agencies will receive less in the FY 2002 recommendations than is currently appropriated in FY 2001. This budget will present challenges for many state agencies. It will take tremendous efforts on the part of managers and state employees to manage their resources but it will also provide the opportunity to review, reassess, and reengineer their programs and services.
Governor Taft's four broad goals helped guide the budget preparation strategies. The following strategies have guided the preparation of Governor Taft's Executive Budget:
1. Make primary and secondary education and higher education the first
priority in the budget, ensuring that at least 50 percent of new spending
will support education at all levels.
2. Focus remaining resources on policy and program priorities: health care,
economic development and technology, and quality of life.
3. Develop a balanced budget without new taxes.
4. Limit the growth of state agencies.
5. Maintain conservative fiscal management practices including sufficient
ending fiscal year GRF balances and maintaining an adequate Budget
Stabilization Fund.
Governor's Taft's total Education Budget is $10.7 billion for FY 2002 and $11.2 billion for FY 2003. The GRF portion is $8.5 billion in FY 2002 and $8.9 billion in FY 2003. This budget contains appropriations for all primary and secondary education-related agencies, the Lottery Commission, and higher education-related agencies. The total general operating budget is $30.1 billion in FY 2002 and $31.6 billion in FY 2003. The GRF portion is $13.4 billion in FY 2002 and $14.1 billion in FY 2003. The general operating budget contains the appropriations for all other agencies including the Departments of Rehabilitation and Correction, Youth Services, Mental Health, Mental Retardation and Developmental Disabilities, and Natural Resources. The transportation budget bill contains the non-GRF appropriations for transportation-related agencies, including the Department of Transportation, the Department of Public Safety, and
the Public Works Commission. The total of this bill is $3.0 billion in FY 2002 and $2.6 billion in FY 2003. The GRF appropriations of the transportation-related agencies are contained in the general operating budget and are $191.0 million in FY 2002 and $200.0 million in FY 2003. The Bureau of Workers' Compensation budget is $303.6 million in FY 2002 and $316.6 million in FY 2003. Appropriations for the Bureau are non-GRF. The Industrial Commission budget is $57.0 million in FY 2002 and $60.0 million in FY 2003. Appropriations for the Commission are non-GRF.
TAXES. Ohio's personal income tax law is based closely on federal law to facilitate compliance by the taxpayer and administration by the state. The starting point for computation of the Ohio income tax is federal adjusted gross income as reported on the federal income tax return. After adding and subtracting certain adjustments and subtracting personal exemptions, Ohio's graduated tax rates are applied to the remaining figure (Ohio taxable income) to calculate the tax liability. From this figure, certain credits may be subtracted to arrive at the final personal income tax liability.
Total collections for fiscal year 2000 were $8,084.6 million. Of this amount 5.7% or $460.8 million was distributed to the Library and Local Government Support Fund, 4.2% or $339.5 million was distributed to the Local Government Fund, 0.6% or $48.5 million to the Local Government Revenue Assistance Fund, and 89.5% or $7,232.0 million went to the General Revenue Fund. The Ohio Constitution requires that at least 50% of income tax collections be returned to the county of origin. This obligation is met primarily through General Revenue Fund allocations to education and local property tax relief.
There can be no assurance that future national, regional or state-wide economic difficulties, and the resulting impact on State or local government finances generally, will not adversely affect the market value of Ohio obligations held in the Ohio Tax Free Fund or the ability of particular obligors to make timely payments of debt service on (or lease payments relating to) those obligations.
CFTC INFORMATION
The Commodity Futures Trading Commission (the "CFTC"), a federal agency, regulates trading activity pursuant to the Commodity Exchange Act, as amended. The CFTC requires the registration of "commodity pool operators," which are defined as any person engaged in a business which is of the nature of an investment trust, syndicate or a similar form of enterprise, and who, in connection therewith, solicits, accepts or receives from others funds, securities or property for the purpose of trading in a commodity for future delivery on or subject to the rules of any contract market. The CFTC has adopted Rule 4.5, which provides an exclusion from the definition of commodity pool operator for any registered investment company which (i) will use commodity futures or commodity options contracts solely for bona fide hedging purposes (provided, however, that in the alternative, with respect to each long position in a commodity future or commodity option contract, an investment company may meet certain other tests set forth in Rule 4.5); (ii) will not enter into commodity futures and commodity options contracts for which the aggregate initial margin and premiums exceed 5% of its assets; (iii) will not be marketed to the public as a commodity pool or as a vehicle for investing in commodity interests; (iv) will disclose to its investors the purposes of and limitations on its commodity interest trading; and (v) will submit to special calls of the CFTC for information. Any investment company desiring to claim this exclusion must file a notice of eligibility with both the CFTC and the National Futures Association. FAIF has made such notice filings with respect to those Funds which may invest in commodity futures or commodity options contracts.
INVESTMENT RESTRICTIONS
In addition to the investment objectives and policies set forth in the Prospectus and under the caption "Additional Information Concerning Fund Investments" above, the Fund is subject to the investment restrictions set forth below. The investment restrictions set forth in paragraphs 1 through 6 below are fundamental and cannot be changed without approval by the holders of a majority of the outstanding shares of the Fund as defined in the Investment Company Act of 1940, as amended (the "1940 Act"), i.e., by the lesser of the vote of (a) 67% of the shares of the Fund present at a meeting where more than 50% of the outstanding shares are present in person or by proxy, or (b) more than 50% of the outstanding shares of the Fund.
The Fund will not:
1. Concentrate its investments in a particular industry. For purposes of this limitation, the U.S. Government, and state or municipal governments and their political subdivisions are not considered members of any industry. Whether the Fund is concentrating in an industry shall be determined in accordance with the 1940 Act, as interpreted or modified from time to time by any regulatory authority having jurisdiction.*
2. Borrow money or issue senior securities, except as permitted under the 1940 Act, as interpreted or modified from time to time by any regulatory authority having jurisdiction.
3. Act as an underwriter of securities of other issuers, except to the extent that, in connection with the disposition of portfolio securities, it may be deemed an underwriter under applicable laws.
4. Purchase or sell real estate unless as a result of ownership of securities or other instruments, but this shall not prevent the Fund from investing in securities or other instruments backed by real estate or interest therein or in securities of companies that deal in real estate or mortgages.
5. Purchase physical commodities or contracts relating to physical commodities.
6. Make loans except as permitted under the 1940 Act, as interpreted or modified from time to time by any regulatory authority having jurisdiction.
The following restrictions are non-fundamental and may be changed by FAIF's Board of Directors without a shareholder vote:
1. The Fund will not invest more than 15% of its net assets in all forms of illiquid investments.
2. The Fund will not make additional investments while its borrowings exceed 5% of total assets.
3. Make short sales of securities.
4. Lend portfolio securities representing in excess of one-third of the value of its total assets.
The Board of Directors has adopted guidelines and procedures under
which FAIF Funds' investment advisor is to determine whether the following types
of securities which may be held by certain Funds are "liquid" and to report to
the Board concerning its determinations: (i) securities eligible for resale
pursuant to Rule 144A under the Securities Act of 1933; (ii) commercial paper
issued in reliance on the "private placement" exemption from registration under
Section 4(2) of the Securities Act of 1933, whether or not it is eligible for
resale pursuant to Rule 144A; (iii) interest-only and principal-only, inverse
floating rate and inverse interest-only securities issued or guaranteed by the
U.S. Government or its agencies or instrumentalities; and (iv) municipal leases
and securities that represent interests in municipal leases.
FUND NAME
The Fund has adopted an investment strategy pursuant to Rule 35d-1 of the 1940 Act, whereby at least 80% of its net assets (plus the amount of any borrowings for investment purposes) must be invested in municipal securities that pay interest that is exempt from federal and Ohio income tax, including the federal alternative minimum tax. The Fund has adopted a policy to provide shareholders with at least 60 days notice in the event of a planned change to the investment strategy. Such notice to shareholders will meet the requirements of Rule 35d-1(c) of the 1940 Act.
DIRECTORS AND OFFICERS OF THE FUND
The directors and officers of FAIF are listed below. The Board of Directors generally oversees the overall operation and management of FAIF under the laws of the State of Minnesota. Directors who are "interested persons" (as that term is defined in the 1940 Act) of FAIF are set forth in a separate table.
INDEPENDENT DIRECTORS
----------------- ----------- ---------------------- ----------------------- ---------------- -------------
NUMBER OF
PORTFOLIOS IN OTHER
NAME, POSITION(S) TERM OF OFFICE PRINCIPAL FUND COMPLEX DIRECTORSHIPS
ADDRESS, AND HELD AND LENGTH OF OCCUPATION(S) DURING OVERSEEN BY HELD BY
AGE WITH FUND TIME SERVED PAST 5 YEARS DIRECTOR DIRECTOR*
----------------- ----------- ---------------------- ----------------------- ---------------- -------------
Robert J. Director Term expiring Retired Chief First American None
Dayton, 5140 earlier of death, Executive Officer, Funds Complex:
Norwest Center, resignation, Okabena Company, a thirteen
Minneapolis, removal, private family registered
Minnesota 55402 disqualification, or financial services investment
(59) successor duly office; Chairman, companies,
elected and Okabena Company Board including
qualified. Director (1989-present); Chief sixty three
of FAIF since Executive Officer, portfolios
September 1994 Okabena Company
(1993-June 2001)
----------------- ----------- ---------------------- ----------------------- ---------------- -------------
----------------- ----------- ---------------------- ----------------------- ---------------- -------------
Roger A. Director Term expiring Vice President, Cargo First American None
Gibson, 1020 earlier of death, - United Airlines, Funds Complex:
15th Street, resignation, since July 2001; Vice thirteen
Suite 41A, removal, President, North registered
Denver, disqualification, or America-Mountain investment
Colorado 80202 successor duly Region for United companies,
(55) elected and Airlines (1995-2001) including
qualified. Director sixty three
of FAIF since portfolios
October 1997
----------------- ----------- ---------------------- ----------------------- ---------------- -------------
----------------- ----------- ---------------------- ----------------------- ---------------- -------------
Andrew M. Director Term expiring Chairman, Hunter, First American None
Hunter III, 537 earlier of death, Keith Industries, a Funds Complex:
Harrington resignation, diversified thirteen
Road, Wayzata, removal, manufacturing and registered
Minnesota 55391 disqualification, or services management investment
(54) successor duly company, since 1975 companies,
elected and including
qualified. Director sixty three
of FAIF since portfolios
January 1997
----------------- ----------- ---------------------- ----------------------- ---------------- -------------
----------------- ----------- ---------------------- ----------------------- ---------------- -------------
Leonard W. Director Term expiring Owner, Executive and First American None
Kedrowski, 16 earlier of death, Management Funds Complex:
Dellwood resignation, Consulting, Inc., a thirteen
Avenue, removal, management consulting registered
Dellwood, disqualification, or firm, since 1992; investment
Minnesota 55110 successor duly Chief Executive companies,
(60) elected and Officer, Creative including
qualified. Director Promotions sixty three
of FAIF since International, LLC, a portfolios
November 1993 promotional award
programs and products
company, since 1999;
Board member, GC
McGuiggan Corporation
(DBA Smyth Companies),
manufacturer of
designer doors; acted
as CEO of Graphics
Unlimited from
1996-1998
----------------- ----------- ---------------------- ----------------------- ---------------- -------------
|
----------------- ----------- ---------------------- ----------------------- ---------------- -------------
NUMBER OF
PORTFOLIOS IN OTHER
NAME, POSITION(S) TERM OF OFFICE PRINCIPAL FUND COMPLEX DIRECTORSHIPS
ADDRESS, AND HELD AND LENGTH OF OCCUPATION(S) DURING OVERSEEN BY HELD BY
AGE WITH FUND TIME SERVED PAST 5 YEARS DIRECTOR DIRECTOR*
----------------- ----------- ---------------------- ----------------------- ---------------- -------------
Richard K. Director Term expiring Retired; President First American None
Riederer, 741 earlier of death, and Chief Executive Funds Complex:
Chestnut Road, resignation, Officer, Weirton thirteen
Sewickley, removal, Steel (1995-2001); registered
Pennsylvania disqualification, or Director, Weirton investment
15143 (57) successor duly Steel (1993-2001) companies,
elected and including
qualified. Director sixty three
of FAIF since August portfolios
2001
----------------- ----------- ---------------------- ----------------------- ---------------- -------------
Joseph D. Director Term expiring Chairman of FAF's and First American None
Strauss, 8525 earlier of death, FAIF's Boards from Funds Complex:
Edinbrook resignation, 1993 to September thirteen
Crossing, Suite removal, 1997 and of FASF's registered
5, Brooklyn disqualification, or Board from June 1996 investment
Park, Minnesota successor duly to September 1997; companies,
55443 (61) elected and President of FAF and including
qualified. Director FAIF from June 1989 sixty three
of FAIF since April to November 1989; portfolios
1991 Owner and Executive
Officer, Excensus TM
LLC, a consulting
firm, since 2001;
Owner and President,
Strauss Management
Company, a Minnesota
holding company for
various organizational
management business
ventures, since 1993;
Owner, Chairman and
Chief Executive
Officer, Community
Resource Partnerships,
Inc., a strategic
planning, operations
management, government
relations,
transportation planning
and public relations
organization, since
1993; attorney at law
----------------- ----------- ---------------------- ----------------------- ---------------- -------------
----------------- ----------- ---------------------- ----------------------- ---------------- -------------
Virginia L. Chair; Chair Term three Owner and President, First American None
Stringer, 712 Director years. Directors Strategic Management Funds Complex:
Linwood Avenue, Term expiring Resources, Inc., a thirteen
St. Paul, earlier of death, management consulting registered
Minnesota 55105 resignation, firm, since 1993; investment
(57) removal, Executive Consultant companies,
disqualification, or for State Farm including
successor duly Insurance Company sixty three
elected and since 1997; formerly portfolios
qualified. Chair of President and
FAIF's Board since Director, The
September 1997; Inventure Group, a
Director of FAIF management consulting
since August 1987 and training company;
President, Scott's,
Inc., a
transportation
company, and Vice
President of Human
Resources, The
Pillsbury Company
----------------- ----------- ---------------------- ----------------------- ---------------- -------------
----------------- ----------- ---------------------- ----------------------- ---------------- -------------
James M. Wade, Director Term expiring Owner and President, First American None
2802 Wind Bluff earlier of death, Jim Wade Homes, a Funds Complex:
Circle, resignation, homebuilding company, thirteen
Wilmington, removal, since 1999 registered
North Carolina disqualification, or investment
28409 (58) successor duly companies,
elected and including
qualified. Director sixty three
of FAIF since August portfolios
2001
----------------- ----------- ---------------------- ----------------------- ---------------- -------------
|
* Includes only directorships in a company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act or subject to the requirements of Section 15(d) of the Securities Exchange Act, or any company registered as an investment company under the Investment Company Act.
INTERESTED DIRECTOR(S)
----------------- ----------- ---------------------- ----------------------- ---------------- -------------
NAME, ADDRESS, POSITION(S) TERM OF OFFICE PRINCIPAL NUMBER OF
AND AGE HELD AND LENGTH OF OCCUPATION(S) DURING PORTFOLIOS IN OTHER
WITH FUND TIME SERVED PAST 5 YEARS FUND COMPLEX DIRECTORSHIPS
OVERSEEN BY HELD BY
DIRECTOR DIRECTOR*
----------------- ----------- ---------------------- ----------------------- ---------------- -------------
John M. Murphy, Director Term expiring Executive Vice First American None
Jr., 800 earlier of death, President, U.S. Funds Complex:
Nicollet Mall, resignation, Bancorp since January thirteen
Minneapolis, removal, 1999; Minnesota State registered
Minnesota 55402 disqualification, or Chairman - U.S. investment
(60) ** successor duly Bancorp since 2000; companies,
elected and Chairman and Chief including
qualified. Director Investment Officer, sixty three
of FAIF since June First American Asset portfolios
1999 Management and U.S.
Bank Trust, N.A., and
Executive Vice
President, U.S.
Bancorp (1991-1999).
----------------- ----------- ---------------------- ----------------------- ---------------- -------------
|
* Includes only directorships in a company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act or subject to the requirements of Section 15(d) of the Securities Exchange Act, or any company registered as an investment company under the Investment Company Act.
** Mr. Murphy is considered an "interested" Director because of his employment with U.S. Bancorp, U.S. Bancorp Asset Management (and its predecessor, First American Asset Management) and U.S. Bank Trust National Association, and his ownership of securities issued by U.S. Bancorp.
OFFICERS
----------------- ----------- ---------------------- ----------------------- ---------------- -------------
NUMBER OF
PORTFOLIOS IN OTHER
NAME, POSITION(S) TERM OF OFFICE PRINCIPAL FUND COMPLEX DIRECTORSHIPS
ADDRESS, AND HELD AND LENGTH OF OCCUPATION(S) DURING OVERSEEN BY HELD BY
AGE WITH FUND TIME SERVED PAST 5 YEARS OFFICER OFFICER*
----------------- ----------- ---------------------- ----------------------- ---------------- -------------
Thomas S. President Re-elected by the Chief Executive First American Director of
Schreier, Jr., Board annually; Officer of U.S. Funds Complex: Pinnacle
U.S. Bancorp President of FAIF Bancorp Asset thirteen Airlines
Asset since February 2001 Management, Inc. registered Corp.
Management, since May 2001; Chief investment
Inc., 800 Executive Officer of companies,
Nicollet Mall, First American Asset including
Minneapolis, Management from sixty three
Minnesota 55402 December 2000 through portfolios
(39)** May 2001 and of
Firstar Investment &
Research Management Company
from February 2001 through
May 2001; Senior Managing
Director and Head of Equity
Research of U.S. Bancorp
Piper Jaffray from October
1998 through December 2000;
Senior Airline Analyst and
Director of Equity Research
of Credit Suisse First
Boston through 1998
----------------- ----------- ---------------------- ----------------------- ---------------- -------------
|
----------------- ----------- ---------------------- ----------------------- ---------------- -------------
NUMBER OF
PORTFOLIOS IN OTHER
NAME, POSITION(S) TERM OF OFFICE PRINCIPAL FUND COMPLEX DIRECTORSHIPS
ADDRESS, AND HELD AND LENGTH OF OCCUPATION(S) DURING OVERSEEN BY HELD BY
AGE WITH FUND TIME SERVED PAST 5 YEARS OFFICER OFFICER*
----------------- ----------- ---------------------- ----------------------- ---------------- -------------
Mark S. Vice Re-elected by the Chief Investment First American None
Jordahl, U.S. President Board annually; Vice Officer of U.S. Funds Complex:
Bancorp Asset - President - Bancorp Asset thirteen
Management, Investments Investments of FAIF Management, Inc. registered
Inc. 800 since September 2001 since September 2001; investment
Nicollet Mall, President and Chief companies,
Minneapolis, Investment Officer, including
Minnesota 55402 ING Investment sixty three
(41)** Management - Americas portfolios
(September 2000 to
June 2001); Senior
Vice President and
Chief Investment
Officer, ReliaStar
Financial Corp.
(January 1998 to
September 2000);
Executive Vice
President and
Managing Director,
Washington Square
Advisers (January
1996 to December 1997)
----------------- ----------- ---------------------- ----------------------- ---------------- -------------
----------------- ----------- ---------------------- ----------------------- ---------------- -------------
Peter O. Vice Re-elected by the Executive Vice First American None
Torvik, U.S. President Board annually; Vice President of U.S. Funds Complex:
Bancorp Asset - President - Bancorp Asset thirteen
Management, Marketing Marketing of FAIF Management since May registered
Inc. 800 since September 2000 2001; Executive Vice investment
Nicollet Mall, President of First companies,
Minneapolis, American Asset including
Minnesota 55402 Management from sixty three
(47)** February 2001 through portfolios
May 2001; President and
partner of DPG Group, a
Florida-based partnership
engaged in affinity
marketing through 2000
----------------- ----------- ---------------------- ----------------------- ---------------- -------------
----------------- ----------- ---------------------- ----------------------- ---------------- -------------
Jeffery M. Vice Re-elected by the Senior Vice President First American None
Wilson, U.S. President Board annually; Vice of U.S. Bancorp Asset Funds Complex:
Bancorp Asset - President - Management since May thirteen
Management, Administra- Administration of 2001; Senior Vice registered
Inc. 800 tion FAIF since March 2000 President of First investment
Nicollet Mall, American Asset companies,
Minneapolis, Management through including
Minnesota 55402 May 2001 sixty three
(45)** portfolios
----------------- ----------- ---------------------- ----------------------- ---------------- -------------
Robert H. Treasurer Re-elected by the Senior Vice President First American None
Nelson, U.S. Board annually; of U.S. Bancorp Asset Funds Complex:
Bancorp Asset Treasurer of FAIF Management since May thirteen
Management, since March 2000 2001; Senior Vice registered
Inc. 800 President of First investment
Nicollet Mall, American Asset companies,
Minneapolis, Management from 1998 including
Minnesota 55402 through May 2001 and sixty three
(38)** of Firstar Investment portfolios
& Research Management
Company from February
2001 through May
2001; Senior Vice
President of Piper
Capital Management
Inc. through 1998
----------------- ----------- ---------------------- ----------------------- ---------------- -------------
|
----------------- ----------- ---------------------- ----------------------- ---------------- -------------
NUMBER OF
PORTFOLIOS IN OTHER
NAME, POSITION(S) TERM OF OFFICE PRINCIPAL FUND COMPLEX DIRECTORSHIPS
ADDRESS, AND HELD AND LENGTH OF OCCUPATION(S) DURING OVERSEEN BY HELD BY
AGE WITH FUND TIME SERVED PAST 5 YEARS OFFICER OFFICER*
----------------- ----------- ---------------------- ----------------------- ---------------- -------------
James L. Chosy, Secretary Re-elected by the General Counsel First American None
U.S. Bancorp Board annually; Managing Director of Funds Complex:
Asset Secretary of FAIF U.S. Bancorp Piper thirteen
Management, since February 2001 Jaffray Inc. since registered
Inc. 800 March 2001; investment
Nicollet Mall, previously Associate companies,
Minneapolis, General Counsel of including
Minnesota 55402 U.S. Bancorp since sixty three
(38)** November 1995 portfolios
----------------- ----------- ---------------------- ----------------------- ---------------- -------------
----------------- ----------- ---------------------- ----------------------- ---------------- -------------
Michael J. Assistant Re-elected by the Partner, Dorsey & First American None
Radmer, 50 Secretary Board annually; Whitney LLP, a Funds Complex:
South Sixth Assistant Secretary Minneapolis- based thirteen
Street, Suite of FAIF since March law firm registered
1500, 2000; Secretary of investment
Minneapolis, FAIF from September companies,
Minnesota 55402 1999 through March including
(57) 2000 sixty three
portfolios
----------------- ----------- ---------------------- ----------------------- ---------------- -------------
----------------- ----------- ---------------------- ----------------------- ---------------- -------------
James D. Alt, Assistant Re-elected by the Partner, Dorsey & First American None
50 South Sixth Secretary Board annually; Whitney LLP, a Funds Complex:
Street, Suite Assistant Secretary Minneapolis- based thirteen
1500, of FAIF since law firm registered
Minneapolis, September 1998 investment
Minnesota 55402 companies,
(50) including
sixty three
portfolios
----------------- ----------- ---------------------- ----------------------- ---------------- -------------
----------------- ----------- ---------------------- ----------------------- ---------------- -------------
Kathleen L. Assistant Re-elected by the Partner, Dorsey & First American None
Prudhomme, 50 Secretary Board annually; Whitney LLP, a Funds Complex:
South Sixth Assistant Secretary Minneapolis- based thirteen
Street, Suite of FAIF since law firm registered
1500, September 1998 investment
Minneapolis, companies,
Minnesota 55402 including
(49) sixty three
portfolios
----------------- ----------- ---------------------- ----------------------- ---------------- -------------
----------------- ----------- ---------------------- ----------------------- ---------------- -------------
Douglas G. Assistant Re-elected by the Assistant Vice First American None
Hess, 612 E. Secretary Board annually; President, Fund Funds Complex:
Michigan Assistant Secretary Compliance thirteen
Street, of FAIF since Administrator, U.S. registered
Milwaukee, WI September 2001 Bancorp Fund investment
53202 (34)** Services, LLC (FKA companies,
Firstar Mutual Fund including
Services, LLC) since sixty three
March 1997 portfolios
----------------- ----------- ---------------------- ----------------------- ---------------- -------------
|
* Includes only directorships in a company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act or subject to the requirements of Section 15(d) of the Securities Exchange Act, or any company registered as an investment company under the Investment Company Act.
