Form 485BPOS FIRST AMERICAN FUNDS
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1933 Act Registration No. 002-74747
1940 Act Registration No. 811-03313
As filed with the Securities and Exchange Commission on July 18, 2016
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
| Pre-Effective Amendment No. | [ ] | |
| Post-Effective Amendment No. 84 | [X] |
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY
ACT OF 1940
| Amendment No. 84 | [X] |
FIRST AMERICAN FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
800 Nicollet Mall
Minneapolis, Minnesota 55402
(Address of Principal Executive Offices) (Zip Code)
(612) 303-7987
(Registrant’s Telephone Number, including Area Code)
Richard J. Ertel
U.S. Bancorp Asset Management, Inc.
800 Nicollet Mall, BC-MN-H04N
Minneapolis, Minnesota 55402-7020
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box):
| [X] | immediately upon filing pursuant to paragraph (b) of Rule 485 | |
| [ ] | on (date) 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 |
| Table of | |
| Contents |
Please find First American Funds’ Privacy Policy inside the back cover of this Prospectus.
This prospectus and the related Statement of Additional Information (SAI) do not constitute an offer to sell or a solicitation of an offer to buy shares in the funds, 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.
The funds may be offered only to persons in the United States. This prospectus should not be considered a solicitation or offering of fund shares outside the United States.
Investment Objective
Retail Prime Obligations Fund’s objective is to seek maximum current income to the extent consistent with the preservation of capital and maintenance of liquidity.
Fees and Expenses
The following tables describe the fees and expenses that you may pay if you buy and hold shares of the fund.
| Shareholder
Fees (fees paid directly from your investment) |
Class A | |
| Maximum Sales Charge (Load) | None | |
| Maximum Deferred Sales Charge (Load) | None | |
| Annual Low Balance Account Fee (for accounts under $2,500) | $15 | |
| Annual Fund Operating
Expenses (expenses that you pay each year as a percentage of the value of your investment) |
||
| Management Fees | 0.10% | |
| Distribution and/or Service (12b-1) Fees | 0.25% | |
| Other Expenses: | ||
| Shareholder Servicing Fee | 0.25% | |
| Miscellaneous1 | 0.24% | |
| Total Annual Fund Operating Expenses | 0.84% | |
| Less Fee Waivers2 | (0.09)% | |
| Net Expenses2 | 0.75% |
| 1 | Miscellaneous expenses are based on estimated amounts for the fund’s first fiscal year of operations. | |
| 2 | The advisor has contractually agreed to waive fees and reimburse other fund expenses through July 18, 2017, so that total annual fund operating expenses, after waivers, do not exceed 0.75%. These fee waivers and expense reimbursements may be terminated at any time after July 18, 2017 at the discretion of the advisor. Prior to that time, such waivers and reimbursements may not be terminated without the approval of the fund’s board of directors. |
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. The example assumes that you invest $10,000 in the fund for the time periods indicated . The example also assumes that your investment has a 5% return each year and the fund’s operating expenses remain the same. You would incur these hypothetical expenses whether or not you redeem your investment at the end of the given period. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
| Class A | ||
| 1 year | $ 77 | |
| 3 years | $259 |
| 1 | Prospectus – | First
American Money Market Funds Class A Shares |
Fund Summary
Retail Prime Obligations Fund continued
Principal Investment Strategies
Retail Prime Obligations Fund invests in high-quality short-term debt obligations, including:
| · | commercial paper; |
| · | U.S. dollar-denominated obligations of domestic and foreign banks with total assets of at least $500 million (including fixed and variable rate certificates of deposit, time deposits, and bankers’ acceptances); |
| · | non-convertible corporate debt securities; |
| · | securities issued by the U.S. government or one of its agencies or instrumentalities; |
| · | municipal securities, including variable rate demand notes, commercial paper, and municipal notes and other short-term municipal obligations; |
| · | loan participation interests; and |
| · | repurchase agreements. |
The fund may invest more than 25% of its total assets in obligations of U.S. banks.
Under normal market conditions, portfolio managers will only purchase (and hold) securities in the fund if they are rated in the top short-term rating category, for example, a rating of A-1 or a rating of Prime-1. If the rating of a security is reduced below the top short-term rating category after purchase, portfolio managers will make every attempt to sell the security, unless they have determined that it would not be in the best interest of the fund to dispose of the security at that time and, where necessary, have obtained the approval of the fund’s board of directors to continue to hold the security.
Principal Risks
You could lose money by investing in the fund. Although the fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. The fund may impose a fee upon sale of your shares or may temporarily suspend your ability to sell shares if the fund’s liquidity falls below required minimums because of market conditions or other factors. 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. The advisor or its affiliates have no legal obligation to provide financial support to the fund, and you should not expect that the advisor will provide financial support to the fund at any time.
Principal risks of investing in this fund include:
Banking Industry Risk — An adverse development in the banking industry (domestic or foreign) may affect the value of the fund’s investments more than if the fund was not invested to such a degree in the banking industry. Banks may be particularly susceptible to certain economic factors such as interest rate changes, adverse developments in the real estate market, fiscal, regulatory and monetary policy and general economic cycles.
Credit Risk — The value of your investment might decline if the issuer of an obligation held by the fund defaults on the obligation or has its credit rating downgraded.
Cybersecurity Risk — The fund may be subject to operational and informational security risks resulting from breaches in cybersecurity at the fund, the fund’s affiliates or service providers. A cybersecurity breach at an issuer of securities in which the fund invests may cause such securities to lose value.
| 2 | Prospectus – | First
American Money Market Funds Class A Shares |
Fund Summary
Retail Prime Obligations Fund continued
Foreign Security Risk — Securities of foreign issuers, even when dollar denominated and publicly traded in the United States, may involve risks not associated with the securities of domestic issuers.
Income Risk — The level of income you receive from the fund will be affected by movements in short-term interest rates.
Interest Rate Risk — The value of your investment might decline because of a sharp rise in interest rates that causes the value of the fund’s portfolio holdings to fall.
Liquidity Risk — The fund may not be able to sell a security in a timely manner or at a desired price, or may be unable to sell the security at all, because of a lack of demand in the market for the security, or a liquidity provider defaults on its obligation to purchase the security when properly tendered by the fund.
Municipal Security Risk — The value of municipal securities owned by the fund may be adversely affected by future changes in federal income tax laws, including rate reductions or the imposition of a flat tax, and adverse changes in the financial conditions of municipal securities issuers.
Redemption Risk — If there are unexpectedly high redemptions of fund shares, the fund might have to sell portfolio securities prior to their maturity, possibly at a loss.
Regulatory Risk — In July 2014, the Securities and Exchange Commission (SEC) adopted reforms to money market fund regulation. As the reforms are implemented through October 2016, they could affect the fund’s operations and return potential. The reforms will, among other things, permit the fund to impose a liquidity fee or redemption gate under certain circumstances effective October 14, 2016. In addition, changes to monetary policy by the Federal Reserve or other regulatory actions may impact the fund’s operations, universe of potential investment options, and return potential.
Repurchase Agreement Risk — If the seller of a repurchase agreement defaults on its obligation to repurchase securities from the fund, the fund may incur costs in disposing of the securities purchased and may experience losses if the proceeds from the sale of the securities are less than the full repurchase price.
Variable Rate Demand Note (VRDN) Risk — Investments in VRDNs involve credit risk with respect to the issuer or financial institution providing the fund with the credit and liquidity support for the unconditional put option.
| 3 | Prospectus – | First
American Money Market Funds Class A Shares |
Fund Summary
Retail Prime Obligations Fund continued
Fund Performance
Because the fund had not yet commenced operations as of the date of this prospectus, there is no performance information to present for the fund.
Investment Advisor
U.S. Bancorp Asset Management, Inc.
Other Information
For important information about the purchase and sale of fund shares, tax information, and financial intermediary compensation, please see “Additional Summary Information” on page 5 of the prospectus.
| 4 | Prospectus – | First
American Money Market Funds Class A Shares |
Additional Summary Information
Purchase and Sale of Fund Shares
Investments in the fund are limited to accounts beneficially owned by natural persons. You may purchase or redeem shares of the fund on any business day. You can become a shareholder in the fund by making a minimum initial investment of $2,500. The minimum additional investment is $100. The fund reserves the right to waive or lower purchase minimums under certain circumstances and to reject any purchase order or to stop offering shares for sale at any time.
You can redeem shares through your financial intermediary or by contacting the fund at:
| Phone | Regular Mail | Overnight Express Mail | ||
| 800-677-3863 | First American Funds P.O. Box 701 Milwaukee, WI 53201-0701 |
First American Funds 615 East Michigan Street Milwaukee, WI 53202 |
Tax Information
Dividends you receive from the fund are generally taxable as ordinary income. Dividends attributable to income from U.S. government securities may be exempt from state personal income taxes.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase the fund through a broker-dealer or other financial intermediary (such as a bank), the fund and its related companies may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
| 5 | Prospectus – | First
American Money Market Funds Class A Shares |
The investment objective of the fund is to seek maximum current income to the extent consistent with the preservation of capital and maintenance of liquidity. The fund’s investment objective may be changed without shareholder approval. Please remember, there is no guarantee that the fund will achieve its objective.
Principal Investment Strategies
The fund’s principal investment strategies are discussed below. These are the strategies that the fund’s investment advisor believes are most likely to be important in trying to achieve the fund’s objectives. 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 SAI. For a copy of the SAI, call Investor Services at 800 677-3863.
Principal Investment Strategies Applicable to the Fund
The fund complies with SEC regulations that apply to money market funds. These regulations require that the fund’s investments mature within 397 days from the date of purchase and that the fund maintain a weighted average maturity of 60 days or less and a weighted average life of 120 days or less. The fund may invest in securities with variable or floating interest rates and securities with demand features. The maturities of these securities are determined according to regulations which allow the fund to consider some of these securities as having maturities shorter than their stated maturity dates. All of the fund’s investments must be in U.S. dollar-denominated high quality securities which have been determined by the fund’s advisor to present minimal credit risk and are rated in one of the two highest rating categories by one or more nationally recognized statistical rating organizations (NRSROs) or are deemed by the advisor to be of comparable quality to securities having such ratings. In addition, no more than 3% of the fund’s total assets may be invested in securities rated in the second highest rating category by an NRSRO or deemed to be of comparable quality by the fund’s advisor at the time of purchase (“second-tier securities”). With limited exceptions, the fund may not invest more than 5% of its total assets in securities issued by the same issuer. The fund is further limited to investing no more than ½ of 1% in second-tier securities of any issuer. The fund must comply with weekly liquidity standards that require a fund to hold at least 30% of its total assets in cash, direct obligations of the U.S. Government, agency discount notes with remaining maturities of 60 days or less, or securities convertible into cash within five business days. The fund must also comply with daily liquidity standards that require a fund to hold at least 10% of its total assets in cash, direct obligations of the U.S. Government, or securities convertible into cash within one business day. The fund is limited to investing no more than 5% of its total assets in illiquid securities.
When selecting securities for the fund, the portfolio managers first consider general economic factors, market conditions, and the short-term interest rate environment in determining what types of short-term instruments to purchase. The portfolio managers then select the specific instruments to be purchased. Generally, the portfolio managers buy and hold securities until their maturities. However, the portfolio managers may sell securities for a variety of reasons, such as to adjust the portfolio’s average maturity, credit, liquidity or yield metrics.
For liquidity and to respond to unusual market conditions, the fund may hold all or a significant portion of its total assets in cash for temporary defensive purposes. This may result in a lower yield and prevent the fund from meeting its investment objective.
| 6 | Prospectus – | First
American Money Market Funds Class A Shares |
More about the Fund
Principal Investment Strategies continued
The fund pursues its objective by investing in high-quality short-term debt obligations, including:
| · | commercial paper; |
| · | U.S. dollar-denominated obligations of domestic and foreign banks with total assets of at least $500 million (including fixed and variable rate certificates of deposit, time deposits, and bankers’ acceptances); |
| · | non-convertible corporate debt securities; |
| · | securities issued by the U.S. government or one of its agencies or instrumentalities; |
| · | municipal securities, including variable rate demand notes, commercial paper, and municipal notes and other short-term municipal obligations; |
| · | loan participation interests; and |
| · | repurchase agreements. |
The fund may invest more than 25% of its total assets in obligations of U.S. banks.
Under normal market conditions, portfolio managers will only purchase (and hold) securities in the fund if they are rated in the top short-term rating category, for example, a rating of A-1 or a rating of Prime-1. If the rating of a security is reduced below the top short-term rating category after purchase, portfolio managers will make every attempt to sell the security, unless they have determined that it would not be in the best interest of the fund to dispose of the security at that time and, where necessary, have obtained the approval of the fund’s board of directors to continue to hold the security.
U.S. government securities issued by the Federal National Mortgage Association (Fannie Mae), Federal Home Loan Mortgage Corporation (Freddie Mac) and the Federal Home Loan Banks (FHLB) are neither issued nor guaranteed by the U.S. Treasury and are not backed by the full faith and credit of the United States. These entities, however, were chartered or supported by Acts of Congress and are supported by federal subsidies, loans or other benefits. The Government National Mortgage Association (Ginnie Mae) is a wholly-owned U.S. corporation that is authorized to guarantee timely payment and interest of its securities. U.S. government securities issued by Ginnie Mae are guaranteed by the full faith and credit of the United States. Other U.S. government securities do not have an explicit guarantee but support is implied due to the government sponsorship of their mandated activities, including securities issued by the Tennessee Valley Authority and Federal Farm Credit Banks.
Other Money Market Funds
The fund may invest in other money market funds that invest in the same types of securities as the fund, as a non-principal investment strategy, including each of the other money market funds advised by the fund’s investment advisor. To avoid duplicative investment advisory fees, when the fund invests in another money market fund advised by the fund’s investment advisor, the investment advisor reimburses the fund an amount equal to the fund’s proportionate share of the investment advisory fee paid by the other money market fund to the investment advisor. If the fund invests in money market funds advised by another investment advisor, you will bear both your proportionate share of the expenses in the fund (including management and advisory fees) and, indirectly, the expenses of such other money market fund.
| 7 | Prospectus – | First
American Money Market Funds Class A Shares |
More about the Fund
Other Investment Strategies continued
Securities Lending
To generate additional income, and as a non-principal investment strategy, the fund may lend securities representing up to one-third of the value of its total assets to broker-dealers, banks, and other institutions deemed by the fund’s advisor to present minimal credit risk. When a fund loans its portfolio securities, it will receive, at the inception of each loan, cash collateral equal to at least 102% of the value of the loaned securities, which is invested consistent with the fund’s investment strategies. If the borrower fails to return the loaned securities, the fund could suffer a loss if the value of the invested collateral is insufficient to purchase replacement securities.
The principal risks of investing in the fund are identified and further discussed below.
| · | Banking Industry Risk | · | Liquidity Risk |
| · | Credit Risk | · | Municipal Security Risk |
| · | Cybersecurity Risk | · | Redemption Risk |
| · | Foreign Security Risk | · | Regulatory Risk |
| · | Income Risk | · | Repurchase Agreement Risk |
| · | Interest Rate Risk | · | Variable Rate Demand Note (VRDN) Risk |
Description of Principal Investment Risks
Banking Industry Risk. An adverse development in the banking industry (domestic or foreign) may affect the value of the fund’s investments more than if the fund was not invested to such a degree in the banking industry. Banks may be particularly susceptible to certain economic factors such as interest rate changes, adverse developments in the real estate market, fiscal and monetary policy and general economic cycles. For example, deteriorating economic and business conditions can disproportionately impact companies in the banking industry due to increased defaults on payments by borrowers. Moreover, political and regulatory changes can affect the operations and financial results of companies in the banking industry, potentially imposing additional costs and expenses or restricting the types of business activities of these companies.
Credit Risk. The value of your investment might decline if the issuer of an obligation held by the fund defaults on the obligation or has its credit rating downgraded.
Cybersecurity Risk. With the increased use of technologies such as the Internet and the dependence on computer systems to perform necessary business functions, a fund may be subject to operational and informational security risks resulting from breaches in cybersecurity (“cyber-attacks”). A cyber-attack refers to both intentional and unintentional events that may cause a fund to lose proprietary information, suffer data corruption, or lose operational capacity. Cyber-attacks include, but are not limited to, infection by computer viruses or other malicious software code, gaining unauthorized access to systems, networks, or devices that are used to service the fund’s operations through “hacking” or other means for the purpose of misappropriating assets or sensitive information, corrupting data, or causing operational disruption.
| 8 | Prospectus – | First
American Money Market Funds Class A Shares |
More about the Fund
Description of Principal Investment Risks continued
Cybersecurity failures or breaches by the fund’s affiliates or service providers, may cause disruptions and impact the business operations, potentially resulting in financial losses to both a fund and its shareholders, the inability of fund shareholders to transact business, inability to calculate a fund’s net asset value, impediments to trading, violations of applicable privacy and other laws (including the release of private shareholder information), regulatory fines, penalties, reputational damage, reimbursement or other compensation costs, and/or additional compliance costs. In addition, substantial costs may be incurred in order to prevent any cyber incidents in the future. While the advisor has risk management systems designed to prevent or reduce the impact of such cyber-attacks, there are inherent limitations in such controls, systems and protocols, including the possibility that certain risks have not been identified, as well as the rapid development of new threats. These cybersecurity risks are also present for issuers of securities in which a fund invests, which could result in material adverse consequences for such issuers, and may cause a fund’s investment in such securities to lose value and may result in financial loss for fund shareholders.
Foreign Security Risk. The foreign securities in which the fund may invest, even when dollar denominated and publicly traded in the United States, may involve risks not associated with the securities of domestic issuers. Political or social instability or diplomatic developments could adversely affect the securities. There is also the risk of possible withholding taxes, seizure of foreign deposits, currency controls, interest limitations, or other governmental restrictions which might affect the payment of principal or interest on securities owned by the fund. In addition, there may be less public information available about foreign corporations and foreign banks and their branches.
Income Risk. The level of income you receive from the fund will be affected by movements in short-term interest rates.
Interest Rate Risk. The value of your investment might decline because of a sharp rise in interest rates that causes the value of the fund’s portfolio holdings to fall.
Liquidity Risk. The fund may not be able to sell a security in a timely manner or at a desired price, or may be unable to sell the security at all, because of a lack of demand in the market for the security or because a liquidity provider defaults on its obligation to purchase the security when properly tendered by the fund.
Municipal Security Risk. The value of municipal securities owned by the fund may be adversely affected by future changes in federal income tax laws, including rate reductions or the imposition of a flat tax, and adverse changes in the financial conditions of municipal securities issuers.
Redemption Risk. If there are unexpectedly high redemptions of fund shares, the fund might have to sell portfolio securities prior to their maturity, possibly at a loss.
| 9 | Prospectus – | First
American Money Market Funds Class A Shares |
More about the Fund
Description of Principal Investment Risks continued
Regulatory Risk. In July 2014, the SEC adopted reforms to money market fund regulation. The compliance periods for these reforms range between July 2015 and October 2016. When the reforms are implemented, they could affect the fund’s operations and return potential. The reforms will, among other things, beginning October 14, 2016, permit (and, under certain circumstances, require) money market funds, including the fund, to impose a “liquidity fee” (up to 2% of redemption proceeds) or “redemption gate” that temporarily restricts redemptions from a money market fund, if a fund’s weekly liquidity level falls below the required regulatory threshold. In addition, changes to monetary policy by the Federal Reserve or other regulatory actions could expose fixed income and related markets to heightened volatility, interest rate sensitivity and reduced liquidity, which may impact the fund’s operations, universe of potential investment options, and return potential.
Repurchase Agreement Risk. For the fund, if the seller of a repurchase agreement defaults on its obligation to repurchase securities from the fund, the fund may incur costs in disposing of the securities purchased and may experience losses if the proceeds from the sale of the securities are less than the full repurchase price. Securities purchased by the fund under a repurchase agreement may include securities that the fund is not otherwise permitted to purchase directly, such as long-term government bonds, investment and non-investment grade corporate bonds, asset- and mortgage-backed securities, collateralized mortgage obligations, agency real estate mortgage investment conduits, and equity securities. The value of these securities may be more volatile or less liquid than the securities the fund is permitted to purchase directly, which increases the risk that the fund will be unable to recover fully in the event of the seller’s default.
Variable Rate Demand Note (VRDN) Risk. Investments in VRDNs involve credit risk with respect to the issuer or financial institution providing the fund with the credit and liquidity support for the unconditional put option. While the fund invests only in VRDNs of high quality issuers, or which are supported by high quality financial institutions, it is still possible that an issuer or financial institution could default on its obligations.
Disclosure of Portfolio Holdings
A description of the fund’s policies and procedures with respect to the disclosure of the fund’s portfolio securities is available in the fund’s SAI.
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American Money Market Funds Class A Shares |
U.S. Bancorp Asset Management, Inc.
800 Nicollet Mall
Minneapolis, MN 55402
U.S. Bancorp Asset Management provides investment management services to individuals and institutions, including corporations, foundations, pensions, and retirement plans. As of December 31, 2015, U.S. Bancorp Asset Management had more than $56 billion in assets under management, including investment company assets of more than $44 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 pays the investment advisor a monthly management fee equal to an annual rate of 0.10% of average daily net assets for providing investment advisory services to the fund.
U.S. Bancorp Asset Management may voluntarily waive or reimburse certain fees and expenses in order to maintain a zero or positive yield for each share class of the fund. These waivers and reimbursements may be terminated at any time by U.S. Bancorp Asset Management.
A discussion regarding the basis for the board’s approval of the fund’s investment advisory agreement will appear in the fund’s annual report to shareholders for the fiscal year ending August 31, 2016.
Additional Compensation
U.S. Bancorp Asset Management, U.S. Bank National Association (U.S. Bank) 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, U.S. Bank and their affiliates also receive compensation from the fund as set forth below.
Administration Services. U.S. Bancorp Asset Management and its affiliate, U.S. Bancorp Fund Services, LLC (Fund Services), act as the fund’s administrator and sub-administrator, respectively, providing administration services that include general administrative and accounting services, blue sky services and shareholder services. For such services, the fund pays U.S. Bancorp Asset Management the fund’s pro rata portion of up to 0.20%, on an annual basis, of the aggregate average daily net assets attributable to Class A shares of all First American money market funds. U.S. Bancorp Asset Management pays Fund Services a portion of its fee, as agreed to from time to time. In addition to these fees, the fund may reimburse U.S. Bancorp Asset Management for any out-of-pocket expenses incurred in providing administration services.
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American Money Market Funds Class A Shares |
Fund Management
Investment Advisor continued
Custody Services. U.S. Bank provides custody services to the fund. U.S. Bank is paid monthly fees equal, on an annual basis, to 0.005% of the fund’s average daily net assets.
Distribution Services. Quasar Distributors, LLC, an affiliate of U.S. Bancorp Asset Management, receives distribution and shareholder servicing fees for acting as the fund’s distributor.
Securities Lending Services. In connection with lending their portfolio securities, the funds pay fees to U.S. Bank of 20% of the fund’s net income from securities lending transactions and U.S. Bank pays half of such fees to U.S. Bancorp Asset Management for certain securities lending services provided by U.S. Bancorp Asset Management.
Shareholder Servicing Fees. The fund pays U.S. Bancorp Asset Management a shareholder servicing fee at an annual rate of 0.25% of its average daily net assets attributable to Class A shares for providing or arranging for the provision of shareholder services to the holders of its Class A shares.
Transfer Agency Services. Fund Services provides transfer agency and dividend disbursing services, as well as certain shareholder services, to the fund. Fund Services receives fees for transfer agency and dividend disbursing services on a per shareholder account basis, subject to a minimum fee per share class. In addition, the fund may reimburse Fund Services for any out-of-pocket expenses incurred in providing transfer agency services.
Other Compensation. To the extent that fund shares are held through U.S. Bank or its broker-dealer affiliate, U.S. Bancorp Investments, Inc., those entities may receive distribution and/or shareholder servicing fees from the fund’s distributor as well as other payments from the fund’s distributor and/or advisor as described below under “Shareholder Information — Additional Payments to Institutions.”
The fund is managed by a team of persons who are employed by U.S. Bancorp Asset Management.
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American Money Market Funds Class A Shares |
You may purchase or redeem shares of the fund on any business day that the Federal Reserve Bank of New York (Federal Reserve) is open, except as noted below. In addition to weekends, the Federal Reserve is closed on the following Federal holidays: New Year’s Day, Martin Luther King, Jr. Day, Presidents’ Day, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving Day, and Christmas Day. The fund may close when the Federal Reserve is open and the NYSE is closed, such as Good Friday. On any business day when the Securities Industry Financial Markets Association recommends that the bond markets close trading early, the fund may also close trading early.
Your purchase or redemption price will be based on that day’s NAV per share if your order is received by the fund in proper form prior to the time the fund calculates its NAV. See “Additional Information on Purchasing, Redeeming, and Exchanging Fund Shares — Calculating Net Asset Value” below. Contact your investment professional or financial institution to determine the time by which it must receive your order to be assured same day processing. To make sure your order is in proper form, you must follow the instructions set forth below under “Purchasing Fund Shares” and “Redeeming Fund Shares.”
Some investment professionals or financial institutions may charge a fee for helping you purchase, redeem, or exchange shares. Contact your investment professional or financial institution for more information. No such fee will be imposed if you purchase shares directly from the fund.
The fund issues its shares in multiple classes. This prospectus offers Class A shares.
Class A shares are offered at net asset value with no front-end or contingent deferred sales charge, but with an annual distribution (12b-1) fee of 0.25% and an annual shareholder servicing fee of 0.25%.
The fund has adopted a plan pursuant to Rule 12b-1 under the Investment Company Act that allows the fund to pay its distributor an annual fee for the distribution and sale of its shares and/or for services provided to shareholders. The 12b-1 fees are equal to 0.25% of the average daily net assets of Class A shares.
Because these fees are paid out of a 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 distribution fee. The fund’s distributor uses the distribution fee to compensate investment professionals or financial institutions for providing distribution-related services to the fund.
Your investment professional or financial institution will continue to receive Rule 12b-1 fees relating to your shares for as long as you hold those shares.
The board of directors has approved the suspension or reduction of 12b-1 fee payments by the fund as needed in order to maintain a yield for each share class of at least 0%. Any such suspension or reduction will result in a corresponding suspension or reduction of amounts paid by the fund’s distributor to investment professionals and financial institutions.
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American Money Market Funds Class A Shares |
Shareholder Information
The fund also has adopted a non-Rule 12b-1 shareholder servicing plan and agreement with respect to the Class A shares. Under this plan and agreement, the fund pays U.S. Bancorp Asset Management a shareholder servicing fee at an annual rate of 0.25% of average daily Class A share net assets for providing or arranging for the provision of shareholder services to the holders of Class A shares. No distribution-related services are provided under this plan and agreement.
Because the current prospectus and SAI are available on First American Funds’ website free of charge, we do not disclose the following information separately on the website.
Your purchase or redemption price for Class A shares is the fund’s next determined net asset value after the fund, or its designated agent, receives your order in proper form. To understand how the fund calculates its net asset value, see “Additional Information on Purchasing, Redeeming, and Exchanging Fund Shares — Calculating Net Asset Value” below.