** Messrs. Schreier, Jordahl, Torvik, Wilson, Nelson and Chosy are each officers of U.S. Bancorp Asset Management, Inc., which serves as investment adviser for FAIF. Mr. Hess is an officer of U.S. Bancorp Fund Services, LLC, which is a subsidiary of U.S. Bancorp and which serves as Co-Administrator for FAIF.
STANDING COMMITTEES OF THE BOARD OF DIRECTORS
There are currently three standing committees of the FAIF Board of Directors: Audit Committee, Pricing Committee and Nominating Committee.
----------------- -------------------------------------------- ----------------------- --------------------
NUMBER OF FUND
COMPLEX COMMITTEE
COMMITTEE FUNCTION COMMITTEE MEMBERS MEETINGS HELD
DURING LAST FISCAL
YEAR
----------------- -------------------------------------------- ----------------------- --------------------
Audit Committee The Committee will recommend annually to Leonard Kedrowski 9
the Board of Directors a firm of (Chair)
independent certified public accountants Roger Gibson
to audit the books and records of the Richard Riederer
funds for the ensuing year. In connection Virginia Stringer
therewith, the Committee will monitor that (ex-officio)
firm's performance, including a review of
each audit and review of fees paid, confer
with that firm as to the funds' financial
statements and internal controls,
evaluate the firm's independence, review
procedures to safeguard portfolio
securities, review the purchase by the
funds from the firm of nonaudit services,
facilitate communications with management
and service providers and review funds'
back-up procedures and disaster recovery
plans.
----------------- -------------------------------------------- ----------------------- --------------------
----------------- -------------------------------------------- ----------------------- --------------------
Pricing The Committee is responsible for valuing Joseph Strauss (Chair) 8
Committee portfolio securities for which market Robert Dayton
quotations are not readily available, John Murphy
pursuant to procedures established by the Virginia Stringer
Board of Directors. (ex-officio)
----------------- -------------------------------------------- ----------------------- --------------------
----------------- -------------------------------------------- ----------------------- --------------------
Nominating The Committee is responsible for Andrew Hunter (Chair) 7
Committee recommending to the Board of Directors Roger Gibson
(1) nominees for election as directors, Richard Riederer
(2) a successor to the Chair when a Virginia Stringer
vacancy occurs, and (3) compensation plans (ex-officio)
and arrangements for the directors; and
reviewing with the Chair, the Chair's
recommended Committee assignments.
----------------- -------------------------------------------- ----------------------- --------------------
|
FUND SHARES OWNED BY THE DIRECTORS
The information in the table below discloses the dollar ranges of (i) each Director's beneficial ownership in FAIF, and (ii) each Director's aggregate beneficial ownership in all funds within the First American Funds complex.
-------------------------- ------------------------------------ -------------------------------------------------
NAME OF DIRECTOR DOLLAR RANGE OF EQUITY SECURITIES AGGREGATE DOLLAR RANGE OF EQUITY SECURITIES IN
IN FAIF THE FIRST AMERICAN FUNDS COMPLEX*
-------------------------- ------------------------------------ -------------------------------------------------
VIRGINIA STRINGER Over $100,000 Over $100,000
-------------------------- ------------------------------------ -------------------------------------------------
ROBERT DAYTON -- $50,001-100,000
-------------------------- ------------------------------------ -------------------------------------------------
LEONARD KEDROWSKI Over $100,000 Over $100,000
-------------------------- ------------------------------------ -------------------------------------------------
ROGER GIBSON $10,001-50,000 $10,001-50,000
-------------------------- ------------------------------------ -------------------------------------------------
ANDREW HUNTER -- Over $100,000
-------------------------- ------------------------------------ -------------------------------------------------
JOSEPH STRAUSS Over $100,000 Over $100,000
-------------------------- ------------------------------------ -------------------------------------------------
RICHARD RIEDERER $50,001-100,000 $50,001-100,000
-------------------------- ------------------------------------ -------------------------------------------------
JAMES WADE Over $100,000 Over $100,000
-------------------------- ------------------------------------ -------------------------------------------------
JOHN MURPHY Over $100,000 Over $100,000
-------------------------- ------------------------------------ -------------------------------------------------
|
* The dollar range disclosed is based on the value of the securities as of December 31, 2001.
The table below provides the amount of securities owned beneficially, or of record, by each independent Director, and their immediate family members, in (i) an investment advisor or principal underwriter of the Fund and (ii) a person (other than a registered investment company) directly of indirectly controlling, controlled by, or under common control with an investment advisor or principal underwriter of the Fund.
--------------------- --------------- ------------ --------------- ------------------ ---------------------
NAME OF DIRECTOR NAME OF COMPANY TITLE OF CLASS VALUE OF PERCENT OF CLASS
OWNERS AND SECURITIES
RELATIONSHIPS
TO DIRECTOR
--------------------- --------------- ------------ --------------- ------------------ ---------------------
VIRGINIA STRINGER -- -- -- -- --
--------------------- --------------- ------------ --------------- ------------------ ---------------------
ROBERT DAYTON -- -- -- -- --
--------------------- --------------- ------------ --------------- ------------------ ---------------------
LEONARD KEDROWSKI -- -- -- -- --
--------------------- --------------- ------------ --------------- ------------------ ---------------------
ROGER GIBSON -- -- -- -- --
--------------------- --------------- ------------ --------------- ------------------ ---------------------
ANDREW HUNTER -- -- -- -- --
--------------------- --------------- ------------ --------------- ------------------ ---------------------
JOSEPH STRAUSS -- -- -- -- --
--------------------- --------------- ------------ --------------- ------------------ ---------------------
RICHARD RIEDERER -- -- -- -- --
--------------------- --------------- ------------ --------------- ------------------ ---------------------
JAMES WADE -- -- -- -- --
--------------------- --------------- ------------ --------------- ------------------ ---------------------
|
APPROVAL OF INVESTMENT ADVISORY CONTRACT
The Board of Directors last reviewed the Advisory Agreement and approved its continuation on June 1, 2001. In connection with its review, the Board of Directors requested and reviewed materials relating to, and considered and evaluated with respect to, each Fund, including (i) the terms of the Advisory Agreement, including the nature and scope of services to be provided to the Fund by the Advisor as well as the structure and rate of the investment advisory fee to be charged for those services; (ii) the fees and expenses that would be paid by the Fund as compared to the fees and expenses paid by similar funds managed by other investment advisers; (iii) the historical investment performance of each Fund, as compared to the performance of other funds currently available in the market not advised or managed by the Advisor, but having a similar investment focus and asset composition; (iv) the type and score of services that historically have been provided to the Fund by the Advisor and the ability of the Advisor to continue to provide high quality investment advisory services to the Fund, in light of the experience and qualifications of the Advisor and its personnel, the Advisor's financial condition and the terms of the Advisory Agreement; and (v) the current and projected profitability of the Advisor and other benefits that may be received by the Advisor or its affiliates as a result of serving as Advisor to the Fund (including soft dollar benefits received by the Advisor in addition to its investment advisory fee), in light of other fees and expenses that would be paid by the Fund to the Advisor or to affiliates of the Advisor, and the extent to which economies of scale or other benefits were realized by the Advisor and shared with shareholders.
The Board of Directors also considered information and reports concerning the management and performance of each Fund which are provided to it on a regular basis throughout the course of the year. In addition, the Board of Directors was assisted in its review and deliberations by counsel to the independent directors and fund counsel. On the basis of its review and analysis of the foregoing information, the Board of Directors found in the exercise of its business judgment that the terms of the Advisory Agreement were fair and reasonable and in the best interest of shareholders. The Board of Directors also performed a similar analysis of each sub-advisory agreement with respect to the Funds and found in the exercise of its business judgment that the terms of each such agreement were fair and reasonable and in the best interest of shareholders. No single factor or group of factors was deemed to be determinative by the Board in making these judgments; instead, the Board based its decisions on the totality of the information which it requested and reviewed.
COMPENSATION
The First American Family of Funds, which includes FAIF, FAF, FASF, FAIP and the FACEF, currently pays only directors of the funds who are not paid employees or affiliates of the funds, a fee of $40,000 per year ($60,000 in the case of the Chair) plus $10,000 ($15,000 in the case of the Chair) per meeting of the Board attended and $2,500 per Nominating Committee or Audit Committee meeting attended ($3,750 in the case of a committee chair) and reimburses travel expenses of directors and officers to attend Board meetings. In the event of
telephonic Board meetings, each participating director receives a fee of $5,000 ($7,500 in the case of the Chair), and in the event of telephonic Nominating or Audit Committee meetings, each participating director receives a fee of $1,250 ($1,875 in the case of the committee chair). In addition, directors may receive a per diem fee of $2,500 per day, plus travel expenses when directors travel out of town on Fund business. However, directors do not receive the $2,500 per diem amount plus the foregoing Board or committee fee for an out-of-town committee or Board meeting but instead receive the greater of the total per diem fee or meeting fee. Legal fees and expenses are also paid to Dorsey & Whitney LLP, the law firm of which Michael J. Radmer, James D. Alt, and Kathleen L. Prudhomme, Assistant Secretaries of FAIF, FAF, FASF, FAIP and FACEF, are partners, and Gardner, Carton & Douglas, counsel to the independent directors.
The following table sets forth information concerning aggregate compensation paid to each director of FAIF (i) by FAIF (column 2), and (ii) by FAIF, FAF, FASF, FAIP and FACEF collectively (column 5) during the fiscal year ended September 30, 2001.* No executive officer or affiliated person of FAIF received any compensation from FAIF in excess of $60,000 during such fiscal year:
--------------------------------------- ---------------- ------------------ ------------------- -----------------
(5)
(3) TOTAL
(2) PENSION OR COMPENSATION
(1) AGGREGATE RETIREMENT (4) FROM REGISTRANT
NAME OF PERSON, POSITION COMPENSATION BENEFITS ACCRUED ESTIMATED ANNUAL AND FUND
FROM AS PART OF FUND BENEFITS UPON COMPLEX PAID TO
REGISTRANT (1) EXPENSES RETIREMENT DIRECTORS (2)
--------------------------------------- ---------------- ------------------ ------------------- -----------------
Robert J. Dayton, Director $23,146 -0- -0- $63,600
--------------------------------------- ---------------- ------------------ ------------------- -----------------
Andrew S. Duff, Director (3, 4, 5) N/A N/A N/A N/A
--------------------------------------- ---------------- ------------------ ------------------- -----------------
Roger A. Gibson, Director 20,713 -0- -0- 60,600
--------------------------------------- ---------------- ------------------ ------------------- -----------------
Andrew M. Hunter III, Director 20,953 -0- -0- 65,550
--------------------------------------- ---------------- ------------------ ------------------- -----------------
Leonard W. Kedrowski, Director 24,725 -0- -0- 76,150
--------------------------------------- ---------------- ------------------ ------------------- -----------------
Robert L. Spies, Director (3) 23,352 -0- -0- 66,350
--------------------------------------- ---------------- ------------------ ------------------- -----------------
John M. Murphy, Jr., Director (4) N/A N/A N/A N/A
--------------------------------------- ---------------- ------------------ ------------------- -----------------
Richard K. Riederer, Director (3) 2,821 -0- -0- 7,750
--------------------------------------- ---------------- ------------------ ------------------- -----------------
Joseph D. Strauss, Director 27,448 -0- -0- 77,300
--------------------------------------- ---------------- ------------------ ------------------- -----------------
Virginia L. Stringer, Director & Chair 30,430 -0- -0- 92,300
--------------------------------------- ---------------- ------------------ ------------------- -----------------
James M. Wade, Director (3) 3,002 -0- -0- 8,250
--------------------------------------- ---------------- ------------------ ------------------- -----------------
|
(1) Included in the Aggregate Compensation From Registrant under column 2 are amounts deferred by Directors pursuant to the Deferred Compensation Plan discussed below. Pursuant to this Plan, compensation was deferred for the following directors: Roger A. Gibson, $9,685.24; Andrew M. Hunter III, $20,953; Leonard W. Kedrowski, $21,568; Robert L. Spies, $5,738; Joseph D. Strauss, $4,942; and Virginia L. Stringer, $22,815.
(2) Deferred compensation is included in the Total Compensation under column 5 for the following directors: Roger A. Gibson, $30,300; Andrew M. Hunter III, $65,550; Leonard W. Kedrowski, $67,475; Robert L. Spies, $17,950; Joseph D. Strauss, $15,460; and Virginia L. Stringer, $71,375.
(3) Robert L. Spies did not stand for re-election at the August 30, 2001 shareholder meeting. At that same meeting, Andrew S. Duff, Richard K. Riederer and James M. Wade were elected to the Board of Directors.
(4) As "interested persons," Andrew S. Duff and John M. Murphy do not receive compensation from FAIF, FAF, FASF, FAIP or FACEF for their position on the Board of Directors.
(5) Andrew S. Duff resigned from the Board of Directors on December 5, 2001.
* Compensation received during the fiscal year ended September 30, 2001 was based on the following compensation schedule: directors of the funds that were not paid employees or affiliates of the funds were paid a fee of $27,000 per year ($40,500 in the case of the Chair) plus $4,000 ($6,000 in the case of the Chair) per meeting of the Board attended and $1,200 per committee meeting attended ($1,800 in the case of the committee chair) and reimbursed travel expenses of directors and officers to attend Board meetings. In the event of telephonic Board or committee meetings, each director received a fee of $500 per Board or committee meeting ($750 in the case of the Chair or committee chair).In addition, directors may have received a per diem fee of $1,500 per day, plus travel expenses, if they traveled out of town on fund business.
The directors may elect to defer payment of up to 100% of the fees they receive in accordance with a Deferred Compensation Plan (the "Plan"). Under the Plan, a director may elect to have his or her deferred fees treated as if they had been invested in the shares of one or more funds and the amount paid to the
director under the Plan will be determined based on the performance of such investments. Distributions may be taken in a lump sum or over a period years. The Plan will remain unfunded for federal income tax purposes under the Internal Revenue Code of 1986, as amended. Deferral of director fees in accordance with the Plan will have a negligible impact on fund assets and liabilities and will not obligate the funds to retain any director or pay any particular level of compensation.
SALES LOADS
Purchases of the Fund's Class A Shares by the Advisor, any Sub-Advisor, any of their affiliates, or any of their or FAIF's officers, directors, employees, retirees, sales representatives and partners, registered representatives of any broker-dealer authorized to sell Fund shares, and full-time employees of FAIF's counsel, and members of their immediate families (i.e., parent, child, spouse, sibling, step or adopted relationships, grandparent, grandchild and UTMA accounts naming qualifying persons), may be made at net asset value without a sales charge.
CODE OF ETHICS
First American Investment Funds, Inc., U.S. Bancorp Asset Management, Inc. and Quasar Distributors, LLC have each adopted a Code of Ethics pursuant to Rule 17j-1 of the 1940 Act. Each of these Codes of Ethics permits personnel to invest in securities for their own accounts, including securities that may be purchased or held by the Fund. These Codes of Ethics are on public file with, and are available from, the Securities and Exchange Commission.
INVESTMENT ADVISORY AND OTHER SERVICES FOR THE FUND
INVESTMENT ADVISOR
U.S. Bancorp Asset Management, Inc. (the "Advisor"), 800 Nicollet Mall, Minneapolis, Minnesota 55402, serves as the investment advisor and manager of the FAIF Funds. The Advisor is a wholly owned subsidiary of U.S. Bank, 800 Nicollet Mall, Minneapolis, Minnesota 55402, a national banking association that has professionally managed accounts for individuals, insurance companies, foundations, commingled accounts, trust funds, and others for over 75 years. U.S. Bank is, in turn, a subsidiary of U.S. Bancorp, 800 Nicollet Mall, Minneapolis, Minnesota 55402, which is a regional multi-state bank holding company headquartered in Minneapolis, Minnesota that primarily serves the Midwestern, Rocky Mountain and Northwestern states. U.S. Bancorp operates four banks and eleven trust companies with banking offices in twenty-four contiguous states. U.S. Bancorp also has various other subsidiaries engaged in financial services. At December 31, 2001, U.S. Bancorp and its consolidated subsidiaries had consolidated assets of approximately $171.3 billion, consolidated deposits of $105.2 billion and shareholders' equity of $16.4 billion.
Pursuant to an Investment Advisory Agreement dated April 2, 1991 (the "Advisory Agreement") as amended, the Funds engaged U.S. Bank, through its First American Asset Management division ("FAAM"), to act as investment Advisor for and to manage the investment of the assets of FAIF. The Advisory Agreement was assigned to the Advisor on May 2, 2001. Under this Advisory Agreement, the Fund pays the Advisor monthly fees calculated on an annual basis equal to 0.50% of its average daily net assets. The Advisory Agreement requires the Advisor to provide FAIF with all necessary office space, personnel and facilities necessary and incident to the Advisor's performance of its services thereunder. The Advisor is responsible for the payment of all compensation to personnel of FAIF and the officers and directors of FAIF, if any, who are affiliated with the Advisor or any of its affiliates.
The Advisory Agreement requires the Advisor to arrange, if requested by FAIF, for officers or employees of the Advisor to serve without compensation from the Funds as directors, officers, or employees of FAIF if duly elected to such positions by the shareholders or directors of FAIF. The Advisor has the authority and responsibility to make and execute investment decisions for the Funds within the framework of the Funds' investment policies, subject to review by the Board of Directors of FAIF. The Advisor is also responsible for
monitoring the performance of the various organizations providing services to the Funds, including the Funds' distributor, shareholder services agent, custodian, and accounting agent, and for periodically reporting to FAIF's Board of Directors on the performance of such organizations. The Advisor will, at its own expense, furnish the Funds with the necessary personnel, office facilities, and equipment to service the Funds' investments and to discharge its duties as investment advisor of the Funds.
In addition to the investment advisory fee, each Fund pays all of its expenses that are not expressly assumed by the Advisor or any other organization with which the Fund may enter into an agreement for the performance of services. Each Fund is liable for such nonrecurring expenses as may arise, including litigation to which the Fund may be a party. FAIF may have an obligation to indemnify its directors and officers with respect to such litigation. The Advisor will be liable to the Funds under the Advisory Agreement for any negligence or willful misconduct by the Advisor other than liability for investments made by the Advisor in accordance with the explicit direction of the Board of Directors or the investment objectives and policies of the Funds. The Advisor has agreed to indemnify the Funds with respect to any loss, liability, judgment, cost or penalty that a Fund may suffer due to a breach of the Advisory Agreement by the Advisor.
The Advisor has agreed to a contractual fee waiver for each of the Funds through September 30, 2002. This waiver is set forth in the Funds' Prospectuses. Additionally, the Advisor may, at its option, waive any or all of its fees, or reimburse expenses, with respect to any Fund from time to time. Any such waiver or reimbursement is voluntary and may be discontinued at any time. The Advisor also may absorb or reimburse expenses of the Funds from time to time, in its discretion, while retaining the ability to be reimbursed by the Funds for such amounts prior to the end of the fiscal year. This practice would have the effect of lowering a Fund's overall expense ratio and of increasing yield to investors, or the converse, at the time such amounts are absorbed or reimbursed, as the case may be.
The Advisor has agreed to contractual fee caps of .75%, 1.15%, and .50% for the Fund's Class A, Class C, and Class Y shares, respectively, through September 30, 2002. These expense limits on the annual operating expenses of the share classes within the Fund may be terminated at any time after September 30, 2002 upon prior notice to FAIF's Board of Directors.
ADMINISTRATORS
U.S. Bancorp Asset Management, Inc. and U.S. Bancorp Fund Services, LLC ("UBFS"), 615 East Michigan Street, Milwaukee, WI 53202 (collectively the "Administrators"), serve as co-Administrators pursuant to a Co-Administration Agreement between the Administrators and the FAIF Funds, dated as of October 1, 2001 ("Co-Administration Agreement"). The Administrators will provide administration services to the Fund and serve as the Fund's Administrators. The Administrators are each subsidiaries of U.S. Bancorp. Under the Co-Administration Agreement, the Administrators provide, or compensate others to provide, services to the Fund. These services include various oversight and legal services, accounting services, dividend disbursing services and shareholder services. Pursuant to the Co-Administration Agreement, UBFS will also serve as the Fund's transfer agent. The Fund pays the Administrators fees which are calculated daily and paid monthly, equal to the fund's pro rata share of an amount equal, on an annual basis, to 0.25% of the aggregate average daily assets of all open-end mutual funds in the First American fund family up to $8 billion, 0.235% on the next $17 billion of aggregate average daily assets, 0.22% on the next $25 billion of aggregate average daily assets, and 0.20% of the aggregate average daily net assets of all open-end mutual funds in the First American fund family in excess of $50 billion. (For the purposes of this Agreement, the First American fund family includes all series of FAF, FASF, FAIF and FAIP.) In addition, the Fund pays annual fees of $18,500 per CUSIP, shareholder account maintenance fees of $9 to $15 per account, closed account fees of $3.50 per account, and Individual Retirement Account fees of $15 per account.
DISTRIBUTOR
Quasar Distributiors, LLC. (the "Distributor") serves as the distributor for the Class A, Class C and Class Y Shares of the Fund. The Distributor is a wholly-owned subsidiary of U.S. Bancorp.
The Distributor serves as distributor for the Class A and Class Y Shares pursuant to a Distribution Agreement dated October 1, 2001 (the "Class A/Class Y Distribution Agreement") between itself and the FAIF Funds. In addition, the Distributor serves as distributor for the Class C Shares pursuant to a Distribution and Service Agreement dated October 1, 2001 ("Class C Distribution and Service Agreement") between itself and the FAIF Funds. These agreements are referred to collectively as the "Distribution Agreements."
Fund shares and other securities distributed by the Distributor are not deposits or obligations of, or endorsed or guaranteed by, U.S. Bank or its affiliates, and are not insured by the Bank Insurance Fund, which is administered by the Federal Deposit Insurance Corporation.
Under the Distribution Agreements, the Distributor has agreed to perform all distribution services and functions of the FAIF Funds to the extent such services and functions are not provided to the FAIF Funds pursuant to another agreement. The Distribution Agreements provide that shares of the FAIF Funds are distributed through the Distributor and, with respect to Class A and Class C Shares, through securities firms, financial institutions (including, without limitation, banks) and other industry professionals (the "Participating Institutions") which enter into sales agreements with the Distributor to perform share distribution or shareholder support services.
The Class A Shares pay to the Distributor a shareholder servicing fee at an annual rate of 0.25% of the average daily net assets of the Class A Shares. The fee may be used by the Distributor to provide compensation for shareholder servicing activities with respect to the Class A Shares. The shareholder servicing fee is intended to compensate the Distributor for ongoing servicing and/or maintenance of shareholder accounts and may be used by the Distributor to provide compensation to institutions through which shareholders hold their shares for ongoing servicing and/or maintenance of shareholder accounts. This fee is calculated and paid each month based on average daily net assets of Class A Shares each fund for that month.
The Class C Shares pay to the Distributor a shareholder servicing fee at the annual rate of 0.25% of the average daily net assets of the Class C Shares. The fee may be used by the Distributor to provide compensation for shareholder servicing activities with respect to the Class C Shares. This fee is calculated and paid each month based on average daily net assets of the Class C Shares. The Class C Shares also pay to the Distributor a distribution fee at the annual rate of 0.75% of the average daily net assets of the Class C Shares. The Distributor may use the distribution fee to provide compensation to institutions through which shareholders hold their shares beginning one year after purchase. The Distributor has contractually agreed to limit the shareholder servicing fee to 0.15% of average daily net assets of the Class C Shares until September 30, 2002.
The Distributor receives no compensation for distribution of the Class Y Shares.
The Distribution Agreements provide that they will continue in effect for a period of more than one year from the date of their execution only so long as such continuance is specifically approved at least annually by the vote of a majority of the Board members of FAIF and by the vote of the majority of those Board members of FAIF who are not interested persons of FAIF and who have no direct or indirect financial interest in the operation of FAIF's Rule 12b-1 Plans of Distribution or in any agreement related to such plans.
FAIF has adopted Plans of Distribution with respect to the Class A and Class C Shares of the FAIF Funds, respectively, pursuant to Rule 12b-1 under the 1940 Act (collectively, the "Plans"). Rule 12b-1 provides in substance that a mutual fund may not engage directly or indirectly in financing any activity which is primarily intended to result in the sale of shares, except pursuant to a plan adopted under the Rule. The Plans authorize the Distributor to retain the sales charges paid upon purchase of Class A and Class C Shares. Each of the Plans is a "compensation-type" plan under which the Distributor is entitled to receive the distribution fee regardless of whether its actual distribution expenses are more or less than the amount of the fee. The Class C Plan authorizes the Distributor to retain the contingent deferred sales charge applied on redemptions of Class C Shares, except that portion which is reallowed
to Participating Institutions. The Plans recognize that the Distributor, any Participating Institution, the Administrator, and the Advisor, in their discretion, may from time to time use their own assets to pay for certain additional costs of distributing Class A and Class C Shares. Any such arrangements to pay such additional costs may be commenced or discontinued by the Distributor, any Participating Institution, the Administrator, or the Advisor at any time.
CUSTODIAN AND AUDITORS
CUSTODIAN. The custodian of the FAIF Funds' assets is U.S. Bank National Association (the "Custodian"), U.S. Bank Center, 180 East Fifth Street, St. Paul, Minnesota 55101. The Custodian is a subsidiary of USB. All of the instruments representing the investments of the Fund and all cash is held by the Custodian. The Custodian or such sub-custodian delivers securities against payment upon sale and pays for securities against delivery upon purchase. The Custodian also remits Fund assets in payment of Fund expenses, pursuant to instructions of FAIF's officers or resolutions of the Board of Directors.
As compensation for its services to the Fund, the Custodian is paid a monthly fee calculated on an annual basis equal to 0.01% of the Fund's average daily net assets. In addition, the Custodian is reimbursed for its out-of-pocket expenses incurred while providing its services to the Fund. The Custodian continues to serve so long as its appointment is approved at least annually by the Board of Directors including a majority of the directors who are not interested persons (as defined under the 1940 Act) of FAIF.
AUDITORS. Ernst & Young LLP, 220 South Sixth Street, Suite 1400, Minneapolis, Minnesota 55402, serves as the Funds' independent auditors, providing audit services, including audits of the annual financial statements and assistance and consultation in connection with SEC filings.
PORTFOLIO TRANSACTIONS AND ALLOCATION OF BROKERAGE
Decisions with respect to which securities are to be bought or sold, the total amount of securities to be bought or sold, the broker-dealer with or through which the securities transactions are to be effected and the commission rates applicable to the trades are made by the Advisor.
In selecting a broker-dealer to execute securities transactions, the Advisor considers a variety of factors, including the execution capability, financial responsibility and responsiveness of the broker-dealer in seeking best price and execution. However, in the case of the Advisor, a predominant factor in selecting a broker-dealer to execute securities transactions is often the nature and quality of any brokerage and research services provided by the broker-dealer. The Fund may pay a broker-dealer a commission in excess of that which another broker-dealer might have charged for effecting the same transaction (a practice commonly referred to as "paying up"). The Fund may pay up in recognition of the value of brokerage and research services provided to the Advisor by the broker-dealer. In such cases, the Fund is in effect paying for the brokerage and research services in so-called "soft-dollars". However, the Advisor would authorize the Fund to pay an amount of commission for effecting a securities transaction in excess of the amount of commission another broker or dealer would have charged only if the Advisor determined in good faith that the amount of such commission was reasonable in relation to the value of the brokerage and research services provided by such broker or dealer, viewed in terms of either that particular transaction or the overall responsibilities of the Advisor with respect to the Fund.
The types of brokerage services the Advisor receives from broker-dealers include automated equity trade order entry and execution systems and systems which provide an automated DTC interface to facilitate securities trading, clearance and settlement. Such brokerage services may be provided as a part of a product that bundles many separate and distinct brokerage, execution, investment management, custodial and record-keeping services into one package. The types of research services the Advisor receives include economic analysis and forecasts, financial market analysis and forecasts, industry and company specific analysis, performance monitoring, interest rate forecasts, arbitrage relative valuation analysis of various debt securities, analysis of U.S. Treasury securities, research-dedicated computer hardware and software and
related consulting services and other services that assist in the investment decisionmaking process. Research services are received primarily in the form of written reports, computer-generated services, telephone contacts and personal meetings with security analysts. Research services may also be provided in the form of meetings arranged with corporate and industry spokespersons or may be generated by third parties but are provided to the Advisor by, or through, broker-dealers.
The research products and services the Advisor receives from broker-dealers are supplemental to, and do not necessarily reduce, the Advisor's own normal research activities. As a practical matter, however, it would be impossible for the Advisor to generate all of the information presently provided by broker-dealers. The expenses of the Advisor would be materially increased if it attempted to generate such additional information through its own staff. To the extent that the Advisor could use cash to purchase many of the brokerage and research products and services received for allocating securities transactions to broker-dealers, the Advisor is relieved of expenses that it might otherwise bear when such services are provided by broker-dealers.
As a general matter, the brokerage and research products and services the Advisor receives from broker-dealers are used to service all of its accounts. However, any particular brokerage and research product or service may not be used to service each and every client account, and may not benefit the particular accounts that generated the brokerage commissions.
In some cases, the Advisor may receive brokerage or research products or services that are used for both brokerage or research purposes and other purposes, such as accounting, record-keeping, administration or marketing. In such cases, the Advisor will make a good faith effort to decide the relative proportion of the cost of such products or services used for non-brokerage or research purposes and will pay for such portion from its own funds. In such circumstance, the Advisor has a conflict of interest in making such decisions. Subject to its best price and execution responsibilities, the Advisor may consider the placement of orders by securities firms for the purchase of Fund shares as a factor in allocating portfolio transactions.
The Advisor effects equity securities transactions on behalf of the Fund through its trading desks in Minneapolis and Milwaukee. Each trading desk makes its own determinations regarding allocation of brokerage among the various broker-dealers it uses to execute trades, including evaluations of the quality of execution, the research products and services received and the commissions paid. The trading desks communicate with each other, and each has access to the trade blotter of the other, but they otherwise operate independently. One trading desk may therefore be selling a given security at the same time that the other trading desk is buying the security.
Many of the Fund's portfolio transactions are with dealers or issuers who act as principal for their own accounts and not as brokers. Transactions effected on a principal basis, other than certain transactions effected on a so-called riskless principal basis, are made without the payment of brokerage commissions but at net prices which usually include a spread or markup. In effecting transactions in over-the-counter securities, the Fund typically deals with market makers unless it appears that better price and execution are available elsewhere.
The Fund does not effect any brokerage transactions in its portfolio securities with any broker or dealer affiliated directly or indirectly with the Advisor or the Distributor unless such transactions, including the frequency thereof, the receipt of commission payable in connection therewith, and the selection of the affiliated broker or dealer effecting such transactions are not unfair or unreasonable to the shareholders of the Fund, as determined by the Board of Directors. Any transactions with an affiliated broker or dealer must be on terms that are both at least as favorable to the Fund as the Fund can obtain elsewhere and at least as favorable as such affiliated broker or dealer normally gives to others.
When two or more clients of the Advisor are simultaneously engaged in the purchase or sale of the same security, the prices and amounts are allocated in accordance with a formula considered by the Advisor to be equitable to each client. In some cases, this system could have a detrimental effect on the price or volume of the security as far as each client is concerned. In other cases, however, the ability of the clients to participate in volume transactions may produce better executions for each client.
CAPITAL STOCK
Each share of the Fund's $.0001 par value common stock is fully paid, nonassessable, and transferable. Shares may be issued as either full or fractional shares. Fractional shares have pro rata the same rights and privileges as full shares. Shares of the Fund have no preemptive or conversion rights.
Each share of the Fund has one vote. On some issues, such as the election of directors, all shares of all FAIF Funds vote together as one series. The shares do not have cumulative voting rights. Consequently, the holders of more than 50% of the shares voting for the election of directors are able to elect all of the directors if they choose to do so. On issues affecting the Fund only (as opposed to every FAIF Fund) or one specific class of shares, the shares of the Fund or specific class will vote as a separate series. Examples of such issues would be proposals to alter a fundamental investment restriction pertaining to the Fund or to approve, disapprove or alter a distribution plan pertaining to a class of shares.
Under the laws of the state of Maryland and FAIF's Bylaws, FAIF is not required to hold shareholder meetings unless they (i) are required by the 1940 Act, or (ii) are requested in writing by the holders of 10% or more of the outstanding shares of FAIF.
NET ASSET VALUE AND PUBLIC OFFERING PRICE
The public offering price of the shares of the Fund generally equals the Fund's net asset value plus any applicable sales charge. A summary of any applicable sales charge assessed on Fund share purchases is set forth in the Fund's Prospectuses. Please note that the public offering prices of Class Y Shares are the same as net asset value since no sales charges are imposed on the purchase of such shares.
The net asset value of the Fund's shares is determined on each day during which the New York Stock Exchange (the "NYSE") is open for business. The NYSE is not open for business on the following holidays (or on the nearest Monday or Friday if the holiday falls on a weekend): New Year's Day, Martin Luther King, Jr. Day, Washington's Birthday (observed), Good Friday, Memorial Day (observed), Independence Day, Labor Day, Thanksgiving Day and Christmas Day. Each year the NYSE may designate different dates for the observance of these holidays as well as designate other holidays for closing in the future. To the extent that the securities held by the Fund are traded on days that the Fund is not open for business, the Fund's net asset value per share may be affected on days when investors may not purchase or redeem shares. The Net Asset Value for each share class on April 30, 2002 equals $10.00.
FUND PERFORMANCE
PERFORMANCE PRESENTATION. Advertisements and other sales literature for the Fund may refer to the Fund's "average annual total return" and "cumulative total return." In addition, the Fund may provide yield calculations in advertisements and other sales literature. All such yield and total return quotations are based on historical earnings and are not intended to indicate future performance. The return on and principal value of an investment in any of the Funds will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost. No performance information is available for the Fund as it was not offered prior to the date of this Statement of Additional Information.
AVERAGE ANNUAL TOTAL RETURN. Average annual total return is the average annual compounded rate of return on a hypothetical $1,000 investment made at the beginning of the advertised period. Average annual total return figures are computed according to the following formula:
P(1 + T)n = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the period of
a hypothetical $1,000 payment made at the beginning
of such period
|
This calculation deducts the maximum sales charge from the initial hypothetical $1,000 investment, assumes all dividends and capital gains distributions are reinvested at net asset value on the appropriate reinvestment dates as described in the Prospectus, and includes all recurring fees, such as investment advisory and management fees, charged to all shareholder accounts. For Class C Shares, the calculation assumes the maximum deferred sales load is deducted at the times, in the amounts and under the terms disclosed in the applicable Prospectus. Average annual total return quotations may be accompanied by quotations that do not reflect the sales charges, and therefore will be higher.
The Advisor and Distributor have waived a portion of their fees on a voluntary basis, thereby increasing total return and yield. These fees may or may not be waived in the future in the Advisor's or Distributor's discretion.
CUMULATIVE TOTAL RETURN. Cumulative total return is calculated by subtracting a hypothetical $1,000 investment in the Fund from the redeemable value of such investment at the end of the advertised period, dividing such difference by $1,000 and multiplying the quotient by 100. Cumulative total return is computed according to the following formula:
P
Where: CTR = Cumulative total return;
ERV = ending redeemable value at the end of the period of
a hypothetical $1,000 payment made at the beginning
of such period; and
P = initial payment of $1,000.
|
This calculation assumes all dividends and capital gain distributions are reinvested at net asset value on the appropriate reinvestment dates as described in the Prospectus and includes all recurring fees, such as investment advisory and management fees, charged to all shareholder accounts.
YIELD. Yield is computed by dividing the net investment income per share (as defined under Securities and Exchange Commission rules and regulations) earned during the advertised period by the offering price per share (including the maximum sales charge) on the last day of the period. The result will then be "annualized" using a formula that provides for semi-annual compounding of income. Yield is computed according to the following formula:
Where: a = dividends and interest earned during the period;
b = expenses accrued for the period (net of
reimbursements);
c = the average daily number of shares outstanding during
the period that were entitled to receive dividends;
and
d = the maximum offering price per share on the last day
of the period.
|
TAX-EXEMPT VS. TAXABLE INCOME. The tables below show the approximate
yields that taxable securities must earn to equal yields that are (i) exempt
from federal income taxes; (ii) exempt from both federal and Ohio income taxes,
under selected income tax brackets scheduled to be in effect in 2002. The
30.80%, 34.83%, 39.88%, and 43.21% combined federal/Ohio tax rates assume that
an investor is subject to, respectively, (1) a 27% marginal federal rate and a
5.201% marginal Ohio rate, (2) a 30% marginal federal rate and a 6.9% marginal
Ohio rate, (3) a 35% marginal federal rate and a 7.5% marginal Ohio rate, and
(4) a 38.6% marginal federal rate and a 7.5% marginal Ohio rate. The combined
rates reflect the deductibility of state income taxes for purposes of
calculating federal taxable income but do not reflect federal rules concerning
the phase-out of personal exemptions and limitations on the allowance of
itemized deductions for certain high-income taxpayers. The tables are based upon
yields that are derived solely from tax-exempt income. To the extent that the
Fund's yield is derived from taxable income, the Fund's tax equivalent yield
will be less than set forth in the tables. The tax-free yields used in these
tables should not be considered as representations of any particular rates of
return and are for purposes of illustration only.
TAX-EQUIVALENT YIELDS
OHIO & FEDERAL COMBINED RATES
30.80% 34.83% 39.88% 43.21%
TAXABLE EQUIVALENT YIELDS
TAX-EXEMPT YIELD
3.0% 4.34% 4.60% 4.99% 5.28%
3.5% 5.06% 5.37% 5.82% 6.16%
4.0% 5.78% 6.14% 6.65% 7.04%
4.5% 6.50% 6.91% 7.49% 7.92%
5.0% 7.23% 7.67% 8.32% 8.80%
5.5% 7.95% 8.44% 9.15% 9.68%
6.0% 8.67% 9.21% 9.98% 10.57%
6.5% 9.39% 9.97% 10.81% 11.45%
|
TAX-EQUIVALENT YIELD. Tax-equivalent yield is the yield that a taxable investment must generate in order to equal the Fund's yield for an investor in a stated federal or combined federal/state income tax bracket. The tax-equivalent yield is computed by dividing that portion of a Fund's yield (computed as described above) that is tax-exempt by one minus the stated federal or combined federal/state income tax rate, and adding the resulting number to that portion, if any, of such Fund's yield that is not tax exempt. The combined federal/state income tax rates take into account the deductibility of state income taxes in calculating federal tax rates.
CERTAIN PERFORMANCE COMPARISONS. In addition to advertising total return and yield, comparative performance information may be used from time to time in advertising the Fund's shares, including data from Lipper, Inc. ("Lipper"), Morningstar, other industry publications and other entities or organizations which track the performance of investment companies. The performance of the Fund may be compared to that of its unmanaged benchmark index and to the performance of similar funds as reported by Lipper or such other database services.
HISTORICAL DISTRIBUTION RATES. The Fund's historical annualized distribution rates are computed by dividing the income dividends of the Fund for a stated period by the maximum offering price on the last day of such period.
ANNUALIZED CURRENT DISTRIBUTION RATES. The Fund's annualized current distribution rates are computed by dividing the Fund's income dividends for a specified month by the number of days in that month and multiplying by 365, and dividing the resulting figure by the maximum offering price on the last day of the specified period.
TAX EQUIVALENT DISTRIBUTION RATES. The tax equivalent distribution rate for the Fund is computed by dividing that portion of the Fund's annualized current distribution rate (computed as described above) which is tax-exempt by one minus the stated federal or combined federal/state income tax rate, and adding the resulting figure to that portion, if any, of the annualized current distribution rate which is not tax-exempt.
TAXATION
The Fund intends to fulfill the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"), as a regulated investment company. If so qualified, the Fund will not be liable for federal income taxes to the extent it distributes its taxable income to its shareholders.
If the Fund disposes of a municipal obligation that it acquired after April 30, 1993 at a market discount, it must recognize any gain it realizes on the disposition as ordinary income (and not as capital gain) to the extent of the accrued market discount.
Some of the investment practices that may be employed by the Fund will be subject to special provisions that, among other things, may defer the use of certain losses of the Fund, affect the holding period of the securities held by the Fund and affect the character of the gains or losses realized. These provisions may also require the Fund to mark-to-market some of the positions in their respective portfolios (i.e., treat them as closed out) or to accrue original discount, both of which may cause the Fund to recognize income without receiving cash with which to make distributions in amounts necessary to satisfy the distribution requirements for qualification as a regulated investment company and for avoiding income and excise taxes. Accordingly, in order to make the required distributions, the Fund may be required to borrow or liquidate securities. The Fund will monitor its transactions and may make certain elections in order to mitigate the effect of these rules and prevent disqualification of the Fund as a regulated investments company.