To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. As a result, when you open an account, we will ask for your name, permanent street address, date of birth, and social security or taxpayer identification number. Addresses containing a P.O. Box only will not be accepted. We may also ask for other identifying documents or information.
Investments in the fund are intended to be limited to accounts beneficially owned by natural persons. Natural persons are permitted to invest in the fund through certain tax-advantaged savings accounts, trusts and other retirement and investment accounts, including, for example:
| · | Participant-directed defined contribution plans; |
| · | Individual retirement accounts; |
| · | Simplified employee pension arrangements; |
| · | SIMPLE retirement accounts; |
| · | Custodial accounts; |
| · | Deferred compensation plans for government or tax-exempt organization employees; |
| · | Archer medical savings accounts; |
| · | College savings plans; |
| · | Health savings account plans; |
| · | Ordinary trusts and estates of natural persons; or |
| · | Certain other retirement and investment accounts having an institutional decision maker (e.g., a plan sponsor in certain retirement arrangements or an investment adviser managing discretionary investment accounts). |
On or before October 14, 2016, the fund will adopt policies and procedures reasonably designed to limit all beneficial owners of the fund to natural persons. The fund reserves the right to repurchase shares in any accounts that are not beneficially owned by natural persons, after providing 60 days’ written notice.
You may become a shareholder in the fund by making a minimum initial investment of $2,500. The minimum additional investment is $100. The fund reserves the right to waive or lower purchase minimums under certain circumstances and to reject any purchase order or to stop offering shares for sale at any time.
By Phone. You may purchase shares of the fund on any business day by calling your investment professional or financial institution, if they have a sales agreement with the fund’s distributor.
| 14 | Prospectus – | First
American Money Market Funds Class A Shares |
Shareholder Information
Purchasing Fund Shares continued
You may also purchase shares by calling Investor Services and making a wire transfer or an Automated Clearing House (ACH) transaction from your bank. Before making an initial investment by wire or ACH, you must submit a new account form to the fund and select this option. Be sure to include a cancelled check or pre-printed deposit slip with the form. Once the account is established, you may request the account number and wiring instructions from Investor Services by calling 800 677-3863. Purchases may then be made by wire transfer or ACH by calling the same number. All information will be taken over the telephone, and your order will be priced at the next NAV calculated after the fund’s custodian receives your payment by wire or ACH.
You cannot purchase shares by wire or ACH on days when federally chartered banks are closed.
By Mail. To purchase shares by mail, simply complete and sign a new account form, enclose a check made payable to the fund and mail both to:
| Regular U.S. Mail: | Overnight Express Mail: | |
| First American Funds | First American Funds | |
| P.O. Box 701 | 615 East Michigan Street | |
| Milwaukee, WI 53201-0701 | Milwaukee, WI 53202 |
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:
| · | All purchases must be drawn on a bank located within the United States and payable in U.S. dollars to First American Funds. |
| · | Cash, money orders, third-party checks, credit card checks, traveler’s checks, starter checks, and credit cards will not be accepted. We are unable to accept post-dated checks or any conditional order as payment. |
| · | If a check or ACH transaction does not clear your bank, the fund reserves the right to cancel the purchase, and you may be charged a fee of $25 per check or transaction. You could be liable for any losses or fees incurred by the fund as a result of your check or ACH transaction failing to clear. |
By Systematic Investment Plan. To purchase shares as part of a savings discipline, you may add to your investment on a regular basis by having $100 or more automatically withdrawn from your bank account on a periodic basis and invested in fund shares. You may apply for participation in this program through your investment professional or financial institution or by calling Investor Services at 800 677-3863.
Purchases In-Kind. Generally, all purchases will be in cash. However, the fund reserves the right to permit you to purchase shares through the exchange of other securities that you own if consistent with the fund’s investment objective, policies, and operations. The market value of any securities exchanged, plus any cash, must be at least $25 million. Please contact your investment professional, financial institution or Investor Services at 800 677-3863.
When you redeem shares, the proceeds are normally sent on the next business day, but in no event more than seven days, after your request is received in proper form.
By Phone. If you purchased shares through an investment professional or financial institution, simply call them to redeem your shares of the fund on any business day.
| 15 | Prospectus – | First
American Money Market Funds Class A Shares |
Shareholder Information
Redeeming Fund Shares continued
If you did not purchase shares through an investment professional or financial institution, you may redeem your shares by calling Investor Services at 800 677-3863. Proceeds can be wired to your bank account (if you have previously supplied your bank account information to the fund) or sent to you by check. The fund charges a $15 fee for wire redemptions, but have the right to waive this fee for shares redeemed through certain financial intermediaries and by certain accounts. Proceeds also can be sent directly to your bank or brokerage account via electronic funds transfer if your bank or brokerage firm is a member of the ACH network. The fund reserves the right to limit telephone redemptions to $50,000 per account per day.
If you recently purchased your shares by check or through the ACH network, 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 redeem shares by mail, send a written request to your investment professional or financial institution, or to the fund at the following address:
| Regular U.S. Mail: | Overnight Express Mail: | |
| First American Funds | First American Funds | |
| P.O. Box 701 | 615 East Michigan Street | |
| Milwaukee, WI 53201-0701 | Milwaukee, WI 53202 |
Your request should include the following information:
| · | name of the fund; |
| · | account number; |
| · | dollar amount or number of shares redeemed; |
| · | name on the account; and |
| · | signatures of all registered account owners. |
After you have established your account, signatures on a written request must be guaranteed if:
| · | you would like redemption proceeds to be paid or mailed to any person, address, or bank account other than that on record; |
| · | you have changed the address on the fund’s records within the last 30 calendar days; |
| · | your redemption request is in excess of $50,000; or |
| · | you intend to change legal ownership of your account. |
In addition to the situations described above, the fund reserves the right to require a signature guarantee, or another acceptable form of signature verification, in other instances based on the circumstances of a particular situation.
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 intermediary to determine if it has this capability. A notary public is not an acceptable signature guarantor.
Proceeds from a written redemption request will be sent to you by check unless another form of payment is requested.
| 16 | Prospectus – | First
American Money Market Funds Class A Shares |
Shareholder Information
Redeeming Fund Shares continued
By Checking Account. You may sign up for check writing privileges when you complete a new account form, or by calling your investment professional, financial institution, or the fund. With a fund checking account, you may redeem shares simply by writing a check for $100 or more, unless your investment professional or financial institution requires a higher minimum. The fund may charge a $25 fee for draft checks written against insufficient funds and requests to stop payment on a check. Call Investor Services at 800 677-3863 for more information.
Please note that you may not use a check to close your account.
By Systematic Withdrawal Plan. 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. You may set up a systematic withdrawal when you complete a new account form or by calling your investment professional or financial institution.
Redemptions In-Kind. Generally, all redemptions will be for cash. However, the fund reserves the right to pay all or part of your redemption proceeds in readily marketable securities instead of cash. If payment by the fund is made in securities, the fund will value the securities selected in the same manner in which it computes its NAV. This process minimizes the effect of large redemptions on the fund and its remaining shareholders. If you receive redemption proceeds in-kind, you should expect to incur transaction costs upon disposition of those securities. In addition, if you receive redemption proceeds in-kind, you will be subject to market gains or losses upon the disposition of those securities.
Suspension or Postponement of Redemptions. The fund reserves the right to suspend the right of shareholder redemption, or postpone the date of payment:
| · | if emergency conditions should exist, as specified in the Investment Company Act of 1940 (the “Investment Company Act”), or as determined by the Securities and Exchange Commission (SEC), as a result of which disposal of portfolio securities or determination of the net asset value (NAV) of the fund is not reasonably practicable; | |
| · | for any period during which trading on the New York Stock Exchange (NYSE) is restricted as determined by the SEC or the NYSE is closed (other than customary weekend and holiday closings); | |
| · | for any period during which the SEC has, by rule or regulation, deemed that (1) trading shall be restricted or (2) an emergency exists; or | |
| · | for such other periods as the SEC may by order permit for the protection of shareholders of the fund. |
In addition, in the unlikely event that the fund’s board of directors were to determine pursuant to SEC regulations that the extent of the deviation between the fund’s amortized cost per share and its market-based NAV per share may result in material dilution or other unfair results to shareholders, the board will cause the fund to take such action as it deems appropriate to eliminate or reduce to the extent practicable such dilution or unfair results, including suspending redemption of shares and liquidating the fund under Rule 22e-3 of the Investment Company Act.
Potential Restrictions on Fund Redemptions – Fees and Gates. Beginning October 14, 2016, the fund’s board of directors will be permitted to impose a liquidity fee on redemptions (up to 2% of redemption proceeds) or temporarily restrict redemptions from the fund up to 10 business days during a 90-day period (a “redemption gate”), in the event that the fund’s weekly liquid assets fall below the following thresholds:
| · | 30% weekly liquid assets – If the fund’s weekly liquid assets fall below 30% of the fund’s total assets, and the fund’s board of directors determines it is in the best interest of the Fund, the board of directors may impose a liquidity fee of no more than 2% of the amount redeemed and/or a redemption gate that temporarily suspends the right of redemption. |
| · | 10% weekly liquid assets – If the fund’s weekly liquid assets fall below 10% of the fund’s total assets, the fund will impose, at the beginning of the next business day, a liquidity fee of 1% of the amount redeemed, unless the fund’s board of directors determines that imposing such a fee would not be in the best interests of the fund or determines that a lower or higher fee (not to exceed 2%) would be in the best interests of the fund. |
| 17 | Prospectus – | First
American Money Market Funds Class A Shares |
Shareholder Information
Redeeming Fund Shares continued
Liquidity fees and redemption gates may be terminated at any time in the discretion of the fund’s board of directors. Liquidity fees and redemption gates will also terminate at the beginning of the next business day once the fund has invested 30% or more of its total assets in weekly liquid assets as of the end of a business day.
Weekly liquid assets generally include cash; direct obligations of the U.S. government; certain U.S. government agency discount notes with remaining maturities of 60 days or less; securities that will mature or are subject to a demand feature that is exercisable and payable within five business days; or amounts receivable and due unconditionally within five business days on pending sales of portfolio securities. For these purposes, weekly liquid assets will be calculated as of the end of each business day.
Exchanges may be made only on days when the Federal Reserve is open. There is no fee to exchange shares.
Generally, you may exchange your shares only for the same class of shares of the other fund. Exchanges are made based on the net asset value per share of each fund at the time of the exchange.
Before exchanging into any fund, be sure to read its prospectus carefully. A fund may change or cancel its exchange policies at any time upon notice to shareholders, which may be given by means of a new or supplemented prospectus.
The First American money market funds also are offered as money market exchange vehicles for certain other mutual fund families that have entered into agreements with the funds’ distributor. If you are using one of the funds as such an exchange vehicle, you may exchange your shares only for shares of the funds in that other mutual fund family; you may not exchange your shares for shares of another First American fund. You may be assessed certain transactional or service fees by your original mutual fund family in connection with any such exchange. If you have any questions regarding the amount of fees assessed per transaction, please call the toll-free number on your statement.
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 at 800 677-3863.
By Mail. To exchange shares by written request, please follow the procedures under “Redeeming Fund Shares” above. Be sure to include the names of both funds involved in the exchange.
By Systematic Exchange Plan. You may make automatic exchanges on a regular basis of your Class A shares for the same class of shares of another First American fund. You may apply for participation in this program through your investment professional or financial institution, or by calling Investor Services at 800 677-3863.
| 18 | Prospectus – | First
American Money Market Funds Class A Shares |
Shareholder Information
Additional Information on Purchasing, Redeeming, and Exchanging Fund Shares
Calculating Net Asset Value
The fund generally calculates its NAV per share as of 3:30 p.m. Central time on each business day that the fund is open, except that the NAV for the fund is generally calculated at 1:00 p.m. Central time on days on which the bond markets close early (typically on the business day preceding a Federal holiday) (an “Early Close”). Purchase and redemption orders received after closing time, including an Early Close, will be processed the next business day.
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. The securities held by the fund is valued on the basis of amortized cost. This involves valuing an instrument at its cost and thereafter assuming a constant amortization of any discount or premium until the instrument’s maturity, rather than looking at actual changes in the market value of the instrument. The fund’s net asset value is normally expected to be $1 per share.
Frequent Trading of Fund Shares
The fund is designed to offer investors a liquid cash option and it is anticipated that shareholders will purchase and redeem fund shares on a frequent basis. Frequent trading by shareholders may disrupt the management of the fund and increase fund expenses. However, given the short-term nature of the fund’s investments and its use of the amortized cost method for calculating the NAV of fund shares, the fund does not anticipate that in the normal case frequent or short-term trading into and out of the funds will have significant adverse consequences for the fund and its shareholders. Accordingly, the fund’s board of directors has not adopted policies or procedures to monitor or discourage frequent or short-term trading of the fund’s shares.
Telephone Transactions
You may purchase, redeem, or exchange shares by telephone, unless you elected on your new account form to restrict this privilege. If you wish to reinstate this option on an existing account, please call Investor Services at 800 677-3863 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 recording telephone conversations. If an account has more than one owner or authorized person, the fund will accept telephone instructions from any one owner or authorized person.
| 19 | Prospectus – | First
American Money Market Funds Class A Shares |
Shareholder Information
Additional Information on Purchasing, Redeeming, and Exchanging Fund Shares continued
Once a telephone transaction has been placed, it generally cannot be canceled or modified.
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.
Accounts with Low Balances
The fund reserves the right to liquidate or assess a low balance fee to any account holding a balance that is less than the account balance minimum of $2,500 for any reason.
If the fund elects to liquidate or assess a low balance fee, then annually, on or about the second Wednesday of August, the fund will assess a $15 low balance account fee to certain retirement accounts, education savings plans, and UGMA/UTMA accounts that have balances under the account balance minimum. At the same time, other accounts with balances under the account balance minimum will be liquidated, with proceeds being mailed to the address of record. Prior to the assessment of any low balance fee or liquidation of low balance accounts, affected shareholders will receive a communication reminding them of the pending action, thereby providing time to ensure that balances are at or above the account balance minimum prior to any fee assessment or account liquidation.
An intermediary may apply its own procedures in attempting to comply with the fund’s low balance account policy.
The fund earns interest, dividends and other income from its investments, and distributes this income (less fund expenses) to you as dividends. Dividends from the fund’s net investment income are declared daily and paid monthly. The fund may take into account capital gains and losses (other than net long-term capital gains) in its daily dividend declarations. A fund may also make additional distributions for tax purposes if necessary.
If the fund receives your wire transfer payment for fund shares by the time the fund determines its NAV, you will begin to accrue dividends on that day. If you place an exchange order for fund shares by the time the fund determines its NAV, you will begin to accrue dividends on the next business day. In the case of shares purchased by check, because money market instruments must be purchased with federal funds and it takes a money market mutual fund one business day to convert check proceeds into federal funds, you will begin to accrue dividends on the first business day after the fund receives your check (provided your check is received by the time the fund determines its NAV). If you redeem shares and your request is received by the time the fund determines its NAV, you will receive a dividend on the day of your redemption request if the fund pays your redemption proceeds by check, but you will not receive a dividend on the day of your redemption request if the fund pays your redemption proceeds by wire.
Dividends will be reinvested in additional shares of the same 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, by contacting your financial institution, or by calling Investor Services at 800 677-3863. Cash distributions will be paid on or about the first business day of each month. If you request that your distributions be paid in cash but those distributions cannot
| 20 | Prospectus – | First
American Money Market Funds Class A Shares |
Shareholder Information
Dividends and Distributions continued
be delivered because of an incorrect mailing address, or if a distribution check remains uncashed for six months, the undelivered or uncashed 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 provided in the SAI. However, because everyone’s tax situation is unique, always consult your tax professional about federal, state, and local tax consequences.
Dividends you receive from the fund are generally taxable as ordinary income, whether you reinvest them or take them in cash. Dividends from the fund will not be eligible for the reduced rate of tax that applies to “qualified dividend income.”
Additional Payments to Institutions
The advisor and/or the distributor may pay additional compensation to investment professionals, participating institutions and “one-stop” mutual fund networks (each an “institution” and, collectively, “institutions”) out of their own resources in connection with the sale or retention of fund shares and/or in exchange for sales and/or administrative services performed on behalf of the institution’s customers. The amounts of these payments may be significant, and may create an incentive for the institution or its employees or associated persons to recommend or sell shares of the fund to you. These payments are not reflected in the fees and expenses listed in the “Fund Summary” section of the prospectus because they are not paid by the fund.
These payments are negotiated and may be based on such factors as the number or value of First American money market fund shares that the institution sells or may sell; the value of the assets invested in the First American money market funds by the institution’s customers; reimbursement of ticket or operational charges (fees that an institution charges its representatives for effecting transactions in fund shares); lump sum payment for services provided; the type and nature of services or support furnished by the institution; and/or other measures as determined from time to time by the advisor and/or distributor.
The advisor and/or distributor may make other payments or allow other promotional incentives to institutions to the extent permitted by SEC and FINRA rules and by other applicable laws and regulations. Certain institutions may also receive payments in recognition of sub-accounting or other services they provide to shareholders or plan participants who invest in the fund through their employee benefit or retirement plan.
You can ask your institution for information about any payments it receives from the advisor and/or the distributor and from the fund, and any services your institution provides, as well as about fees and/or commissions your institution charges. You can also find more details about payments made by the advisor and/or the distributor in the fund’s SAI.
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American Money Market Funds Class A Shares |
Shareholder Information
Shareholder Reports
Shareholder reports are mailed twice a year, in October and April. They include financial statements and performance information, and, on an annual basis, the report of independent registered public accounting firm.
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 800 677-3863.
Statements and Confirmations
Statements summarizing activity in accounts held directly with the fund are mailed quarterly. Confirmations generally are mailed following each non-systematic purchase or sale of fund shares. Generally, the fund does not send statements for shares held in a brokerage account. Please review your statements and confirmations as soon as you receive them and promptly report any discrepancies to your financial intermediary or to Investor Services at 800 677-3863.
| 22 | Prospectus – | First
American Money Market Funds Class A Shares |
As of the date of this prospectus, the fund had not yet commenced operations and had no financial highlights to report.
| 23 | Prospectus – | First
American Money Market Funds Class A Shares |
First American Funds’ Privacy Policy
We want to provide an explanation to Consumers of what nonpublic personal information is and how it’s collected and used.
A “Consumer” is considered an individual investor who invests or has invested in our products for personal, family or household purposes.
“Nonpublic personal information” is nonpublic information that we obtain while providing financial products or services to you.
How we collect your information
We obtain nonpublic information about you during the account opening process from the applications and other forms you are asked to complete and from the transactions you make with us. We may also receive nonpublic information about you from companies affiliated with us or from other companies that provide services to you.
The types of information we collect
We may collect the following nonpublic personal information about you:
| · | Information about your identity, such as your name, address, and social security number. |
| · | Information about your transactions with us. |
| · | Information you provide on applications, such as your beneficiaries and banking information, if provided to us. |
Why we collect your information
We gather nonpublic personal information about you and your accounts so that we can:
| · | Know who you are and prevent unauthorized access to your information. |
| · | Comply with the laws and regulations that govern us. |
What information we disclose
We may share some or all of the nonpublic personal information that we collect about you with our affiliated providers of financial services, including our family of funds and their advisor, and with companies that perform shareholder services on our behalf. We do not use nonpublic information received from our affiliates for marketing purposes.
We’re permitted by law to disclose nonpublic personal information about you to other third parties in certain circumstances. For example, we may disclose nonpublic personal information about you to affiliated and nonaffiliated third parties to assist us in servicing your account (e.g., mailing of fund-related materials) and to government entities (e.g., IRS for tax purposes).
We’ll continue to adhere to the privacy policies and practices described here even after your account is closed or becomes inactive.
Confidentiality and security
To protect nonpublic personal information about you, we restrict access to such information to only those employees and authorized agents who need to use the information. We maintain physical, electronic, and procedural safeguards to maintain the confidentiality and security of nonpublic information about you. In addition, we require our service providers to restrict access to nonpublic personal information about you to those employees who need that information in order to provide products or services to you. We also require them to maintain physical, electronic, and procedural safeguards that comply with applicable federal standards and regulations to guard your information.
Additional rights and protections
You may have other privacy protections under applicable state laws. To the extent that these state laws apply, we will comply with them when we share information about you. This privacy policy does not apply to your relationship with other financial service providers, such as broker-dealers. We may amend this privacy notice at any time, and we will inform you of changes as required by law.
Our pledge applies to products and services offered by the First American Family of Funds
| NOT FDIC INSURED NO BANK GUARANTEE MAY LOSE VALUE |
THIS PAGE IS NOT PART OF THE PROSPECTUS
First American Funds
P.O. Box 1330
Minneapolis, MN 55440-1330
The Statement of Additional Information (SAI) provides more details about the fund and its policies and is incorporated into this prospectus by reference (which means that it is legally part of this prospectus).
Additional information about the fund’s investments will be available in the fund’s annual and semi-annual reports to shareholders. Prior to the date of this prospectus, the fund had not commenced operations.
You can obtain a free copy of the fund’s annual or semi-annual reports or the SAI, request other information about the fund, or make other shareholder inquiries by calling Investor Services at 800 677-3863 or by contacting the fund at the address above. Annual or semi-annual reports and the SAI will also be available on the fund’s Internet site at www.firstamericanfunds.com.
Information about the fund (including the SAI) can also be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. To find out more about this public service, call the SEC at 1-202-551-8090. Reports and other information about the fund are also available on the EDGAR Database on the SEC’s Internet site at www.sec.gov, or you can obtain copies of this information, after paying a duplicating fee, by electronic request at the following e-mail address: [email protected], or by writing the SEC’s Public Reference Section, Washington, D.C. 20549-1520.
| SEC file number: 811-03313 | PROMMA 07/16 |
Contents
Please find First American Funds’ Privacy Policy inside the back cover of this Prospectus.
| Dividends and Distributions | 14 | ||
| Taxes | 14 | ||
| Additional Payments to Institutions | 15 | ||
| Staying Informed | 15 | ||
| Financial Highlights | 16 |
This prospectus and the related Statement of Additional Information (SAI) do not constitute an offer to sell or a solicitation of an offer to buy shares in the funds, 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.
The funds may be offered only to persons in the United States. This prospectus should not be considered a solicitation or offering of fund shares outside the United States.
Investment Objective
Retail Prime Obligations Fund’s objective is to seek maximum current income to the extent consistent with the preservation of capital and maintenance of liquidity.
Fees and Expenses
The following tables describe the fees and expenses that you may pay if you buy and hold shares of the fund.
| Shareholder
Fees (fees paid directly from your investment) |
Class T | ||
| Maximum Sales Charge (Load) | None | ||
| Maximum Deferred Sales Charge (Load) | None | ||
| Annual
Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) |
|||
| Management Fees | 0.10% | ||
| Distribution and/or Service (12b-1) Fees | None | ||
| Other Expenses: | |||
| Shareholder Servicing Fee | 0.20% | ||
| Miscellaneous1 | 0.19% | ||
| Total Annual Fund Operating Expenses | 0.49% | ||
| Less Fee Waivers2 | (0.09)% | ||
| Net Expenses2 | 0.40% |
| 1 | Miscellaneous expenses are based on estimated amounts for the fund's first fiscal year of operations. |
| 2 | The advisor has contractually agreed to waive fees and reimburse other fund expenses through July 18, 2017, so that total annual fund operating expenses, after waivers, do not exceed 0.40%. These fee waivers and expense reimbursements may be terminated at any time after July 18, 2017 at the discretion of the advisor. Prior to that time, such waivers and reimbursements may not be terminated without the approval of the fund’s board of directors. |
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. The example assumes that you invest $10,000 in the fund for the time periods indicated . The example also assumes that your investment has a 5% return each year and the fund’s operating expenses remain the same. You would incur these hypothetical expenses whether or not you redeem your investment at the end of the given period. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
| Class T | |||
| 1 year | $ 41 | ||
| 3 years | $ 148 |
| 1 | Prospectus – | First
American Money Market Funds Class T Shares |
Fund Summary
Retail Prime Obligations Fund continued
Principal Investment Strategies
Retail Prime Obligations Fund invests in high-quality short-term debt obligations, including:
| · | commercial paper; |
| · | U.S. dollar-denominated obligations of domestic and foreign banks with total assets of at least $500 million (including fixed and variable rate certificates of deposit, time deposits, and bankers’ acceptances); |
| · | non-convertible corporate debt securities; |
| · | securities issued by the U.S. government or one of its agencies or instrumentalities; |
| · | municipal securities, including variable rate demand notes, commercial paper, and municipal notes and other short-term municipal obligations; |
| · | loan participation interests; and |
| · | repurchase agreements. |
The fund may invest more than 25% of its total assets in obligations of U.S. banks.
Under normal market conditions, portfolio managers will only purchase (and hold) securities in the fund if they are rated in the top short-term rating category, for example, a rating of A-1 or a rating of Prime-1. If the rating of a security is reduced below the top short-term rating category after purchase, portfolio managers will make every attempt to sell the security, unless they have determined that it would not be in the best interest of the fund to dispose of the security at that time and, where necessary, have obtained the approval of the fund’s board of directors to continue to hold the security.
Principal Risks
You could lose money by investing in the fund. Although the fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. The fund may impose a fee upon sale of your shares or may temporarily suspend your ability to sell shares if the fund’s liquidity falls below required minimums because of market conditions or other factors. 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. The advisor or its affiliates have no legal obligation to provide financial support to the fund, and you should not expect that the advisor will provide financial support to the fund at any time.
Principal risks of investing in this fund include:
Banking Industry Risk — An adverse development in the banking industry (domestic or foreign) may affect the value of the fund’s investments more than if the fund was not invested to such a degree in the banking industry. Banks may be particularly susceptible to certain economic factors such as interest rate changes, adverse developments in the real estate market, fiscal, regulatory and monetary policy and general economic cycles.
Credit Risk — The value of your investment might decline if the issuer of an obligation held by the fund defaults on the obligation or has its credit rating downgraded.
Cybersecurity Risk — The fund may be subject to operational and informational security risks resulting from breaches in cybersecurity at the fund, the fund’s affiliates or service providers. A cybersecurity breach at an issuer of securities in which the fund invests may cause such securities to lose value.
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Fund Summary
Retail Prime Obligations Fund continued
Foreign Security Risk — Securities of foreign issuers, even when dollar denominated and publicly traded in the United States, may involve risks not associated with the securities of domestic issuers.
Income Risk — The level of income you receive from the fund will be affected by movements in short-term interest rates.
Interest Rate Risk — The value of your investment might decline because of a sharp rise in interest rates that causes the value of the fund’s portfolio holdings to fall.
Liquidity Risk — The fund may not be able to sell a security in a timely manner or at a desired price, or may be unable to sell the security at all, because of a lack of demand in the market for the security, or a liquidity provider defaults on its obligation to purchase the security when properly tendered by the fund.
Municipal Security Risk — The value of municipal securities owned by the fund may be adversely affected by future changes in federal income tax laws, including rate reductions or the imposition of a flat tax, and adverse changes in the financial conditions of municipal securities issuers.
Redemption Risk — If there are unexpectedly high redemptions of fund shares, the fund might have to sell portfolio securities prior to their maturity, possibly at a loss.