It is expected that any net gain realized from the closing out of futures contracts, options, or forward currency contracts will be considered gain from the sale of securities or currencies and therefore qualifying income for purposes of the 90% of gross income from qualified sources requirement, as discussed above.
Any loss on the sale or exchange of shares of the Fund generally will be disallowed to the extent that a shareholder acquires or contracts to acquire shares of the Fund within 30 days before or after such sale or exchange. Furthermore, if Fund shares with respect to which a long-term capital gain distribution has been made are held for less than six months, any loss on the sale of exchange of such shares will be treated as a long-term capital loss to the extent of such long-term capital gain distribution. Furthermore, if a shareholder of the Fund receives an exempt-interest dividend and then disposes of his or her shares in the Fund within six months after acquiring them, any loss on the sale or exchange of such shares will be disallowed to the extent of the exempt-interest dividend.
For federal tax purposes, if a shareholder exchanges shares of the Fund for shares of any other FAIF Fund pursuant to the exchange privilege (see "Managing Your Investment -- Exchanging Shares" in the Prospectuses), such exchange will be considered a taxable sale of the shares being exchanged. Furthermore, if a shareholder of Class A or Class C shares carries out the exchange within 90 days of purchasing shares in a fund on which he or she has incurred a sales charge, the sales charge cannot be taken into account in determining the shareholder's gain or loss on the sale of those shares to the extent that the sales charge that would have been applicable to the purchase of the later-acquired shares in the other fund is reduced because of the exchange privilege. However, the amount of any sales charge that may not be taken into account in determining the shareholder's gain or loss on the sale of the first-acquired shares may be taken into account in determining gain or loss on the eventual sale or exchange of the later-acquired shares.
Pursuant to the Code, distributions of net investment income by the Fund to a shareholder who is a foreign shareholder (as defined below) will be subject to U.S. withholding tax (at a rate of 30% or lower treaty rate). Withholding will not apply if a dividend paid by the Fund to a foreign shareholder is "effectively connected" with a U.S. trade or business of such shareholder, in which case the reporting and withholding requirements applicable to U.S. citizens or domestic corporations will apply. Distributions of net long-term capital gains are not subject to tax withholding but, in the case of a foreign shareholder who is a nonresident alien individual, such distributions ordinarily will be subject to U.S. income tax at a rate of 30% if the individual is physically present in the U.S. for more than 182 days during the taxable year. The Fund will report annually to its shareholders the amount of any withholding.
A foreign shareholder is any person who is not (i) a citizen or resident of the United States, (ii) a corporation, partnership or other entity organized in the United States or under the laws of the Untied States or a political subdivision thereof, (iii) an estate whose income is includible in gross income for U.S. federal income tax purposes of (iv) a trust whose administration is subject to the primary supervision of the U.S. court and which has one or more U.S. fiduciaries who have authority to control all substantial decisions of the trust.
The foregoing relates only to federal income taxation and is a general summary of the federal tax law in effect as of the date of this Statement of Additional Information.
REDUCING SALES CHARGES
CLASS A SALES CHARGE
The sales charge can be reduced on the purchase of Class A Shares through (i) quantity discounts and accumulated purchases, or (ii) signing a 13-month letter of intent.
QUANTITY DISCOUNTS AND ACCUMULATED PURCHASES: The Fund will combine purchases made by an investor, the investor's spouse, and the investor's children under age 21 when it calculates the sales charge. In addition, the sales charge, if applicable, is reduced for purchases made at one time by a trustee or fiduciary for a single trust estate or a single fiduciary account.
For the Fund, the sales charge discount will be determined by adding
(i) the purchase price (including sales charge) of the Fund shares that are
being purchased, plus (ii) the purchase price of the Class A shares of any other
First American fund (other than a money market fund) that you are concurrently
purchasing, plus (iii) the higher of the current net asset value or the original
purchase price of Class A shares of the Fund or any other First American fund
(other than a money market fund) that your already own. In order for an investor
to receive the sales charge reduction on Class A Shares, the Fund must be
notified by the investor in writing or by his or her financial institution at
the time the purchase is made that Fund shares are already owned or that
purchases are being combined.
LETTER OF INTENT: If an investor intends to purchase, in the aggregate, at least $50,000 of Class A shares in the Fund and other First American funds (other than money market funds), over the next 13 months, the sales charge may be reduced by signing a letter of intent to that effect. This letter of intent includes a provision for a sales charge adjustment depending on the amount actually purchased within the 13-month period and a provision for the Funds' custodian to hold a percentage equal to the Funds' maximum sales charge rate of the total amount intended to be purchased in escrow (in shares) until the purchase is completed.
The amount held in escrow for all FAIF Funds will be applied to the investor's account at the end of the 13-month period after deduction of the sales load applicable to the dollar value of shares actually purchased. In this event, an appropriate number of escrowed shares may be redeemed in order to realize the difference in the sales charge.
A letter of intent will not obligate the investor to purchase shares, but if he or she does, each purchase during the period will be at the sales charge applicable to the total amount intended to be purchased. This letter may be dated as of a prior date to include any purchases made within the past 90 days.
SALES OF CLASS A SHARES AT NET ASSET VALUE
Purchases of the Fund's Class A Shares by the Advisor, or any of its affiliates, or any of its or FAIF's officers, directors, employees, retirees, sales representatives and partners, registered representatives of any broker-dealer authorized to sell Fund shares, and full-time employees of FAIF's general counsel, and members of their immediate families (i.e., parent, child, spouse, sibling, step or adopted relationships, and UTMA accounts naming qualifying persons), may be made at net asset value without a sales charge. The Fund's Class A Shares also may be purchased at net asset value without a sales charge by fee-based registered investment advisors, financial planners and registered broker-dealers who are purchasing shares on behalf of their customers and by purchasers through "one-stop" mutual fund networks through which the Fund is made available. In addition, Class A Shares may be purchased at net asset value without a sales charge by investors participating in asset allocation "wrap" accounts offered by the Advisor or any of its affiliates, and by retirement and deferred compensation plans and the trusts used to fund such plans (including, but not limited to, those defined in Sections 401(k), 403(b) and 457 of the Internal Revenue Code and "rabbi trusts"), which plans and trusts purchase through "one-stop" mutual fund networks. In addition, purchases of Class A Shares for an investor's medical savings account for which U.S. Bank or an affiliate serves in a custodian capacity may be made at net asset value without a sales charge. The Advisor may pay its affiliated broker-dealers, U.S. Bancorp Piper Jaffray Inc. and U.S. Bancorp Investments, Inc., a commission of up to 2% of your purchase price in connection with net asset value purchases of Class A shares made pursuant to this paragraph.
Class A shares may be purchased without a sales charge by non-retirement accounts if they total $1 million or more. Your investment professional or financial institution may receive a commission equal to 1.00% of the first $3 million, 0.75% of shares purchased in excess of $3 million up to $5 million, and 0.50% of shares purchased in excess of $5 million. If such a commission is paid, you will be assessed a contingent deferred sales charge (CDSC) of 1% if you sell your shares within 18 months.
Class A Shares may also be purchased without a sales charge by 401(k), 403(b) and 457 plans, and profit sharing and pension plans, which have 200 or more eligible participants. Your representative must notify the Fund if your retirement/deferred compensation plan is eligible for the sales load waiver. A contingent deferred sales charge of 1.00% will be imposed if all shares are redeemed within 18 months of purchase. Securities firms, financial institutions and other industry professionals that enter into sales agreements with the Fund's distributor to perform share distribution services may receive a commission on such sales of the Fund equal to 1.00% of the first $3 million, 0.75% of shares purchased in excess of $3 million up to $5 million, and 0.50% of shares purchased in excess of $5 million.
In addition, Class A Shares may be purchased without a sales charge by bundled retirement plans and Simple IRA plans sponsored by U.S. Bank and sold by an affiliate, and SEP IRA plans sold by an affiliate.
If Class A Shares of the Fund have been redeemed, the shareholder has a one-time right, within 180 days, to reinvest the redemption proceeds in Class A Shares of any First American fund at the next-determined net asset value without any sales charge. The Fund must be notified by the shareholder in writing or by his or her financial institution of the reinvestment in order to eliminate a sales charge. If the shareholder redeems his or her shares of the Fund, there may be tax consequences.
ADDITIONAL INFORMATION ABOUT SELLING SHARES
BY TELEPHONE
A shareholder may redeem shares of the Fund, if he or she elects the privilege on the initial shareholder application, by calling his or her financial institution to request the redemption. Shares will be redeemed at the net asset value next determined after the Fund receives the redemption request from the financial institution (less the amount of any applicable contingent deferred sales charge). Redemption requests must be received by the financial institution by the time specified by the institution in order for shares to be redeemed at that day's net asset value, and redemption requests must be transmitted to and received by the Fund as of the close of regular trading on the New York Stock Exchange (usually by 3:00 p.m. Central time) in order for shares to be redeemed at that day's net asset value unless the financial institution has been authorized to accept redemption requests on behalf of the Fund. Pursuant to instructions received from the financial institution, redemptions will be made by check or by wire transfer. It is the financial institution's responsibility to transmit redemption requests promptly. Certain financial institutions are authorized to act as the Fund's agent for the purpose of accepting redemption requests, and the Fund will be deemed to have received a redemption request upon receipt of the request by the financial institution.
Shareholders who did not purchase their shares of the Fund through a financial institution may redeem their shares by telephoning Investor Services at 800 677-FUND. At the shareholder's request, redemption proceeds will be paid by check mailed to the shareholder's address of record or wire transferred to the shareholder's account at a domestic commercial bank that is a member of the Federal Reserve System, normally within one business day, but in no event more than seven days after the request. Wire instructions must be previously established on the account or provided in writing. The minimum amount for a wire transfer is $1,000. If at any time the Fund determines it necessary to terminate or modify this method of redemption, shareholders will be promptly notified. The Fund may limit telephone redemption requests to $50,000 per day.
In the event of drastic economic or market changes, a shareholder may experience difficulty in redeeming shares by telephone. If this should occur, another method of redemption should be considered. Neither the Administrators nor the Fund will be responsible for any loss, liability, cost or expense for acting upon wire transfer instructions or telephone instructions that it reasonably believes to be genuine. The Administrators and the Fund will each employ reasonable procedures to confirm that instructions communicated are genuine. These procedures may include taping of telephone conversations. To ensure authenticity of redemption or exchange instructions received by telephone, the Administrators examine each shareholder request by verifying the account number and/or tax identification number at the time such request is made. The Administrators subsequently send confirmation of both exchange sales and exchange purchases to the shareholder for verification. If reasonable procedures are not employed, the Administrators and the Fund may be liable for any losses due to unauthorized or fraudulent telephone transactions.
BY MAIL
Any shareholder may redeem Fund shares by sending a written request to the Administrators, shareholder servicing agent, or financial institution. The written request should include the shareholder's name, the Fund name, the account number, and the share or dollar amount requested to be redeemed, and should be signed exactly as the shares are registered. Shareholders should call the Fund, shareholder servicing agent or financial institution for assistance in redeeming by mail. Unless another form of payment is requested, a check for redemption proceeds normally is mailed within three days, but in no event more than seven days, after receipt of a proper written redemption request.
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 Fund, or a redemption payable other than to the shareholder of record, must have signatures on written redemption requests guaranteed by:
o a trust company or commercial bank the deposits of which are insured by the Bank Insurance Fund, which is administered by the Federal Deposit Insurance Corporation ("FDIC");
o a member firm of the New York, American, Boston, Midwest, or Pacific Stock Exchanges or of the National Association of Securities Dealers;
o a savings bank or savings and loan association the deposits of which are insured by the Savings Association;
o any other "eligible guarantor institution," as defined in the Securities Exchange Act of 1934.
The Fund does not accept signatures guaranteed by a notary public.
The Fund and the Administrators have adopted standards for accepting signatures from the above institutions. The Fund may elect in the future to limit eligible signature guarantees to institutions that are members of a signature guarantee program. The Fund and the Administrators reserve the right to amend these standards at any time without notice.
REDEMPTIONS BEFORE PURCHASE INSTRUMENTS CLEAR
When shares are purchased by check or with funds transmitted through the Automated Clearing House, the proceeds of redemptions of those shares are not available until the Administrators are reasonably certain that the purchase payment has cleared, which could take up to fifteen calendar days from the purchase date.
RATINGS
A rating of a rating service represents that service's opinion as to the credit quality of the rated security. However, such ratings are general and cannot be considered absolute standards of quality or guarantees as to the creditworthiness of an issuer. A rating is not a recommendation to purchase, sell or hold a security, because it does not take into account market value or suitability for a particular investor. Markets values of debt securities may change as a result of a variety of factors unrelated to credit quality, including changes in market interest rates.
When a security has been rated by more than one service, the ratings may not coincide, and each rating should be evaluated independently. Ratings are based on current information furnished by the issuer or obtained by the rating services from other sources which they consider reliable. Ratings may be changed, suspended or withdrawn as a result of changes in or unavailability of such information, or for other reasons. In general, the Funds are not required to dispose of a security if its rating declines after it is purchased, although they may consider doing so.
RATINGS OF CORPORATE DEBT OBLIGATIONS AND MUNICIPAL BONDS
STANDARD & POOR'S
AAA: Securities rated AAA have the highest rating assigned by Standard & Poor's to a debt obligation. Capacity to pay interest and repay principal is extremely strong.
AA: Securities rated AA have a very strong capacity to pay interest and repay principal and differ from the highest rated issues only to a small degree.
A: Securities rated A have a strong capacity to pay interest and repay principal, although they are somewhat more susceptible to adverse effects of changes in circumstances and economic conditions than bonds in higher rated categories.
BBB: Securities rated BBB are regarded as having an adequate capacity to pay interest and repay principal. Although such securities normally exhibit adequate protection standards, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to pay interest and repay principal for securities in this category than for those in higher rated categories.
Debt rated BB, B, CCC, CC, and C by Standard & Poor's 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 the lowest degree of speculation and C the highest degree of speculation. While such debt will likely have some quality and protective characteristics, these are outweighed by large uncertainties or major risk exposures to adverse conditions.
BB: Securities rated BB have less near-term vulnerability to default than other speculative issues. However, 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 BB rating category is also used for debt subordinated to senior debt that is assigned an actual or implied BBB- rating.
B: Securities rated B have a greater vulnerability to default but currently have 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 or BB-rating.
CCC: Securities rated CCC have a currently identifiable vulnerability to default, and are dependent upon favorable business, financial, and economic conditions to meet timely payment of interest and repayment of principal. In the event of adverse business, financial, or economic conditions, they are not likely to have the capacity to pay interest and repay principal. The CCC rating category is also used for debt subordinated to senior debt that is assigned an actual or implied B or B-rating.
The ratings from AA to CCC may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within the major rating categories. Securities rated SD or D are in selective default or default, respectively. Such a rating is assigned when an obligor has failed to pay one or more of its financial obligations (rated or unrated) when it came due.
MOODY'S
Aaa: Securities which are rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt edge." Interest payments are protected by a large or 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: Securities 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 securities. They are rated lower than the best securities because margins of protection may not be as large as in Aaa securities, or fluctuation of protective elements may be of greater magnitude, or there may be other elements present which make the long-term risks appear somewhat greater than in Aaa securities.
A: Securities 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: Securities which are rated Baa are considered as medium grade obligations, being 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 securities lack outstanding investment characteristics, and in fact have some speculative characteristics.
Ba: An issue which is rated Ba is judged to have speculative elements; its 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 he future. Uncertainty of position characterizes issues in this class.
B: An issue which is rated B generally lacks characteristics of the desirable investment. Assurance of interest and principal payments or of maintenance of other terms of the contract over any long period of time may be small.
Caa: An issue which is rated Caa is of poor standing. Such an issue may be in default or there may be present elements of danger with respect to principal or interest.
Those securities in the Aa, A and Baa groups which Moody's believes possess the strongest investment attributes are designated by the symbols Aa-1, A-1 and Baa-1. Other Aa, A and Baa securities comprise the balance of their respective groups. These rankings (1) designate the securities which offer the maximum in security within their quality, (2) designate securities which can be bought for possible upgrading in quality, and (3) afford the investor an opportunity to gauge more precisely the relative attractiveness of offerings in the marketplace.
RATINGS OF MUNICIPAL NOTES
STANDARD & POOR'S
SP-1: Very strong capacity to pay principal and interest. Those issues determined to possess overwhelming safety characteristics are given a plus (+) designation.
SP-2: Satisfactory capacity to pay principal and interest.
SP-3: Speculative capacity to pay principal and interest.
The Fund will not purchase SP-3 municipal notes.
MOODY'S. Generally, Moody's ratings for state and municipal short-term obligations are designated Moody's Investment Grade ("MIG"); however, where an issue has a demand feature which makes the issue a variable rate demand obligation, the applicable Moody's rating is "VMIG."
MIG 1/VMIG 1: This designation denotes the best quality. There is strong protection by established cash flows, superior liquidity support or demonstrated broad-based access to the market for refinancing.
MIG 2/VMIG 2: This designation denotes high quality, with margins of protection ample although not so large as available in the preceding group.
MIG 3/VMIG 3: This designation denotes favorable quality, with all security elements accounted for, but lacking the strength of the preceding grades. Liquidity and cash flow protection may be narrow and market access for refinancing is likely to be less well established.
The Fund will not purchase MIG 3/VMIG 3 municipal notes.
RATINGS OF COMMERCIAL PAPER
STANDARD & POOR'S. Commercial paper ratings are graded into four categories, ranging from "A" for the highest quality obligations to "D" for the lowest. Issues assigned the A rating are regarded as having the greatest capacity for timely payment. Issues in this category are further refined with the designation 1, 2 and 3 to indicate the relative degree of safety. The "A-1" designation indicates that the degree of safety regarding timely payment is very strong. Those issues determined to possess overwhelming safety characteristics will be denoted with a plus (+) symbol designation. None of the Funds will purchase commercial paper rated A-3 or lower.
MOODY'S. Moody's commercial paper ratings are opinions as to the ability of the issuers to timely repay promissory obligations not having an original maturity in excess of nine months. Moody's makes no representation that such obligations are exempt from registration under the Securities Act of 1933, and it does not represent that any specific instrument is a valid obligation of a rated issuer or issued in conformity with any applicable law. Moody's employs the following three designations, all judged to be investment grade, to indicate the relative repayment capacity of rated issuers:
PRIME-1: Superior capacity for repayment.
PRIME-2: Strong capacity for repayment.
PRIME-3: Acceptable capacity for repayment.
The Fund will not purchase Prime-3 commercial paper.
FIRST AMERICAN INVESTMENT FUNDS, INC.
PART C -- OTHER INFORMATION
ITEM 23. EXHIBITS
(a)(1) Amended and Restated Articles of Incorporation, as amended
through April 2, 1998 (Incorporated by reference to Exhibit
(1) to Post-Effective Amendment No. 36, Filed on April 15,
1998 (File Nos. 33-16905, 811-05309)).
(a)(2) Articles Supplementary, designating new series and new share classes (Incorporated by reference to Exhibit (a)(2) to Post-Effective Amendment No. 54, Filed on June 27, 2001 (File Nos. 33-16905, 811-05309)).
* (a)(3) Articles Supplementary, designating new Series.
* (b) Bylaws, as amended through February 21, 2002.
(c) Not applicable.
(d)(1) Investment Advisory Agreement dated April 2, 1991, between the Registrant and First Bank National Association, as amended and supplemented through August 1994, and assigned to U.S. Bancorp Asset Management, Inc. on May 2, 2001 (Incorporated by reference to Exhibit (5)(a) to Post-Effective Amendment No. 21, Filed on May 15, 1995 (File Nos. 33-16905, 811-05309)).
* (d)(2) Exhibit A to Investment Advisory Agreement (series and advisory fees).
(d)(3) Supplement to Advisory Agreement Relating to International Fund dated December 31, 1993 (Incorporated by reference to Exhibit (d)(3) to Post-Effective Amendment No. 46, Filed on December 28, 2000 (File Nos. 33-16905, 811-05309)).
(d)(4) Supplement to Advisory Agreement Relating to Emerging Markets
Fund dated July 23, 1998 (Incorporated by reference to Exhibit
(d)(4) to Post-Effective Amendment No. 46, Filed on December
28, 2000 (File Nos. 33-16905, 811-05309)).
(d)(5) Supplement to Advisory Agreement Relating to Strategic Income
Fund dated July 24, 1998 (Incorporated by reference to Exhibit
(d)(5) to Post-Effective Amendment No. 46, Filed on December
28, 2000 (File Nos. 33-16905, 811-05309)).
(d)(6) Sub-Advisory Agreement dated July 1, 2001, between U.S. Bancorp Asset Management, Inc. and Clay Finlay Inc. with respect to International Fund (Incorporated by reference to Exhibit (d)(6) to Post-Effective Amendment No. 54, Filed on June 27, 2001 (File Nos. 33-16905, 811-05309)).
(d)(7) Sub-Advisory Agreement dated July 23, 1998, between U.S. Bank National Association, as assigned to U.S. Bancorp Asset Management, Inc. on May 2, 2001, and Marvin & Palmer Associates, Inc., with respect to Emerging Markets Fund (Incorporated by reference to Exhibit 5(f) to Post-Effective Amendment No. 39, Filed on July 31, 1998 (File Nos. 33-16905, 811-05309)).
(d)(8) Sub-Advisory Agreement dated July 24, 1998, between U.S. Bank National Association, as assigned to U.S. Bancorp Asset Management, Inc. on May 2, 2001, and Federated Global Investment Management Corp., with respect to Strategic Income Fund (Incorporated by reference to Exhibit 5(g) to Post-Effective Amendment No. 39, Filed on July 31, 1998 (File Nos. 33-16905, 811-05309)).
(e)(1) Distribution Agreement [Class A and Class Y Shares,] between the Registrant and Quasar Distributors, LLC (Incorporated by reference to Exhibit e(1) to Post-Effective Amendment No. 58, Filed on September 21, 2001 (File Nos. 33-16905, 811-05309)).