Regulatory Risk — In July 2014, the Securities and Exchange Commission (SEC) adopted reforms to money market fund regulation. As the reforms are implemented through October 2016, they could affect the fund’s operations and return potential. The reforms will, among other things, permit the fund to impose a liquidity fee or redemption gate under certain circumstances effective October 14, 2016. In addition, changes to monetary policy by the Federal Reserve or other regulatory actions may impact the fund’s operations, universe of potential investment options, and return potential.
Repurchase Agreement Risk — If the seller of a repurchase agreement defaults on its obligation to repurchase securities from the fund, the fund may incur costs in disposing of the securities purchased and may experience losses if the proceeds from the sale of the securities are less than the full repurchase price.
Variable Rate Demand Note (VRDN) Risk — Investments in VRDNs involve credit risk with respect to the issuer or financial institution providing the fund with the credit and liquidity support for the unconditional put option.
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Fund Summary
Retail Prime Obligations Fund continued
Fund Performance
Because the fund had not yet commenced operations as of the date of this prospectus, there is no performance information to present for the fund.
Investment Advisor
U.S. Bancorp Asset Management, Inc.
Purchase and Sale of Fund Shares
Investments in the fund are limited to accounts beneficially owned by natural persons. You may purchase or redeem shares of the fund on any business day by calling your financial institution. The fund reserves the right to reject any purchase order or to stop offering shares for sale at any time.
Tax Information
Dividends you receive from the fund are generally taxable as ordinary income. Dividends attributable to income from U.S. government securities may be exempt from state personal income taxes.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase the fund through a broker-dealer or other financial intermediary (such as a bank), the fund and its related companies may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
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The investment objective of the fund is to seek maximum current income to the extent consistent with the preservation of capital and maintenance of liquidity. The fund’s investment objective may be changed without shareholder approval. Please remember, there is no guarantee that the fund will achieve its objective.
Principal Investment Strategies
The fund’s principal investment strategies are discussed below. These are the strategies that the fund’s investment advisor believes are most likely to be important in trying to achieve the fund’s objectives. 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 SAI. For a copy of the SAI, call Investor Services at 800 677-3863.
Principal Investment Strategies Applicable to the Fund
The fund complies with SEC regulations that apply to money market funds. These regulations require that the fund’s investments mature within 397 days from the date of purchase and that the fund maintain a weighted average maturity of 60 days or less and a weighted average life of 120 days or less. The fund may invest in securities with variable or floating interest rates and securities with demand features. The maturities of these securities are determined according to regulations which allow the fund to consider some of these securities as having maturities shorter than their stated maturity dates. All of the fund’s investments must be in U.S. dollar-denominated high quality securities which have been determined by the fund’s advisor to present minimal credit risk and are rated in one of the two highest rating categories by one or more nationally recognized statistical rating organizations (NRSROs) or are deemed by the advisor to be of comparable quality to securities having such ratings. In addition, no more than 3% of the fund’s total assets may be invested in securities rated in the second highest rating category by an NRSRO or deemed to be of comparable quality by the fund’s advisor at the time of purchase (“second-tier securities”). With limited exceptions, the fund may not invest more than 5% of its total assets in securities issued by the same issuer. The fund is further limited to investing no more than ½ of 1% in second-tier securities of any issuer. The fund must comply with weekly liquidity standards that require a fund to hold at least 30% of its total assets in cash, direct obligations of the U.S. Government, agency discount notes with remaining maturities of 60 days or less, or securities convertible into cash within five business days. The fund must also comply with daily liquidity standards that require a fund to hold at least 10% of its total assets in cash, direct obligations of the U.S. Government, or securities convertible into cash within one business day. The fund is limited to investing no more than 5% of its total assets in illiquid securities.
When selecting securities for the fund, the portfolio managers first consider general economic factors, market conditions, and the short-term interest rate environment in determining what types of short-term instruments to purchase. The portfolio managers then select the specific instruments to be purchased. Generally, the portfolio managers buy and hold securities until their maturities. However, the portfolio managers may sell securities for a variety of reasons, such as to adjust the portfolio’s average maturity, credit, liquidity or yield metrics.
For liquidity and to respond to unusual market conditions, the fund may hold all or a significant portion of its total assets in cash for temporary defensive purposes. This may result in a lower yield and prevent the fund from meeting its investment objective.
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More about the Fund
Principal Investment Strategies continued
The fund pursues its objective by investing in high-quality short-term debt obligations, including:
| · | commercial paper; |
| · | U.S. dollar-denominated obligations of domestic and foreign banks with total assets of at least $500 million (including fixed and variable rate certificates of deposit, time deposits, and bankers’ acceptances); |
| · | non-convertible corporate debt securities; |
| · | securities issued by the U.S. government or one of its agencies or instrumentalities; |
| · | municipal securities, including variable rate demand notes, commercial paper, and municipal notes and other short-term municipal obligations; |
| · | loan participation interests; and |
| · | repurchase agreements. |
The fund may invest more than 25% of its total assets in obligations of U.S. banks.
Under normal market conditions, portfolio managers will only purchase (and hold) securities in the fund if they are rated in the top short-term rating category, for example, a rating of A-1 or a rating of Prime-1. If the rating of a security is reduced below the top short-term rating category after purchase, portfolio managers will make every attempt to sell the security, unless they have determined that it would not be in the best interest of the fund to dispose of the security at that time and, where necessary, have obtained the approval of the fund’s board of directors to continue to hold the security.
U.S. government securities issued by the Federal National Mortgage Association (Fannie Mae), Federal Home Loan Mortgage Corporation (Freddie Mac) and the Federal Home Loan Banks (FHLB) are neither issued nor guaranteed by the U.S. Treasury and are not backed by the full faith and credit of the United States. These entities, however, were chartered or supported by Acts of Congress and are supported by federal subsidies, loans or other benefits. The Government National Mortgage Association (Ginnie Mae) is a wholly-owned U.S. corporation that is authorized to guarantee timely payment and interest of its securities. U.S. government securities issued by Ginnie Mae are guaranteed by the full faith and credit of the United States. Other U.S. government securities do not have an explicit guarantee but support is implied due to the government sponsorship of their mandated activities, including securities issued by the Tennessee Valley Authority and Federal Farm Credit Banks.
Other Money Market Funds
The fund may invest in other money market funds that invest in the same types of securities as the fund, as a non-principal investment strategy, including each of the other money market funds advised by the fund’s investment advisor. To avoid duplicative investment advisory fees, when the fund invests in another money market fund advised by the fund’s investment advisor, the investment advisor reimburses the fund an amount equal to the fund’s proportionate share of the investment advisory fee paid by the other money market fund to the investment advisor. If the fund invests in money market funds advised by another investment advisor, you will bear both your proportionate share of the expenses in the fund (including management and advisory fees) and, indirectly, the expenses of such other money market fund.
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More about the Fund
Other Investment Strategies continued
Securities Lending
To generate additional income, and as a non-principal investment strategy, the fund may lend securities representing up to one-third of the value of its total assets to broker-dealers, banks, and other institutions deemed by the fund’s advisor to present minimal credit risk. When a fund loans its portfolio securities, it will receive, at the inception of each loan, cash collateral equal to at least 102% of the value of the loaned securities, which is invested consistent with the fund’s investment strategies. If the borrower fails to return the loaned securities, the fund could suffer a loss if the value of the invested collateral is insufficient to purchase replacement securities.
The principal risks of investing in the fund are identified and further discussed below.
| · | Banking Industry Risk | · | Liquidity Risk |
| · | Credit Risk | · | Municipal Security Risk |
| · | Cybersecurity Risk | · | Redemption Risk |
| · | Foreign Security Risk | · | Regulatory Risk |
| · | Income Risk | · | Repurchase Agreement Risk |
| · | Interest Rate Risk | · | Variable Rate Demand Note (VRDN) Risk |
Description of Principal Investment Risks
Banking Industry Risk. An adverse development in the banking industry (domestic or foreign) may affect the value of the fund’s investments more than if the fund was not invested to such a degree in the banking industry. Banks may be particularly susceptible to certain economic factors such as interest rate changes, adverse developments in the real estate market, fiscal and monetary policy and general economic cycles. For example, deteriorating economic and business conditions can disproportionately impact companies in the banking industry due to increased defaults on payments by borrowers. Moreover, political and regulatory changes can affect the operations and financial results of companies in the banking industry, potentially imposing additional costs and expenses or restricting the types of business activities of these companies.
Credit Risk. The value of your investment might decline if the issuer of an obligation held by the fund defaults on the obligation or has its credit rating downgraded.
Cybersecurity Risk. With the increased use of technologies such as the Internet and the dependence on computer systems to perform necessary business functions, a fund may be subject to operational and informational security risks resulting from breaches in cybersecurity (“cyber-attacks”). A cyber-attack refers to both intentional and unintentional events that may cause a fund to lose proprietary information, suffer data corruption, or lose operational capacity. Cyber-attacks include, but are not limited to, infection by computer viruses or other malicious software code, gaining unauthorized access to systems, networks, or devices that are used to service the fund’s operations through “hacking” or other means for the purpose of misappropriating assets or sensitive information, corrupting data, or causing operational disruption.
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More about the Fund
Description of Principal Investment Risks continued
Cybersecurity failures or breaches by the fund’s affiliates or service providers, may cause disruptions and impact the business operations, potentially resulting in financial losses to both a fund and its shareholders, the inability of fund shareholders to transact business, inability to calculate a fund’s net asset value, impediments to trading, violations of applicable privacy and other laws (including the release of private shareholder information), regulatory fines, penalties, reputational damage, reimbursement or other compensation costs, and/or additional compliance costs. In addition, substantial costs may be incurred in order to prevent any cyber incidents in the future. While the advisor has risk management systems designed to prevent or reduce the impact of such cyber-attacks, there are inherent limitations in such controls, systems and protocols, including the possibility that certain risks have not been identified, as well as the rapid development of new threats. These cybersecurity risks are also present for issuers of securities in which a fund invests, which could result in material adverse consequences for such issuers, and may cause a fund’s investment in such securities to lose value and may result in financial loss for fund shareholders.
Foreign Security Risk. The foreign securities in which the fund may invest, even when dollar denominated and publicly traded in the United States, may involve risks not associated with the securities of domestic issuers. Political or social instability or diplomatic developments could adversely affect the securities. There is also the risk of possible withholding taxes, seizure of foreign deposits, currency controls, interest limitations, or other governmental restrictions which might affect the payment of principal or interest on securities owned by the fund. In addition, there may be less public information available about foreign corporations and foreign banks and their branches.
Income Risk. The level of income you receive from the fund will be affected by movements in short-term interest rates.
Interest Rate Risk. The value of your investment might decline because of a sharp rise in interest rates that causes the value of the fund’s portfolio holdings to fall.
Liquidity Risk. The fund may not be able to sell a security in a timely manner or at a desired price, or may be unable to sell the security at all, because of a lack of demand in the market for the security or because a liquidity provider defaults on its obligation to purchase the security when properly tendered by the fund.
Municipal Security Risk. The value of municipal securities owned by the fund may be adversely affected by future changes in federal income tax laws, including rate reductions or the imposition of a flat tax, and adverse changes in the financial conditions of municipal securities issuers.
Redemption Risk. If there are unexpectedly high redemptions of fund shares, the fund might have to sell portfolio securities prior to their maturity, possibly at a loss.
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More about the Fund
Description of Principal Investment Risks continued
Regulatory Risk. In July 2014, the SEC adopted reforms to money market fund regulation. The compliance periods for these reforms range between July 2015 and October 2016. When the reforms are implemented, they could affect the fund’s operations and return potential. The reforms will, among other things, beginning October 14, 2016, permit (and, under certain circumstances, require) money market funds, including the fund, to impose a “liquidity fee” (up to 2% of redemption proceeds) or “redemption gate” that temporarily restricts redemptions from a money market fund, if a fund’s weekly liquidity level falls below the required regulatory threshold. In addition, changes to monetary policy by the Federal Reserve or other regulatory actions could expose fixed income and related markets to heightened volatility, interest rate sensitivity and reduced liquidity, which may impact the fund’s operations, universe of potential investment options, and return potential.
Repurchase Agreement Risk. For the fund, if the seller of a repurchase agreement defaults on its obligation to repurchase securities from the fund, the fund may incur costs in disposing of the securities purchased and may experience losses if the proceeds from the sale of the securities are less than the full repurchase price. Securities purchased by the fund under a repurchase agreement may include securities that the fund is not otherwise permitted to purchase directly, such as long-term government bonds, investment and non-investment grade corporate bonds, asset- and mortgage-backed securities, collateralized mortgage obligations, agency real estate mortgage investment conduits, and equity securities. The value of these securities may be more volatile or less liquid than the securities the fund is permitted to purchase directly, which increases the risk that the fund will be unable to recover fully in the event of the seller’s default.
Variable Rate Demand Note (VRDN) Risk. Investments in VRDNs involve credit risk with respect to the issuer or financial institution providing the fund with the credit and liquidity support for the unconditional put option. While the fund invests only in VRDNs of high quality issuers, or which are supported by high quality financial institutions, it is still possible that an issuer or financial institution could default on its obligations.
Disclosure of Portfolio Holdings
A description of the fund’s policies and procedures with respect to the disclosure of the fund’s portfolio securities is available in the fund’s SAI.
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U.S.
Bancorp Asset Management, Inc.
800 Nicollet Mall
Minneapolis, MN 55402
U.S. Bancorp Asset Management provides investment management services to individuals and institutions, including corporations, foundations, pensions, and retirement plans. As of December 31, 2015, U.S. Bancorp Asset Management had more than $56 billion in assets under management, including investment company assets of more than $44 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 pays the investment advisor a monthly management fee equal to an annual rate of 0.10% of average daily net assets for providing investment advisory services to the fund.
U.S. Bancorp Asset Management may voluntarily waive or reimburse certain fees and expenses in order to maintain a zero or positive yield for each share class of the fund. These waivers and reimbursements may be terminated at any time by U.S. Bancorp Asset Management.
A discussion regarding the basis for the board’s approval of the fund’s investment advisory agreement will appear in the fund’s annual report to shareholders for the fiscal year ending August 31, 2016.
Additional Compensation
U.S. Bancorp Asset Management, U.S. Bank National Association (U.S. Bank) 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, U.S. Bank and their affiliates also receive compensation from the fund as set forth below.
Administration Services. U.S. Bancorp Asset Management and its affiliate, U.S. Bancorp Fund Services, LLC (Fund Services), act as the fund’s administrator and sub-administrator, respectively, providing administration services that include general administrative and accounting services, blue sky services and shareholder services. For such services, the fund pays U.S. Bancorp Asset Management the fund’s pro rata portion of up to 0.15%, on an annual basis, of the aggregate average daily net assets attributable to Class T shares of all First American money market funds. U.S. Bancorp Asset Management pays Fund Services a portion of its fee, as agreed to from time to time. In addition to these fees, the fund may reimburse U.S. Bancorp Asset Management for any out-of-pocket expenses incurred in providing administration services.
Custody Services. U.S. Bank provides custody services to the fund. U.S. Bank is paid monthly fees equal, on an annual basis, to 0.005% of the fund’s average daily net assets.
Securities Lending Services. In connection with lending its portfolio securities, the fund pays a fee to U.S. Bank of 20% of its net income from securities lending transactions and U.S. Bank pays half of such fees to U.S. Bancorp Asset Management for certain securities lending services provided by U.S. Bancorp Asset Management.
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Fund Management
Investment Advisor continued
Shareholder Servicing Fees. The fund pays U.S. Bancorp Asset Management a shareholder servicing fee at an annual rate of 0.20% of its average daily net assets attributable to Class T shares for providing or arranging for the provision of shareholder services to the holders of its Class T shares.
Transfer Agency Services. Fund Services provides transfer agency and dividend disbursing services, as well as certain shareholder services, to the fund. Fund Services receives fees for transfer agency and dividend disbursing services on a per shareholder account basis, subject to a minimum fee per share class. In addition, the fund may reimburse Fund Services for any out-of-pocket expenses incurred in providing transfer agency services.
Other Compensation. To the extent that fund shares are held through U.S. Bank or its broker-dealer affiliate, U.S. Bancorp Investments, Inc., those entities may receive distribution and/or shareholder servicing fees from the fund’s distributor as well as other payments from the fund’s distributor and/or advisor as described below under “Shareholder Information —Additional Payments to Institutions.”
The fund is managed by a team of persons who are employed by U.S. Bancorp Asset Management.
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You may purchase or redeem shares of the fund on any business day that the Federal Reserve Bank of New York (Federal Reserve) is open, except as noted below. In addition to weekends, the Federal Reserve is closed on the following Federal holidays: New Year’s Day, Martin Luther King, Jr. Day, Presidents’ Day, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving Day, and Christmas Day. The fund may close when the Federal Reserve is open and the NYSE is closed, such as Good Friday. On any business day when the Securities Industry Financial Markets Association recommends that the bond markets close trading early, the fund may also close trading early.
Your purchase or redemption price will be based on that day’s NAV per share if your order is received by the fund in proper form prior to the time the fund calculates its NAV. See “Additional Information on Purchasing and Redeeming Fund Shares — Calculating Net Asset Value” below. Contact your investment professional or financial institution to determine the time by which it must receive your order to be assured same day processing. To make sure your order is in proper form, you must follow the instructions set forth below under “Purchasing and Redeeming Fund Shares.”
The fund issues its shares in multiple classes. This prospectus offers Class T shares.
Class T shares are only available to certain accounts for which a financial intermediary acts in a fiduciary, agency, custodial, or other service capacity. Class T shares are offered at net asset value, with no front-end or contingent deferred sales charge, but with an annual shareholder servicing fee of 0.20%.
The fund also has adopted a non-Rule 12b-1 shareholder servicing plan and agreement with respect to its Class T shares. Under this plan and agreement, the fund pays U.S. Bancorp Asset Management, Inc. a shareholder servicing fee at an annual rate of 0.20% of average daily Class T share net assets for providing or arranging for the provision of shareholder services to the holders of Class T shares. No distribution-related services are provided under this plan and agreement.
Because the current prospectus and SAI are available on First American Funds’ website free of charge, we do not disclose the following information separately on the website.
Your purchase or redemption price for Class T shares is the fund’s next determined net asset value after the fund, or its designated agent, receives your order in proper form. To understand how the fund calculates its net asset value, see “Additional Information on Purchasing and Redeeming Fund Shares – Calculating Net Asset Value” below.
Purchasing and Redeeming Fund Shares
To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. As a result, when you open an account, we will ask for your name, permanent street address, date of birth, and social security or taxpayer identification number. Addresses containing a P.O. Box only will not be accepted. We may also ask for other identifying documents or information.
Investments in the fund are intended to be limited to accounts beneficially owned by natural persons. Natural persons are permitted to invest in the fund through certain tax-advantaged savings accounts, trusts and other retirement and investment accounts, including, for example:
| · | Participant-directed defined contribution plans; |
| · | Individual retirement accounts; |
| · | Simplified employee pension arrangements; |
| · | SIMPLE retirement accounts; |
| · | Custodial accounts; |
| · | Deferred compensation plans for government or tax-exempt organization employees; |
| · | Archer medical savings accounts; |
| · | College savings plans; |
| · | Health savings account plans; |
| · | Ordinary trusts and estates of natural persons; or |
| · | Certain other retirement and investment accounts having an institutional decision maker (e.g., a plan sponsor in certain retirement arrangements or an investment adviser managing discretionary investment accounts). |
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Shareholder Information
Purchasing and Redeeming Fund Shares continued
On or before October 14, 2016, the fund will adopt policies and procedures reasonably designed to limit all beneficial owners of the fund to natural persons. The fund reserves the right to repurchase shares in any accounts that are not beneficially owned by natural persons, after providing 60 days’ written notice.
You may purchase or redeem shares of the Fund on any business day by calling your financial institution.
When purchasing shares, payment must be made by wire transfer, which can be arranged by your financial institution. You cannot purchase shares by wire on days when federally chartered banks are closed.
If the fund receives a redemption request by the time the fund calculates its NAV, as specified below, payment will be made the same day by transfer of federal funds if the Fedwire transfer system is available for use that day. Otherwise, payment will be made on the next business day.
Suspension or Postponement of Redemptions. The fund reserves the right to suspend the right of shareholder redemption, or postpone the date of payment:
| · | if emergency conditions should exist, as specified in the Investment Company Act of 1940 (the “Investment Company Act”), or as determined by the Securities and Exchange Commission (SEC), as a result of which disposal of portfolio securities or determination of the net asset value (NAV) of the fund is not reasonably practicable; |
| · | for any period during which trading on the New York Stock Exchange (NYSE) is restricted as determined by the SEC or the NYSE is closed (other than customary weekend and holiday closings); |
| · | for any period during which the SEC has, by rule or regulation, deemed that (1) trading shall be restricted or (2) an emergency exists; or |
| · | for such other periods as the SEC may by order permit for the protection of shareholders of the fund. |
In addition, in the unlikely event that the fund’s board of directors were to determine pursuant to SEC regulations that the extent of the deviation between the fund’s amortized cost per share and its market-based NAV per share may result in material dilution or other unfair results to shareholders, the board will cause the fund to take such action as it deems appropriate to eliminate or reduce to the extent practicable such dilution or unfair results, including suspending redemption of shares and liquidating the fund under Rule 22e-3 of the Investment Company Act.
Purchases In-Kind. Generally, all purchases will be in cash. However, the fund reserves the right to permit you to purchase shares through the exchange of other securities that you own if consistent with the fund’s investment objective, policies, and operations. The market value of any securities exchanged, plus any cash, must be at least $25 million. Please contact your financial institution.
Redemptions In-Kind. Generally, all redemptions will be for cash. However, the fund reserves the right to pay all or part of your redemption proceeds in readily marketable securities instead of cash. If payment by the fund is made in securities, the fund will value the securities selected in the same manner in which it computes its NAV. This process minimizes the effect of large redemptions on the fund and its remaining shareholders. If you receive redemption proceeds in-kind, you should expect to incur transaction costs upon disposition of those securities. In addition, if you receive redemption proceeds in-kind, you will be subject to market gains or losses upon the disposition of those securities.
Potential Restrictions on Fund Redemptions – Fees and Gates. Beginning October 14, 2016, the fund’s board of directors will be permitted to impose a liquidity fee on redemptions (up to 2% of redemption proceeds) or temporarily restrict redemptions from the fund up to 10 business days during a 90-day period (a “redemption gate”), in the event that the fund’s weekly liquid assets fall below the following thresholds:
| · | 30% weekly liquid assets – If the fund’s weekly liquid assets fall below 30% of the fund’s total assets, and the fund’s board of directors determines it is in the best interest of the Fund, the board of directors may impose a liquidity fee of no more than 2% of the amount redeemed and/or a redemption gate that temporarily suspends the right of redemption. |
| · | 10% weekly liquid assets – If the fund’s weekly liquid assets fall below 10% of the fund’s total assets, the fund will impose, at the beginning of the next business day, a liquidity fee of 1% of the amount redeemed, unless the fund’s board of directors determines that imposing such a fee would not be in the best interests of the fund or determines that a lower or higher fee (not to exceed 2%) would be in the best interests of the fund. |
Liquidity fees and redemption gates may be terminated at any time in the discretion of the fund’s board of directors. Liquidity fees and redemption gates will also terminate at the beginning of the next business day once the fund has invested 30% or more of its total assets in weekly liquid assets as of the end of a business day.
Weekly liquid assets generally include cash; direct obligations of the U.S. government; certain U.S. government agency discount notes with remaining maturities of 60 days or less; securities that will mature or are subject to a demand feature that is exercisable and payable within five business days; or amounts receivable and due unconditionally within five business days on pending sales of portfolio securities. For these purposes, weekly liquid assets will be calculated as of the end of each business day.
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Shareholder Information
Additional Information on Purchasing and Redeeming Fund Shares
Calculating Net Asset Value
The fund generally calculates its NAV per share as of 3:30 p.m. Central time on each business day that the fund is open, except that the NAV for the fund is generally calculated at 1:00 p.m. Central time on days on which the bond markets close early (typically on the business day preceding a Federal holiday) (an “Early Close”). Purchase and redemption orders received after closing time, including an Early Close, will be processed the next business day.
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. The securities held by the fund are valued on the basis of amortized cost. This involves valuing an instrument at its cost and thereafter assuming a constant amortization of any discount or premium until the instrument’s maturity, rather than looking at actual changes in the market value of the instrument. The fund’s net asset value is normally expected to be $1 per share.
Frequent Trading of Fund Shares
The fund is designed to offer investors a liquid cash option and it is anticipated that shareholders will purchase and redeem fund shares on a frequent basis. Frequent trading by shareholders may disrupt the management of the fund and increase fund expenses. However, given the short-term nature of the fund’s investments and its use of the amortized cost method for calculating the NAV of fund shares, the fund does not anticipate that in the normal case frequent or short-term trading into and out of the fund will have significant adverse consequences for the fund and its shareholders. Accordingly, the fund’s board of directors has not adopted policies or procedures to monitor or discourage frequent or short-term trading of the fund’s shares.
The fund earns interest, dividends and other income from its investments, and distributes this income (less fund expenses) to you as dividends. Dividends from the fund’s net investment income are declared daily and paid monthly. The fund may take into account capital gains and losses (other than net long-term capital gains) in its daily dividend declarations. The fund may also make additional distributions for tax purposes if necessary.
If the fund receives your wire transfer payment for fund shares by the time the fund determines its NAV, you will begin to accrue dividends on that day. If you redeem shares, you will not receive a dividend on the day of your redemption request if your request is received by the time the fund determines its NAV.
Dividends will be reinvested in additional shares of the same 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, by contacting your financial institution, or by calling Investor Services at 800 677-3863. Cash distributions will be paid on or about the first business day of each month. If you request that your distributions be paid in cash but those distributions cannot be delivered because of an incorrect mailing address, or if a distribution check remains uncashed for six months, the undelivered or uncashed 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 provided in the SAI. However, because everyone’s tax situation is unique, always consult your tax professional about federal, state, and local tax consequences.
Dividends you receive from the fund are generally taxable as ordinary income, whether you reinvest them or take them in cash. Dividends from the fund will not be eligible for the reduced rate of tax that applies to “qualified dividend income.”
| 14 | Prospectus – | First
American Money Market Funds Class T Shares |
Shareholder Information
Additional Payments to Institutions
The advisor and/or the distributor may pay additional compensation to participating institutions (each an “institution” and, collectively, “institutions”) out of their own resources in connection with the sale or retention of fund shares and/or in exchange for sales and/or administrative services performed on behalf of the institution’s customers. The amounts of these payments may be significant, and may create an incentive for the institution or its employees or associated persons to recommend or sell shares of the fund to you. These payments are not reflected in the fees and expenses listed in the “Fund Summary” section of the prospectus because they are not paid by the fund.
These payments are negotiated and may be based on such factors as the number or value of First American money market fund shares that the institution sells or may sell; the value of the assets invested in the First American money market funds by the institution’s customers; lump sum payment for services provided; the type and nature of services or support furnished by the institution; and/or other measures as determined from time to time by the advisor and/or distributor.
The advisor and/or distributor may make other payments or allow other promotional incentives to institutions to the extent permitted by SEC and FINRA rules and by other applicable laws and regulations. Certain institutions may also receive payments in recognition of sub-accounting or other services they provide to shareholders or plan participants who invest in the fund or other First American money market funds through their employee benefit or retirement plan.
You can ask your institution for information about any payments it receives from the advisor and/or the distributor and from the fund, and any services your institution provides, as well as about fees and/or commissions your institution charges. You can also find more details about payments made by the advisor and/or the distributor in the fund’s SAI.
Shareholder Reports
Shareholder reports are mailed twice a year, in October and April. They include financial statements and performance information, and, on an annual basis, the report of independent registered public accounting firm.
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 800 677-3863.
Statements and Confirmations
Statements summarizing activity in your account are mailed quarterly. Confirmations generally 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.
| 15 | Prospectus – | First
American Money Market Funds Class T Shares |
As of the date of this prospectus, the fund had not yet commenced operations and had no financial highlights to report.
| 16 | Prospectus – | First
American Money Market Funds Class T Shares |
First American Funds’ Privacy Policy
We want to provide an explanation to Consumers of what nonpublic personal information is and how it’s collected and used.
A “Consumer” is considered an individual investor who invests or has invested in our products for personal, family or household purposes.
“Nonpublic personal information” is nonpublic information that we obtain while providing financial products or services to you.
How we collect your information
We obtain nonpublic information about you during the account opening process from the applications and other forms you are asked to complete and from the transactions you make with us. We may also receive nonpublic information about you from companies affiliated with us or from other companies that provide services to you.
The types of information we collect
We may collect the following nonpublic personal information about you:
| · | Information about your identity, such as your name, address, and social security number. |
| · | Information about your transactions with us. |
| · | Information you provide on applications, such as your beneficiaries and banking information, if provided to us. |
Why we collect your information
We gather nonpublic personal information about you and your accounts so that we can:
| · | Know who you are and prevent unauthorized access to your information. |
| · | Comply with the laws and regulations that govern us. |
What information we disclose
We may share some or all of the nonpublic personal information that we collect about you with our affiliated providers of financial services, including our family of funds and their advisor, and with companies that perform shareholder services on our behalf. We do not use nonpublic information received from our affiliates for marketing purposes.
We’re permitted by law to disclose nonpublic personal information about you to other third parties in certain circumstances. For example, we may disclose nonpublic personal information about you to affiliated and nonaffiliated third parties to assist us in servicing your account (e.g., mailing of fund-related materials) and to government entities (e.g., IRS for tax purposes).
We’ll continue to adhere to the privacy policies and practices described here even after your account is closed or becomes inactive.
Confidentiality and security
To protect nonpublic personal information about you, we restrict access to such information to only those employees and authorized agents who need to use the information. We maintain physical, electronic, and procedural safeguards to maintain the confidentiality and security of nonpublic information about you. In addition, we require our service providers to restrict access to nonpublic personal information about you to those employees who need that information in order to provide products or services to you. We also require them to maintain physical, electronic, and procedural safeguards that comply with applicable federal standards and regulations to guard your information.
Additional rights and protections
You may have other privacy protections under applicable state laws. To the extent that these state laws apply, we will comply with them when we share information about you. This privacy policy does not apply to your relationship with other financial service providers, such as broker-dealers. We may amend this privacy notice at any time, and we will inform you of changes as required by law.
Our pledge applies to products and services offered by the First American Family of Funds
| NOT FDIC INSURED NO BANK GUARANTEE MAY LOSE VALUE |
THIS PAGE IS NOT PART OF THE PROSPECTUS
First American Funds
P.O. Box 1330
Minneapolis, MN 55440-1330
| |
| The Statement of Additional Information (SAI) provides more details about the fund and its policies and is incorporated into this prospectus by reference (which means that it is legally part of this prospectus). | Information about the fund (including the SAI) can also be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. To find out more about this public service, call the SEC at 1-202-551-8090. Reports and other information about the fund are also available on the EDGAR Database on the SEC’s Internet site at www.sec.gov, or you can obtain copies of this information, after paying a duplicating fee, by electronic request at the following e-mail address: [email protected], or by writing the SEC’s Public Reference Section, Washington, D.C. 20549-1520. | |
| Additional information about the fund’s investments will be available in the fund’s annual and semi-annual reports to shareholders. Prior to the date of this prospectus, the fund had not commenced operations. | ||
| You can obtain a free copy of the fund’s annual or semi-annual reports or the SAI, request other information about the fund, or make other shareholder inquiries by calling Investor Services at 800 677-3863 or by contacting the fund at the address above. Annual or semi-annual reports and the SAI will also be available on the fund’s Internet site at www.firstamericanfunds.com. |
| SEC file number: 811-03313 | PROPRIMET 07/16 |
Contents
Please find First American Funds’ Privacy Policy inside the back cover of this Prospectus.
This prospectus and the related Statement of Additional Information (SAI) do not constitute an offer to sell or a solicitation of an offer to buy shares in the funds, 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.
The funds may be offered only to persons in the United States. This prospectus should not be considered a solicitation or offering of fund shares outside the United States.
Investment Objective
Retail Prime Obligations Fund’s objective is to seek maximum current income to the extent consistent with the preservation of capital and maintenance of liquidity.
Fees and Expenses
The following tables describe the fees and expenses that you may pay if you buy and hold shares of the fund.
| Shareholder
Fees (fees paid directly from your investment) | Class Y | |||
| Maximum Sales Charge (Load) | None | |||
| Maximum Deferred Sales Charge (Load) | None | |||
| Annual
Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) | ||||
| Management Fees | 0.10% | |||
| Distribution and/or Service (12b-1) Fees | None | |||
| Other Expenses: | ||||
| Shareholder Servicing Fee | 0.25% | |||
| Miscellaneous1 | 0.19% | |||
| Total Annual Fund Operating Expenses | 0.54% | |||
| Less Fee Waivers2 | (0.09)% | |||
| Net Expenses2 | 0.45% |
| 1 | Miscellaneous expenses are based on estimated amounts for the fund's first fiscal year of operations. |
| 2 | The advisor has contractually agreed to waive fees and reimburse other fund expenses through July 18, 2017, so that total annual fund operating expenses, after waivers, do not exceed 0.45%. These fee waivers and expense reimbursements may be terminated at any time after July 18, 2017 at the discretion of the advisor. Prior to that time, such waivers and reimbursements may not be terminated without the approval of the fund’s board of directors. |
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. The example assumes that you invest $10,000 in the fund for the time periods indicated . The example also assumes that your investment has a 5% return each year and the fund’s operating expenses remain the same. You would incur these hypothetical expenses whether or not you redeem your investment at the end of the given period. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
| Class Y | ||||
| 1 year | $ | 46 | ||
| 3 years | $ | 164 | ||
| 1 | Prospectus – | First
American Money Market Funds Class Y Shares |
Fund Summary
Retail Prime Obligations Fund continued
Principal Investment Strategies
Retail Prime Obligations Fund invests in high-quality short-term debt obligations, including:
| · | commercial paper; |
| · | U.S. dollar-denominated obligations of domestic and foreign banks with total assets of at least $500 million (including fixed and variable rate certificates of deposit, time deposits, and bankers’ acceptances); |
| · | non-convertible corporate debt securities; |
| · | securities issued by the U.S. government or one of its agencies or instrumentalities; |
| · | municipal securities, including variable rate demand notes, commercial paper, and municipal notes and other short-term municipal obligations; |
| · | loan participation interests; and |
| · | repurchase agreements. |
The fund may invest more than 25% of its total assets in obligations of U.S. banks.
Under normal market conditions, portfolio managers will only purchase (and hold) securities in the fund if they are rated in the top short-term rating category, for example, a rating of A-1 or a rating of Prime-1. If the rating of a security is reduced below the top short-term rating category after purchase, portfolio managers will make every attempt to sell the security, unless they have determined that it would not be in the best interest of the fund to dispose of the security at that time and, where necessary, have obtained the approval of the fund’s board of directors to continue to hold the security.
Principal Risks
You could lose money by investing in the fund. Although the fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. The fund may impose a fee upon sale of your shares or may temporarily suspend your ability to sell shares if the fund’s liquidity falls below required minimums because of market conditions or other factors. 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. The advisor or its affiliates have no legal obligation to provide financial support to the fund, and you should not expect that the advisor will provide financial support to the fund at any time.
Principal risks of investing in this fund include:
Banking Industry Risk — An adverse development in the banking industry (domestic or foreign) may affect the value of the fund’s investments more than if the fund was not invested to such a degree in the banking industry. Banks may be particularly susceptible to certain economic factors such as interest rate changes, adverse developments in the real estate market, fiscal, regulatory and monetary policy and general economic cycles.
Credit Risk — The value of your investment might decline if the issuer of an obligation held by the fund defaults on the obligation or has its credit rating downgraded.
Cybersecurity Risk — The fund may be subject to operational and informational security risks resulting from breaches in cybersecurity at the fund, the fund’s affiliates or service providers. A cybersecurity breach at an issuer of securities in which the fund invests may cause such securities to lose value.
| 2 | Prospectus – | First
American Money Market Funds Class Y Shares |
Fund Summary
Retail Prime Obligations Fund continued
Foreign Security Risk — Securities of foreign issuers, even when dollar denominated and publicly traded in the United States, may involve risks not associated with the securities of domestic issuers.
Income Risk — The level of income you receive from the fund will be affected by movements in short-term interest rates.
Interest Rate Risk — The value of your investment might decline because of a sharp rise in interest rates that causes the value of the fund’s portfolio holdings to fall.
Liquidity Risk — The fund may not be able to sell a security in a timely manner or at a desired price, or may be unable to sell the security at all, because of a lack of demand in the market for the security, or a liquidity provider defaults on its obligation to purchase the security when properly tendered by the fund.
Municipal Security Risk — The value of municipal securities owned by the fund may be adversely affected by future changes in federal income tax laws, including rate reductions or the imposition of a flat tax, and adverse changes in the financial conditions of municipal securities issuers.
Redemption Risk — If there are unexpectedly high redemptions of fund shares, the fund might have to sell portfolio securities prior to their maturity, possibly at a loss.
Regulatory Risk — In July 2014, the Securities and Exchange Commission (SEC) adopted reforms to money market fund regulation. As the reforms are implemented through October 2016, they could affect the fund’s operations and return potential. The reforms will, among other things, permit the fund to impose a liquidity fee or redemption gate under certain circumstances effective October 14, 2016. In addition, changes to monetary policy by the Federal Reserve or other regulatory actions may impact the fund’s operations, universe of potential investment options, and return potential.
Repurchase Agreement Risk — If the seller of a repurchase agreement defaults on its obligation to repurchase securities from the fund, the fund may incur costs in disposing of the securities purchased and may experience losses if the proceeds from the sale of the securities are less than the full repurchase price.
Variable Rate Demand Note (VRDN) Risk — Investments in VRDNs involve credit risk with respect to the issuer or financial institution providing the fund with the credit and liquidity support for the unconditional put option.
| 3 | Prospectus – | First
American Money Market Funds Class Y Shares |
Fund Summary
Retail Prime Obligations Fund continued
Fund Performance
Because the fund had not yet commenced operations as of the date of this prospectus, there is no performance information to present for the fund.
Investment Advisor
U.S. Bancorp Asset Management, Inc.
Other Information
For important information about the purchase and sale of fund shares, tax information, and financial intermediary compensation, please see “Additional Summary Information” on page 5 of the prospectus.
| 4 | Prospectus – | First
American Money Market Funds Class Y Shares |
Additional Summary Information
Purchase and Sale of Fund Shares
Investments in the fund are limited to accounts beneficially owned by natural persons. You may purchase or redeem shares of the fund on any business day by calling your financial institution. The fund reserves the right to reject any purchase order or to stop offering shares for sale at any time.
Tax Information
Dividends you receive from the fund are generally taxable as ordinary income. Dividends attributable to income from U.S. government securities may be exempt from state personal income taxes.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase the fund through a broker-dealer or other financial intermediary (such as a bank), the fund and its related companies may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
| 5 | Prospectus – | First
American Money Market Funds Class Y Shares |
The investment objective of the fund is to seek maximum current income to the extent consistent with the preservation of capital and maintenance of liquidity. The fund’s investment objective may be changed without shareholder approval. Please remember, there is no guarantee that the fund will achieve its objective.
Principal Investment Strategies
The fund’s principal investment strategies are discussed below. These are the strategies that the fund’s investment advisor believes are most likely to be important in trying to achieve the fund’s objectives. 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 SAI. For a copy of the SAI, call Investor Services at 800 677-3863.
Principal Investment Strategies Applicable to the Fund
The fund complies with SEC regulations that apply to money market funds. These regulations require that the fund’s investments mature within 397 days from the date of purchase and that the fund maintain a weighted average maturity of 60 days or less and a weighted average life of 120 days or less. The fund may invest in securities with variable or floating interest rates and securities with demand features. The maturities of these securities are determined according to regulations which allow the fund to consider some of these securities as having maturities shorter than their stated maturity dates. All of the fund’s investments must be in U.S. dollar-denominated high quality securities which have been determined by the fund’s advisor to present minimal credit risk and are rated in one of the two highest rating categories by one or more nationally recognized statistical rating organizations (NRSROs) or are deemed by the advisor to be of comparable quality to securities having such ratings. In addition, no more than 3% of the fund’s total assets may be invested in securities rated in the second highest rating category by an NRSRO or deemed to be of comparable quality by the fund’s advisor at the time of purchase (“second-tier securities”). With limited exceptions, the fund may not invest more than 5% of its total assets in securities issued by the same issuer. The fund is further limited to investing no more than ½ of 1% in second-tier securities of any issuer. The fund must comply with weekly liquidity standards that require a fund to hold at least 30% of its total assets in cash, direct obligations of the U.S. Government, agency discount notes with remaining maturities of 60 days or less, or securities convertible into cash within five business days. The fund must also comply with daily liquidity standards that require a fund to hold at least 10% of its total assets in cash, direct obligations of the U.S. Government, or securities convertible into cash within one business day. The fund is limited to investing no more than 5% of its total assets in illiquid securities.
When selecting securities for the fund, the portfolio managers first consider general economic factors, market conditions, and the short-term interest rate environment in determining what types of short-term instruments to purchase. The portfolio managers then select the specific instruments to be purchased. Generally, the portfolio managers buy and hold securities until their maturities. However, the portfolio managers may sell securities for a variety of reasons, such as to adjust the portfolio’s average maturity, credit, liquidity or yield metrics.
For liquidity and to respond to unusual market conditions, the fund may hold all or a significant portion of its total assets in cash for temporary defensive purposes. This may result in a lower yield and prevent the fund from meeting its investment objective.
| 6 | Prospectus – | First
American Money Market Funds Class Y Shares |
More about the Fund
Principal Investment Strategies continued
The fund pursues its objective by investing in high-quality short-term debt obligations, including:
| · | commercial paper; |
| · | U.S. dollar-denominated obligations of domestic and foreign banks with total assets of at least $500 million (including fixed and variable rate certificates of deposit, time deposits, and bankers’ acceptances); |
| · | non-convertible corporate debt securities; |
| · | securities issued by the U.S. government or one of its agencies or instrumentalities; |
| · | municipal securities, including variable rate demand notes, commercial paper, and municipal notes and other short-term municipal obligations; |
| · | loan participation interests; and |
| · | repurchase agreements. |
The fund may invest more than 25% of its total assets in obligations of U.S. banks.
Under normal market conditions, portfolio managers will only purchase (and hold) securities in the fund if they are rated in the top short-term rating category, for example, a rating of A-1 or a rating of Prime-1. If the rating of a security is reduced below the top short-term rating category after purchase, portfolio managers will make every attempt to sell the security, unless they have determined that it would not be in the best interest of the fund to dispose of the security at that time and, where necessary, have obtained the approval of the fund’s board of directors to continue to hold the security.
U.S. government securities issued by the Federal National Mortgage Association (Fannie Mae), Federal Home Loan Mortgage Corporation (Freddie Mac) and the Federal Home Loan Banks (FHLB) are neither issued nor guaranteed by the U.S. Treasury and are not backed by the full faith and credit of the United States. These entities, however, were chartered or supported by Acts of Congress and are supported by federal subsidies, loans or other benefits. The Government National Mortgage Association (Ginnie Mae) is a wholly-owned U.S. corporation that is authorized to guarantee timely payment and interest of its securities. U.S. government securities issued by Ginnie Mae are guaranteed by the full faith and credit of the United States. Other U.S. government securities do not have an explicit guarantee but support is implied due to the government sponsorship of their mandated activities, including securities issued by the Tennessee Valley Authority and Federal Farm Credit Banks.
Other Money Market Funds
The fund may invest in other money market funds that invest in the same types of securities as the fund, as a non-principal investment strategy, including each of the other money market funds advised by the fund’s investment advisor. To avoid duplicative investment advisory fees, when the fund invests in another money market fund advised by the fund’s investment advisor, the investment advisor reimburses the fund an amount equal to the fund’s proportionate share of the investment advisory fee paid by the other money market fund to the investment advisor. If the fund invests in money market funds advised by another investment advisor, you will bear both your proportionate share of the expenses in the fund (including management and advisory fees) and, indirectly, the expenses of such other money market fund.
| 7 | Prospectus – | First
American Money Market Funds Class Y Shares |
More about the Fund
Other Investment Strategies continued
Securities Lending
To generate additional income, and as a non-principal investment strategy, the fund may lend securities representing up to one-third of the value of its total assets to broker-dealers, banks, and other institutions deemed by the fund’s advisor to present minimal credit risk. When a fund loans its portfolio securities, it will receive, at the inception of each loan, cash collateral equal to at least 102% of the value of the loaned securities, which is invested consistent with the fund’s investment strategies. If the borrower fails to return the loaned securities, the fund could suffer a loss if the value of the invested collateral is insufficient to purchase replacement securities.
The principal risks of investing in the fund are identified and further discussed below.
| · | Banking Industry Risk | · | Liquidity Risk |
| · | Credit Risk | · | Municipal Security Risk |
| · | Cybersecurity Risk | · | Redemption Risk |
| · | Foreign Security Risk | · | Regulatory Risk |
| · | Income Risk | · | Repurchase Agreement Risk |
| · | Interest Rate Risk | · | Variable Rate Demand Note (VRDN) Risk |
Description of Principal Investment Risks
Banking Industry Risk. An adverse development in the banking industry (domestic or foreign) may affect the value of the fund’s investments more than if the fund was not invested to such a degree in the banking industry. Banks may be particularly susceptible to certain economic factors such as interest rate changes, adverse developments in the real estate market, fiscal and monetary policy and general economic cycles. For example, deteriorating economic and business conditions can disproportionately impact companies in the banking industry due to increased defaults on payments by borrowers. Moreover, political and regulatory changes can affect the operations and financial results of companies in the banking industry, potentially imposing additional costs and expenses or restricting the types of business activities of these companies.
Credit Risk. The value of your investment might decline if the issuer of an obligation held by the fund defaults on the obligation or has its credit rating downgraded.
Cybersecurity Risk. With the increased use of technologies such as the Internet and the dependence on computer systems to perform necessary business functions, a fund may be subject to operational and informational security risks resulting from breaches in cybersecurity (“cyber-attacks”). A cyber-attack refers to both intentional and unintentional events that may cause a fund to lose proprietary information, suffer data corruption, or lose operational capacity. Cyber-attacks include, but are not limited to, infection by computer viruses or other malicious software code, gaining unauthorized access to systems, networks, or devices that are used to service the fund’s operations through “hacking” or other means for the purpose of misappropriating assets or sensitive information, corrupting data, or causing operational disruption.
| 8 | Prospectus – | First
American Money Market Funds Class Y Shares |
More about the Fund
Description of Principal Investment Risks continued
Cybersecurity failures or breaches by the fund’s affiliates or service providers, may cause disruptions and impact the business operations, potentially resulting in financial losses to both a fund and its shareholders, the inability of fund shareholders to transact business, inability to calculate a fund’s net asset value, impediments to trading, violations of applicable privacy and other laws (including the release of private shareholder information), regulatory fines, penalties, reputational damage, reimbursement or other compensation costs, and/or additional compliance costs. In addition, substantial costs may be incurred in order to prevent any cyber incidents in the future. While the advisor has risk management systems designed to prevent or reduce the impact of such cyber-attacks, there are inherent limitations in such controls, systems and protocols, including the possibility that certain risks have not been identified, as well as the rapid development of new threats. These cybersecurity risks are also present for issuers of securities in which a fund invests, which could result in material adverse consequences for such issuers, and may cause a fund’s investment in such securities to lose value and may result in financial loss for fund shareholders.
Foreign Security Risk. The foreign securities in which the fund may invest, even when dollar denominated and publicly traded in the United States, may involve risks not associated with the securities of domestic issuers. Political or social instability or diplomatic developments could adversely affect the securities. There is also the risk of possible withholding taxes, seizure of foreign deposits, currency controls, interest limitations, or other governmental restrictions which might affect the payment of principal or interest on securities owned by the fund. In addition, there may be less public information available about foreign corporations and foreign banks and their branches.
Income Risk. The level of income you receive from the fund will be affected by movements in short-term interest rates.
Interest Rate Risk. The value of your investment might decline because of a sharp rise in interest rates that causes the value of the fund’s portfolio holdings to fall.
Liquidity Risk. The fund may not be able to sell a security in a timely manner or at a desired price, or may be unable to sell the security at all, because of a lack of demand in the market for the security or because a liquidity provider defaults on its obligation to purchase the security when properly tendered by the fund.
Municipal Security Risk. The value of municipal securities owned by the fund may be adversely affected by future changes in federal income tax laws, including rate reductions or the imposition of a flat tax, and adverse changes in the financial conditions of municipal securities issuers.
Redemption Risk. If there are unexpectedly high redemptions of fund shares, the fund might have to sell portfolio securities prior to their maturity, possibly at a loss.
| 9 | Prospectus – | First
American Money Market Funds Class Y Shares |
More about the Fund
Description of Principal Investment Risks continued
Regulatory Risk. In July 2014, the SEC adopted reforms to money market fund regulation. The compliance periods for these reforms range between July 2015 and October 2016. When the reforms are implemented, they could affect the fund’s operations and return potential. The reforms will, among other things, beginning October 14, 2016, permit (and, under certain circumstances, require) money market funds, including the fund, to impose a “liquidity fee” (up to 2% of redemption proceeds) or “redemption gate” that temporarily restricts redemptions from a money market fund, if a fund’s weekly liquidity level falls below the required regulatory threshold. In addition, changes to monetary policy by the Federal Reserve or other regulatory actions could expose fixed income and related markets to heightened volatility, interest rate sensitivity and reduced liquidity, which may impact the fund’s operations, universe of potential investment options, and return potential.
Repurchase Agreement Risk. For the fund, if the seller of a repurchase agreement defaults on its obligation to repurchase securities from the fund, the fund may incur costs in disposing of the securities purchased and may experience losses if the proceeds from the sale of the securities are less than the full repurchase price. Securities purchased by the fund under a repurchase agreement may include securities that the fund is not otherwise permitted to purchase directly, such as long-term government bonds, investment and non-investment grade corporate bonds, asset- and mortgage-backed securities, collateralized mortgage obligations, agency real estate mortgage investment conduits, and equity securities. The value of these securities may be more volatile or less liquid than the securities the fund is permitted to purchase directly, which increases the risk that the fund will be unable to recover fully in the event of the seller’s default.
Variable Rate Demand Note (VRDN) Risk. Investments in VRDNs involve credit risk with respect to the issuer or financial institution providing the fund with the credit and liquidity support for the unconditional put option. While the fund invests only in VRDNs of high quality issuers, or which are supported by high quality financial institutions, it is still possible that an issuer or financial institution could default on its obligations.
Disclosure of Portfolio Holdings
A description of the fund’s policies and procedures with respect to the disclosure of the fund’s portfolio securities is available in the fund’s SAI.
| 10 | Prospectus – | First
American Money Market Funds Class Y Shares |
U.S.
Bancorp Asset Management, Inc.
800 Nicollet Mall
Minneapolis, MN 55402
U.S. Bancorp Asset Management provides investment management services to individuals and institutions, including corporations, foundations, pensions, and retirement plans. As of December 31, 2015, U.S. Bancorp Asset Management had more than $56 billion in assets under management, including investment company assets of more than $44 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 pays the investment advisor a monthly management fee equal to an annual rate of 0.10% of average daily net assets for providing investment advisory services to the fund.
U.S. Bancorp Asset Management may voluntarily waive or reimburse certain fees and expenses in order to maintain a zero or positive yield for each share class of the fund. These waivers and reimbursements may be terminated at any time by U.S. Bancorp Asset Management.
A discussion regarding the basis for the board’s approval of the fund’s investment advisory agreement will appear in the fund’s annual report to shareholders for the fiscal year ending August 31, 2016.
Additional Compensation
U.S. Bancorp Asset Management, U.S. Bank National Association (U.S. Bank) 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, U.S. Bank and their affiliates also receive compensation from the fund as set forth below.
Administration Services. U.S. Bancorp Asset Management and its affiliate, U.S. Bancorp Fund Services, LLC (Fund Services), act as the fund’s administrator and sub-administrator, respectively, providing administration services that include general administrative and accounting services, blue sky services and shareholder services. For such services, the fund pays U.S. Bancorp Asset Management the fund’s pro rata portion of up to 0.15%, on an annual basis, of the aggregate average daily net assets attributable to Class Y shares of all First American money market funds. U.S. Bancorp Asset Management pays Fund Services a portion of its fee, as agreed to from time to time. In addition to these fees, the fund may reimburse U.S. Bancorp Asset Management for any out-of-pocket expenses incurred in providing administration services.
| 11 | Prospectus – | First
American Money Market Funds Class Y Shares |
Fund Management
Investment Advisor continued
Custody Services. U.S. Bank provides custody services to the fund. U.S. Bank is paid monthly fees equal, on an annual basis, to 0.005% of the fund’s average daily net assets.
Securities Lending Services. In connection with lending their portfolio securities, the funds pay fees to U.S. Bank of 20% of the fund’s net income from securities lending transactions and U.S. Bank pays half of such fees to U.S. Bancorp Asset Management for certain securities lending services provided by U.S. Bancorp Asset Management.
Shareholder Servicing Fees. The fund pays U.S. Bancorp Asset Management a shareholder servicing fee at an annual rate of 0.25% of its average daily net assets attributable to Class Y shares for providing or arranging for the provision of shareholder services to the holders of its Class Y shares.
Transfer Agency Services. Fund Services provides transfer agency and dividend disbursing services, as well as certain shareholder services, to the fund. Fund Services receives fees for transfer agency and dividend disbursing services on a per shareholder account basis, subject to a minimum fee per share class. In addition, the fund may reimburse Fund Services for any out-of-pocket expenses incurred in providing transfer agency services.
Other Compensation. To the extent that fund shares are held through U.S. Bank or its broker-dealer affiliate, U.S. Bancorp Investments, Inc., those entities may receive distribution and/or shareholder servicing fees from the fund’s distributor as well as other payments from the fund’s distributor and/or advisor as described below under “Shareholder Information —Additional Payments to Institutions.”