(e)(2) Distribution and Service Agreement [Class B] between the Registrant and Quasar Distributors, LLC (Incorporated by reference to Exhibit e(2) to Post-Effective Amendment No. 58, Filed on September 21, 2001 (File Nos. 33-16905, 811-05309)).
(e)(3) Distribution and Service Agreement [Class C] between the Registrant and Quasar Distributors, LLC (Incorporated by reference to Exhibit e(3) to Post-Effective Amendment No. 58, Filed on September 21, 2001 (File Nos. 33-16905, 811-05309)).
(e)(4) Shareholder Service Plan and Agreement [Class S] between Registrant and Quasar Distributors, LLC (Incorporated by reference to Exhibit e(4) to Post-Effective Amendment No. 58, Filed on September 21, 2001 (File Nos. 33-16905, 811-05309)).
(e)(5) Dealer Agreement (Incorporated by reference to Exhibit e(5) to Post-Effective Amendment No. 58, Filed on September 21, 2001 (File Nos. 33-16905, 811- 05309)).
(f) Deferred Compensation Plan for Directors Trust Agreement dated January 1, 2000 (Incorporated by reference to Exhibit (f) to Post-Effective Amendment No. 46, Filed on December 28, 2000 (File Nos. 33-16905, 811-05309)).
(g)(1) Custodian Agreement dated September 20, 1993, between the Registrant and First Trust National Association, as supplemented through August 1994 (Incorporated by reference to Exhibit (8) to Post-Effective Amendment No. 18 (File Nos. 33-16905, 811-05309)).
(g)(2) Supplement dated March 15, 1994, to Custodian Agreement dated September 20, 1993 (File Nos. 33-16905, 811-05309).
(g)(3) Further Supplement dated November 21, 1997, with respect to International Index Fund, and July 23, 1998, with respect to Strategic Income Fund and Emerging Markets Fund, to Custodian Agreement dated September 20, 1993 (Incorporated by reference to Exhibit 8(c) to Post-Effective Amendment No. 39, Filed on July 31, 1998 (File Nos. 33-16905, 811-05309)).
(g)(4) Compensation Agreement pursuant to Custodian Agreement dated September 20, 1993, as amended (Incorporated by reference to Exhibit (g)(4) to Post-Effective Amendment No. 54, Filed on June 27, 2001 (File Nos. 33-16905, 811-05309)).
(g)(5) Compensation Agreement dated as of September 19, 2001, pursuant to Custodian Agreement dated September 20, 1993, as amended (Incorporated by reference to Exhibit (g)(5) to Post-Effective Amendment No. 59, Filed on January 28, 2002 (File Nos. 33-16905, 811-05309)).
(g)(6) Assignment of Custodian Agreements and Security Lending Agency Agreement to U.S. Bank National Association, dated May 1, 1998 (Incorporated by reference to Exhibit (g)(5) to Post-Effective Amendment No. 41, Filed on December 2, 1998 (File Nos. 33-16905, 811-05309)).
(g)(7) Further Supplement to Custodian Agreement dated December 8, 1999 (Incorporated by reference to Exhibit (g)(6) to Post-Effective Amendment No. 44, Filed on January 28, 2000 (File Nos. 33-16905, 811-05309)).
* (g)(8) Compensation Agreement dated as of February 21, 2002, pursuant to Custodian Agreement dated September 20, 1993, as amended.
(h)(1) Co-Administration Agreement dated by and between U.S. Bancorp Asset Management, U. S. Bancorp Fund Services, LLC, and First American Investment Funds, Inc. (Incorporated by reference to Exhibit h(1) to Post-Effective Amendment No. 58, Filed on September 21, 2001 (File Nos. 33-16905, 811-05309))
(i)(1) Opinion and Consent of Dorsey & Whitney (Incorporated by
reference to Exhibit (10)(a) to Post-Effective Amendment No.
15 (File Nos. 33-16905, 811-05309)).
(i)(2) Opinion and Consent of Dorsey & Whitney, LLP with respect to Strategic Income Fund, Class HH, dated July 24, 1998 (Incorporated by reference to Exhibit (10)(c) to Post-Effective Amendment No. 38, Filed on July 24, 1998 (File Nos. 33-16905, 811-05309)).
(i)(3) Opinion and Consent of Dorsey & Whitney, LLP with respect to Adjustable Rate Mortgage Securities Fund (Class CC), Tax Free Fund (Class DD), Minnesota Tax Free Fund (Class EE), Mid Cap Growth Fund (Class FF) and Emerging Markets Fund (Class GG), dated July 31, 1998 (Incorporated by reference to Exhibit 10(d) to Post-Effective Amendment No. 39, Filed on July 31, 1998 (File Nos. 33-16905, 811-05309)).
(i)(4) Opinion and Consent of Dorsey & Whitney, LLP with respect to Arizona Tax Free Fund (II), California Tax Free Fund (JJ), Colorado Tax Free Fund (KK) and Corporate Bond Fund (LL) (Incorporated by reference to Exhibit (i)(5) to Post-Effective Amendment No. 44, Filed on January 28, 2000 (File Nos. 33-16905, 811-05309)).
(i)(5) Opinion and Consent of Dorsey & Whitney, LLP with respect to Nebraska Tax Free Fund and High Yield Bond Fund (Incorporated by reference to Exhibit (i)(6) to Post-Effective Amendment No. 47, Filed on January 18, 2001 (File Nos. 33-16905, 811-05309)).
(i)(6) Opinion and Consent of Dorsey & Whitney, LLP with respect to new shell funds and share classes (Incorporated by reference to Exhibit i(6) to Post-Effective Amendment No. 58, Filed on September 21, 2001 (File Nos. 33-16905, 811-05309)).
* (i)(7) Opinion and Consent of Dorsey & Whitney, LLP with respect to Ohio Tax Free Fund (BBB).
(j)(1) Opinion and Consent of Dorsey & Whitney, dated November 25, 1991 (Incorporated by reference to Exhibit (11)(b) to Post-Effective Amendment No. 21, Filed on May 15, 1995 (File Nos. 33-16905, 811-05309)).
(j)(3) Consent of KPMG Peat Marwick LLP (Incorporated by reference to Exhibit (j)(3) to Post-Effective Amendment No. 44 on January 28, 2000 (File No. 33-16905, 811-0530).
(j)(4) Consent of PriceWaterhouseCoopers LP (Incorporated by reference to Exhibit j(4) to Post-Effective Amendment No. 58, Filed on September 21, 2001 (File Nos. 33-16905, 811-05309)).
(k) Not applicable.
(l) Not applicable.
(m)(1) Distribution Plan [Class A], Retail Class (Incorporated by reference to Exhibit (m)(1) to Post-Effective Amendment No. 46, Filed on December 28, 2000 (File Nos. 33-16905, 811-05309)).
(m)(2) Distribution Plan [Class B] Contingent Deferred Sales Change Class. (Incorporated by reference to Exhibit 15(b) to Post-Effective Amendment No. 21, Filed on May 15, 1995 (File Nos. 33-16905, 811-05309)).
(m)(3) Service Plan [Class B] (Incorporated by reference to Exhibit
(15)(c) to Post-Effective Amendment No. 21, Filed on May 15,
1995 (File Nos. 33-16905, 811-05309)).
(m)(4) Distribution Plan [Class C] Level-Load Class (Incorporated by reference to Exhibit (m)(4) to Post-Effective Amendment No. 42, Filed on February 1, 1999 (File Nos. 33-16905, 811-05309)).
(m)(5) Service Plan [Class C] (Incorporated by reference to Exhibit
(m)(5) to Post-Effective Amendment No. 42, Filed on February
1, 1999 (File Nos. 33-16905, 811-05309)).
(n)(1) Multiple Class Plan Pursuant to Rule 18f-3, dated June 1, 2001 (Incorporated by reference to Exhibit (n)(1) to Post-Effective Amendment No. 54, Filed on June 27, 2001 (File Nos. 33-16905, 811-05309)).
* (n)(2) Multiple Class Plan Pursuant to Rule 18f-3, as amended February 21, 2002.
(o) Reserved.
(p)(1) First American Funds Code of Ethics (Incorporated by reference to Exhibit p(1) to Post-Effective Amendment No. 58, Filed on September 21, 2001 (File Nos. 33-16905, 811-05309)).
(p)(2) U.S. Bancorp Asset Management, Inc. Code of Ethics (Incorporated by reference to Exhibit p(2) to Post-Effective Amendment No. 58, Filed on September 21, 2001 (File Nos. 33-16905, 811-05309)).
(p)(3) Marvin & Palmer Associates, Inc. Code of Ethics (Incorporated by reference to Exhibit p(3) to Post-Effective Amendment No. 58, Filed on September 21, 2001 (File Nos. 33-16905, 811-05309)).
(p)(4) Clay Finlay Inc. Code of Ethics (Incorporated by reference to Exhibit p(4) to Post-Effective Amendment No. 58, Filed on September 21, 2001 (File Nos. 33-16905, 811-05309)).
(p)(5) Federated Investors, Inc. Code of Ethics, as amended (Incorporated by reference to Exhibit (p)(4) to Post-Effective Amendment No. 46, Filed on December 28, 2000 (File Nos. 33-16905, 811-05309)).
(p)(6) Quasar Distributors, LLC Code of Ethics (Incorporated by reference to Exhibit p(6) to Post-Effective Amendment No. 58, Filed on September 21, 2001 (File Nos. 33-16905, 811-05309)).
* Filed herewith
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE FUND
Not applicable.
ITEM 25. INDEMNIFICATION
The first four paragraphs of Item 27 of Part C of Pre-Effective Amendment No. 1 to the Registrant's Registration Statement on Form N-1A, dated November 27, 1987, are incorporated herein by reference.
On February 18, 1988 the indemnification provisions of the Maryland General Corporation Law (the "Law") were amended to permit, among other things, corporations to indemnify directors and officers unless it is proved that the individual (1) acted in bad faith or with active and deliberate dishonesty, (2) actually received an improper personal benefit in money, property or services, or (3) in the case of a criminal proceeding, had reasonable cause to believe that his act or omission was unlawful. The Law was also amended to permit corporations to indemnify directors and officers for amounts paid in settlement of stockholders' derivative suits.
The Registrant undertakes that no indemnification or advance will be made unless it is consistent with Sections 17(h) or 17(i) of the Investment Company Act of 1940, as now enacted or hereafter amended, and Securities and Exchange Commission rules, regulations, and releases (including, without limitation, Investment Company Act of 1940 Release No. 11330, September 2, 1980).
Insofar as the indemnification for liability arising under the Securities Act of 1933, as amended, may be permitted to directors, officers, and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in such Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer, or controlling person of the Registrant in the successful defense of any action, suit, or proceeding) is asserted by such director, officer, or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933, as amended, and will be governed by the final adjudication of such issue.
The Registrant maintains officers' and directors' liability insurance providing coverage, with certain exceptions, for acts and omissions in the course of the covered persons' duties as officers and directors.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Information on the business of the Registrant's investment adviser, U.S. Bancorp Asset Management, Inc. (the "Manager" or "USBAM"), is described in the section of the fund's Statement of Additional Information, filed as part of this Registration Statement, entitled "Investment Advisory and Other Services for the Fund." The directors and officers of the Manager are listed below, together with their principal occupation or other positions of a substantial nature during the past two fiscal years. This information is as of March 1, 2002.
James L. Chosy
Business Background: Secretary, FAF, FAIF, FASF and FAIP, Minneapolis, MN
(February 2001 to present); General Counsel Managing Director, U.S. Bancorp
Piper Jaffray Inc., Minneapolis, MN (March 2001 to present); Associate General
Counsel, U.S. Bancorp, Minneapolis, MN (November 1995 to March 2001).
Kenneth L. Delecki
Business Background: CFO and Treasurer, USBAM, Minneapolis, MN (March 2001 to
present); Director, Business Performance, U.S. Bancorp Piper Jaffray Inc.,
Minneapolis, MN (September 2000 to March 2001); Independent Consultant, Edina,
MN (May 1999 to September 2000); Managing Director, Financial Planning and
Analysis, Northwest Airlines, Eagan, MN (September 1998 to May 1999).
Walter E. Dewey
Business Background: Director and Senior Portfolio Manager, USBAM, Minneapolis,
MN (April 2001 to present); Senior Portfolio Manager and Senior Vice President,
FIRMCO, Milwaukee, WI (1983 to May 2001).
John J. Gibas
Business Background: Director and Director, Institutional Advisory Group, USBAM,
Minneapolis, MN (April 2001 to present); Director, Institutional Advisory Group,
FAAM, Minneapolis, MN (September 1998 to present).
Mark S. Jordahl
Business Background: Chief Investment Officer and Director, USBAM, Minneapolis,
MN (July 2001 to present); Vice President, FAIF, FAF, FASF and FAIP,
Minneapolis, MN (September 2001 to present); President and Chief Investment
Officer, ING Investment Management - Americas (September 2000 to May 2001);
Senior Vice President and Chief Investment Officer, ReliaStar Financial Corp.
(January 1998 to September 2000).
Kimberly F. Kaul
Business Background: Communications Director, USBAM, Minneapolis, MN (April 2001
to present); Communications Director, FAAM, Minneapolis, MN (September 1998 to
present); Communications Director, Piper Capital Management, Inc., Minneapolis,
MN (May 1991 to September 1998).
Robert H. Nelson
Business Background: Director and Chief Operating Officer, USBAM, Minneapolis,
MN (April 2001 to present); Senior Vice President, FAAM, Minneapolis, MN
(September 1998 to present); Treasurer, FAF, FAIF, FASF and FAIP, Minneapolis,
MN (March 2000 to present); Senior Vice President, Piper Capital Management,
Inc. (November 1994 to September 1998).
Christopher O. Petersen
Business Background: Assistant Secretary, USBAM, Minneapolis, MN (December 2000
to present); Corporate Counsel, USBAM, Minneapolis, MN (September 1999 to
present).
Thomas S. Schreier, Jr.
Business Background: CEO, President and Director, USBAM, Minneapolis, MN (March
2001 to present); President, FAIF, FAF, FASF, FAIP, Minneapolis, MN (February
2001 to present); CEO and President, FIRMCO, Minneapolis, MN (March 2001 to May
2001); Senior Managing Director, Equity Research, U.S. Bancorp Piper Jaffray
Inc., Minneapolis, MN (October 1998 to December 2000).
Jon M. Stevens
Business Background: Assistant Secretary, USBAM, Minneapolis, MN (2000 to
present); Senior Managing Director, U.S. Bancorp Private Asset Management,
Minneapolis, MN (1997 to present).
Peter O. Torvik
Business Background: Director and Executive Vice President, USBAM, Minneapolis,
MN (April 2001 to present); Executive Vice President, FAAM, Minneapolis, MN
(August 2000 to present); Vice President Marketing of FAF, FAIF, FASF and FAIP,
Minneapolis, MN (September 2000 to present); President and Partner, DPG Group,
Tallahassee, FL (January 1995 to July 2000).
ITEM 27. PRINCIPAL UNDERWRITERS:
a) State the name of the investment company (other than the Fund) for which each principal underwriter currently distributing the Fund's securities also acts as a principal underwriter, depositor, or investment adviser.
Registrant's distributor, Quasar Distributors, LLC (the "Distributor") acts as principal underwriter and distributor for Cullen Funds Trust, Country Mutual Funds Trust, The Hennessy Mutual Funds, Inc., The Hennessy Funds, Inc., Kit Cole Investment Trust, Everest Funds, Brandywine Advisors Fund, Light Revolution Fund, Inc., IPS Funds, The Jensen Portfolio, The Lindner Funds, AHA Investment Funds, Wexler Trust (The Muhlenkamp Fund), Mutuals. com (The Generation Wave Funds), First American Funds, Inc., First American Investment Funds, Inc., First American Strategy Funds, Inc., First American Closed-End Funds, Zodiac Trust (Conning Money Market Portfolio), CCMA Select Investment Trust, CCM ADVISORS FUNDS, Glenmede Fund, Inc., DAL Investment Company, Fort Pitt Capital Funds, MW Capital Management Funds, Quintara Funds, Jacob Internet Fund, Advisor Series Trust, Brandes Investment Trust (Brandes Institutional International Equity Fund), Builders Fixed Income Fund, Inc., Dessauer Fund Group (The Dessauer Global Equity Fund), FFTW Funds, Inc., Harding Loevner Funds, Inc., Investec Funds, Kayne Anderson Funds, PIC Investment Trust Funds (Provident Investment Counsel), Professionally Managed Portfolios, Purisma Funds, Ranier Funds, RNC Funds, SEIX Funds, TIFF Investment Program, Inc., Trust for Investment Managers, and TT International.
b) Provide the information required by the following table for each director, officer, or partner of each principal underwriter named in the response to Item 20. Unless otherwise noted, the business address for each Quasar Distributors, LLC Board Member or Officer is 615 East Michigan Street, Milwaukee, WI 53202.
POSITION AND OFFICES POSITION AND OFFICES
NAME WITH THE UNDERWRITER WITH THE REGISTRANT
---------------------------------------------------------------------------
James Schoenike President, Board Member None
Donna Berth Treasurer None
Suzanne Riley Secretary None
Joe Redwine Board Member None
Bob Kern Board Member None
Paul Rock Board Member None
Laura Bednarski Board Member None
220 South Sixth Street
Minneapolis, MN 55402
|
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS
All accounts, books, and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the rules promulgated
thereunder are maintained by U.S. Bancorp Asset Management, Inc. 800 Nicollet
Mall, Minneapolis, Minnesota, 55402.
ITEM 29. MANAGEMENT SERVICES
Not applicable.
ITEM 30. UNDERTAKINGS
Not applicable.
SIGNATURES
As required by the Securities Act of 1933, as amended, and the Investment Company Act of 1940, as amended, the Registrant certifies that it meets all of the requirements for effectiveness of this Registration Statement under Rule 485(b) of the Securities Act of 1933, as amended, and has duly caused this Post-Effective Amendment to its Registration Statement Nos. 33-16905 and 811-05309 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Minneapolis, State of Minnesota, on the 30th day of April, 2002.
FIRST AMERICAN INVESTMENT FUNDS, INC.
ATTEST: /s/ Jeffery M. Wilson By: /s/ James L. Chosy
----------------------------- -----------------------------
Jeffery M. Wilson James L. Chosy
Senior Vice President Secretary
|
Pursuant to the requirements of the Securities Act of 1933, as amended, this Amendment to the Registration Statement has been signed below by the following persons in the capacity and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Jeffery M. Wilson Senior Vice President **
----------------------------
Jeffery M. Wilson
* Director **
----------------------------
John M. Murphy, Jr.
* Director **
----------------------------
Robert J. Dayton
|
* Director **
----------------------------
Andrew M. Hunter III
* Director **
----------------------------
Leonard W. Kedrowski
* Director **
----------------------------
Richard K. Riederer
* Director **
----------------------------
Joseph D. Strauss
* Director **
----------------------------
Virginia L. Stringer
* Director **
----------------------------
Roger A. Gibson
* Director **
----------------------------
James M. Wade
By: /s/ James L. Chosy
------------------------
James L. Chosy
Attorney-in-Fact
** April 30, 2002
|
EXHIBIT (a)(3)
FIRST AMERICAN INVESTMENT FUNDS, INC.
ARTICLES SUPPLEMENTARY
[February 2002]
First American Investment Funds, Inc., a corporation organized under the laws of the State of Maryland (the "Corporation"), does hereby file for record with the State Department of Assessments and Taxation of Maryland the following Articles Supplementary to its Articles of Incorporation:
FIRST: The Corporation is registered as an open-end investment company under the Investment Company Act of 1940 (the "1940 Act"). As hereinafter set forth, the Corporation has classified its authorized capital stock in accordance with the Maryland General Corporation Law.
SECOND: Immediately before the classifications hereinafter set forth, the Corporation had authority to issue four hundred twenty billion (420,000,000,000) shares of common stock (individually, a "Share" and collectively, the "Shares"), of the par value of $.0001 per Share and of the aggregate par value of forty-two million dollars ($42,000,000), classified as follows:
(1) Class B Common Shares (formerly referred to as "fixed income fund shares"): Two billion (2,000,000,000) Shares.
(2) Class B, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(3) Class B, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(4) Class B, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(5) Class B, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(6) Class C Common Shares (formerly referred to as "municipal bond fund shares"): Two billion (2,000,000,000) Shares.
(7) Class C, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(8) Class C, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(9) Class C, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(10) Class D Common Shares (formerly referred to as "stock fund shares"): Two billion (2,000,000,000) Shares.
(11) Class D, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(12) Class D, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(13) Class D, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(14) Class D, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(15) Class E Common Shares (formerly referred to as "special equity fund shares"): Two billion (2,000,000,000) Shares.
(16) Class E, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(17) Class E, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(18) Class E, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(19) Class E, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(20) Class G Common Shares (formerly referred to as "balanced fund shares"): Two billion (2,000,000,000) Shares.
(21) Class G, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(22) Class G, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(23) Class G, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(24) Class G, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(25) Class H Common Shares (formerly referred to as "equity index fund shares"): Two billion (2,000,000,000) Shares.
(26) Class H, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(27) Class H, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(28) Class H, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(29) Class H, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(30) Class I Common Shares (formerly referred to as "intermediate term income fund shares"): Two billion (2,000,000,000) Shares.
(31) Class I, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(32) Class I, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(33) Class I, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(34) Class I, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(35) Class J Common Shares (formerly referred to as "limited term income fund shares"): Two billion (2,000,000,000) Shares.
(36) Class J, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(37) Class J, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(38) Class J, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(39) Class J, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(40) Class M Common Shares: Two billion (2,000,000,000) Shares.
(41) Class M, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(42) Class M, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(43) Class M, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(44) Class N Common Shares: Two billion (2,000,000,000) Shares.
(45) Class N, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(46) Class N, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(47) Class N, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(48) Class O Common Shares: Two billion (2,000,000,000) Shares.
(49) Class O, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(50) Class O , Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(51) Class O, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(52) Class O, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(53) Class P Common Shares: Two billion (2,000,000,000) Shares.
(54) Class P, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(55) Class P, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(56) Class P, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(57) Class P, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(58) Class Q Common Shares: Two billion (2,000,000,000) Shares.
(59) Class Q, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(60) Class Q, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(61) Class Q, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(62) Class Q, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(63) Class S Common Shares: Two billion (2,000,000,000) Shares.
(64) Class S, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(65) Class S, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(66) Class S, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(67) Class S, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(68) Class T Common Shares: Two billion (2,000,000,000) Shares.
(69) Class T, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(70) Class T, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(71) Class T, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(72) Class T, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(73) Class V Common Shares: Two billion (2,000,000,000) Shares.
(74) Class V, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(75) Class V, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(76) Class V, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(77) Class V, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(78) Class W Common Shares: Two billion (2,000,000,000) Shares.
(79) Class W, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(80) Class W, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(81) Class W, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(82) Class W, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(83) Class X Common Shares: Two billion (2,000,000,000) Shares.
(84) Class X, Series 1 Common Shares: Two billion (2,000,000,000) Shares.
(85) Class X, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(86) Class Y Common Shares: Two billion (2,000,000,000) Shares.
(87) Class Y, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(88) Class Y, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(89) Class AA Common Shares: Two billion (2,000,000,000) Shares.
(90) Class AA, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(91) Class AA, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(92) Class AA, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(93) Class AA, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(94) Class DD Common Shares: Two billion (2,000,000,000) Shares.
(95) Class DD, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(96) Class DD, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(97) Class DD, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(98) Class EE Common Shares: Two billion (2,000,000,000) Shares.
(99) Class EE, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(100) Class EE, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(101) Class EE, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(102) Class FF Common Shares: Two billion (2,000,000,000) Shares.
(103) Class FF, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(104) Class FF, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(105) Class FF, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(106) Class FF, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(107) Class GG Common Shares: Two billion (2,000,000,000) Shares.
(108) Class GG, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(109) Class GG, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(110) Class GG, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(111) Class GG, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(112) Class HH Common Shares: Two billion (2,000,000,000) Shares.
(113) Class HH, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(114) Class HH, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(115) Class HH, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(116) Class HH, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(117) Class I I Common Shares: Two billion (2,000,000,000) Shares.
(118) Class I I, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(119) Class I I, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(120) Class JJ Common Shares: Two billion (2,000,000,000) Shares.
(121) Class JJ, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(122) Class JJ, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(123) Class KK Common Shares: Two billion (2,000,000,000) Shares.
(124) Class KK, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(125) Class KK, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(126) Class LL Common Shares: Two billion (2,000,000,000) Shares.
(127) Class LL, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(128) Class LL, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(129) Class LL, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(130) Class LL, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(131) Class MM Common Shares: Two billion (2,000,000,000) Shares.
(132) Class MM, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(133) Class MM, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(134) Class NN Common Shares: Two billion (2,000,000,000) Shares.
(135) Class NN, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(136) Class NN, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(137) Class NN, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(138) Class NN, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(139) Class OO Common Shares: Two billion (2,000,000,000) Shares.
(140) Class OO, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(141) Class OO, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(142) Class OO, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(143) Class OO, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(144) Class PP Common Shares: Two billion (2,000,000,000) Shares.
(145) Class PP, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(146) Class PP, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(147) Class PP, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(148) Class PP, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(149) Class QQ Common Shares: Two billion (2,000,000,000) Shares.
(150) Class QQ, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(151) Class QQ, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(152) Class QQ, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(153) Class QQ, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(154) Class RR Common Shares: Two billion (2,000,000,000) Shares.
(155) Class RR, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(156) Class RR, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(157) Class RR, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(158) Class RR, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(159) Class SS Common Shares: Two billion (2,000,000,000) Shares.
(160) Class SS, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(161) Class SS, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(162) Class SS, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(163) Class SS, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(164) Class TT Common Shares: Two billion (2,000,000,000) Shares.
(165) Class TT, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(166) Class TT, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(167) Class TT, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(168) Class TT, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(169) Class UU Common Shares: Two billion (2,000,000,000) Shares.
(170) Class UU, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(171) Class UU, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(172) Class UU, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(173) Class UU, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(174) Class VV Common Shares: Two billion (2,000,000,000) Shares.
(175) Class VV, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(176) Class VV, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(177) Class VV, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(178) Class VV, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(179) Class WW Common Shares: Two billion (2,000,000,000) Shares.
(180) Class WW, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(181) Class WW, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(182) Class WW, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(183) Class WW, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(184) Class XX Common Shares: Two billion (2,000,000,000) Shares.
(185) Class XX, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(186) Class XX, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(187) Class XX, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(188) Class XX, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(189) Class YY Common Shares: Two billion (2,000,000,000) Shares.
(190) Class YY, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(191) Class YY, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(192) Class YY, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(193) Class YY, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(194) Class ZZ Common Shares: Two billion (2,000,000,000) Shares.
(195) Class ZZ, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(196) Class ZZ, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(197) Class ZZ, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(198) Class ZZ, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(199) Class AAA Common Shares: Two billion (2,000,000,000) Shares.
(200) Class AAA, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(201) Class AAA, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(202) Unclassified Shares: Eighteen billion (18,000,000,000) Shares.
THIRD: Pursuant to the authority contained in Article IV of the Articles of Incorporation of the Corporation and Section 2-208 of the Maryland General Corporation Law, the Board of Directors of the Corporation, by resolution adopted February 21, 2002, classified the following additional Shares out of the authorized, unissued and unclassified Shares of the Corporation:
(1) Class BBB Common Shares: Two billion (2,000,000,000) Shares.
(2) Class BBB, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(3) Class BBB, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
FOURTH: The Shares classified pursuant to THIRD above shall have the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications, and terms and conditions of redemption, set forth in the Corporation's Articles of Incorporation. Any Class or Series of Shares classified pursuant to THIRD above may be subject to such charges and expenses (including by way of example, but not by way of limitation, such front-end and deferred sales charges as may be permitted under the 1940 Act and rules of the National Association of Securities Dealers, Inc. ("NASD"), expenses under Rule 12b-1 plans, administration plans, service plans, or other plans or arrangements, however designated) adopted from time to time by the Board of Directors of the Corporation in accordance, to the extent applicable, with the 1940 Act, and all of the charges and expenses to which such a Class or Series is subject shall be borne by such Class or Series and shall be appropriately reflected (in the manner determined by the Board of Directors) in determining the net asset value and the amounts payable with respect to dividends and distributions on and redemptions or liquidations of, the Shares of such Class or Series.
FIFTH: Immediately after the classifications hereinbefore set forth and upon filing for record of these Articles Supplementary, the Corporation has authority to issue four hundred twenty billion (420,000,000,000) shares of common stock (individually, a "Share" and collectively, the "Shares"), of the par value of $.0001 per Share and of the aggregate par value of forth-two million dollars ($42,000,000), classified as follows:
(1) Class B Common Shares (formerly referred to as "fixed income fund shares"): Two billion (2,000,000,000) Shares.
(2) Class B, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(3) Class B, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(4) Class B, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(5) Class B, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(6) Class C Common Shares (formerly referred to as "municipal bond fund shares"): Two billion (2,000,000,000) Shares.
(7) Class C, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(8) Class C, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(9) Class C, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(10) Class D Common Shares (formerly referred to as "stock fund shares"): Two billion (2,000,000,000) Shares.
(11) Class D, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(12) Class D, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(13) Class D, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(14) Class D, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(15) Class E Common Shares (formerly referred to as "special equity fund shares"): Two billion (2,000,000,000) Shares.
(16) Class E, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(17) Class E, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(18) Class E, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(19) Class E, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(20) Class G Common Shares (formerly referred to as "balanced fund shares"): Two billion (2,000,000,000) Shares.
(21) Class G, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(22) Class G, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(23) Class G, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(24) Class G, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(25) Class H Common Shares (formerly referred to as "equity index fund shares"): Two billion (2,000,000,000) Shares.
(26) Class H, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(27) Class H, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(28) Class H, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(29) Class H, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(30) Class I Common Shares (formerly referred to as "intermediate term income fund shares"): Two billion (2,000,000,000) Shares.
(31) Class I, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(32) Class I, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(33) Class I, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(34) Class I, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(35) Class J Common Shares (formerly referred to as "limited term income fund shares"): Two billion (2,000,000,000) Shares.
(36) Class J, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(37) Class J, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(38) Class J, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(39) Class J, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(40) Class M Common Shares: Two billion (2,000,000,000) Shares.
(41) Class M, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(42) Class M, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(43) Class M, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(44) Class N Common Shares: Two billion (2,000,000,000) Shares.
(45) Class N, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(46) Class N, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(47) Class N, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(48) Class O Common Shares: Two billion (2,000,000,000) Shares.
(49) Class O, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(50) Class O , Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(51) Class O, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(52) Class O, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(53) Class P Common Shares: Two billion (2,000,000,000) Shares.
(54) Class P, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(55) Class P, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(56) Class P, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(57) Class P, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(58) Class Q Common Shares: Two billion (2,000,000,000) Shares.
(59) Class Q, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(60) Class Q, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(61) Class Q, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(62) Class Q, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(63) Class S Common Shares: Two billion (2,000,000,000) Shares.
(64) Class S, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(65) Class S, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(66) Class S, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(67) Class S, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(68) Class T Common Shares: Two billion (2,000,000,000) Shares.
(69) Class T, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(70) Class T, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(71) Class T, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(72) Class T, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(73) Class V Common Shares: Two billion (2,000,000,000) Shares.
(74) Class V, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(75) Class V, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(76) Class V, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(77) Class V, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(78) Class W Common Shares: Two billion (2,000,000,000) Shares.
(79) Class W, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(80) Class W, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(81) Class W, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(82) Class W, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(83) Class X Common Shares: Two billion (2,000,000,000) Shares.
(84) Class X, Series 1 Common Shares: Two billion (2,000,000,000) Shares.
(85) Class X, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(86) Class Y Common Shares: Two billion (2,000,000,000) Shares.
(87) Class Y, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(88) Class Y, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(89) Class AA Common Shares: Two billion (2,000,000,000) Shares.
(90) Class AA, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(91) Class AA, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(92) Class AA, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(93) Class AA, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(94) Class DD Common Shares: Two billion (2,000,000,000) Shares.
(95) Class DD, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(96) Class DD, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(97) Class DD, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(98) Class EE Common Shares: Two billion (2,000,000,000) Shares.
(99) Class EE, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(100) Class EE, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(101) Class EE, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(102) Class FF Common Shares: Two billion (2,000,000,000) Shares.
(103) Class FF, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(104) Class FF, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(105) Class FF, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(106) Class FF, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(107) Class GG Common Shares: Two billion (2,000,000,000) Shares.
(108) Class GG, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(109) Class GG, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(110) Class GG, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(111) Class GG, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(112) Class HH Common Shares: Two billion (2,000,000,000) Shares.
(113) Class HH, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(114) Class HH, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(115) Class HH, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(116) Class HH, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(117) Class I I Common Shares: Two billion (2,000,000,000) Shares.
(118) Class I I, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(119) Class I I, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(120) Class JJ Common Shares: Two billion (2,000,000,000) Shares.
(121) Class JJ, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(122) Class JJ, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(123) Class KK Common Shares: Two billion (2,000,000,000) Shares.
(124) Class KK, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(125) Class KK, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(126) Class LL Common Shares: Two billion (2,000,000,000) Shares.
(127) Class LL, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(128) Class LL, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(129) Class LL, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(130) Class LL, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(131) Class MM Common Shares: Two billion (2,000,000,000) Shares.
(132) Class MM, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(133) Class MM, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(134) Class NN Common Shares: Two billion (2,000,000,000) Shares.
(135) Class NN, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(136) Class NN, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(137) Class NN, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(138) Class NN, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(139) Class OO Common Shares: Two billion (2,000,000,000) Shares.
(140) Class OO, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(141) Class OO, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(142) Class OO, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(143) Class OO, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(144) Class PP Common Shares: Two billion (2,000,000,000) Shares.
(145) Class PP, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(146) Class PP, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(147) Class PP, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(148) Class PP, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(149) Class QQ Common Shares: Two billion (2,000,000,000) Shares.
(150) Class QQ, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(151) Class QQ, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(152) Class QQ, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(153) Class QQ, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(154) Class RR Common Shares: Two billion (2,000,000,000) Shares.
(155) Class RR, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(156) Class RR, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(157) Class RR, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(158) Class RR, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(159) Class SS Common Shares: Two billion (2,000,000,000) Shares.
(160) Class SS, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(161) Class SS, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(162) Class SS, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(163) Class SS, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(164) Class TT Common Shares: Two billion (2,000,000,000) Shares.
(165) Class TT, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(166) Class TT, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(167) Class TT, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(168) Class TT, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(169) Class UU Common Shares: Two billion (2,000,000,000) Shares.
(170) Class UU, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(171) Class UU, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(172) Class UU, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(173) Class UU, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(174) Class VV Common Shares: Two billion (2,000,000,000) Shares.
(175) Class VV, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(176) Class VV, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(177) Class VV, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(178) Class VV, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(179) Class WW Common Shares: Two billion (2,000,000,000) Shares.
(180) Class WW, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(181) Class WW, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(182) Class WW, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(183) Class WW, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(184) Class XX Common Shares: Two billion (2,000,000,000) Shares.
(185) Class XX, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(186) Class XX, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(187) Class XX, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(188) Class XX, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(189) Class YY Common Shares: Two billion (2,000,000,000) Shares.
(190) Class YY, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(191) Class YY, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(192) Class YY, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(193) Class YY, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(194) Class ZZ Common Shares: Two billion (2,000,000,000) Shares.
(195) Class ZZ, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(196) Class ZZ, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(197) Class ZZ, Series 4 Common Shares: Two billion (2,000,000,000) Shares.
(198) Class ZZ, Series 5 Common Shares: Two billion (2,000,000,000) Shares.
(199) Class AAA Common Shares: Two billion (2,000,000,000) Shares.
(200) Class AAA, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(201) Class AAA, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(202) Class BBB Common Shares: Two billion (2,000,000,000) Shares.
(203) Class BBB, Series 2 Common Shares: Two billion (2,000,000,000) Shares.
(204) Class BBB, Series 3 Common Shares: Two billion (2,000,000,000) Shares.
(205) Unclassified Shares: Twelve billion (12,000,000,000) Shares.
SIXTH: The aforesaid action by the Board of Directors of the Corporation was taken pursuant to authority and power contained in the Articles of Incorporation of the Corporation.
The undersigned officer of the Corporation hereby acknowledges, in the name and on behalf of the Corporation, the foregoing Articles Supplementary to be the corporate act of the Corporation and further certifies that, to the best of his or her knowledge, information and belief, the matters and facts set forth therein with respect to the approval thereof are true in all material respects, under the penalties of perjury.
IN WITNESS WHEREOF, the Corporation has caused these Articles Supplementary to be signed in its name and on its behalf by its Vice President and witnessed by its Secretary on February 22, 2002.
FIRST AMERICAN INVESTMENT FUNDS, INC.
By /s/ Jeffery M. Wilson Jeffery M. Wilson, Vice President |
WITNESS:
/s/ James L. Chosy James L. Chosy, Secretary |
EXHIBIT (b)
NAME CHANGE FROM "SECURAL MUTUAL FUNDS, INC." TO "FIRST AMERICAN INVESTMENT FUNDS, INC." APPROVED AT BOARD OF DIRECTORS' MEETINGS ON FEBRUARY 12, 1991; AMENDMENT ADDING NEW SECTION 8 TO ARTICLE I APPROVED AT BOARD OF DIRECTORS' MEETING ON DECEMBER 15, 1992; AMENDMENTS TO ARTICLE III APPROVED AT BOARD OF DIRECTORS' MEETINGS ON SEPTEMBER 7, 1993; AMENDMENT ADDING NEW SECTION 3 TO ARTICLE V APPROVED AT BOARD OF DIRECTORS' MEETING ON DECEMBER 7, 1993; AMENDMENT TO ARTICLE V, SECTION 3 CHANGING FUND NAMES APPROVED AT BOARD OF DIRECTORS' MEETING ON MARCH 7, 1994; AMENDMENT TO ARTICLE V, SECTION 3 PROVIDING FOR NAMES OF NEW CLASSES AND SERIES APPROVED AT BOARD OF DIRECTORS MEETING ON JUNE 8, 1994; AMENDMENT TO ARTICLE V, SECTION 3 PROVIDING FOR NAMES OF NEW CLASSES AND SERIES APPROVED AT BOARD OF DIRECTORS MEETING ON DECEMBER 7, 1994; AMENDMENT TO ARTICLE V, SECTION 3 PROVIDING FOR NAMES OF NEW CLASSES AND SERIES APPROVED AT BOARD OF DIRECTORS MEETING ON MARCH 6, 1995; AMENDMENT TO ARTICLE V, SECTION 3 PROVIDING FOR NAMES OF NEW CLASSES AND SERIES APPROVED AT BOARD OF DIRECTORS MEETING ON DECEMBER 6, 1995; AMENDMENT TO ARTICLE V, SECTION 3 PROVIDING FOR NAMES OF NEW CLASSES AND SERIES APPROVED AT BOARD OF DIRECTORS MEETING ON JUNE 4, 1997; AMENDMENT TO ARTICLE V, SECTION 3 PROVIDING FOR NAMES OF CLASSES AND SERIES APPROVED AT BOARD OF DIRECTORS MEETING ON FEBRUARY 23, 1998; AMENDMENT TO ARTICLE V, SECTION 3 PROVIDING FOR NAMES OF NEW CLASSES AND SERIES APPROVED AT BOARD OF DIRECTORS MEETING ON DECEMBER 9, 1998; AMENDMENT TO ARTICLE II, SECTION 8 SPECIFYING COMMITTEE QUORUM APPROVED AT BOARD OF DIRECTORS MEETING ON FEBRUARY 23, 1999; AMENDMENT TO ARTICLE V, SECTION 3 PROVIDING FOR NAMES OF NEW CLASSES AND SERIES APPROVED AT BOARD OF DIRECTORS MEETING ON SEPTEMBER 8, 1999; AMENDMENT TO ARTICLE I, SECTION 4 PROVIDING FOR ELECTRONIC VOTING APPROVED AT BOARD OF DIRECTORS MEETING ON DECEMBER 8, 1999; AMENDMENT TO ARTICLE V, SECTION 3 PROVIDING FOR NAMES OF CLASSES AND SERIES APPROVED AT BOARD OF DIRECTORS MEETING ON FEBRUARY 28, 2001; AMENDMENT TO ARTICLE V, SECTION 3 PROVIDING FOR NAMES OF CLASSES AND SERIES APPROVED AT BOARD OF DIRECTORS MEETING ON JUNE 1, 2001; AMENDMENT TO ARTICLE V, SECTION 3 PROVIDING FOR NAMES OF CLASSES AND SERIES APPROVED AT BOARD OF DIRECTORS MEETING ON FEBRUARY 21, 2002.
BYLAWS
OF
FIRST AMERICAN INVESTMENT FUNDS, INC.
(A MARYLAND CORPORATION)
ARTICLE I
STOCKHOLDERS
SECTION 1. Meetings. Annual or special meetings of stockholders may be held on such date and at such time as shall be set or provided for by the Board of Directors or, if not so set or provided for, then as stated in the notice of meeting. The notice of meeting shall state the purpose or purposes for which the meeting is called.
SECTION 2. Place of Meetings. All meetings of stockholders shall be held at such place in the United States as is set or provided for by the Board of Directors or, if not so set or provided for, then as stated in the notice of meeting.
SECTION 3. Organization. At any meeting of the stockholders, in the absence of the Chairman of the Board of Directors, if any, and of the President or a Vice President acting in his stead, the stockholders shall choose a chairman to preside over the meeting. In the absence of the Secretary or an Assistant Secretary, acting in his stead, the chairman of the meeting shall appoint a secretary to keep the record of all the votes and minutes of the proceedings.
SECTION 4. Proxies. At any meeting of the stockholders, every stockholder having the right to vote shall be entitled to vote in person or by proxy submitted by any means permitted by Maryland Statutes Section 2-507(c)(3) or any successor provision of Maryland Statutes. No proxy shall be voted after eleven months from its date unless it provides for a longer period.
SECTION 5. Voting. At any meeting of the stockholders, every stockholder shall be entitled to one vote or a fractional vote on each matter submitted to a vote for each share or fractional share of stock standing in his name on the books of the Corporation as of the close of business on the record date for such meeting. Unless the voting is conducted by inspectors, all questions relating to the qualifications of voters, validity of proxies and acceptance or rejection of votes shall be decided by the chairman of the meeting.
SECTION 6. Record Date; Closing of Transfer Books. The Board of Directors may fix, in advance, a date as the record date for the purpose of determining stockholders entitled to notice of, or to vote at, any meeting of stockholders, or stockholders entitled to receive payment of any dividend or the allotment of any rights, or in order to make a determination of stockholders for any other proper purpose. Such date, in any case, shall be not more than sixty days, and in case of a meeting of stockholders not less than ten days, prior to the date on which the particular action requiring such determination of stockholders is to be taken. In lieu of fixing a record date, the Board of Directors may provide that the stock transfer books shall be closed for a stated period but not to exceed, in any case, twenty days. If the stock transfer books are closed for the purpose of determining stockholders entitled to notice of or to vote at a meeting of stockholders, such books shall be closed for at least ten days immediately preceding such meeting.
SECTION 7. Registered Stockholders. The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof.
SECTION 8. Calling of Special Meeting of Shareholders. A special meeting of stockholders shall be called upon the written request of the holders of shares entitled to cast not less than 10% of all votes entitled to vote at such meeting.