The fund is managed by a team of persons who are employed by U.S. Bancorp Asset Management.
| 12 | Prospectus – | First
American Money Market Funds Class Y Shares |
You may purchase or redeem shares of the fund on any business day that the Federal Reserve Bank of New York (Federal Reserve) is open, except as noted below. In addition to weekends, the Federal Reserve is closed on the following Federal holidays: New Year’s Day, Martin Luther King, Jr. Day, Presidents’ Day, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving Day, and Christmas Day. The fund may close when the Federal Reserve is open and the NYSE is closed, such as Good Friday. On any business day when the Securities Industry Financial Markets Association recommends that the bond markets close trading early, the fund may also close trading early.
Your purchase or redemption price will be based on that day’s NAV per share if your order is received by the fund in proper form prior to the time the fund calculates its NAV. See “Additional Information on Purchasing and Redeeming Fund Shares — Calculating Net Asset Value” below. Contact your investment professional or financial institution to determine the time by which it must receive your order to be assured same day processing. To make sure your order is in proper form, you must follow the instructions set forth below under “Purchasing and Redeeming Fund Shares.” Some financial institutions may charge a transaction-based fee for helping you purchase or redeem shares or an asset-based fee. Contact your financial institution for more information.
The fund issues its shares in multiple classes. This prospectus offers Class Y shares.
Class Y shares are offered at net asset value, with no front-end or contingent deferred sales charge, but with an annual shareholder servicing fee of 0.25%. Class Y shares are offered to group retirement and employee benefit plans and to certain persons who are charged fees for advisory, investment, consulting or similar services by a financial intermediary or other service provider. Such persons may include, but are not limited to, individuals, corporations, and endowments.
The fund also has adopted a non-Rule 12b-1 shareholder servicing plan and agreement with respect to its Class Y shares. Under this plan and agreement, the fund pays U.S. Bancorp Asset Management a shareholder servicing fee at an annual rate of 0.25% of average daily Class Y share net assets for providing or arranging for the provision of shareholder services to the holders of Class Y shares. No distribution-related services are provided under this plan and agreement.
Because the current prospectus and SAI are available on First American Funds’ website free of charge, we do not disclose the following information separately on the website.
Your purchase or redemption price for Class Y shares is the fund’s next determined net asset value after the fund, or its designated agent, receives your order in proper form. To understand how the fund calculates its net asset value, see “Additional Information on Purchasing and Redeeming Fund Shares – Calculating Net Asset Value” below.
Purchasing and Redeeming Fund Shares
To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. As a result, when you open an account, we will ask for your name, permanent street address, date of birth, and social security or taxpayer identification number. Addresses containing a P.O. Box only will not be accepted. We may also ask for other identifying documents or information.
Investments in the fund are intended to be limited to accounts beneficially owned by natural persons. Natural persons are permitted to invest in the fund through certain tax-advantaged savings accounts, trusts and other retirement and investment accounts, including, for example:
| · | Participant-directed defined contribution plans; |
| · | Individual retirement accounts; |
| · | Simplified employee pension arrangements; |
| · | SIMPLE retirement accounts; |
| · | Custodial accounts; |
| · | Deferred compensation plans for government or tax-exempt organization employees; |
| · | Archer medical savings accounts; |
| · | College savings plans; |
| · | Health savings account plans; |
| · | Ordinary trusts and estates of natural persons; or |
| · | Certain other retirement and investment accounts having an institutional decision maker (e.g., a plan sponsor in certain retirement arrangements or an investment adviser managing discretionary investment accounts). |
| 13 | Prospectus – | First
American Money Market Funds Class Y Shares |
Shareholder Information
Purchasing and Redeeming Fund Shares continued
On or before October 14, 2016, the fund will adopt policies and procedures reasonably designed to limit all beneficial owners of the fund to natural persons. The fund reserves the right to repurchase shares in any accounts that are not beneficially owned by natural persons, after providing 60 days’ written notice.
You may purchase or redeem shares of the fund on any business day by calling your financial institution.
When purchasing shares, payment must be made by wire transfer, which can be arranged by your financial institution. You cannot purchase shares by wire on days when federally chartered banks are closed.
If the fund receives a redemption request by the time the fund calculates its NAV, as specified below, payment will be made the same day by transfer of federal funds if the Fedwire transfer system is available for use that day. Otherwise, payment will be made on the next business day.
Suspension or Postponement of Redemptions. The fund reserves the right to suspend the right of shareholder redemption, or postpone the date of payment:
| · | if emergency conditions should exist, as specified in the Investment Company Act of 1940 (the “Investment Company Act”), or as determined by the Securities and Exchange Commission (SEC), as a result of which disposal of portfolio securities or determination of the net asset value (NAV) of the fund is not reasonably practicable; |
| · | for any period during which trading on the New York Stock Exchange (NYSE) is restricted as determined by the SEC or the NYSE is closed (other than customary weekend and holiday closings); |
| · | for any period during which the SEC has, by rule or regulation, deemed that (1) trading shall be restricted or (2) an emergency exists; or |
| · | for such other periods as the SEC may by order permit for the protection of shareholders of the fund. |
In addition, in the unlikely event that the fund’s board of directors were to determine pursuant to SEC regulations that the extent of the deviation between the fund’s amortized cost per share and its market-based NAV per share may result in material dilution or other unfair results to shareholders, the board will cause the fund to take such action as it deems appropriate to eliminate or reduce to the extent practicable such dilution or unfair results, including suspending redemption of shares and liquidating the fund under Rule 22e-3 of the Investment Company Act.
Purchases In-Kind. Generally, all purchases will be in cash. However, the fund reserves the right to permit you to purchase shares through the exchange of other securities that you own if consistent with the fund’s investment objective, policies, and operations. The market value of any securities exchanged, plus any cash, must be at least $25 million. Please contact your investment professional, financial institution or Investor Services at 800 677-3863.
Redemptions In-Kind. Generally, all redemptions will be for cash. However, the fund reserves the right to pay all or part of your redemption proceeds in readily marketable securities instead of cash. If payment by the fund is made in securities, the fund will value the securities selected in the same manner in which it computes its NAV. This process minimizes the effect of large redemptions on the fund and its remaining shareholders. If you receive redemption proceeds in-kind, you should expect to incur transaction costs upon disposition of those securities. In addition, if you receive redemption proceeds in-kind, you will be subject to market gains or losses upon the disposition of those securities.
Potential Restrictions on Fund Redemptions – Fees and Gates. Beginning October 14, 2016, the fund’s board of directors will be permitted to impose a liquidity fee on redemptions (up to 2% of redemption proceeds) or temporarily restrict redemptions from the fund up to 10 business days during a 90-day period (a “redemption gate”), in the event that the fund’s weekly liquid assets fall below the following thresholds:
| · | 30% weekly liquid assets – If the fund’s weekly liquid assets fall below 30% of the fund’s total assets, and the fund’s board of directors determines it is in the best interest of the Fund, the board of directors may impose a liquidity fee of no more than 2% of the amount redeemed and/or a redemption gate that temporarily suspends the right of redemption. |
| · | 10% weekly liquid assets – If the fund’s weekly liquid assets fall below 10% of the fund’s total assets, the fund will impose, at the beginning of the next business day, a liquidity fee of 1% of the amount redeemed, unless the fund’s board of directors determines that imposing such a fee would not be in the best interests of the fund or determines that a lower or higher fee (not to exceed 2%) would be in the best interests of the fund. |
Liquidity fees and redemption gates may be terminated at any time in the discretion of the fund’s board of directors. Liquidity fees and redemption gates will also terminate at the beginning of the next business day once the fund has invested 30% or more of its total assets in weekly liquid assets as of the end of a business day.
Weekly liquid assets generally include cash; direct obligations of the U.S. government; certain U.S. government agency discount notes with remaining maturities of 60 days or less; securities that will mature or are subject to a demand feature that is exercisable and payable within five business days; or amounts receivable and due unconditionally within five business days on pending sales of portfolio securities. For these purposes, weekly liquid assets will be calculated as of the end of each business day.
| 14 | Prospectus – | First
American Money Market Funds Class Y Shares |
Shareholder Information
Additional Information on Purchasing and Redeeming Fund Shares
Calculating Net Asset Value
The fund generally calculates its NAV per share as of 3:30 p.m. Central time on each business day that the fund is open, except that the NAV for the fund is generally calculated at 1:00 p.m. Central time on days on which the bond markets close early (typically on the business day preceding a Federal holiday) (an “Early Close”). Purchase and redemption orders received after closing time, including an Early Close, will be processed the next business day.
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. The securities held by the fund is valued on the basis of amortized cost. This involves valuing an instrument at its cost and thereafter assuming a constant amortization of any discount or premium until the instrument’s maturity, rather than looking at actual changes in the market value of the instrument. The fund’s net asset value is normally expected to be $1 per share.
Frequent Trading of Fund Shares
The fund is designed to offer investors a liquid cash option and it is anticipated that shareholders will purchase and redeem fund shares on a frequent basis. Frequent trading by shareholders may disrupt the management of the fund and increase fund expenses. However, given the short-term nature of the fund’s investments and its use of the amortized cost method for calculating the NAV of fund shares, the fund does not anticipate that in the normal case frequent or short-term trading into and out of the fund will have significant adverse consequences for the fund and its shareholders. Accordingly, the fund’s board of directors has not adopted policies or procedures to monitor or discourage frequent or short-term trading of the fund’s shares.
The fund earns interest, dividends and other income from its investments, and distributes this income (less fund expenses) to you as dividends. Dividends from the fund’s net investment income are declared daily and paid monthly. The fund may take into account capital gains and losses (other than net long-term capital gains) in its daily dividend declarations. A fund may also make additional distributions for tax purposes if necessary.
If the fund receives your wire transfer payment for fund shares by the time the fund determines its NAV, you will begin to accrue dividends on that day. If you redeem shares, you will not receive a dividend on the day of your redemption request if your request is received by the time the fund determines its NAV.
Dividends will be reinvested in additional shares of the same 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, by contacting your financial institution, or by calling Investor Services at 800 677-3863. Cash distributions will be paid on or about the first business day of each month. If you request that your distributions be paid in cash but those distributions cannot be delivered because of an incorrect mailing address, or if a distribution check remains uncashed for six months, the undelivered or uncashed 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 provided in the SAI. However, because everyone’s tax situation is unique, always consult your tax professional about federal, state, and local tax consequences.
Dividends you receive from the fund are generally taxable as ordinary income, whether you reinvest them or take them in cash. Dividends from the fund will not be eligible for the reduced rate of tax that applies to “qualified dividend income.”
| 15 | Prospectus – | First
American Money Market Funds Class Y Shares |
Shareholder Information
Additional Payments to Institutions
The advisor and/or the distributor may pay additional compensation to investment professionals, participating institutions and “one-stop” mutual fund networks (each an “institution” and, collectively, “institutions”) out of their own resources in connection with the sale or retention of fund shares and/or in exchange for sales and/or administrative services performed on behalf of the institution’s customers. The amounts of these payments may be significant, and may create an incentive for the institution or its employees or associated persons to recommend or sell shares of the fund to you. These payments are not reflected in the fees and expenses listed in the “Fund Summary” section of the prospectus because they are not paid by the fund.
These payments are negotiated and may be based on such factors as the number or value of First American money market fund shares that the institution sells or may sell; the value of the assets invested in the First American money market funds by the institution’s customers; reimbursement of ticket or operational charges (fees that an institution charges its representatives for effecting transactions in fund shares); lump sum payment for services provided; the type and nature of services or support furnished by the institution; and/or other measures as determined from time to time by the advisor and/or distributor.
The advisor and/or distributor may make other payments or allow other promotional incentives to institutions to the extent permitted by SEC and FINRA rules and by other applicable laws and regulations. Certain institutions may also receive payments in recognition of sub-accounting or other services they provide to shareholders or plan participants who invest in the fund through their employee benefit or retirement plan.
You can ask your institution for information about any payments it receives from the advisor and/or the distributor and from the fund, and any services your institution provides, as well as about fees and/or commissions your institution charges. You can also find more details about payments made by the advisor and/or the distributor in the fund’s SAI.
Shareholder Reports
Shareholder reports are mailed twice a year, in October and April. They include financial statements and performance information, and, on an annual basis, the report of independent registered public accounting firm.
| 16 | Prospectus – | First
American Money Market Funds Class Y Shares |
Shareholder Information
Staying Informed continued
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 800 677-3863.
Statements and Confirmations
Statements summarizing activity in your account are mailed quarterly. Confirmations generally 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.
| 17 | Prospectus – | First
American Money Market Funds Class Y Shares |
As of the date of this prospectus, the fund had not yet commenced operations and had no financial highlights to report.
| 18 | Prospectus – | First
American Money Market Funds Class Y Shares |
First American Funds’ Privacy Policy
We want to provide an explanation to Consumers of what nonpublic personal information is and how it’s collected and used.
A “Consumer” is considered an individual investor who invests or has invested in our products for personal, family or household purposes.
“Nonpublic personal information” is nonpublic information that we obtain while providing financial products or services to you.
How we collect your information
We obtain nonpublic information about you during the account opening process from the applications and other forms you are asked to complete and from the transactions you make with us. We may also receive nonpublic information about you from companies affiliated with us or from other companies that provide services to you.
The types of information we collect
We may collect the following nonpublic personal information about you:
| · | Information about your identity, such as your name, address, and social security number. |
| · | Information about your transactions with us. |
| · | Information you provide on applications, such as your beneficiaries and banking information, if provided to us. |
Why we collect your information
We gather nonpublic personal information about you and your accounts so that we can:
| · | Know who you are and prevent unauthorized access to your information. |
| · | Comply with the laws and regulations that govern us. |
What information we disclose
We may share some or all of the nonpublic personal information that we collect about you with our affiliated providers of financial services, including our family of funds and their advisor, and with companies that perform shareholder services on our behalf. We do not use nonpublic information received from our affiliates for marketing purposes.
We’re permitted by law to disclose nonpublic personal information about you to other third parties in certain circumstances. For example, we may disclose nonpublic personal information about you to affiliated and nonaffiliated third parties to assist us in servicing your account (e.g., mailing of fund-related materials) and to government entities (e.g., IRS for tax purposes).
We’ll continue to adhere to the privacy policies and practices described here even after your account is closed or becomes inactive.
Confidentiality and security
To protect nonpublic personal information about you, we restrict access to such information to only those employees and authorized agents who need to use the information. We maintain physical, electronic, and procedural safeguards to maintain the confidentiality and security of nonpublic information about you. In addition, we require our service providers to restrict access to nonpublic personal information about you to those employees who need that information in order to provide products or services to you. We also require them to maintain physical, electronic, and procedural safeguards that comply with applicable federal standards and regulations to guard your information.
Additional rights and protections
You may have other privacy protections under applicable state laws. To the extent that these state laws apply, we will comply with them when we share information about you. This privacy policy does not apply to your relationship with other financial service providers, such as broker-dealers. We may amend this privacy notice at any time, and we will inform you of changes as required by law.
Our pledge applies to products and services offered by the First American Family of Funds
| NOT FDIC INSURED NO BANK GUARANTEE MAY LOSE VALUE |
THIS PAGE IS NOT PART OF THE PROSPECTUS
First
American Funds
P.O. Box 1330
Minneapolis, MN 55440-1330
The Statement of Additional Information (SAI) provides more details about the fund and its policies and is incorporated into this prospectus by reference (which means that it is legally part of this prospectus).
Additional information about the fund’s investments will be available in the fund’s annual and semi-annual reports to shareholders. Prior to the date of this prospectus, the fund had not commenced operations.
You can obtain a free copy of the fund’s annual or semi-annual reports or the SAI, request other information about the fund, or make other shareholder inquiries by calling Investor Services at 800 677-3863 or by contacting the fund at the address above. Annual or semi-annual reports and the SAI will also be available on the fund’s Internet site at www.firstamericanfunds.com.
Information about the fund (including the SAI) can also be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. To find out more about this public service, call the SEC at 1-202-551-8090. Reports and other information about the fund are also available on the EDGAR Database on the SEC’s Internet site at www.sec.gov, or you can obtain copies of this information, after paying a duplicating fee, by electronic request at the following e-mail address: [email protected], or by writing the SEC’s Public Reference Section, Washington, D.C. 20549-1520.
| SEC file number: 811-03313 | PROMMY 07/16 |
Please find First American Funds’ Privacy Policy inside the back cover of this Prospectus.
This prospectus and the related Statement of Additional Information (SAI) do not constitute an offer to sell or a solicitation of an offer to buy shares in the funds, 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.
The funds may be offered only to persons in the United States. This prospectus should not be considered a solicitation or offering of fund shares outside the United States.
Investment Objective
Retail Prime Obligations Fund’s objective is to seek maximum current income to the extent consistent with the preservation of capital and maintenance of liquidity.
Fees and Expenses
The following tables describe the fees and expenses that you may pay if you buy and hold shares of the fund.
| Shareholder
Fees (fees paid directly from your investment) |
Class Z | ||
| Maximum Sales Charge (Load) | None | ||
| Maximum Deferred Sales Charge (Load) | None | ||
| Annual
Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) |
|||
| Management Fees | 0.10% | ||
| Distribution and/or Service (12b-1) Fees | None | ||
| Other Expenses 1 | 0.18% | ||
| Total Annual Fund Operating Expenses | 0.28% | ||
| Less Fee Waivers2 | (0.08)% | ||
| Net Expenses2 | 0.20% |
| 1 | Other expenses are based on estimated amounts for the fund's first fiscal year of operations. | |
| 2 | The advisor has contractually agreed to waive fees and reimburse other fund expenses through July 18, 2017, so that total annual fund operating expenses, after waivers, do not exceed 0.20%. These fee waivers and expense reimbursements may be terminated at any time after July 18, 2017, at the discretion of the advisor. Prior to that time, such waivers and reimbursements may not be terminated without the approval of the fund’s board of directors. |
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. The example assumes that you invest $10,000 in the fund for the time periods indicated . The example also assumes that your investment has a 5% return each year and the fund’s operating expenses remain the same. You would incur these hypothetical expenses whether or not you redeem your investment at the end of the given period. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
| Class Z | ||||
| 1 year | $ | 20 | ||
| 3 years | $ | 82 | ||
| 1 | Prospectus – | First American Money Market
Funds Class Z Shares |
Fund Summary
Retail Prime Obligations Fund continued
Principal Investment Strategies
Retail Prime Obligations Fund invests in high-quality short-term debt obligations, including:
| · | commercial paper; |
| · | U.S. dollar-denominated obligations of domestic and foreign banks with total assets of at least $500 million (including fixed and variable rate certificates of deposit, time deposits, and bankers’ acceptances); |
| · | non-convertible corporate debt securities; |
| · | securities issued by the U.S. government or one of its agencies or instrumentalities; |
| · | municipal securities, including variable rate demand notes, commercial paper, and municipal notes and other short-term municipal obligations; |
| · | loan participation interests; and |
| · | repurchase agreements. |
The fund may invest more than 25% of its total assets in obligations to U.S. banks.
Under normal market conditions, portfolio managers will only purchase (and hold) securities in the fund if they are rated in the top short-term rating category, for example, a rating of A-1 or a rating of Prime-1. If the rating of a security is reduced below the top short-term rating category after purchase, portfolio managers will make every attempt to sell the security, unless they have determined that it would not be in the best interest of the fund to dispose of the security at that time and, where necessary, have obtained the approval of the fund’s board of directors to continue to hold the security.
Principal Risks
You could lose money by investing in the fund. Although the fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. The fund may impose a fee upon sale of your shares or may temporarily suspend your ability to sell shares if the fund’s liquidity falls below required minimums because of market conditions or other factors. 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. The advisor or its affiliates have no legal obligation to provide financial support to the fund, and you should not expect that the advisor will provide financial support to the fund at any time.
Principal risks of investing in this fund include:
Banking Industry Risk — An adverse development in the banking industry (domestic or foreign) may affect the value of the fund’s investments more than if the fund was not invested to such a degree in the banking industry. Banks may be particularly susceptible to certain economic factors such as interest rate changes, adverse developments in the real estate market, fiscal, regulatory and monetary policy and general economic cycles.
Credit Risk — The value of your investment might decline if the issuer of an obligation held by the fund defaults on the obligation or has its credit rating downgraded.
Cybersecurity Risk — The fund may be subject to operational and informational security risks resulting from breaches in cybersecurity at the fund, the fund’s affiliates or service providers. A cybersecurity breach at an issuer of securities in which the fund invests may cause such securities to lose value.
| 2 | Prospectus – | First American Money Market
Funds Class Z Shares |
Fund Summary
Retail Prime Obligations Fund continued
Foreign Security Risk — Securities of foreign issuers, even when dollar denominated and publicly traded in the United States, may involve risks not associated with the securities of domestic issuers.
Income Risk — The level of income you receive from the fund will be affected by movements in short-term interest rates.
Interest Rate Risk — The value of your investment might decline because of a sharp rise in interest rates that causes the value of the fund’s portfolio holdings to fall.
Liquidity Risk — The fund may not be able to sell a security in a timely manner or at a desired price, or may be unable to sell the security at all, because of a lack of demand in the market for the security, or a liquidity provider defaults on its obligation to purchase the security when properly tendered by the fund.
Municipal Security Risk — The value of municipal securities owned by the fund may be adversely affected by future changes in federal income tax laws, including rate reductions or the imposition of a flat tax, and adverse changes in the financial conditions of municipal securities issuers.
Redemption Risk — If there are unexpectedly high redemptions of fund shares, the fund might have to sell portfolio securities prior to their maturity, possibly at a loss.
Regulatory Risk — In July 2014, the Securities and Exchange Commission (SEC) adopted reforms to money market fund regulation. As the reforms are implemented through October 2016, they could affect the fund’s operations and return potential. The reforms will, among other things, permit the fund to impose a liquidity fee or redemption gate under certain circumstances effective October 14, 2016. In addition, changes to monetary policy by the Federal Reserve or other regulatory actions may impact the fund’s operations, universe of potential investment options, and return potential.
Repurchase Agreement Risk — If the seller of a repurchase agreement defaults on its obligation to repurchase securities from the fund, the fund may incur costs in disposing of the securities purchased and may experience losses if the proceeds from the sale of the securities are less than the full repurchase price.
Variable Rate Demand Note (VRDN) Risk — Investments in VRDNs involve credit risk with respect to the issuer or financial institution providing the fund with the credit and liquidity support for the unconditional put option.
| 3 | Prospectus – | First American Money Market
Funds Class Z Shares |
Fund Summary
Retail Prime Obligations Fund continued
Fund Performance
Because the fund had not yet commenced operations as of the date of this prospectus, there is no performance information to present for the fund.
Investment Advisor
U.S. Bancorp Asset Management, Inc.
Other Information
For important information about the purchase and sale of fund shares, tax information, and financial intermediary compensation, please see “Additional Summary Information” on page 5 of the prospectus.
| 4 | Prospectus – | First American Money Market
Funds Class Z Shares |
Additional Summary Information
Purchase and Sale of Fund Shares
Investments in the fund are limited to accounts beneficially owned by natural persons. You may purchase or redeem shares of the fund on any business day by calling your financial institution. You can become a shareholder in the fund by making a minimum initial investment of at least $10 million. The fund reserves the right to waive or lower purchase minimums under certain circumstances and to reject any purchase order or to stop offering shares for sale at any time. You can redeem shares through your financial institution.
Tax Information
Dividends you receive from the fund are generally taxable as ordinary income. Dividends attributable to income from U.S. government securities may be exempt from state personal income taxes.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase the fund through a broker-dealer or other financial intermediary (such as a bank), the fund and its related companies may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
| 5 | Prospectus – | First
American Money Market Funds Class Z Shares |
The investment objective of the fund is to seek maximum current income to the extent consistent with the preservation of capital and maintenance of liquidity. The fund’s investment objective may be changed without shareholder approval. Please remember, there is no guarantee that the fund will achieve its objective.
Principal Investment Strategies
The fund’s principal investment strategies are discussed below. These are the strategies that the fund’s investment advisor believes are most likely to be important in trying to achieve the fund’s objectives. 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 SAI. For a copy of the SAI, call Investor Services at 800 677-3863.
Principal Investment Strategies Applicable to the Fund
The fund complies with SEC regulations that apply to money market funds. These regulations require that the fund’s investments mature within 397 days from the date of purchase and that the fund maintain a weighted average maturity of 60 days or less and a weighted average life of 120 days or less. The fund may invest in securities with variable or floating interest rates and securities with demand features. The maturities of these securities are determined according to regulations which allow the fund to consider some of these securities as having maturities shorter than their stated maturity dates. All of the fund’s investments must be in U.S. dollar-denominated high quality securities which have been determined by the fund’s advisor to present minimal credit risk and are rated in one of the two highest rating categories by one or more nationally recognized statistical rating organizations (NRSROs) or are deemed by the advisor to be of comparable quality to securities having such ratings. In addition, no more than 3% of the fund’s total assets may be invested in securities rated in the second highest rating category by an NRSRO or deemed to be of comparable quality by the fund’s advisor at the time of purchase (“second-tier securities”). With limited exceptions, the fund may not invest more than 5% of its total assets in securities issued by the same issuer. The fund is further limited to investing no more than ½ of 1% in second-tier securities of any issuer. The fund must comply with weekly liquidity standards that require a fund to hold at least 30% of its total assets in cash, direct obligations of the U.S. Government, agency discount notes with remaining maturities of 60 days or less, or securities convertible into cash within five business days. The fund must also comply with daily liquidity standards that require a fund to hold at least 10% of its total assets in cash, direct obligations of the U.S. Government, or securities convertible into cash within one business day. The fund is limited to investing no more than 5% of its total assets in illiquid securities.
When selecting securities for the fund, the portfolio managers first consider general economic factors, market conditions, and the short-term interest rate environment in determining what types of short-term instruments to purchase. The portfolio managers then select the specific instruments to be purchased. Generally, the portfolio managers buy and hold securities until their maturities. However, the portfolio managers may sell securities for a variety of reasons, such as to adjust the portfolio’s average maturity, credit, liquidity or yield metrics.
For liquidity and to respond to unusual market conditions, the fund may hold all or a significant portion of its total assets in cash for temporary defensive purposes. This may result in a lower yield and prevent the fund from meeting its investment objective.
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More about the Fund
Principal Investment Strategies continued
The fund pursues its objective by investing in high-quality short-term debt obligations, including:
| · | commercial paper; |
| · | U.S. dollar-denominated obligations of domestic and foreign banks with total assets of at least $500 million (including fixed and variable rate certificates of deposit, time deposits, and bankers’ acceptances); |
| · | non-convertible corporate debt securities; |
| · | securities issued by the U.S. government or one of its agencies or instrumentalities; |
| · | municipal securities, including variable rate demand notes, commercial paper, and municipal notes and other short-term municipal obligations; |
| · | loan participation interests; and |
| · | repurchase agreements. |
The fund may invest more than 25% of its total assets in obligations of U.S. banks.
Under normal market conditions, portfolio managers will only purchase (and hold) securities in the fund if they are rated in the top short-term rating category, for example, a rating of A-1 or a rating of Prime-1. If the rating of a security is reduced below the top short-term rating category after purchase, portfolio managers will make every attempt to sell the security, unless they have determined that it would not be in the best interest of the fund to dispose of the security at that time and, where necessary, have obtained the approval of the fund’s board of directors to continue to hold the security.
U.S. government securities issued by the Federal National Mortgage Association (Fannie Mae), Federal Home Loan Mortgage Corporation (Freddie Mac) and the Federal Home Loan Banks (FHLB) are neither issued nor guaranteed by the U.S. Treasury and are not backed by the full faith and credit of the United States. These entities, however, were chartered or supported by Acts of Congress and are supported by federal subsidies, loans or other benefits. The Government National Mortgage Association (Ginnie Mae) is a wholly-owned U.S. corporation that is authorized to guarantee timely payment and interest of its securities. U.S. government securities issued by Ginnie Mae are guaranteed by the full faith and credit of the United States. Other U.S. government securities do not have an explicit guarantee but support is implied due to the government sponsorship of their mandated activities, including securities issued by the Tennessee Valley Authority and Federal Farm Credit Banks.
Other Money Market Funds
The fund may invest in other money market funds that invest in the same types of securities as the fund, as a non-principal investment strategy, including each of the other money market funds advised by the fund’s investment advisor. To avoid duplicative investment advisory fees, when the fund invests in another money market fund advised by the fund’s investment advisor, the investment advisor reimburses the fund an amount equal to the fund’s proportionate share of the investment advisory fee paid by the other money market fund to the investment advisor. If the fund invests in money market funds advised by another investment advisor, you will bear both your proportionate share of the expenses in the fund (including management and advisory fees) and, indirectly, the expenses of such other money market fund.
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More about the Fund
Other Investment Strategies continued
Securities Lending
To generate additional income, and as a non-principal investment strategy, the fund may lend securities representing up to one-third of the value of its total assets to broker-dealers, banks, and other institutions deemed by the fund’s advisor to present minimal credit risk. When a fund loans its portfolio securities, it will receive, at the inception of each loan, cash collateral equal to at least 102% of the value of the loaned securities, which is invested consistent with the fund’s investment strategies. If the borrower fails to return the loaned securities, the fund could suffer a loss if the value of the invested collateral is insufficient to purchase replacement securities.
The principal risks of investing in the fund are identified and further discussed below.
| · | Banking Industry Risk | · | Liquidity Risk |
| · | Credit Risk | · | Municipal Security Risk |
| · | Cybersecurity Risk | · | Redemption Risk |
| · | Foreign Security Risk | · | Regulatory Risk |
| · | Income Risk | · | Repurchase Agreement Risk |
| · | Interest Rate Risk | · | Variable Rate Demand Note (VRDN) Risk |
Description of Principal Investment Risks
Banking Industry Risk. An adverse development in the banking industry (domestic or foreign) may affect the value of the fund’s investments more than if the fund was not invested to such a degree in the banking industry. Banks may be particularly susceptible to certain economic factors such as interest rate changes, adverse developments in the real estate market, fiscal and monetary policy and general economic cycles. For example, deteriorating economic and business conditions can disproportionately impact companies in the banking industry due to increased defaults on payments by borrowers. Moreover, political and regulatory changes can affect the operations and financial results of companies in the banking industry, potentially imposing additional costs and expenses or restricting the types of business activities of these companies.
Credit Risk. The value of your investment might decline if the issuer of an obligation held by the fund defaults on the obligation or has its credit rating downgraded.
Cybersecurity Risk. With the increased use of technologies such as the Internet and the dependence on computer systems to perform necessary business functions, a fund may be subject to operational and informational security risks resulting from breaches in cybersecurity (“cyber-attacks”). A cyber-attack refers to both intentional and unintentional events that may cause a fund to lose proprietary information, suffer data corruption, or lose operational capacity. Cyber-attacks include, but are not limited to, infection by computer viruses or other malicious software code, gaining unauthorized access to systems, networks, or devices that are used to service the fund’s operations through “hacking” or other means for the purpose of misappropriating assets or sensitive information, corrupting data, or causing operational disruption.
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More about the Fund
Description of Principal Investment Risks continued
Cybersecurity failures or breaches by the fund’s affiliates or service providers, may cause disruptions and impact the business operations, potentially resulting in financial losses to both a fund and its shareholders, the inability of fund shareholders to transact business, inability to calculate a fund’s net asset value, impediments to trading, violations of applicable privacy and other laws (including the release of private shareholder information), regulatory fines, penalties, reputational damage, reimbursement or other compensation costs, and/or additional compliance costs. In addition, substantial costs may be incurred in order to prevent any cyber incidents in the future. While the advisor has risk management systems designed to prevent or reduce the impact of such cyber-attacks, there are inherent limitations in such controls, systems and protocols, including the possibility that certain risks have not been identified, as well as the rapid development of new threats. These cybersecurity risks are also present for issuers of securities in which a fund invests, which could result in material adverse consequences for such issuers, and may cause a fund’s investment in such securities to lose value and may result in financial loss for fund shareholders.
Foreign Security Risk. The foreign securities in which the fund may invest, even when dollar denominated and publicly traded in the United States, may involve risks not associated with the securities of domestic issuers. Political or social instability or diplomatic developments could adversely affect the securities. There is also the risk of possible withholding taxes, seizure of foreign deposits, currency controls, interest limitations, or other governmental restrictions which might affect the payment of principal or interest on securities owned by the fund. In addition, there may be less public information available about foreign corporations and foreign banks and their branches.
Income Risk. The level of income you receive from the fund will be affected by movements in short-term interest rates.
Interest Rate Risk. The value of your investment might decline because of a sharp rise in interest rates that causes the value of the fund’s portfolio holdings to fall.
Liquidity Risk. The fund may not be able to sell a security in a timely manner or at a desired price, or may be unable to sell the security at all, because of a lack of demand in the market for the security or because a liquidity provider defaults on its obligation to purchase the security when properly tendered by the fund.
Municipal Security Risk. The value of municipal securities owned by the fund may be adversely affected by future changes in federal income tax laws, including rate reductions or the imposition of a flat tax, and adverse changes in the financial conditions of municipal securities issuers.
Redemption Risk. If there are unexpectedly high redemptions of fund shares, the fund might have to sell portfolio securities prior to their maturity, possibly at a loss.
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More about the Fund
Description of Principal Investment Risks continued
Regulatory Risk. In July 2014, the SEC adopted reforms to money market fund regulation. The compliance periods for these reforms range between July 2015 and October 2016. When the reforms are implemented, they could affect the fund’s operations and return potential. The reforms will, among other things, beginning October 14, 2016, permit (and, under certain circumstances, require) money market funds, including the fund, to impose a “liquidity fee” (up to 2% of redemption proceeds) or “redemption gate” that temporarily restricts redemptions from a money market fund, if a fund’s weekly liquidity level falls below the required regulatory threshold. In addition, changes to monetary policy by the Federal Reserve or other regulatory actions could expose fixed income and related markets to heightened volatility, interest rate sensitivity and reduced liquidity, which may impact the fund’s operations, universe of potential investment options, and return potential.
Repurchase Agreement Risk. For the fund, if the seller of a repurchase agreement defaults on its obligation to repurchase securities from the fund, the fund may incur costs in disposing of the securities purchased and may experience losses if the proceeds from the sale of the securities are less than the full repurchase price. Securities purchased by the fund under a repurchase agreement may include securities that the fund is not otherwise permitted to purchase directly, such as long-term government bonds, investment and non-investment grade corporate bonds, asset- and mortgage-backed securities, collateralized mortgage obligations, agency real estate mortgage investment conduits, and equity securities. The value of these securities may be more volatile or less liquid than the securities the fund is permitted to purchase directly, which increases the risk that the fund will be unable to recover fully in the event of the seller’s default.
Variable Rate Demand Note (VRDN) Risk. Investments in VRDNs involve credit risk with respect to the issuer or financial institution providing the fund with the credit and liquidity support for the unconditional put option. While the fund invests only in VRDNs of high quality issuers, or which are supported by high quality financial institutions, it is still possible that an issuer or financial institution could default on its obligations.
Disclosure of Portfolio Holdings
A description of the fund’s policies and procedures with respect to the disclosure of the fund’s portfolio securities is available in the fund’s SAI.
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U.S.
Bancorp Asset Management, Inc.
800 Nicollet Mall
Minneapolis, MN 55402
U.S. Bancorp Asset Management provides investment management services to individuals and institutions, including corporations, foundations, pensions, and retirement plans. As of December 31, 2015, U.S. Bancorp Asset Management had more than $56 billion in assets under management, including investment company assets of more than $44 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 pays the investment advisor a monthly management fee equal to an annual rate of 0.10% of average daily net assets for providing investment advisory services to the fund.
U.S. Bancorp Asset Management may voluntarily waive or reimburse certain fees and expenses in order to maintain a zero or positive yield for each share class of the fund. These waivers and reimbursements may be terminated at any time by U.S. Bancorp Asset Management.
A discussion regarding the basis for the board’s approval of the fund’s investment advisory agreement will appear in the fund’s annual report to shareholders for the fiscal year ending August 31, 2016.
Additional Compensation
U.S. Bancorp Asset Management, U.S. Bank National Association (U.S. Bank) 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, U.S. Bank and their affiliates also receive compensation from the fund as set forth below.
Administration Services. U.S. Bancorp Asset Management and its affiliate, U.S. Bancorp Fund Services, LLC (Fund Services), act as the fund’s administrator and sub-administrator, respectively, providing administration services that include general administrative and accounting services, blue sky services and shareholder services. For such services, the fund pays U.S. Bancorp Asset Management the fund’s pro rata portion of up to 0.15%, on an annual basis, of the aggregate average daily net assets attributable to Class Z shares of all First American money market funds. U.S. Bancorp Asset Management pays Fund Services a portion of its fee, as agreed to from time to time. In addition to these fees, the fund may reimburse U.S. Bancorp Asset Management for any out-of-pocket expenses incurred in providing administration services.
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Fund Management
Investment Advisor continued
Custody Services. U.S. Bank provides custody services to the fund. U.S. Bank is paid monthly fees equal, on an annual basis, to 0.005% of the fund’s average daily net assets.
Securities Lending Services. In connection with lending their portfolio securities, the funds pay fees to U.S. Bank of 20% of the fund’s net income from securities lending transactions and U.S. Bank pays half of such fees to U.S. Bancorp Asset Management for certain securities lending services provided by U.S. Bancorp Asset Management.
Transfer Agency Services. Fund Services provides transfer agency and dividend disbursing services, as well as certain shareholder services, to the fund. Fund Services receives fees for transfer agency and dividend disbursing services on a per shareholder account basis, subject to a minimum fee per share class. In addition, the fund may reimburse Fund Services for any out-of-pocket expenses incurred in providing transfer agency services.
Other Compensation. To the extent that fund shares are held through U.S. Bank or its broker-dealer affiliate, U.S. Bancorp Investments, Inc., those entities may receive distribution and/or shareholder servicing fees from the fund’s distributor as well as other payments from the fund’s distributor and/or advisor as described below under “Shareholder Information — Additional Payments to Institutions.”
The fund is managed by a team of persons who are employed by U.S. Bancorp Asset Management.
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You may purchase or redeem shares of the fund on any business day that the Federal Reserve Bank of New York (Federal Reserve) is open, except as noted below. In addition to weekends, the Federal Reserve is closed on the following Federal holidays: New Year’s Day, Martin Luther King, Jr. Day, Presidents’ Day, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving Day, and Christmas Day. The fund may close when the Federal Reserve is open and the NYSE is closed, such as Good Friday. On any business day when the Securities Industry Financial Markets Association recommends that the bond markets close trading early, the fund may also close trading early.
Your purchase or redemption price will be based on that day’s NAV per share if your order is received by the fund in proper form prior to the time the fund calculates its NAV. See “Additional Information on Purchasing and Redeeming Fund Shares — Calculating Net Asset Value” below. Contact your investment professional or financial institution to determine the time by which it must receive your order to be assured same day processing. To make sure your order is in proper form, you must follow the instructions set forth below under “Purchasing and Redeeming Fund Shares.”
Some investment professionals or financial institutions may charge a transaction-based fee for helping you purchase or redeem shares or an asset-based fee. Contact your investment professional or financial institution for more information.
The fund issues its shares in multiple classes. This prospectus offers Class Z shares.
Class Z shares are available for a minimum initial investment of at least $10 million in any one fund. Shares are also available to other mutual fund families for whom U.S. Bancorp Fund Services, LLC provides administration services. Class Z shares are offered at net asset value, with no front-end or contingent deferred sales charge and no distribution (12b-1) or shareholder servicing fee.
Because the current prospectus and SAI are available on First American Funds’ website free of charge, we do not disclose the following information separately on the website.
Your purchase or redemption price for Class Z shares is the fund’s next determined net asset value after the fund, or its designated agent, receives your order in proper form. To understand how the fund calculates its net asset value, see “Additional Information on Purchasing and Redeeming Fund Shares – Calculating Net Asset Value” below.
Purchasing and Redeeming Fund Shares
To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. As a result, when you open an account, we will ask for your name, permanent street address, date of birth, and social security or taxpayer identification number. Addresses containing a P.O. Box only will not be accepted. We may also ask for other identifying documents or information. You may purchase or redeem shares by calling your financial institution.
Investments in the fund are intended to be limited to accounts beneficially owned by natural persons. Natural persons are permitted to invest in the fund through certain tax-advantaged savings accounts, trusts and other retirement and investment accounts, including, for example:
| · | Participant-directed defined contribution plans; |
| · | Individual retirement accounts; |
| · | Simplified employee pension arrangements; |
| · | SIMPLE retirement accounts; |
| · | Custodial accounts; |
| · | Deferred compensation plans for government or tax-exempt organization employees; |
| · | Archer medical savings accounts; |
| · | College savings plans; |
| · | Health savings account plans; |
| · | Ordinary trusts and estates of natural persons; or |
| · | Certain other retirement and investment accounts having an institutional decision maker (e.g., a plan sponsor in certain retirement arrangements or an investment adviser managing discretionary investment accounts). |
On or before October 14, 2016, the fund will adopt policies and procedures reasonably designed to limit all beneficial owners of the fund to natural persons. The fund reserves the right to repurchase shares in any accounts that are not beneficially owned by natural persons, after providing 60 days’ written notice.
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Shareholder Information
Purchasing and Redeeming Fund Shares continued
When purchasing shares, payment must be made by wire transfer, which can be arranged by your financial institution. You cannot purchase shares by wire on days when federally chartered banks are closed.
If the fund receives a redemption request by the time the fund calculates its NAV, as specified below, payment will be made the same day by transfer of federal funds if the Fedwire transfer system is available for use that day. Otherwise, payment will be made on the next business day.
Suspension or Postponement of Redemptions. The fund reserves the right to suspend the right of shareholder redemption, or postpone the date of payment:
| · | if emergency conditions should exist, as specified in the Investment Company Act of 1940 (the “Investment Company Act”), or as determined by the Securities and Exchange Commission (SEC), as a result of which disposal of portfolio securities or determination of the net asset value (NAV) of the fund is not reasonably practicable; | |
| · | for any period during which trading on the New York Stock Exchange (NYSE) is restricted as determined by the SEC or the NYSE is closed (other than customary weekend and holiday closings); | |
| · | for any period during which the SEC has, by rule or regulation, deemed that (1) trading shall be restricted or (2) an emergency exists; or | |
| · | for such other periods as the SEC may by order permit for the protection of shareholders of the fund. | |
In addition, in the unlikely event that the fund’s board of directors were to determine pursuant to SEC regulations that the extent of the deviation between the fund’s amortized cost per share and its market-based NAV per share may result in material dilution or other unfair results to shareholders, the board will cause the fund to take such action as it deems appropriate to eliminate or reduce to the extent practicable such dilution or unfair results, including suspending redemption of shares and liquidating the fund under Rule 22e-3 of the Investment Company Act.
Purchases In-Kind. Generally, all purchases will be in cash. However, the fund reserves the right to permit you to purchase shares through the exchange of other securities that you own if consistent with the fund’s investment objective, policies, and operations. The market value of any securities exchanged, plus any cash, must be at least $25 million. Please contact your investment professional, financial institution or Investor Services at 800 677-3863.
Redemptions In-Kind. Generally, all redemptions will be for cash. However, the fund reserves the right to pay all or part of your redemption proceeds in readily marketable securities instead of cash. If payment by the fund is made in securities, the fund will value the securities selected in the same manner in which it computes its NAV. This process minimizes the effect of large redemptions on the fund and its remaining shareholders. If you receive redemption proceeds in-kind, you should expect to incur transaction costs upon disposition of those securities. In addition, if you receive redemption proceeds in-kind, you will be subject to market gains or losses upon the disposition of those securities.
Potential Restrictions on Fund Redemptions – Fees and Gates. Beginning October 14, 2016, the fund’s board of directors will be permitted to impose a liquidity fee on redemptions (up to 2% of redemption proceeds) or temporarily restrict redemptions from the fund up to 10 business days during a 90-day period (a “redemption gate”), in the event that the fund’s weekly liquid assets fall below the following thresholds:
| · | 30% weekly liquid assets – If the fund’s weekly liquid assets fall below 30% of the fund’s total assets, and the fund’s board of directors determines it is in the best interest of the Fund, the board of directors may impose a liquidity fee of no more than 2% of the amount redeemed and/or a redemption gate that temporarily suspends the right of redemption. |
| · | 10% weekly liquid assets – If the fund’s weekly liquid assets fall below 10% of the fund’s total assets, the fund will impose, at the beginning of the next business day, a liquidity fee of 1% of the amount redeemed, unless the fund’s board of directors determines that imposing such a fee would not be in the best interests of the fund or determines that a lower or higher fee (not to exceed 2%) would be in the best interests of the fund. |
Liquidity fees and redemption gates may be terminated at any time in the discretion of the fund’s board of directors. Liquidity fees and redemption gates will also terminate at the beginning of the next business day once the fund has invested 30% or more of its total assets in weekly liquid assets as of the end of a business day.
Weekly liquid assets generally include cash; direct obligations of the U.S. government; certain U.S. government agency discount notes with remaining maturities of 60 days or less; securities that will mature or are subject to a demand feature that is exercisable and payable within five business days; or amounts receivable and due unconditionally within five business days on pending sales of portfolio securities. For these purposes, weekly liquid assets will be calculated as of the end of each business day.
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Shareholder Information
Additional Information on Purchasing and Redeeming Fund Shares
Calculating Net Asset Value
The fund generally calculates its NAV per share as of 3:30 p.m. Central time on each business day that the fund is open, except that the NAV for the fund is generally calculated at 1:00 p.m. Central time on days on which the bond markets close early (typically on the business day preceding a Federal holiday) (an “Early Close”). Purchase and redemption orders received after closing time, including an Early Close, will be processed the next business day.
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. The securities held by the fund is valued on the basis of amortized cost. This involves valuing an instrument at its cost and thereafter assuming a constant amortization of any discount or premium until the instrument’s maturity, rather than looking at actual changes in the market value of the instrument. The fund’s net asset value is normally expected to be $1 per share.
Frequent Trading of Fund Shares
The fund is designed to offer investors a liquid cash option and it is anticipated that shareholders will purchase and redeem fund shares on a frequent basis. Frequent trading by shareholders may disrupt the management of the fund and increase fund expenses. However, given the short-term nature of the fund’s investments and its use of the amortized cost method for calculating the NAV of fund shares, the fund does not anticipate that in the normal case frequent or short-term trading into and out of the fund will have significant adverse consequences for the fund and its shareholders. Accordingly, the fund’s board of directors has not adopted policies or procedures to monitor or discourage frequent or short-term trading of the fund’s shares.
The fund earns interest, dividends and other income from its investments, and distributes this income (less fund expenses) to you as dividends. Dividends from the fund’s net investment income are declared daily and paid monthly. The fund may take into account capital gains and losses (other than net long-term capital gains) in its daily dividend declarations. A fund may also make additional distributions for tax purposes if necessary.
If the fund receives your wire transfer payment for fund shares by the time the fund determines its NAV, you will begin to accrue dividends on that day. If you redeem shares, you will not receive a dividend on the day of your redemption request if your request is received by the time the fund determines its NAV.
Dividends will be reinvested in additional shares of the same 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, by contacting your financial institution, or by calling Investor Services at 800 677-3863. Cash distributions will be paid on or about the first business day of each month. If you request that your distributions be paid in cash but those distributions cannot be delivered because of an incorrect mailing address, or if a distribution check remains uncashed for six months, the undelivered or uncashed 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 provided in the SAI. However, because everyone’s tax situation is unique, always consult your tax professional about federal, state, and local tax consequences.
Dividends you receive from the fund are generally taxable as ordinary income, whether you reinvest them or take them in cash. Dividends from the fund will not be eligible for the reduced rate of tax that applies to “qualified dividend income.”
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Shareholder Information
Additional Payments to Institutions
The advisor and/or the distributor may pay additional compensation to investment professionals, participating institutions and “one-stop” mutual fund networks (each an “institution” and, collectively, “institutions”) out of their own resources in connection with the sale or retention of fund shares and/or in exchange for sales and/or administrative services performed on behalf of the institution’s customers. The amounts of these payments may be significant, and may create an incentive for the institution or its employees or associated persons to recommend or sell shares of the fund to you. These payments are not reflected in the fees and expenses listed in the “Fund Summary” section of the prospectus because they are not paid by the fund.
These payments are negotiated and may be based on such factors as the number or value of First American money market fund shares that the institution sells or may sell; the value of the assets invested in the First American money market funds by the institution’s customers; lump sum payment for services provided; the type and nature of services or support furnished by the institution; and/or other measures as determined from time to time by the advisor and/or distributor.
The advisor and/or distributor may make other payments or allow other promotional incentives to institutions to the extent permitted by SEC and FINRA rules and by other applicable laws and regulations. Certain institutions may also receive payments in recognition of sub-accounting or other services they provide to shareholders or plan participants who invest in the fund through their employee benefit or retirement plan.
You can ask your institution for information about any payments it receives from the advisor and/or the distributor and from the fund, and any services your institution provides, as well as about fees and/or commissions your institution charges. You can also find more details about payments made by the advisor and/or the distributor in the fund’s SAI.
Shareholder Reports
Shareholder reports are mailed twice a year, in October and April. They include financial statements and performance information, and, on an annual basis, the report of independent registered public accounting firm.
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 800 677-3863.
Statements and Confirmations
Statements summarizing activity in your account are mailed quarterly. Confirmations generally 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.
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As of the date of this prospectus, the fund had not yet commenced operations and had no financial highlights to report.
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First American Funds’ Privacy Policy
We want to provide an explanation to Consumers of what nonpublic personal information is and how it’s collected and used.
A “Consumer” is considered an individual investor who invests or has invested in our products for personal, family or household purposes.
“Nonpublic personal information” is nonpublic information that we obtain while providing financial products or services to you.
How we collect your information
We obtain nonpublic information about you during the account opening process from the applications and other forms you are asked to complete and from the transactions you make with us. We may also receive nonpublic information about you from companies affiliated with us or from other companies that provide services to you.
The types of information we collect
We may collect the following nonpublic personal information about you:
· Information about your identity, such as your name, address, and social security number.
· Information about your transactions with us.
· Information you provide on applications, such as your beneficiaries and banking information, if provided to us.
Why we collect your information
We gather nonpublic personal information about you and your accounts so that we can:
· Know who you are and prevent unauthorized access to your information.
· Comply with the laws and regulations that govern us.
What information we disclose
We may share some or all of the nonpublic personal information that we collect about you with our affiliated providers of financial services, including our family of funds and their advisor, and with companies that perform shareholder services on our behalf. We do not use nonpublic information received from our affiliates for marketing purposes.
We’re permitted by law to disclose nonpublic personal information about you to other third parties in certain circumstances. For example, we may disclose nonpublic personal information about you to affiliated and nonaffiliated third parties to assist us in servicing your account (e.g., mailing of fund-related materials) and to government entities (e.g., IRS for tax purposes).
We’ll continue to adhere to the privacy policies and practices described here even after your account is closed or becomes inactive.
Confidentiality and security
To protect nonpublic personal information about you, we restrict access to such information to only those employees and authorized agents who need to use the information. We maintain physical, electronic, and procedural safeguards to maintain the confidentiality and security of nonpublic information about you. In addition, we require our service providers to restrict access to nonpublic personal information about you to those employees who need that information in order to provide products or services to you. We also require them to maintain physical, electronic, and procedural safeguards that comply with applicable federal standards and regulations to guard your information.
Additional rights and protections
You may have other privacy protections under applicable state laws. To the extent that these state laws apply, we will comply with them when we share information about you. This privacy policy does not apply to your relationship with other financial service providers, such as broker-dealers. We may amend this privacy notice at any time, and we will inform you of changes as required by law.
Our pledge applies to products and services offered by the First American Family of Funds
| NOT FDIC INSURED NO BANK GUARANTEE MAY LOSE VALUE |
THIS PAGE IS NOT PART OF THE PROSPECTUS
First American Funds
P.O. Box 1330
Minneapolis, MN 55440-1330
The Statement of Additional Information (SAI) provides more details about the fund and its policies and is incorporated into this prospectus by reference (which means that it is legally part of this prospectus).
Additional information about the fund’s investments will be available in the fund’s annual and semi-annual reports to shareholders. Prior to the date of this prospectus, the fund had not commenced operations.
You can obtain a free copy of the fund’s annual or semi-annual reports or the SAI, request other information about the fund, or make other shareholder inquiries by calling Investor Services at 800 677-3863 or by contacting the fund at the address above. Annual or semi-annual reports and the SAI will also be available on the fund’s Internet site at www.firstamericanfunds.com.
Information about the fund (including the SAI) can also be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. To find out more about this public service, call the SEC at 1-202-551-8090. Reports and other information about the fund are also available on the EDGAR Database on the SEC’s Internet site at www.sec.gov, or you can obtain copies of this information, after paying a duplicating fee, by electronic request at the following e-mail address: [email protected], or by writing the SEC’s Public Reference Section, Washington, D.C. 20549-1520.
| SEC file number: 811-03313 | PROMMZ 07/16 |
Contents
Please find First American Funds’ Privacy Policy inside the back cover of this Prospectus.
This prospectus and the related Statement of Additional Information (SAI) do not constitute an offer to sell or a solicitation of an offer to buy shares in the funds, 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.
The funds may be offered only to persons in the United States. This prospectus should not be considered a solicitation or offering of fund shares outside the United States.
Investment Objective
Retail Prime Obligations Fund’s objective is to seek maximum current income to the extent consistent with the preservation of capital and maintenance of liquidity.