ARTICLE II
BOARD OF DIRECTORS
SECTION 1. Number, Qualification, Tenure and Vacancies. The initial Board of Directors shall consist of five (5) directors. Except as hereinafter provided, a director shall be elected to serve until his successor
shall be elected and shall qualify or until his earlier death, resignation, retirement or removal. The directors may at any time when the stockholders are not assembled in meeting, establish, increase or decrease their own number by majority vote of the entire Board of Directors; provided, that the number of directors shall never be less than three (3) nor more than twelve (12). The number of directors may not be decreased so as to affect the term of any incumbent director. If the number be increased, the additional directors to fill the vacancies thus created may, except as hereinafter provided, by elected by majority vote of the entire Board of Directors. Any vacancy occurring for any cause may be filled by a majority of the remaining members of the Board of Directors, although such majority is less than a quorum; provided, however, that after filling any vacancy for any cause whatsoever two-thirds (2/3) of the entire Board of Directors shall have been elected by the stockholders of the Corporation. A director elected under any circumstance shall be elected to hold office until his successor is elected and qualified, or until such director's earlier death, resignation, retirement or removal.
SECTION 2. When Stockholder Meeting Required. If at any time less than a majority of the directors holding office were elected by the stockholders of the Corporation, the directors or the President or Secretary shall cause a meeting of stockholders to be held as soon as possible and, in any event, within sixty (60) days, unless extended by order of the Securities and Exchange Commission, for the purpose of electing directors to fill any vacancy.
SECTION 3. Regular Meetings. Regular meetings of the Board of Directors may be held at such time and place as shall be determined from time to time by agreement or fixed by resolution of the Board of Directors.
SECTION 4. Special Meetings. Special meetings of the Board of Directors may be called at any time by the Chairman of the Board or President and shall be called by the Secretary upon the written request of any two (2) directors.
SECTION 5. Notice of Meetings. Except as otherwise provided in these Bylaws, notice need not be given of regular meetings of the Board of Directors held at times fixed by agreement or resolution of the Board of Directors. Notice of special meetings of the Board of Directors, stating the place, date and time thereof, shall be given not less than two (2) days before such meeting to each director. Notice to a director may be given personally, by telegram, cable or wireless, by telephone, by mail, or by leaving such notice at his place of residence or usual place of business. If mailed, such notice shall be deemed to be given when deposited in the United States mail, postage prepaid, directed to the director at his address as it appears on the records of the Corporation. Meetings may be held at any time without notice if all the directors are present, or if those not present waive notice of the meeting in writing. If the President shall determine in advance that a quorum would not be present on the date set for any regular or special meeting, such meeting may be held at such later date, time and place as he shall determine, upon at least twenty-four (24) hours' notice.
SECTION 6. Quorum. A majority of the directors then in office, at a meeting duly assembled, but not less than one-third of the entire Board of Directors nor in any event less than two directors, shall constitute a quorum for the transaction of business. The vote of a majority of directors present at a meeting at which a quorum is present shall be the act of the Board of Directors, except as may be otherwise specifically provided by statute or by the Articles of Incorporation or by these Bylaws. If at any meeting of the Board of Directors, there shall be less than a quorum present, a majority of those present may adjourn the meeting, without further notice, from time to time until a quorum shall have been obtained.
SECTION 7. Removal. At any meeting of stockholders, duly called and at which a quorum is present, the stockholders may, by the affirmative vote of the holders of a majority of the votes entitled to be cast thereon, remove any director or directors from office and may elect a successor or successors to fill any resulting vacancies.
SECTION 8. Committees. The Board of Directors, may, by resolution adopted by a majority of the entire Board of Directors, from time to time appoint from among its members one or more committees as it may determine. Each committee appointed by the Board of Directors shall be composed of two (2) or more directors and may, to the extent provided in such resolution, have and exercise all the powers of the Board of Directors, except the power to declare dividends, to issue stock or to recommend to stockholders any action requiring stockholder approval. Each such committee shall serve at the pleasure of the Board of Directors. Each such committee shall keep a record of its proceedings and shall adopt its own rules of procedure. It shall make reports as may be required by the Board of Directors.
A quorum of any committee shall consist of one-third of its members unless the committee is comprised of two or three members, in which event a quorum shall consist of two members. If a Pricing Committee is appointed and a member of such committee is absent from a committee meeting, the remainder of the committee (although not constituting a quorum) may appoint another director to act in place of the absent member.
ARTICLE III
OFFICERS AND CHAIRMAN OF THE BOARD OF DIRECTORS
SECTION 1. Offices. The elected officers of the Corporation shall be the President, the Secretary and the Treasurer, and may also include one or more Vice Presidents, one or more Assistant Secretaries, one or more Assistant Treasurers and such other officers as the Board of Directors may determine. Any two or more offices may be held by the same person, except that no person may hold both the office of President and the office of Vice President. A person who holds more than one office in the Corporation shall not act in more than one capacity to execute, acknowledge or verify an instrument required by law to be executed, acknowledged or verified by more than one officer.
SECTION 2. Selection, Term of Office and Vacancies. The initial officers of the Corporation shall be elected by the Board of Directors at the first meeting of the Board of Directors. Additional officers may be elected at any regular or special meeting of the Board of Directors. Each officer shall serve at the pleasure of the Board of Directors or until his earlier death, resignation or retirement. If any office becomes vacant, the vacancy shall be filled by the Board of Directors.
SECTION 3. Chairman of the Board. The Board of Directors may elect one of its members as Chairman of the Board. Except as otherwise provided in these Bylaws, in the event the Board of Directors elects a Chairman of the Board of Directors, he shall preside at all meetings of the stockholders and the Board of Directors and shall perform such other duties as from time to time may be assigned to him by the Board of Directors. The Chairman of the Board of Directors will under no circumstances be deemed to be an "officer" of the Corporation, and an individual serving as Chairman of the Board of Directors will not be deemed to be an "affiliated person" with respect to the Corporation (under the Investment Company Act of 1940, as amended) solely by virtue of such person's position as Chairman of the Board of Directors of the Corporation.
SECTION 4. President. The president shall be the chair executive officer of the Corporation and shall perform such other duties as from time to time may be assigned to him by the Board of Directors. He shall perform the duties of the Chairman of the Board of Directors in the event there is no Chairman or in the event the Chairman is absent.
SECTION 5. Vice Presidents. A Vice President shall perform such duties as may be assigned by the President or the Board of Directors. In the absence of the President and in accordance with such order of priority as may be established by the Board of Directors, he may perform the duties of the President, and when so acting, shall have all the powers of and be subject to all the restrictions upon the President.
SECTION 6. Secretary. The Secretary shall (a) keep the minutes of the stockholders' and Board of Directors' meetings in one or more books provided for that purpose, and shall perform like duties for committees when requested, (b) see that all notices are duly given in accordance with the provisions of these Bylaws or as required by law, (c) be custodian of the corporate records and of the seal of the Corporation and see that the seal of the Corporation is affixed to all documents the execution of which on behalf of the Corporation under its seal is duly authorized or required by law, and (d) in general perform all duties incident to the office of Secretary and such other duties as may be assigned by the President or the Board of Directors.
SECTION 7. Assistant Secretaries. One or more Assistant Secretaries may be elected by the Board of Directors or appointed by the President. In the absence of the Secretary and in accordance with such order as may be established by the Board of Directors, an Assistant Secretary shall have the power to perform his duties including the certification, execution and attestation of corporate records and corporate instruments. Assistant Secretaries shall perform such other duties as may be assigned to them by the President or the Board of Directors.
SECTION 8. Treasurer. The Treasurer (a) shall be the principal financial officer of the Corporation, (b) shall see that all funds and securities of the Corporation are held by the custodian of the Corporation's assets, and (c) shall be the principal accounting officer of the Corporation.
SECTION 9. Assistant Treasurers. One or more Assistant Treasurers may be elected by the Board of Directors or appointed by the President. In the absence of the Treasurer and in accordance with such order as may be established by the Board of Directors, an Assistant Treasurer shall have the power to perform his duties. Assistant Treasurers shall perform such other duties as may be assigned to them by the President or the Board of Directors.
SECTION 10. Other Officers. The Board of Directors may appoint or may authorize the Chairman of the Board or the President to appoint such other officers and agents as the appointer may deem necessary and proper, who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the appointer.
SECTION 11. Bond. If required by the Board of Directors, the Treasurer and such other directors, officers, employees and agents of the Corporation as the Board of Directors may specify, shall give the Corporation a bond in such amount, in such form and with such security, surety or sureties, as may be satisfactory to the Board of Directors, conditioned on the faithful performance of the duties of their office and for the restoration to the Corporation, in case of their death, resignation, or removal from their office of all books, papers, vouchers, monies, securities and property of whatever kind in their possession belonging to the Corporation. All premiums on such bonds shall be paid by the Corporation.
SECTION 12. Removal. Any officer (or the Chairman of the Board of Directors) of the Corporation may be removed by the Board of Directors whenever, in its judgment, the best interests of the Corporation will be served thereby, but such removal shall be without prejudice to the contractual rights, if any, of the officer (or the Chairman of the Board of Directors) so removed.
ARTICLE IV
CAPITAL STOCK
SECTION 1. Stock Certificates. Certificates representing shares of stock of the Corporation shall be in such form consistent with the laws of the State of Maryland as shall be determined by the Board of Directors. All certificates for shares of stock shall be consecutively numbered or otherwise identified. The name and address of the person to whom the shares of stock represented thereby are issued, with the number of shares and date of issue, shall be entered on the stock transfer records of the Corporation.
SECTION 2. Redemption and Transfer. Any holder of stock of the Corporation desiring to redeem or transfer shares of stock standing in the name of such holder on the books of the Corporation shall deliver to the Corporation or to its agent duly authorized for such purpose a written unconditional request, in form acceptable to the Corporation, for such redemption or transfer. If certificates evidencing such shares have been issued, such certificates shall also be so delivered in transferable form duly endorsed or accompanied by all necessary stock transfer stamps or currency or certified or bank cashier's check payable to the order of the Corporation for the appropriate price thereof. The Corporation or its duly authorized agent may require that the signature of a redeeming stockholder on any or all of the request, endorsement or stock power be guaranteed and that other documentation in accordance with the custom of brokers be so delivered where appropriate, such as proof of capacity and power to make request or transfer. All documents and funds shall be deemed to have been delivered only when physically deposited at such office or other place of deposit as the Corporation or its duly authorized agent shall from time to time designate. At any time during which the right of redemption is suspended or payment for such shares is postponed pursuant to the Investment Company Act of 1940, as amended, or any rule, regulation or order thereunder, any stockholder may withdraw his request (and certificates and funds, if any) or may leave the same on deposit, in which case the redemption price shall be the net asset value next applicable after such suspension or postponement is terminated.
SECTION 3. Lost, Mutilated, Destroyed or Wrongfully Taken Certificates. Any person claiming a stock certificate to have been lost, mutilated, destroyed or wrongfully taken, and who requests the issuance of a new certificate before the Corporation has notice that the certificate alleged to have been lost, mutilated, destroyed or wrongfully taken has been acquired by a bona fide purchaser, shall make an affidavit of that fact and shall give the Corporation and its transfer agents and registrars a bond, with sufficient surety, to indemnify them against any loss or claim arising as a result of the issuance of a new certificate. The form and amount of such bond and the surety thereon shall in each case be deemed sufficient if satisfactory to the President or Treasurer of the Corporation.
ARTICLE V
GENERAL PROVISIONS
SECTION 1. Fiscal Year. The fiscal year of the Corporation shall be established by resolution of the Board of Directors.
SECTION 2. Amendments. These Bylaws may be altered, amended or repealed and new Bylaws may be adopted by a majority of the entire Board of Directors at any meeting of the Board of Directors.
SECTION 3. Names of Classes and Series of Shares. The names of the classes and series of shares which have been classified by the Corporation in its Articles of Incorporation and in Articles Supplementary shall be as follows:
Designation of Shares in Articles of Incorporation or Articles Supplementary Name of Class or Series ------------------------- ----------------------- Class B Common Shares ......................... Fixed Income Fund, Class A Class B, Series 2 Common Shares..................... Fixed Income Fund, Class Y Class B, Series 3 Common Shares..................... Fixed Income Fund, Class B Class B, Series 4 Common Shares..................... Fixed Income Fund, Class C Class B, Series 5 Common Shares..................... Fixed Income Fund, Class S Class C Common Shares ......................... Intermediate Tax Free Fund, Class A Class C, Series 2 Common Shares..................... Intermediate Tax Free Fund, Class Y Class C, Series 3 Common Shares..................... Intermediate Tax Free Fund, Class B Class C, Series 4 Common Shares..................... Intermediate Tax Free Fund, Class C Class D Common Shares ......................... Large Cap Value Fund, Class A Class D, Series 2 Common Shares..................... Large Cap Value Fund, Class Y Class D, Series 3 Common Shares..................... Large Cap Value Fund, Class B Class D, Series 4 Common Shares..................... Large Cap Value Fund, Class C Class D, Series 5 Common Shares..................... Large Cap Value Fund, Class S Class E Common Shares ......................... Mid Cap Value Fund, Class A Class E, Series 2 Common Shares..................... Mid Cap Value Fund, Class Y Class E, Series 3 Common Shares..................... Mid Cap Value Fund, Class B Class E, Series 4 Common Shares..................... Mid Cap Value Fund, Class C Class E, Series 5 Common Shares..................... Mid Cap Value Fund, Class S Class G Common Shares ......................... Balanced Fund, Class A Class G, Series 2 Common Shares..................... Balanced Fund, Class Y Class G, Series 3 Common Shares..................... Balanced Fund, Class B Class G, Series 4 Common Shares..................... Balanced Fund, Class C Class G, Series 5 Common Shares..................... Balanced Fund, Class S Class H Common Shares ......................... Equity Index Fund, Class A Class H, Series 2 Common Shares..................... Equity Index Fund, Class Y Class H, Series 3 Common Shares..................... Equity Index Fund, Class B Class H, Series 4 Common Shares..................... Equity Index Fund, Class C Class H, Series 5 Common Shares..................... Equity Index Fund, Class S Class I Common Shares ......................... Intermediate Term Bond Fund, Class A Class I, Series 2 Common Shares..................... Intermediate Term Bond Fund, Class Y Class I, Series 3 Common Shares..................... Intermediate Term Bond Fund, Class B Class I, Series 4 Common Shares..................... Intermediate Term Bond Fund, Class C Class I, Series 5 Common Shares..................... Intermediate Term Bond Fund, Class S Class J Common Shares ......................... Short Term Bond Fund, Class A Class J, Series 2 Common Shares..................... Short Term Bond Fund, Class Y Class J, Series 3 Common Shares..................... Short Term Bond Fund, Class B Class J, Series 4 Common Shares..................... Short Term Bond Fund, Class C Class J, Series 5 Common Shares..................... Short Term Bond Fund, Class S Class M Common Shares ......................... Minnesota Intermediate Tax Free Fund, Class A Class M, Series 2 Common Shares..................... Minnesota Intermediate Tax Free Fund, Class Y Class M, Series 3 Common Shares..................... Minnesota Intermediate Tax Free Fund, Class B Class M, Series 4 Common Shares..................... Minnesota Intermediate Tax Free Fund, Class C Class N Common Shares ......................... Colorado Intermediate Tax Free Fund, Class A Class N, Series 2 Common Shares..................... Colorado Intermediate Tax Free Fund, Class Y Class N, Series 3 Common Shares..................... Colorado Intermediate Tax Free Fund, Class B Class N, Series 4 Common Shares..................... Colorado Intermediate Tax Free Fund, Class C Class O Common Shares ......................... Small Cap Growth Fund, Class A Class O, Series 2 Common Shares..................... Small Cap Growth Fund, Class Y Class O, Series 3 Common Shares..................... Small Cap Growth Fund, Class B Class O, Series 4 Common Shares..................... Small Cap Growth Fund, Class C Class O, Series 5 Common Shares..................... Small Cap Growth Fund, Class S |
Class P Common Shares ......................... Technology Fund, Class A Class P, Series 2 Common Shares..................... Technology Fund, Class Y Class P, Series 3 Common Shares..................... Technology Fund, Class B Class P, Series 4 Common Shares..................... Technology Fund, Class C Class P, Series 5 Common Shares..................... Technology Fund, Class S Class Q Common Shares ......................... International Fund, Class A Class Q, Series 2 Common Shares..................... International Fund, Class Y Class Q, Series 3 Common Shares..................... International Fund, Class B Class Q, Series 4 Common Shares..................... International Fund, Class C Class Q, Series 5 Common Shares..................... International Fund, Class S Class S Common Shares ......................... Large Cap Growth Fund, Class A Class S, Series 2 Common Shares..................... Large Cap Growth Fund, Class B Class S, Series 3 Common Shares..................... Large Cap Growth Fund, Class Y Class S, Series 4 Common Shares..................... Large Cap Growth Fund, Class C Class S, Series 5 Common Shares..................... Large Cap Growth Fund, Class S Class T Common Shares ......................... Equity Income Fund, Class A Class T, Series 2 Common Shares..................... Equity Income Fund, Class B Class T, Series 3 Common Shares..................... Equity Income Fund, Class Y Class T, Series 4 Common Shares..................... Equity Income Fund, Class C Class T, Series 5 Common Shares..................... Equity Income Fund, Class S Class V Common Shares ......................... Real Estate Securities Fund, Class A Class V, Series 2 Common Shares..................... Real Estate Securities Fund, Class B Class V, Series 3 Common Shares..................... Real Estate Securities Fund, Class Y Class V, Series 4 Common Shares..................... Real Estate Securities Fund, Class C Class V, Series 5 Common Shares..................... Real Estate Securities Fund, Class S Class W Common Shares ......................... Health Sciences Fund, Class A Class W, Series 2 Common Shares..................... Health Sciences Fund, Class B Class W, Series 3 Common Shares..................... Health Sciences Fund, Class Y Class W, Series 4 Common Shares..................... Health Sciences Fund, Class C Class W, Series 5 Common Shares..................... Health Sciences Fund, Class S Class X Common Shares ......................... Oregon Intermediate Tax Free Fund, Class Y Class X, Series 2 Common Shares..................... Oregon Intermediate Tax Free Fund, Class A Class X, Series 3 Common Shares..................... Oregon Intermediate Tax Free Fund, Class C Class Y Common Shares ......................... California Intermediate Tax Free Fund, Class A Class Y, Series 2 Common Shares..................... California Intermediate Tax Free Fund, Class Y Class Y, Series 3 Common Shares..................... California Intermediate Tax Free Fund, Class C Class AA Common Shares ......................... Small Cap Value Fund, Class A Class AA, Series 2 Common Shares.................... Small Cap Value Fund, Class B Class AA, Series 3 Common Shares.................... Small Cap Value Fund, Class Y Class AA, Series 4 Common Shares.................... Small Cap Value Fund, Class C Class AA, Series 5 Common Shares.................... Small Cap Value Fund, Class S Class DD Common Shares ......................... Tax Free Fund, Class A Class DD, Series 2 Common Shares.................... Tax Free Fund, Class B Class DD, Series 3 Common Shares.................... Tax Free Fund, Class Y Class DD, Series 4 Common Shares.................... Tax Free Fund, Class C Class EE Common Shares ......................... Minnesota Tax Free Fund, Class A Class EE, Series 2 Common Shares.................... Minnesota Tax Free Fund, Class B Class EE, Series 3 Common Shares.................... Minnesota Tax Free Fund, Class Y Class EE, Series 4 Common Shares.................... Minnesota Tax Free Fund, Class C Class FF Common Shares ......................... Mid Cap Growth Fund, Class A Class FF, Series 2 Common Shares.................... Mid Cap Growth Fund, Class B Class FF, Series 3 Common Shares.................... Mid Cap Growth Fund, Class Y Class FF, Series 4 Common Shares.................... Mid Cap Growth Fund, Class C Class FF, Series 5 Common Shares.................... Mid Cap Growth Fund, Class S Class GG Common Shares ......................... Emerging Markets Fund, Class A Class GG, Series 2 Common Shares.................... Emerging Markets Fund, Class B |
Class GG, Series 3 Common Shares.................... Emerging Markets Fund, Class Y Class GG, Series 4 Common Shares.................... Emerging Markets Fund, Class C Class GG, Series 5 Common Shares.................... Emerging Markets Fund, Class S Class HH Common Shares ......................... Strategic Income Fund, Class A Class HH, Series 2 Common Shares.................... Strategic Income Fund, Class B Class HH, Series 3 Common Shares.................... Strategic Income Fund, Class Y Class HH, Series 4 Common Shares.................... Strategic Income Fund, Class C Class HH, Series 5 Common Shares.................... Strategic Income Fund, Class S Class I I Common Shares ......................... California Tax Free Fund, Class A Class I I, Series 2 Common Shares................... California Tax Free Fund, Class C Class I I, Series 3 Common Shares................... California Tax Free Fund, Class Y Class JJ Common Shares ......................... Arizona Tax Free Fund, Class A Class JJ, Series 2 Common Shares.................... Arizona Tax Free Fund, Class C Class JJ, Series 3 Common Shares.................... Arizona Tax Free Fund, Class Y Class KK Common Shares ......................... Colorado Tax Free Fund, Class A Class KK, Series 2 Common Shares.................... Colorado Tax Free Fund, Class C Class KK, Series 3 Common Shares.................... Colorado Tax Free Fund, Class Y Class LL Common Shares ......................... Corporate Bond Fund, Class A Class LL, Series 2 Common Shares.................... Corporate Bond Fund, Class B Class LL, Series 3 Common Shares.................... Corporate Bond Fund, Class C Class LL, Series 4 Common Shares.................... Corporate Bond Fund, Class Y Class LL, Series 5 Common Shares.................... Corporate Bond Fund, Class S Class MM Common Shares ......................... Nebraska Tax Free Fund, Class A Class MM, Series 2 Common Shares.................... Nebraska Tax Free Fund, Class C Class MM, Series 3 Common Shares.................... Nebraska Tax Free Fund, Class Y Class NN Common Shares ......................... High Yield Bond Fund, Class A Class NN, Series 2 Common Shares.................... High Yield Bond Fund, Class B Class NN, Series 3 Common Shares.................... High Yield Bond Fund, Class C Class NN, Series 4 Common Shares.................... High Yield Bond Fund, Class Y Class NN, Series 5 Common Shares.................... High Yield Bond Fund, Class S Class OO Common Shares ......................... Capital Growth Fund, Class A Class OO, Series 2 Common Shares.................... Capital Growth Fund, Class B Class OO, Series 3 Common Shares.................... Capital Growth Fund, Class C Class OO, Series 4 Common Shares.................... Capital Growth Fund, Class Y Class OO, Series 5 Common Shares.................... Capital Growth Fund, Class S Class PP Common Shares ......................... Relative Value Fund, Class A Class PP, Series 2 Common Shares.................... Relative Value Fund, Class B Class PP, Series 3 Common Shares.................... Relative Value Fund, Class C Class PP, Series 4 Common Shares.................... Relative Value Fund, Class Y Class PP, Series 5 Common Shares.................... Relative Value Fund, Class S Class QQ Common Shares ......................... Large Cap Core Fund, Class A Class QQ, Series 2 Common Shares.................... Large Cap Core Fund, Class B Class QQ, Series 3 Common Shares.................... Large Cap Core Fund, Class C Class QQ, Series 4 Common Shares.................... Large Cap Core Fund, Class Y Class QQ, Series 5 Common Shares.................... Large Cap Core Fund, Class S Class RR Common Shares ......................... Growth & Income Fund, Class A Class RR, Series 2 Common Shares.................... Growth & Income Fund, Class B Class RR, Series 3 Common Shares.................... Growth & Income Fund, Class C Class RR, Series 4 Common Shares.................... Growth & Income Fund, Class Y Class RR, Series 5 Common Shares.................... Growth & Income Fund, Class S Class SS Common Shares ......................... Mid Cap Core Fund, Class A Class SS, Series 2 Common Shares.................... Mid Cap Core Fund, Class B Class SS, Series 3 Common Shares.................... Mid Cap Core Fund, Class C Class SS, Series 4 Common Shares.................... Mid Cap Core Fund, Class Y Class SS, Series 5 Common Shares.................... Mid Cap Core Fund, Class S Class TT Common Shares ......................... Micro Cap Fund, Class A |
Class TT, Series 2 Common Shares.................... Micro Cap Fund, Class B Class TT, Series 3 Common Shares.................... Micro Cap Fund, Class C Class TT, Series 4 Common Shares.................... Micro Cap Fund, Class Y Class TT, Series 5 Common Shares.................... Micro Cap Fund, Class S Class UU Common Shares ......................... Small Cap Core Fund, Class A Class UU, Series 2 Common Shares.................... Small Cap Core Fund, Class B Class UU, Series 3 Common Shares.................... Small Cap Core Fund, Class C Class UU, Series 4 Common Shares.................... Small Cap Core Fund, Class Y Class UU, Series 5 Common Shares.................... Small Cap Core Fund, Class S Class VV Common Shares ......................... Science & Technology Fund, Class A Class VV, Series 2 Common Shares.................... Science & Technology Fund, Class B Class VV, Series 3 Common Shares.................... Science & Technology Fund, Class C Class VV, Series 4 Common Shares.................... Science & Technology Fund, Class Y Class VV, Series 5 Common Shares.................... Science & Technology Fund, Class S Class WW Common Shares ......................... Mid Cap Index Fund, Class A Class WW, Series 2 Common Shares.................... Mid Cap Index Fund, Class B Class WW, Series 3 Common Shares.................... Mid Cap Index Fund, Class C Class WW, Series 4 Common Shares.................... Mid Cap Index Fund, Class Y Class WW, Series 5 Common Shares.................... Mid Cap Index Fund, Class S Class XX Common Shares ......................... Small Cap Index Fund, Class A Class XX, Series 2 Common Shares.................... Small Cap Index Fund, Class B Class XX, Series 3 Common Shares.................... Small Cap Index Fund, Class C Class XX, Series 4 Common Shares.................... Small Cap Index Fund, Class Y Class XX, Series 5 Common Shares.................... Small Cap Index Fund, Class S Class YY Common Shares ......................... Bond IMMDEX Fund, Class A Class YY, Series 2 Common Shares.................... Bond IMMDEX Fund, Class B Class YY, Series 3 Common Shares.................... Bond IMMDEX Fund, Class C Class YY, Series 4 Common Shares.................... Bond IMMDEX Fund, Class Y Class YY, Series 5 Common Shares.................... Bond IMMDEX Fund, Class S Class ZZ Common Shares ......................... U.S. Government Securities Fund, Class A Class ZZ, Series 2 Common Shares.................... U.S. Government Securities Fund, Class B Class ZZ, Series 3 Common Shares.................... U.S. Government Securities Fund, Class C Class ZZ, Series 4 Common Shares.................... U.S. Government Securities Fund, Class Y Class ZZ, Series 5 Common Shares.................... U.S. Government Securities Fund, Class S Class AAA Common Shares ......................... Missouri Tax Free Fund, Class A Class AAA, Series 2 Common Shares................... Missouri Tax Free Fund, Class B Class AAA, Series 3 Common Shares................... Missouri Tax Free Fund, Class C Class BBB Common Shares ......................... Ohio Tax Free Fund, Class A Class BBB, Series 2 Common Shares................... Ohio Tax Free Fund, Class C Class BBB, Series 3 Common Shares................... Ohio Tax Free Fund, Class Y |
EXHIBIT (d)(2)
FIRST AMERICAN INVESTMENT FUNDS, INC.