Fees and Expenses
The following tables describe the fees and expenses that you may pay if you buy and hold shares of the fund.
| Shareholder
Fees (fees paid directly from your investment) |
Class V |
||
| Maximum Sales Charge (Load) | None | ||
| Maximum Deferred Sales Charge (Load) | None | ||
| Annual
Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) |
|||
| Management Fees | 0.10% | ||
| Distribution and/or Service (12b-1) Fees | None | ||
| Other Expenses: | |||
| Shareholder Servicing Fee | 0.10% | ||
| Miscellaneous1 | 0.19% | ||
| Total Annual Fund Operating Expenses | 0.39% | ||
| Less Fee Waivers2 | (0.09)% | ||
| Net Expenses2 | 0.30% |
| 1 | Miscellaneous expenses are based on estimated amounts for the fund's first fiscal year of operations. |
| 2 | The advisor has contractually agreed to waive fees and reimburse other fund expenses through July 18, 2017, so that total annual fund operating expenses, after waivers, do not exceed 0.30%. These fee waivers and expense reimbursements may be terminated at any time after July 18, 2017 at the discretion of the advisor. Prior to that time, such waivers and reimbursements may not be terminated without the approval of the fund’s board of directors. |
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. The example assumes that you invest $10,000 in the fund for the time periods indicated . The example also assumes that your investment has a 5% return each year and the fund’s operating expenses remain the same. You would incur these hypothetical expenses whether or not you redeem your investment at the end of the given period. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
| Class V | |||
| 1 year | $ 31 | ||
| 3 years | $116 |
| 1 | Prospectus – | First
American Money Market Funds Class V Shares |
Fund Summary
Retail Prime Obligations Fund continued
Principal Investment Strategies
Retail Prime Obligations Fund invests in high-quality short-term debt obligations, including:
| · | commercial paper; |
| · | U.S. dollar-denominated obligations of domestic and foreign banks with total assets of at least $500 million (including fixed and variable rate certificates of deposit, time deposits, and bankers’ acceptances); |
| · | non-convertible corporate debt securities; |
| · | securities issued by the U.S. government or one of its agencies or instrumentalities; |
| · | municipal securities, including variable rate demand notes, commercial paper, and municipal notes and other short-term municipal obligations; |
| · | loan participation interests; and |
| · | repurchase agreements. |
The fund may invest more than 25% of its total assets in obligations of U.S. banks.
Under normal market conditions, portfolio managers will only purchase (and hold) securities in the fund if they are rated in the top short-term rating category, for example, a rating of A-1 or a rating of Prime-1. If the rating of a security is reduced below the top short-term rating category after purchase, portfolio managers will make every attempt to sell the security, unless they have determined that it would not be in the best interest of the fund to dispose of the security at that time and, where necessary, have obtained the approval of the fund’s board of directors to continue to hold the security.
Principal Risks
You could lose money by investing in the fund. Although the fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. The fund may impose a fee upon sale of your shares or may temporarily suspend your ability to sell shares if the fund’s liquidity falls below required minimums because of market conditions or other factors. 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. The advisor or its affiliates have no legal obligation to provide financial support to the fund, and you should not expect that the advisor will provide financial support to the fund at any time.
Principal risks of investing in this fund include:
Banking Industry Risk — An adverse development in the banking industry (domestic or foreign) may affect the value of the fund’s investments more than if the fund was not invested to such a degree in the banking industry. Banks may be particularly susceptible to certain economic factors such as interest rate changes, adverse developments in the real estate market, fiscal, regulatory and monetary policy and general economic cycles.
Credit Risk — The value of your investment might decline if the issuer of an obligation held by the fund defaults on the obligation or has its credit rating downgraded.
Cybersecurity Risk — The fund may be subject to operational and informational security risks resulting from breaches in cybersecurity at the fund, the fund’s affiliates or service providers. A cybersecurity breach at an issuer of securities in which the fund invests may cause such securities to lose value.
| 2 | Prospectus – | First
American Money Market Funds Class V Shares |
Fund Summary
Retail Prime Obligations Fund continued
Foreign Security Risk — Securities of foreign issuers, even when dollar denominated and publicly traded in the United States, may involve risks not associated with the securities of domestic issuers.
Income Risk — The level of income you receive from the fund will be affected by movements in short-term interest rates.
Interest Rate Risk — The value of your investment might decline because of a sharp rise in interest rates that causes the value of the fund’s portfolio holdings to fall.
Liquidity Risk — The fund may not be able to sell a security in a timely manner or at a desired price, or may be unable to sell the security at all, because of a lack of demand in the market for the security, or a liquidity provider defaults on its obligation to purchase the security when properly tendered by the fund.
Municipal Security Risk — The value of municipal securities owned by the fund may be adversely affected by future changes in federal income tax laws, including rate reductions or the imposition of a flat tax, and adverse changes in the financial conditions of municipal securities issuers.
Redemption Risk — If there are unexpectedly high redemptions of fund shares, the fund might have to sell portfolio securities prior to their maturity, possibly at a loss.
Regulatory Risk — In July 2014, the Securities and Exchange Commission (SEC) adopted reforms to money market fund regulation. As the reforms are implemented through October 2016, they could affect the fund’s operations and return potential. The reforms will, among other things, permit the fund to impose a liquidity fee or redemption gate under certain circumstances effective October 14, 2016. In addition, changes to monetary policy by the Federal Reserve or other regulatory actions may impact the fund’s operations, universe of potential investment options, and return potential.
Repurchase Agreement Risk — If the seller of a repurchase agreement defaults on its obligation to repurchase securities from the fund, the fund may incur costs in disposing of the securities purchased and may experience losses if the proceeds from the sale of the securities are less than the full repurchase price.
Variable Rate Demand Note (VRDN) Risk — Investments in VRDNs involve credit risk with respect to the issuer or financial institution providing the fund with the credit and liquidity support for the unconditional put option.
| 3 | Prospectus – | First
American Money Market Funds Class V Shares |
Fund Summary
Retail Prime Obligations Fund continued
Fund Performance
Because the fund had not yet commenced operations as of the date of this prospectus, there is no performance information to present for the fund.
Investment Advisor
U.S. Bancorp Asset Management, Inc.
Other Information
For important information about the purchase and sale of fund shares, tax information, and financial intermediary compensation, please see “Additional Summary Information” on page 5 of the prospectus.
| 4 | Prospectus – | First
American Money Market Funds Class V Shares |
Additional Summary Information
Purchase and Sale of Fund Shares
Investments in the fund are limited to accounts beneficially owned by natural persons. You may purchase or redeem shares of the fund on any business day by calling your financial institution. The fund reserves the right to reject any purchase order or to stop offering shares for sale at any time.
Tax Information
Dividends you receive from the fund are generally taxable as ordinary income. Dividends attributable to income from U.S. government securities may be exempt from state personal income taxes.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase the fund through a broker-dealer or other financial intermediary (such as a bank), the fund and its related companies may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
| 5 | Prospectus – | First
American Money Market Funds Class V Shares |
The investment objective of the fund is to seek maximum current income to the extent consistent with the preservation of capital and maintenance of liquidity. The fund’s investment objective may be changed without shareholder approval. Please remember, there is no guarantee that the fund will achieve its objective.
Principal Investment Strategies
The fund’s principal investment strategies are discussed below. These are the strategies that the fund’s investment advisor believes are most likely to be important in trying to achieve the fund’s objectives. 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 SAI. For a copy of the SAI, call Investor Services at 800 677-3863.
Principal Investment Strategies Applicable to the Fund
The fund complies with SEC regulations that apply to money market funds. These regulations require that the fund’s investments mature within 397 days from the date of purchase and that the fund maintain a weighted average maturity of 60 days or less and a weighted average life of 120 days or less. The fund may invest in securities with variable or floating interest rates and securities with demand features. The maturities of these securities are determined according to regulations which allow the fund to consider some of these securities as having maturities shorter than their stated maturity dates. All of the fund’s investments must be in U.S. dollar-denominated high quality securities which have been determined by the fund’s advisor to present minimal credit risk and are rated in one of the two highest rating categories by one or more nationally recognized statistical rating organizations (NRSROs) or are deemed by the advisor to be of comparable quality to securities having such ratings. In addition, no more than 3% of the fund’s total assets may be invested in securities rated in the second highest rating category by an NRSRO or deemed to be of comparable quality by the fund’s advisor at the time of purchase (“second-tier securities”). With limited exceptions, the fund may not invest more than 5% of its total assets in securities issued by the same issuer. The fund is further limited to investing no more than ½ of 1% in second-tier securities of any issuer. The fund must comply with weekly liquidity standards that require a fund to hold at least 30% of its total assets in cash, direct obligations of the U.S. Government, agency discount notes with remaining maturities of 60 days or less, or securities convertible into cash within five business days. The fund must also comply with daily liquidity standards that require a fund to hold at least 10% of its total assets in cash, direct obligations of the U.S. Government, or securities convertible into cash within one business day. The fund is limited to investing no more than 5% of its total assets in illiquid securities.
When selecting securities for the fund, the portfolio managers first consider general economic factors, market conditions, and the short-term interest rate environment in determining what types of short-term instruments to purchase. The portfolio managers then select the specific instruments to be purchased. Generally, the portfolio managers buy and hold securities until their maturities. However, the portfolio managers may sell securities for a variety of reasons, such as to adjust the portfolio’s average maturity, credit, liquidity or yield metrics.
For liquidity and to respond to unusual market conditions, the fund may hold all or a significant portion of its total assets in cash for temporary defensive purposes. This may result in a lower yield and prevent the fund from meeting its investment objective.
| 6 | Prospectus – | First
American Money Market Funds Class V Shares |
More about the Fund
Principal Investment Strategies continued
The fund pursues its objective by investing in high-quality short-term debt obligations, including:
| · | commercial paper; |
| · | U.S. dollar-denominated obligations of domestic and foreign banks with total assets of at least $500 million (including fixed and variable rate certificates of deposit, time deposits, and bankers’ acceptances); |
| · | non-convertible corporate debt securities; |
| · | securities issued by the U.S. government or one of its agencies or instrumentalities; |
| · | municipal securities, including variable rate demand notes, commercial paper, and municipal notes and other short-term municipal obligations; |
| · | loan participation interests; and |
| · | repurchase agreements. |
The fund may invest more than 25% of its total assets in obligations of U.S. banks.
Under normal market conditions, portfolio managers will only purchase (and hold) securities in the fund if they are rated in the top short-term rating category, for example, a rating of A-1 or a rating of Prime-1. If the rating of a security is reduced below the top short-term rating category after purchase, portfolio managers will make every attempt to sell the security, unless they have determined that it would not be in the best interest of the fund to dispose of the security at that time and, where necessary, have obtained the approval of the fund’s board of directors to continue to hold the security.
U.S. government securities issued by the Federal National Mortgage Association (Fannie Mae), Federal Home Loan Mortgage Corporation (Freddie Mac) and the Federal Home Loan Banks (FHLB) are neither issued nor guaranteed by the U.S. Treasury and are not backed by the full faith and credit of the United States. These entities, however, were chartered or supported by Acts of Congress and are supported by federal subsidies, loans or other benefits. The Government National Mortgage Association (Ginnie Mae) is a wholly-owned U.S. corporation that is authorized to guarantee timely payment and interest of its securities. U.S. government securities issued by Ginnie Mae are guaranteed by the full faith and credit of the United States. Other U.S. government securities do not have an explicit guarantee but support is implied due to the government sponsorship of their mandated activities, including securities issued by the Tennessee Valley Authority and Federal Farm Credit Banks.
Other Money Market Funds
The fund may invest in other money market funds that invest in the same types of securities as the fund, as a non-principal investment strategy, including each of the other money market funds advised by the fund’s investment advisor. To avoid duplicative investment advisory fees, when the fund invests in another money market fund advised by the fund’s investment advisor, the investment advisor reimburses the fund an amount equal to the fund’s proportionate share of the investment advisory fee paid by the other money market fund to the investment advisor. If the fund invests in money market funds advised by another investment advisor, you will bear both your proportionate share of the expenses in the fund (including management and advisory fees) and, indirectly, the expenses of such other money market fund.
| 7 | Prospectus – | First
American Money Market Funds Class V Shares |
More about the Fund
Other Investment Strategies continued
Securities Lending
To generate additional income, and as a non-principal investment strategy, the fund may lend securities representing up to one-third of the value of its total assets to broker-dealers, banks, and other institutions deemed by the fund’s advisor to present minimal credit risk. When a fund loans its portfolio securities, it will receive, at the inception of each loan, cash collateral equal to at least 102% of the value of the loaned securities, which is invested consistent with the fund’s investment strategies. If the borrower fails to return the loaned securities, the fund could suffer a loss if the value of the invested collateral is insufficient to purchase replacement securities.
The principal risks of investing in the fund are identified and further discussed below.
| · | Banking Industry Risk | · | Liquidity Risk |
| · | Credit Risk | · | Municipal Security Risk |
| · | Cybersecurity Risk | · | Redemption Risk |
| · | Foreign Security Risk | · | Regulatory Risk |
| · | Income Risk | · | Repurchase Agreement Risk |
| · | Interest Rate Risk | · | Variable Rate Demand Note (VRDN) Risk |
Description of Principal Investment Risks
Banking Industry Risk. An adverse development in the banking industry (domestic or foreign) may affect the value of the fund’s investments more than if the fund was not invested to such a degree in the banking industry. Banks may be particularly susceptible to certain economic factors such as interest rate changes, adverse developments in the real estate market, fiscal and monetary policy and general economic cycles. For example, deteriorating economic and business conditions can disproportionately impact companies in the banking industry due to increased defaults on payments by borrowers. Moreover, political and regulatory changes can affect the operations and financial results of companies in the banking industry, potentially imposing additional costs and expenses or restricting the types of business activities of these companies.
Credit Risk. The value of your investment might decline if the issuer of an obligation held by the fund defaults on the obligation or has its credit rating downgraded.
Cybersecurity Risk. With the increased use of technologies such as the Internet and the dependence on computer systems to perform necessary business functions, a fund may be subject to operational and informational security risks resulting from breaches in cybersecurity (“cyber-attacks”). A cyber-attack refers to both intentional and unintentional events that may cause a fund to lose proprietary information, suffer data corruption, or lose operational capacity. Cyber-attacks include, but are not limited to, infection by computer viruses or other malicious software code, gaining unauthorized access to systems, networks, or devices that are used to service the fund’s operations through “hacking” or other means for the purpose of misappropriating assets or sensitive information, corrupting data, or causing operational disruption.
| 8 | Prospectus – | First
American Money Market Funds Class V Shares |
More about the Fund
Description of Principal Investment Risks continued
Cybersecurity failures or breaches by the fund’s affiliates or service providers, may cause disruptions and impact the business operations, potentially resulting in financial losses to both a fund and its shareholders, the inability of fund shareholders to transact business, inability to calculate a fund’s net asset value, impediments to trading, violations of applicable privacy and other laws (including the release of private shareholder information), regulatory fines, penalties, reputational damage, reimbursement or other compensation costs, and/or additional compliance costs. In addition, substantial costs may be incurred in order to prevent any cyber incidents in the future. While the advisor has risk management systems designed to prevent or reduce the impact of such cyber-attacks, there are inherent limitations in such controls, systems and protocols, including the possibility that certain risks have not been identified, as well as the rapid development of new threats. These cybersecurity risks are also present for issuers of securities in which a fund invests, which could result in material adverse consequences for such issuers, and may cause a fund’s investment in such securities to lose value and may result in financial loss for fund shareholders.
Foreign Security Risk. The foreign securities in which the fund may invest, even when dollar denominated and publicly traded in the United States, may involve risks not associated with the securities of domestic issuers. Political or social instability or diplomatic developments could adversely affect the securities. There is also the risk of possible withholding taxes, seizure of foreign deposits, currency controls, interest limitations, or other governmental restrictions which might affect the payment of principal or interest on securities owned by the fund. In addition, there may be less public information available about foreign corporations and foreign banks and their branches.
Income Risk. The level of income you receive from the fund will be affected by movements in short-term interest rates.
Interest Rate Risk. The value of your investment might decline because of a sharp rise in interest rates that causes the value of the fund’s portfolio holdings to fall.
Liquidity Risk. The fund may not be able to sell a security in a timely manner or at a desired price, or may be unable to sell the security at all, because of a lack of demand in the market for the security or because a liquidity provider defaults on its obligation to purchase the security when properly tendered by the fund.
Municipal Security Risk. The value of municipal securities owned by the fund may be adversely affected by future changes in federal income tax laws, including rate reductions or the imposition of a flat tax, and adverse changes in the financial conditions of municipal securities issuers.
Redemption Risk. If there are unexpectedly high redemptions of fund shares, the fund might have to sell portfolio securities prior to their maturity, possibly at a loss.
| 9 | Prospectus – | First
American Money Market Funds Class V Shares |
More about the Fund
Description of Principal Investment Risks continued
Regulatory Risk. In July 2014, the SEC adopted reforms to money market fund regulation. The compliance periods for these reforms range between July 2015 and October 2016. When the reforms are implemented, they could affect the fund’s operations and return potential. The reforms will, among other things, beginning October 14, 2016, permit (and, under certain circumstances, require) money market funds, including the fund, to impose a “liquidity fee” (up to 2% of redemption proceeds) or “redemption gate” that temporarily restricts redemptions from a money market fund, if a fund’s weekly liquidity level falls below the required regulatory threshold. In addition, changes to monetary policy by the Federal Reserve or other regulatory actions could expose fixed income and related markets to heightened volatility, interest rate sensitivity and reduced liquidity, which may impact the fund’s operations, universe of potential investment options, and return potential.
Repurchase Agreement Risk. For the fund, if the seller of a repurchase agreement defaults on its obligation to repurchase securities from the fund, the fund may incur costs in disposing of the securities purchased and may experience losses if the proceeds from the sale of the securities are less than the full repurchase price. Securities purchased by the fund under a repurchase agreement may include securities that the fund is not otherwise permitted to purchase directly, such as long-term government bonds, investment and non-investment grade corporate bonds, asset- and mortgage-backed securities, collateralized mortgage obligations, agency real estate mortgage investment conduits, and equity securities. The value of these securities may be more volatile or less liquid than the securities the fund is permitted to purchase directly, which increases the risk that the fund will be unable to recover fully in the event of the seller’s default.
Variable Rate Demand Note (VRDN) Risk. Investments in VRDNs involve credit risk with respect to the issuer or financial institution providing the fund with the credit and liquidity support for the unconditional put option. While the fund invests only in VRDNs of high quality issuers, or which are supported by high quality financial institutions, it is still possible that an issuer or financial institution could default on its obligations.
Disclosure of Portfolio Holdings
A description of the fund’s policies and procedures with respect to the disclosure of the fund’s portfolio securities is available in the funds’ SAI.
| 10 | Prospectus – | First
American Money Market Funds Class V Shares |
U.S. Bancorp
Asset Management, Inc.
800 Nicollet Mall
Minneapolis, MN 55402
U.S. Bancorp Asset Management provides investment management services to individuals and institutions, including corporations, foundations, pensions, and retirement plans. As of December 31, 2015, U.S. Bancorp Asset Management had more than $56 billion in assets under management, including investment company assets of more than $44 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 pays the investment advisor a monthly management fee equal to an annual rate of 0.10% of average daily net assets for providing investment advisory services to the fund.
U.S. Bancorp Asset Management may voluntarily waive or reimburse certain fees and expenses in order to maintain a zero or positive yield for each share class of the fund. These waivers and reimbursements may be terminated at any time by U.S. Bancorp Asset Management.
A discussion regarding the basis for the board’s approval of the fund’s investment advisory agreement will appear in the fund’s annual report to shareholders for the fiscal year ending August 31, 2016.
Additional Compensation
U.S. Bancorp Asset Management, U.S. Bank National Association (U.S. Bank) 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, U.S. Bank and their affiliates also receive compensation from the fund as set forth below.
Administration Services. U.S. Bancorp Asset Management and its affiliate, U.S. Bancorp Fund Services, LLC (Fund Services), act as the fund’s administrator and sub-administrator, respectively, providing administration services that include general administrative and accounting services, blue sky services and shareholder services. For such services, the fund pays U.S. Bancorp Asset Management the fund’s pro rata portion of up to 0.15%, on an annual basis, of the aggregate average daily net assets attributable to Class V shares of all First American money market funds. U.S. Bancorp Asset Management pays Fund Services a portion of its fee, as agreed to from time to time. In addition to these fees, the fund may reimburse U.S. Bancorp Asset Management for any out-of-pocket expenses incurred in providing administration services.
| 11 | Prospectus – | First
American Money Market Funds Class V Shares |
Fund Management
Investment Advisor continued
Custody Services. U.S. Bank provides custody services to the fund. U.S. Bank is paid monthly fees equal, on an annual basis, to 0.005% of the fund’s average daily net assets.
Securities Lending Services. In connection with lending their portfolio securities, the funds pay fees to U.S. Bank of 20% of the fund’s net income from securities lending transactions and U.S. Bank pays half of such fees to U.S. Bancorp Asset Management for certain securities lending services provided by U.S. Bancorp Asset Management.
Shareholder Servicing Fees. The fund pays U.S. Bancorp Asset Management a shareholder servicing fee at an annual rate of 0.10% of its average daily net assets attributable to Class V shares for providing or arranging for the provision of shareholder services to the holders of its Class V shares.
Transfer Agency Services. Fund Services provides transfer agency and dividend disbursing services, as well as certain shareholder services, to the fund. Fund Services receives fees for transfer agency and dividend disbursing services on a per shareholder account basis, subject to a minimum fee per share class. In addition, the fund may reimburse Fund Services for any out-of-pocket expenses incurred in providing transfer agency services.
Other Compensation. To the extent that fund shares are held through U.S. Bank or its broker-dealer affiliate, U.S. Bancorp Investments, Inc., those entities may receive distribution and/or shareholder servicing fees from the fund’s distributor as well as other payments from the fund’s distributor and/or advisor as described below under “Shareholder Information — Additional Payments to Institutions.”
The fund is managed by a team of persons who are employed by U.S. Bancorp Asset Management.
| 12 | Prospectus – | First
American Money Market Funds Class V Shares |
You may purchase or redeem shares of the fund on any business day that the Federal Reserve Bank of New York (Federal Reserve) is open, except as noted below. In addition to weekends, the Federal Reserve is closed on the following Federal holidays: New Year’s Day, Martin Luther King, Jr. Day, Presidents’ Day, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving Day, and Christmas Day. The fund may close when the Federal Reserve is open and the NYSE is closed, such as Good Friday. On any business day when the Securities Industry Financial Markets Association recommends that the bond markets close trading early, the fund may also close trading early.
Your purchase or redemption price will be based on that day’s NAV per share if your order is received by the fund in proper form prior to the time the fund calculates its NAV. See “Additional Information on Purchasing and Redeeming Fund Shares — Calculating Net Asset Value” below. Contact your investment professional or financial institution to determine the time by which it must receive your order to be assured same day processing. To make sure your order is in proper form, you must follow the instructions set forth below under “Purchasing and Redeeming Fund Shares.”
Some financial institutions may charge a transaction-based fee for helping you purchase or redeem shares or an asset-based fee. Contact your financial institution for more information.
The fund issues its shares in multiple classes. This prospectus offers Class V shares.
Class V shares are only available to certain accounts for which a financial intermediary acts in a fiduciary, agency, custodial, or other service capacity. Class V are offered at net asset value, with no front-end or contingent deferred sales charge, but with an annual shareholder servicing fee of 0.10%.
The fund also has adopted a non-Rule 12b-1 shareholder servicing plan and agreement with respect to its Class V shares. Under this plan and agreement, the fund pays U.S. Bancorp Asset Management a shareholder servicing fee at an annual rate of 0.10% of average daily Class V share net assets for providing or arranging for the provision of shareholder services to the holders of Class V shares. No distribution-related services are provided under this plan and agreement.
Because the current prospectus and SAI are available on First American Funds’ website free of charge, we do not disclose the following information separately on the website.
Your purchase or redemption price for Class V shares is the fund’s next determined net asset value after the fund, or its designated agent, receives your order in proper form. To understand how the fund calculates its net asset value, see “Additional Information on Purchasing and Redeeming Fund Shares – Calculating Net Asset Value” below.
Purchasing and Redeeming Fund Shares
To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. As a result, when you open an account, we will ask for your name, permanent street address, date of birth, and social security or taxpayer identification number. Addresses containing a P.O. Box only will not be accepted. We may also ask for other identifying documents or information.
| 13 | Prospectus – | First
American Money Market Funds Class V Shares |
Shareholder Information
Purchasing and Redeeming Fund Shares continued
Investments in the fund are intended to be limited to accounts beneficially owned by natural persons. Natural persons are permitted to invest in the fund through certain tax-advantaged savings accounts, trusts and other retirement and investment accounts, including, for example:
| · | Participant-directed defined contribution plans; |
| · | Individual retirement accounts; |
| · | Simplified employee pension arrangements; |
| · | SIMPLE retirement accounts; |
| · | Custodial accounts; |
| · | Deferred compensation plans for government or tax-exempt organization employees; |
| · | Archer medical savings accounts; |
| · | College savings plans; |
| · | Health savings account plans; |
| · | Ordinary trusts and estates of natural persons; or |
| · | Certain other retirement and investment accounts having an institutional decision maker (e.g., a plan sponsor in certain retirement arrangements or an investment adviser managing discretionary investment accounts). |
On or before October 14, 2016, the fund will adopt policies and procedures reasonably designed to limit all beneficial owners of the fund to natural persons. The fund reserves the right to repurchase shares in any accounts that are not beneficially owned by natural persons, after providing 60 days’ written notice.
You may purchase or redeem shares of the fund on any business day by calling your financial institution.
When purchasing shares, payment must be made by wire transfer, which can be arranged by your financial institution. You cannot purchase shares by wire on days when federally chartered banks are closed.
If a fund receives a redemption request by the time the fund calculates its NAV, as specified below, payment will be made the same day by transfer of federal funds if the Fedwire transfer system is available for use that day. Otherwise, payment will be made on the next business day.
Suspension or Postponement of Redemptions. The fund reserves the right to suspend the right of shareholder redemption, or postpone the date of payment:
| · | if emergency conditions should exist, as specified in the Investment Company Act of 1940 (the “Investment Company Act”), or as determined by the Securities and Exchange Commission (SEC), as a result of which disposal of portfolio securities or determination of the net asset value (NAV) of the fund is not reasonably practicable; |
| · | for any period during which trading on the New York Stock Exchange (NYSE) is restricted as determined by the SEC or the NYSE is closed (other than customary weekend and holiday closings); |
| · | for any period during which the SEC has, by rule or regulation, deemed that (1) trading shall be restricted or (2) an emergency exists; or |
| · | for such other periods as the SEC may by order permit for the protection of shareholders of the fund. |
In addition, in the unlikely event that the fund’s board of directors were to determine pursuant to SEC regulations that the extent of the deviation between the fund’s amortized cost per share and its market-based NAV per share may result in material dilution or other unfair results to shareholders, the board will cause the fund to take such action as it deems appropriate to eliminate or reduce to the extent practicable such dilution or unfair results, including suspending redemption of shares and liquidating the fund under Rule 22e-3 of the Investment Company Act.
| 14 | Prospectus – | First
American Money Market Funds Class V Shares |
Shareholder Information
Purchasing and Redeeming Fund Shares continued
Purchases In-Kind. Generally, all purchases will be in cash. However, the fund reserves the right to permit you to purchase shares through the exchange of other securities that you own if consistent with the fund’s investment objective, policies, and operations. The market value of any securities exchanged, plus any cash, must be at least $25 million. Please contact your financial institution.