EXHIBIT A TO INVESTMENT ADVISORY AGREEMENT
EFFECTIVE MAY 2, 2001
(AS AMENDED FEBRUARY 21, 2002)
PORTFOLIO EFFECTIVE DATE
--------- --------------
Large Cap Value Fund April 2, 1991
Mid Cap Value Fund April 2, 1991
Fixed Income Fund April 2, 1991
Intermediate Tax Free Fund April 2, 1991
Intermediate Term Income Fund September 15, 1992
Equity Index Fund September 15, 1992
Limited Term Income Fund September 15, 1992
Balanced Fund September 15, 1992
Minnesota Intermediate Tax Free Fund December 31, 1993
Colorado Intermediate Tax Free Fund December 31, 1993
Small Cap Growth Fund December 31, 1993
Technology Fund December 31, 1993
International Fund December 31, 1993
Equity Income Fund January 31, 1994
Large Cap Growth Fund January 31, 1994
Real Estate Securities Fund June 12, 1995
Health Sciences Fund January 31, 1996
Oregon Intermediate Tax Free Fund August 5, 1997
California Intermediate Tax Free Fund August 5, 1997
Small Cap Value Fund November 21, 1997
Tax Free Fund July 24, 1998
Minnesota Tax Free Fund July 24, 1998
Mid Cap Growth Fund July 24, 1998
Emerging Markets Fund July 24, 1998
Strategic Income Fund July 24, 1998
California Tax Free Fund February 1, 2000
Arizona Tax Free Fund February 1, 2000
Colorado Tax Free Fund February 1, 2000
Corporate Bond Fund February 1, 2000
Nebraska Tax Free Fund February 28, 2001
High Yield Bond Fund February 28, 2001
Capital Growth Fund May 2, 2001
Relative Value Fund May 2, 2001
Large Cap Core Fund May 2, 2001
Growth & Income Fund May 2, 2001
Mid Cap Core Fund May 2, 2001
Micro Cap Fund May 2, 2001
Small Cap Core Fund May 2, 2001
|
Science & Technology Fund May 2, 2001 Mid Cap Index Fund May 2, 2001 Small Cap Index Fund May 2, 2001 Bond IMMDEX Fund May 2, 2001 U.S. Government Securities Fund May 2, 2001 Missouri Tax Free Fund May 2, 2001 Ohio Tax Free Fund February 21, 2002 |
ANNUAL ADVISORY FEE
AS A PERCENTAGE OF
PORTFOLIO AVERAGE DAILY NET ASSETS AVERAGE DAILY NET ASSETS
--------- ------------------------ ------------------------
Large Cap Value Fund On All Assets .65%
Mid Cap Value Fund On All Assets .70%
Fixed Income Fund On All Assets .50%
Intermediate Tax Free Fund On All Assets .50%
Intermediate Term Income Fund On All Assets .50%
Equity Index Fund On All Assets .25%
Limited Term Income Fund On All Assets .50%
Balanced Fund On All Assets .65%
Minnesota Intermediate Tax Free
Fund On All Assets .50%
Colorado Intermediate Tax Free Fund On All Assets .50%
Small Cap Growth Fund On All Assets .70%
Technology Fund On All Assets .70%
International Fund On All Assets 1.10%
Equity Income Fund On All Assets .65%
Large Cap Growth Fund On All Assets .65%
Real Estate Securities Fund On All Assets .70%
Health Sciences Fund On All Assets .70%
Oregon Intermediate Tax Free Fund On All Assets .50%
California Intermediate Tax Free
Fund On All Assets .50%
Small Cap Value Fund On All Assets .70%
Tax Free Fund On All Assets .50%
Minnesota Tax Free Fund On All Assets .50%
Mid Cap Growth Fund On All Assets .70%
Emerging Markets Fund On All Assets 1.15%
Strategic Income Fund On All Assets .70%
California Tax Free Fund On All Assets .50%
Arizona Tax Free Fund On All Assets .50%
Colorado Tax Free Fund On All Assets .50%
Corporate Bond Fund On All Assets .70%
Nebraska Tax Free Fund On All Assets .50%
High Yield Bond Fund On All Assets .70%
Capital Growth Fund On All Assets .65%
Relative Value Fund On All Assets .65%
Large Cap Core Fund On All Assets .65%
Growth & Income Fund On All Assets .65%
Mid Cap Core Fund On All Assets .70%
Micro Cap Fund On All Assets 1.40%
Small Cap Core Fund On All Assets .70%
Science & Technology Fund On All Assets .70%
Mid Cap Index Fund On All Assets .25%
Small Cap Index Fund On All Assets .40%
Bond IMMDEX Fund On All Assets .30%
|
U.S. Government Securities Fund On All Assets .50% Missouri Tax Free Fund On All Assets .50% Ohio Tax Free Fund On All Assets .50% |
EXHIBIT (g)(8)
FIRST AMERICAN INVESTMENT FUNDS, INC.
COMPENSATION AGREEMENT DATED AS OF FEBRUARY 21, 2002
PURSUANT TO CUSTODIAN AGREEMENT
WHEREAS, First American Investment Funds, Inc., a Maryland corporations (hereinafter called the "Fund"), and First Trust National Association, a national banking association organized and existing under the laws of the United States of America, previously entered into that Custodian Agreement dated September 20, 1993 (the "Custodian Agreement"); and
WHEREAS, First Trust National Association, with the consent of the Fund, assigned its rights and obligations under the Custodian Agreement to U.S. Bank National Association, a national banking association organized and existing under the laws of the United States of America (the "Custodian") by an Assignment and Assumption Agreement dated as of May 1,1998; and
WHEREAS, article 12 of the Custodian Agreement provides that the Custodian shall be paid compensation at such rates and at such times as may from time to time be agreed on in writing by the parties thereto; and
WHEREAS, the Fund and the Custodian previously entered into and subsequently amended the Compensation Agreement; and
WHEREAS, the Fund and the Custodian wish to further amend such compensation agreement in order to add provisions thereto relating to certain new funds.
NOW, THEREFORE, the Fund and the Custodian agree as follows:
1. The compensation payable to the Custodian pursuant to the Custodian Agreement with respect to the respective series of the Fund shall be payable monthly at the following annual rates as percentages of the respective series' average daily net assets: Large Cap Value Fund, Equity Index Fund, Balanced Fund, Mid Cap Value Fund, Short Term Fund, Intermediate Term Bond Fund, Fixed Income Fund, Health Sciences Fund, Real Estate Securities Fund, Equity Income Fund, Large Cap Growth Fund, Small Cap Growth Fund, Technology Fund, Intermediate Tax Free Fund, Minnesota Intermediate Tax Free Fund, Colorado Intermediate Tax Free Fund, Oregon Intermediate Tax Free Fund, California Intermediate Tax Free Fund, Small Cap Value Fund, Tax Free Fund, Minnesota Tax Free Fund, Mid Cap Growth Fund, Strategic Income Fund, California Tax Free Fund, Arizona Tax Free Fund, Colorado Tax Free Fund, Corporate Bond Fund, Nebraska Tax Free Fund High Yield Bond Fund, International Fund,
Emerging Markets Fund, Capital Growth Fund, Relative Value Fund, Large Cap Core Fund, Growth & Income Fund, Mid Cap Core Fund, Micro Cap Fund, Small Cap Core Fund, Science & Technology Fund, Mid Cap Index Fund, Small Cap Index Fund, Bond IMMDEX Fund, U.S. Government Securities Fund, Missouri Tax Free Fund, and Ohio Tax Free Fund of 0.01%. The Custodian shall pay sub-custodian fees with respect to those funds which are authorized to utilize foreign sub-custodians out of the compensation payable to the Custodian with respect to such funds as set forth above. The Fund shall reimburse the Custodian for all other out-of-pocket expenses incurred by the Custodian in connection with the performance of the Custodian's services under the Custodian Agreement.
2. This Compensation Agreement restates and supersedes all prior compensation agreements pursuant to Article 12 of the Custodian Agreement.
IN WITNESS WHEREOF, the Fund and the Custodian have caused this instrument to be executed in duplicate as of the date first above written by their duly authorized officers.
FIRST AMERICAN INVESTMENT FUNDS, INC.
By: /s/ Jeff Wilson Its: Vice President |
U.S. BANK NATIONAL ASSOCIATION
By: /s/ Marsha Croxton Its: Senior Vice President |
EXHIBIT (i)(7)
DORSEY & WHITNEY LLP
MINNEAPOLIS PILLSBURY CENTER SOUTH BRUSSELS
NEW YORK 50 SOUTH SIXTH STREET COSTA MESA
SEATTLE SUITE 1500 BILLINGS
DENVER MINNEAPOLIS, MINNESOTA 55402-1498 FARGO
WASHINGTON, D.C. TELEPHONE: (612) 340-2600 HONG KONG
NORTHERN VIRGINIA FAX: (612) 340-2868 GREAT FALLS
DES MOINES www.dorseylaw.com ROCHESTER
LONDON TOKYO
ANCHORAGE MISSOULA
SALT LAKE CITY VANCOUVER
SHANGHAI
|
February 29, 2002
First American Investment Funds, Inc.
800 Nicollet Mall
Minneapolis, Minnesota 55402
Ladies and Gentlemen:
We have acted as counsel to First American Investment Funds, Inc., a Maryland corporation (the "Company"), in rendering the opinion hereinafter set forth with respect to the authorization of the following classes and series of the Company's common shares, par value $0.001 per share, which are also known by the names set forth opposite their respective class and series designations:
Class and Series Name ---------------- ---- Class BBB Ohio Tax Free Fund, Class A Class BBB, Series 2 Ohio Tax Free Fund, Class C Class BBB, Series 3 Ohio Tax Free Fund, Class Y |
The shares of the Company referred to above are referred to herein collectively as the "Shares."
We understand that the Shares are being registered under the Securities Act of 1933, as amended, and the Investment Company Act of 1940, as amended, pursuant to the Company's Registration Statement on Form N-1A relating to such shares (the "Registration Statement"). In rendering the opinion hereinafter expressed, we have reviewed the corporate proceedings taken by the Company in connection with the authorization and issuance of the Shares, and we have reviewed such questions of law and examined copies of such corporate records of the Company, certificates of public officials and of responsible officers of the Company, and other documents as we have deemed necessary as a basis for such opinion. As to the various matters of fact material to such opinion, we have, when such facts were not independently established, relied to the extent we deemed proper on certificates of public officials and of
responsible officers of the Company. In connection with such review and examination, we have assumed that all copies of documents provided to us conform to the originals and that all signatures are genuine.
In addition, in rendering the opinion hereinafter expressed, we have assumed, with the concurrence of the Company, that all of the Shares will be issued and sold upon the terms and in the manner set forth in the Registration Statement; that the Company will not issue Shares in excess of the numbers authorized in the Company's amended and restated articles of incorporation as in effect at the respective dates of issuance; and that the Company will maintain its corporate existence and good standing under the laws of the State of Maryland in effect at all times after the date of this opinion.
Based on the foregoing, it is our opinion that the Shares issued from and after the date hereof, when issued and delivered by the Company as described in the Registration Statement, will be legally issued and fully paid and non-assessable.
In rendering the foregoing opinion, we express no opinion as to the laws of any jurisdiction other than the State of Maryland. We hereby consent to the filing of this opinion letter as an exhibit to the Registration Statement.
Very truly yours,
/s/ Dorsey & Whitney LLP
JDA/cmq
|
EXHIBIT (n)(2)
FIRST AMERICAN INVESTMENT FUNDS, INC.
Multiple Class Plan Pursuant to Rule 18f-3
Each of the funds listed below (each a "Fund," and collectively the "Funds"), each a portfolio of First American Investment Funds, Inc. (the "Company"), has elected to rely on Rule 18f-3 under the Investment Company Act of 1940, as amended (the "1940 Act") in offering multiple classes of shares in each Fund:
Equity Index Fund Mid Cap Index Fund Small Cap Index Fund Emerging Markets Fund International Fund Health Sciences Fund Real Estate Securities Fund Science & Technology Fund Technology Fund Micro Cap Fund Small Cap Growth Fund Small Cap Value Fund Small Cap Core Fund Mid Cap Growth Fund Mid Cap Value Fund Mid Cap Core Fund Capital Growth Fund Large Cap Growth Fund Relative Value Fund Large Cap Value Large Cap Core Fund Growth & Income Fund Balanced Fund Equity Income Fund Bond IMMDEX Fund U.S. Government Securities Fund Strategic Income Fund Corporate Bond Fund Fixed Income Fund High Yield Fund Intermediate Term Bond Fund Short Term Bond Fund Tax Free Fund Arizona Tax Free Fund California Tax Free Fund Colorado Tax Free Fund Minnesota Tax Free Fund Nebraska Tax Free Fund Missouri Tax Free Bond Fund California Intermediate Tax Free Fund Colorado Intermediate Tax Free Fund Intermediate Tax Free Fund Minnesota Intermediate Tax Free Fund Oregon Intermediate Tax Free Fund Ohio Tax Free Fund |
This Plan sets forth the differences among classes of shares of the Funds, including distribution arrangements, shareholder services, expense allocations, conversion and exchange options, and voting rights.
A. Retail Classes Prospectuses of the respective Funds in the forms most recently filed with the Securities and Exchange Commission (the "SEC") prior to the date of this Plan as amended (with respect to the Class A, Class B and Class C shares of each Fund).
B. Class S Prospectus of the respective Funds in the forms most recently filed with the Securities and Exchange Commission (the "SEC") prior to the date of this Plan as amended (with respect to the Class S shares of each Fund).
C. Institutional Class Prospectus of the respective Funds in the forms most recently filed with the Securities and Exchange Commission (the "SEC") prior to the date of this Plan as amended (with respect to the Class Y shares of each Fund).
D. Statements of Additional Information of the respective Funds in the forms most recently filed with the SEC prior to the date of this Plan as amended (with respect to each Fund).
E. Class A Plan of Distribution in the form approved by the Board of Directors on June 1, 2001 (with respect to the Class A shares of each Fund).
F. Class B Plan of Distribution in the form approved by the Board of Directors on June 1, 2001 (with respect to the Class B shares of each Fund).
G. Class B Service Plan in the form approved by the Board of Directors on June 1, 2001 (with respect to the Class B shares of each Fund).
H. Class C Plan of Distribution in the form approved by the Board of Directors on June 1, 2001 (with respect to the Class C shares of each Fund).
I. Class C Service Plan in the form approved by the Board of Directors on June 1, 2001 (with respect to the Class C shares of each Fund).
J. Class S Service Plan in the form approved by the Board of Directors on June 1, 2001 (with respect to the Class S shares of each Fund).
K. Co-Administration Agreement in the form approved by the Board of Directors on June 1, 2001 (with respect to each class of shares of each Fund).
Expenses of such existing classes of the Funds shall continue to be allocated in the manner set forth in III below. Each such existing class shall have exclusive voting rights on any matter submitted to shareholders that relates solely to its arrangement and shall have separate voting rights on any matter submitted to shareholders in which the interests of one class differ from the interests of any other class.
A. Distribution fees and service fees relating to the respective classes of shares, as set forth in the materials referred to in II above, shall be borne exclusively by the classes of shares to which they relate.
B. Except as set forth in A above, expenses of the Funds shall be borne at the Fund level and shall not be allocated on a class basis.
Unless and until this Plan is amended to provide otherwise, the methodology and procedures for allocating income, realized gains and losses, unrealized appreciation and depreciation, and Fundwide Expenses shall be based on the net assets of each class in relation to the net assets of the company ("relative net assets") as set forth in Rule 18f-3(c)(1)(i).
The foregoing allocations shall in all cases be made in a manner consistent with Revenue Procedure 96-47 (Internal Revenue Code, Section 562) of the Internal Revenue Service.
A. New Funds and New Classes. With respect to any new portfolio of the Company created after the date of this Plan and any new class of shares of the existing Funds created after the date of this Plan, the Board of Directors of the Company shall approve amendments to this Plan setting forth the attributes of the classes of shares of such new portfolio or of such new class of shares.
B. Material Amendments and Periodic Reviews. The Board of Directors of the Company, including a majority of the independent directors, shall periodically review this Plan for its continued appropriateness and shall approve any material amendment of this Plan as it relates to any class of any Fund covered by this Plan.