Redemptions In-Kind. Generally, all redemptions will be for cash. However, the fund reserves the right to pay all or part of your redemption proceeds in readily marketable securities instead of cash. If payment by the fund is made in securities, the fund will value the securities selected in the same manner in which it computes its NAV. This process minimizes the effect of large redemptions on the fund and its remaining shareholders. If you receive redemption proceeds in-kind, you should expect to incur transaction costs upon disposition of those securities. In addition, if you receive redemption proceeds in-kind, you will be subject to market gains or losses upon the disposition of those securities.
Potential Restrictions on Fund Redemptions – Fees and Gates. Beginning October 14, 2016, the fund’s board of directors will be permitted to impose a liquidity fee on redemptions (up to 2% of redemption proceeds) or temporarily restrict redemptions from the fund up to 10 business days during a 90-day period (a “redemption gate”), in the event that the fund’s weekly liquid assets fall below the following thresholds:
| · | 30% weekly liquid assets – If the fund’s weekly liquid assets fall below 30% of the fund’s total assets, and the fund’s board of directors determines it is in the best interest of the Fund, the board of directors may impose a liquidity fee of no more than 2% of the amount redeemed and/or a redemption gate that temporarily suspends the right of redemption. |
| · | 10% weekly liquid assets – If the fund’s weekly liquid assets fall below 10% of the fund’s total assets, the fund will impose, at the beginning of the next business day, a liquidity fee of 1% of the amount redeemed, unless the fund’s board of directors determines that imposing such a fee would not be in the best interests of the fund or determines that a lower or higher fee (not to exceed 2%) would be in the best interests of the fund. |
Liquidity fees and redemption gates may be terminated at any time in the discretion of the fund’s board of directors. Liquidity fees and redemption gates will also terminate at the beginning of the next business day once the fund has invested 30% or more of its total assets in weekly liquid assets as of the end of a business day.
Weekly liquid assets generally include cash; direct obligations of the U.S. government; certain U.S. government agency discount notes with remaining maturities of 60 days or less; securities that will mature or are subject to a demand feature that is exercisable and payable within five business days; or amounts receivable and due unconditionally within five business days on pending sales of portfolio securities. For these purposes, weekly liquid assets will be calculated as of the end of each business day.
| 15 | Prospectus – | First
American Money Market Funds Class V Shares |
Shareholder Information
Additional Information on Purchasing and Redeeming Fund Shares
Calculating Net Asset Value
The fund generally calculates its NAV per share as of 3:30 p.m. Central time on each business day that the fund is open, except that the NAV for the fund is generally calculated at 1:00 p.m. Central time on days on which the bond markets close early (typically on the business day preceding a Federal holiday) (an “Early Close”). Purchase and redemption orders received after closing time, including an Early Close, will be processed the next business day.
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. The securities held by the fund is valued on the basis of amortized cost. This involves valuing an instrument at its cost and thereafter assuming a constant amortization of any discount or premium until the instrument’s maturity, rather than looking at actual changes in the market value of the instrument. The fund’s net asset value is normally expected to be $1 per share.
Frequent Trading of Fund Shares
The fund is designed to offer investors a liquid cash option and it is anticipated that shareholders will purchase and redeem fund shares on a frequent basis. Frequent trading by shareholders may disrupt the management of the fund and increase fund expenses. However, given the short-term nature of the fund’s investments and its use of the amortized cost method for calculating the NAV of fund shares, the fund does not anticipate that in the normal case frequent or short-term trading into and out of the fund will have significant adverse consequences for the fund and its shareholders. Accordingly, the fund’s board of directors has not adopted policies or procedures to monitor or discourage frequent or short-term trading of the fund’s shares.
The fund earns interest, dividends and other income from its investments, and distributes this income (less fund expenses) to you as dividends. Dividends from the fund’s net investment income are declared daily and paid monthly. The fund may take into account capital gains and losses (other than net long-term capital gains) in its daily dividend declarations. A fund may also make additional distributions for tax purposes if necessary.
If the fund receives your wire transfer payment for fund shares by the time the fund determines its NAV, you will begin to accrue dividends on that day. If you redeem shares, you will not receive a dividend on the day of your redemption request if your request is received by the time the fund determines its NAV.
Dividends will be reinvested in additional shares of the same 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, by contacting your financial institution, or by calling Investor Services at 800 677-3863. Cash distributions will be paid on or about the first business day of each month. If you request that your distributions be paid in cash but those distributions cannot be delivered because of an incorrect mailing address, or if a distribution check remains uncashed for six months, the undelivered or uncashed distributions and all future distributions will be reinvested in fund shares at the current NAV.
| 16 | Prospectus – | First
American Money Market Funds Class V Shares |
Shareholder Information
Some of the tax consequences of investing in the fund are discussed below. More information about taxes is provided in the SAI. However, because everyone’s tax situation is unique, always consult your tax professional about federal, state, and local tax consequences.
Dividends you receive from the fund are generally taxable as ordinary income, whether you reinvest them or take them in cash. Dividends from the fund will not be eligible for the reduced rate of tax that applies to “qualified dividend income.”
Additional Payments to Institutions
The advisor and/or the distributor may pay additional compensation to participating institutions (each an “institution” and, collectively, “institutions”) out of their own resources in connection with the sale or retention of fund shares and/or in exchange for sales and/or administrative services performed on behalf of the institution’s customers. The amounts of these payments may be significant, and may create an incentive for the institution or its employees or associated persons to recommend or sell shares of the fund to you. These payments are not reflected in the fees and expenses listed in the “Fund Summary” section of the prospectus because they are not paid by the fund.
These payments are negotiated and may be based on such factors as the number or value of First American money market fund shares that the institution sells or may sell; the value of the assets invested in the First American money market funds by the institution’s customers; lump sum payment for services provided; the type and nature of services or support furnished by the institution; and/or other measures as determined from time to time by the advisor and/or distributor.
The advisor and/or distributor may make other payments or allow other promotional incentives to institutions to the extent permitted by SEC and FINRA rules and by other applicable laws and regulations.
You can ask your institution for information about any payments it receives from the advisor and/or the distributor and from the fund, and any services your institution provides, as well as about fees and/or commissions your institution charges. You can also find more details about payments made by the advisor and/or the distributor in the fund’s SAI.
| 17 | Prospectus – | First
American Money Market Funds Class V Shares |
Shareholder Information
Shareholder Reports
Shareholder reports are mailed twice a year, in October and April. They include financial statements and performance information, and, on an annual basis, the report of independent registered public accounting firm.
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 800 677-3863.
Statements and Confirmations
Statements summarizing activity in your account are mailed quarterly. Confirmations generally 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.
| 18 | Prospectus – | First
American Money Market Funds Class V Shares |
As of the date of this prospectus, the fund had not yet commenced operations and had no financial highlights to report.
| 19 | Prospectus – | First
American Money Market Funds Class V Shares |
First American Funds’ Privacy Policy
We want to provide an explanation to Consumers of what nonpublic personal information is and how it’s collected and used.
A “Consumer” is considered an individual investor who invests or has invested in our products for personal, family or household purposes.
“Nonpublic personal information” is nonpublic information that we obtain while providing financial products or services to you.
How we collect your information
We obtain nonpublic information about you during the account opening process from the applications and other forms you are asked to complete and from the transactions you make with us. We may also receive nonpublic information about you from companies affiliated with us or from other companies that provide services to you.
The types of information we collect
We may collect the following nonpublic personal information about you:
| · | Information about your identity, such as your name, address, and social security number. |
| · | Information about your transactions with us. |
| · | Information you provide on applications, such as your beneficiaries and banking information, if provided to us. |
Why we collect your information
We gather nonpublic personal information about you and your accounts so that we can:
| · | Know who you are and prevent unauthorized access to your information. |
| · | Comply with the laws and regulations that govern us. |
What information we disclose
We may share some or all of the nonpublic personal information that we collect about you with our affiliated providers of financial services, including our family of funds and their advisor, and with companies that perform shareholder services on our behalf. We do not use nonpublic information received from our affiliates for marketing purposes.
We’re permitted by law to disclose nonpublic personal information about you to other third parties in certain circumstances. For example, we may disclose nonpublic personal information about you to affiliated and nonaffiliated third parties to assist us in servicing your account (e.g., mailing of fund-related materials) and to government entities (e.g., IRS for tax purposes).
We’ll continue to adhere to the privacy policies and practices described here even after your account is closed or becomes inactive.
Confidentiality and security
To protect nonpublic personal information about you, we restrict access to such information to only those employees and authorized agents who need to use the information. We maintain physical, electronic, and procedural safeguards to maintain the confidentiality and security of nonpublic information about you. In addition, we require our service providers to restrict access to nonpublic personal information about you to those employees who need that information in order to provide products or services to you. We also require them to maintain physical, electronic, and procedural safeguards that comply with applicable federal standards and regulations to guard your information.
Additional rights and protections
You may have other privacy protections under applicable state laws. To the extent that these state laws apply, we will comply with them when we share information about you. This privacy policy does not apply to your relationship with other financial service providers, such as broker-dealers. We may amend this privacy notice at any time, and we will inform you of changes as required by law.
Our pledge applies to products and services offered by the First American Family of Funds
| NOT FDIC INSURED NO BANK GUARANTEE MAY LOSE VALUE |
THIS PAGE IS NOT PART OF THE PROSPECTUS
First American Funds
P.O. Box 1330
Minneapolis, MN 55440-1330
The Statement of Additional Information (SAI) provides more details about the fund and its policies and is incorporated into this prospectus by reference (which means that it is legally part of this prospectus).
Additional information about the fund’s investments will be available in the fund’s annual and semi-annual reports to shareholders. Prior to the date of this prospectus, the fund had not commenced operations.
You can obtain a free copy of the fund’s annual or semi-annual reports or the SAI, request other information about the fund, or make other shareholder inquiries by calling Investor Services at 800 677-3863 or by contacting the fund at the address above. Annual or semi-annual reports and the SAI will also be available on the fund’s Internet site at www.firstamericanfunds.com.
Information about the fund (including the SAI) can also be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. To find out more about this public service, call the SEC at 1-202-551-8090. Reports and other information about the fund are also available on the EDGAR Database on the SEC’s Internet site at www.sec.gov, or you can obtain copies of this information, after paying a duplicating fee, by electronic request at the following e-mail address: [email protected], or by writing the SEC’s Public Reference Section, Washington, D.C. 20549-1520.
| SEC file number: 811-03313 | PROMMV 07/16 |
FIRST AMERICAN FUNDS, INC.
Statement of Additional Information
July 18, 2016
Money Market Funds
| Fund | Class A | Class T | Class V | Class Y | Class Z |
| Retail Prime Obligations Fund | FAPXX | FEIXX | FPUXX | FYRXX | FZRXX |
This Statement of Additional Information (“SAI”) relates to Retail Prime Obligations Fund (the “Fund”), a series of First American Funds, Inc. (“FAF”). This SAI is not a prospectus, but should be read in conjunction with the Fund’s current Prospectuses dated July 18, 2016. This SAI is incorporated into the Fund’s Prospectuses by reference. To obtain copies of Prospectuses or the Fund’s Annual Report at no charge, write the Fund’s distributor, Quasar Distributors, LLC (the “Distributor”), 615 East Michigan Street, Milwaukee, WI 53202, call Investor Services at 800 677-3863, or visit the Fund’s website at www.firstamericanfunds.com. Please retain this SAI for future reference.
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| ii |
FAF was incorporated in the State of Minnesota under the name “First American Money Fund, Inc.” on October 29, 1981. FAF’s board of directors (the “Board”) and shareholders, at meetings held December 6, 1989 and January 18, 1990, respectively, approved amendments to the Articles of Incorporation providing that the name “First American Money Fund, Inc.” be changed to “First American Funds, Inc.”
As set forth in the Prospectuses, FAF is organized as a series fund, and currently issues its shares in six series (collectively, the “Funds”). Each series of shares represents a separate investment portfolio with its own investment objective and policies (in essence, a separate mutual fund). The series of FAF to which this SAI relates is named on the cover.
Shareholders may purchase shares of the Fund through separate classes. The Fund offers its shares in five classes: Class A, Class T, Class V, Class Y, and Class Z. The different classes provide for variations in distribution costs, voting rights and dividends. To the extent permitted under the Investment Company Act of 1940, as amended (the “1940 Act”), the Fund may also provide for variations in other costs among the classes. Except for differences among the classes pertaining to such costs, each share of the Fund represents an equal proportionate interest in the Fund. The Fund is an open-end diversified management investment company.
FAF has prepared and will provide a separate Prospectus relating to the Class A shares, the Class T shares, the Class V shares, the Class Y shares, and the Class Z shares of the Fund. These Prospectuses can be obtained at no charge by writing Quasar Distributors, LLC at 615 East Michigan Street, Milwaukee, WI 53202, by calling First American Funds Investor Services at 800 677-3863, or by visiting the Fund’s website at www.firstamericanfunds.com.
The Bylaws of FAF provide that meetings of shareholders be held only with such frequency as required under Minnesota law and the 1940 Act. Minnesota corporation law requires only that the Board convene shareholders’ meetings when it deems appropriate. In addition, Minnesota law provides that if a regular meeting of shareholders has not been held during the immediately preceding 15 months, a shareholder or shareholders holding 3% or more of the voting shares of FAF may demand a regular meeting of shareholders by written notice given to the President or Treasurer of FAF. Within 30 days after receipt of the demand, the Board shall cause a regular meeting of shareholders to be called, which meeting shall be held no later than 90 days after receipt of the demand, all at the expense of FAF. In addition, the 1940 Act requires a shareholder vote for, among other things, 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 SAI may also refer to Mount Vernon Securities Lending Trust (the “Mount Vernon Trust”), an affiliated investment company, and to eight separate closed-end funds (the “Closed-End Funds”). The Closed-End Funds are no longer part of the First American fund complex; however, they were part of the complex during the historical periods covered in this SAI. The Funds and Mount Vernon Trust are collectively referred to hereafter as the “Fund Complex.”
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The Fund is classified under the 1940 Act as a diversified series of an open-end management investment company. This classification cannot be changed with respect to a Fund without approval by the holders of a majority of the outstanding shares of the Fund as defined in 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 1940 Act currently restricts the Fund, with respect to 75% of its total assets, from investing more than 5% of the value of its total assets in the outstanding securities of any one issuer, or own more than 10% of the outstanding voting securities of any one issuer, in each case other than securities issued or guaranteed by the U.S. Government or any agency or instrumentality thereof, securities of other investment companies, and cash and cash items (including receivables).
In addition to the investment objective and policies set forth in the Prospectuses and under the caption “Additional Information Concerning Fund Investments” below, the Fund is subject to the investment restrictions set forth below. The investment restrictions set forth in paragraphs 1 through 8 below are fundamental and cannot be changed with respect to a Fund without approval by the holders of a majority of the outstanding shares of the Fund as defined in the 1940 Act.
Fundamental Investment Restrictions
The Fund will not:
| 1. | Concentrate its investments in a particular industry, except that there shall be no limitation on the purchase of obligations of domestic commercial banks, excluding for this purpose, foreign branches of domestic commercial banks. For purposes of this limitation, the U.S. Government and its political subdivisions are not considered members of any industry. Whether a 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. | With respect to 75% of its total assets, purchase securities of an issuer (other than the U.S. Government, its agencies, instrumentalities or authorities or repurchase agreements fully collateralized by U.S. Government securities and other investment companies) if (a) such purchase would, at the time, cause more than 5% of the Fund’s total assets taken at market value to be invested in the securities of such issuer; or (b) such purchase would, at the time, result in more than 10% of the outstanding voting securities of such issuer being held by the Fund. |
| 4. | Invest for the primary purpose of control or management. |
| 5. | Purchase physical commodities or contracts relating to physical commodities. |
| 6. | 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 interests therein or in securities of companies that deal in real estate or mortgages. |
| 7. | 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. |
| 8. | Make loans except as permitted under the 1940 Act, as interpreted or modified from time to time by any regulatory authority having jurisdiction. |
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For purposes of applying the limitation set forth in number 1 above, according to the current interpretation by the U.S. Securities and Exchange Commission (“SEC”), the Fund would be concentrated in an industry if 25% or more of its total assets, based on market value at the time of purchase, were invested in that industry.
For purposes of applying the limitation set forth in number 2 above, under the 1940 Act as currently in effect, the Fund is not permitted to issue senior securities, except that a Fund may borrow from any bank if immediately after such borrowing the value of such Fund’s total assets is at least 300% of the principal amount of all of the Fund’s borrowings (i.e., the principal amount of the borrowings may not exceed 33 1/3% of the Fund’s total assets). In the event that such asset coverage shall at any time fall below 300% the Fund shall, within three days thereafter (not including Sundays and holidays), reduce the amount of its borrowings to an extent that the asset coverage of such borrowings shall be at least 300%.
For purposes of applying the limitation set forth in number 8 above, there are no limitations with respect to unsecured loans made by a Fund to an unaffiliated party. However, when a Fund loans its portfolio securities, the obligation on the part of the Fund to return collateral upon termination of the loan could be deemed to involve the issuance of a senior security within the meaning of Section 18(f) of the 1940 Act. In order to avoid a violation of Section 18(f), a Fund may not make a loan of portfolio securities if, as a result, more than one-third of its total asset value (at market value computed at the time of making a loan) would be on loan. The Fund currently does not intend to make loans, unsecured or otherwise, except to the extent that investments in debt securities in accordance with Rule 2a-7 of the 1940 Act (“Rule 2a-7”) (as discussed below under “Additional Restrictions”) would be deemed to be loans.
Non-Fundamental Investment Restrictions
The following restrictions are non-fundamental and may be changed by the Board without a shareholder vote.
The Fund will not:
| 1. | Sell securities short. |
| 2. | Borrow money in an amount exceeding 10% of a Fund’s total assets. The Fund will not borrow money for leverage purposes. For the purpose of this investment restriction, the purchase of securities on a when-issued or delayed delivery basis shall not be deemed the borrowing of money. A Fund will not make additional investments while its borrowings exceed 5% of total assets. |
| 3. | Invest more than 5% of their total assets in illiquid securities. |
The Fund may not invest in obligations of any affiliate of U.S. Bancorp, including U.S. Bank National Association (“U.S. Bank”).
FAF has received an exemptive order (Investment Company Act Release No. 22589 dated March 28, 1997) from the SEC under which short-term investments and repurchase agreements may be entered into on a joint basis by the Fund and other funds advised by U.S. Bancorp Asset Management, Inc. (“USBAM” or the “Advisor”).
FAF has also received an exemptive order (Investment Company Act Release No. 25526 dated April 15, 2002) from the SEC which permits the Fund to participate in an interfund lending program pursuant to which the Fund and other funds advised by the Advisor may lend money directly to each other for emergency or temporary purposes. The program is subject to a number of conditions designed to ensure fair and equitable treatment of all participating funds, including the following: (1) no Fund may borrow money through the program unless it receives a more favorable interest rate than a rate approximating the lowest interest rate at which bank loans would be available to
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any of the participating funds under a loan agreement; and (2) no Fund may lend money through the program unless it receives a more favorable return than that available from an investment in repurchase agreements and, to the extent applicable, money market cash sweep arrangements. In addition, a Fund may participate in the program only if and to the extent that such participation is consistent with the Fund’s investment objectives and policies (for instance, money market funds would normally participate only as lenders because they rarely need to borrow cash to meet redemptions). The duration of any loans made under the interfund lending program will be limited to the time required to receive payment for the securities sold, but in no event more than 7 days. All loans will be callable by the lending Fund on one business day’s notice. A Fund may have to borrow from a bank at a higher interest rate if an interfund loan is called or not renewed. Any delay in repayment to a lending Fund could result in a lost investment opportunity or additional costs. The program is subject to the oversight and periodic review of the Board of the participating Funds.
The Fund is subject to the investment restrictions of Rule 2a-7 in addition to other policies and restrictions discussed herein. Pursuant to Rule 2a-7, the Fund is required to invest exclusively in securities that mature within 397 days from the date of purchase and to maintain a weighted average maturity of not more than 60 days and a weighted average life of not more than 120 days. Under Rule 2a-7, securities that are subject to specified types of demand or put features may be deemed to mature at the next demand or put date although they have a longer stated maturity. Rule 2a-7 also requires that all investments by the Fund be limited to U.S. dollar-denominated investments that (a) present “minimal credit risk” and (b) are at the time of acquisition “Eligible Securities.” Eligible Securities include, among others, securities that are rated by two Nationally Recognized Statistical Rating Organizations (“NRSROs”) in one of the two highest categories for short-term debt obligations, such as A-1 or A-2 by Standard & Poor’s Rating Services, a division of The McGraw-Hill Companies, Inc. (“Standard & Poor’s”), or Prime-1 or Prime-2 by Moody’s Investors Service, Inc. (“Moody’s”). The Advisor, pursuant to delegation by the Board, is responsible for determining that the Fund’s investments present only “minimal credit risk” and are Eligible Securities. Such determinations are subject to the oversight of, and are made pursuant to written guidelines and procedures established by, the Board.
Rule 2a-7 requires, among other things, that the Fund may not invest, other than in U.S. “Government Securities” (as defined in the 1940 Act), more than 5% of its total assets in securities issued by the issuer of the security; provided that the Fund may invest in First Tier Securities (as defined in Rule 2a-7) in excess of that limitation for a period of up to three business days after the purchase thereof provided that the Fund may not make more than one such investment at any time. Rule 2a-7 also requires that the Fund may not invest, other than in U.S. Government Securities, (a) more than 3% of its total assets in Second Tier Securities (i.e., Eligible Securities that are not rated by two NRSROs in the highest category such as A-1 and Prime-1) and (b) more than 1/2 of 1% of its total assets in Second Tier Securities of any one issuer. The Fund must comply with weekly liquidity standards that require a Fund to hold at least 30% of its total assets in cash, direct obligations of the U.S. Government, agency discount notes with remaining maturities of 60 days or less, or securities convertible into cash within five business days. The Fund must also comply with daily liquidity standards that require a Fund to hold at least 10% of its total assets in cash, direct obligations of the U.S. Government, or securities convertible into cash within one business day. The Fund is limited to investing no more than 5% of its total assets in illiquid securities.
The Fund’s concentration policy permits investment, without limit, in bankers’ acceptances, certificates of deposit and similar instruments issued by (i) U.S. banks and (ii) U.S. branches of foreign banks (in circumstances in which the U.S. branches of foreign banks are subject to the same regulation as U.S. banks). To the extent that such investments are consistent with a Fund’s investment objective and policies, the Fund may concentrate in such instruments when, in the opinion of the Advisor, the yield, marketability and availability of investments meeting the Fund’s quality standards in the banking industry justify any additional risks associated with the concentration of the Fund’s assets in such industry.
The Fund will provide shareholders with at least 60 days’ advance notice before changing these policies.
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Additional Information Concerning Fund Investments
The principal investment strategies of the Fund are set forth in the Fund’s current Prospectuses under “Fund Summary.” This section describes in additional detail certain of the Fund’s principal investment strategies and other non-principal investment strategies. The Fund has attempted to identify investment strategies that will be employed in pursuing their investment objectives. Additional information concerning the Fund’s investment restrictions is set forth above under “Investment Restrictions.”
If a percentage limitation referred to in this SAI or in the Prospectuses is adhered to at the time of an investment, a later increase or decrease in percentage resulting from changes in values of assets will not constitute a violation of such limitation except in the case of the limitations on illiquid investments and borrowing from banks.
The securities in which the Fund invests may not yield as high a level of current income as longer term or lower grade securities. These other securities may have less stability of principal, be less liquid, and fluctuate more in value than the securities in which the Fund invests. All securities in the Fund’s portfolio are purchased with and payable in U.S. dollars.
The Fund may invest in asset-backed securities, including asset-backed commercial paper, as a non-principal investment strategy. Asset-backed securities generally constitute interests in, or obligations secured by, a pool of receivables other than mortgage loans, such as automobile loans and leases, credit card receivables, home equity loans and trade receivables. Asset-backed securities generally are issued by a private special-purpose entity. Their ratings and creditworthiness typically depend on the legal insulation of the issuer and transaction from the consequences of a sponsoring entity’s bankruptcy, as well as on the credit quality of the underlying receivables and the amount and credit quality of any third-party credit enhancement supporting the underlying receivables or the asset-backed securities. Asset-backed securities and their underlying receivables generally are not issued or guaranteed by any governmental entity.
Commercial Paper and Rule 144A Securities
The Fund may invest in commercial paper as a principal investment strategy. Commercial paper refers to short-term, unsecured promissory notes issued by corporations or other entities to finance short-term credit needs. The Fund may also purchase asset-backed commercial paper (“ABCP”), which is a form of commercial paper that is backed by assets such as real estate, trade receivables, credit card loans, auto loans and other commercial assets. ABCP is typically sponsored by a commercial bank or other financial institution. Commercial paper is usually sold on a discount basis and typically has a maturity at the time of issuance not exceeding nine months. Such securities, if they meet the criteria for liquidity established by the Board, will be considered liquid. Consequently, the Fund does not intend to subject such securities to the 5% limitation applicable to investments in illiquid securities.
The commercial paper in which the Fund may invest includes commercial paper issued in reliance on the exemption from registration afforded by Section 4(a)(2) of the Securities Act of 1933 and corporate obligations qualifying for resale to certain “qualified institutional buyers” pursuant to Rule 144A under the Securities Act of 1933. Because the secondary market for Rule 144A securities is generally limited to qualified institutional buyers, there may be times when the trading market for a particular Rule 144A security held by a Fund may be limited and will be considered illiquid. In such event, the Advisor will consider appropriate remedies to minimize the effect on the Fund’s liquidity.
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The Fund, as a non-principal investment strategy, may separately arrange for guarantees, letters of credit, or other forms of credit enhancement agreements (collectively, “Guarantees”) for the purpose of further securing the payment of principal and/or interest on the Fund’s investment securities. Although each investment security, at the time it is purchased, must meet such Fund’s creditworthiness criteria, Guarantees sometimes are purchased from banks and other institutions (collectively, “Guarantors”) when the Advisor, through yield and credit analysis, deems that credit enhancement of certain securities is advisable. As a non-fundamental policy, under normal market conditions, the Fund will limit the value of all investment securities issued or guaranteed by each Guarantor to not more than 10% of the value of such Fund’s total assets.
The Fund may invest as a principal investment strategy in dollar-denominated obligations of U.S. branches of foreign banks, foreign branches of domestic banks, foreign banks, and foreign corporations.
Investment in foreign securities is subject to special investment risks that differ in some respects from those related to investments in securities of U.S. domestic issuers. These risks include political, social or economic instability in the country of the issuer, the difficulty of predicting international trade patterns, the possibility of the imposition of exchange controls, expropriation, limits on removal of currency or other assets, nationalization of assets, foreign withholding and income taxation, and foreign trading practices (including higher trading commissions, custodial charges and delayed settlements). Foreign securities also may be subject to greater fluctuations in price than securities issued by U.S. corporations. The principal markets on which these securities trade may have less volume and liquidity, and may be more volatile, than securities markets in the United States.
In addition, there may be less publicly available information about a foreign bank or company than about a U.S. domiciled bank or company. Foreign banks and companies generally are not subject to uniform accounting, auditing and financial reporting standards comparable to those applicable to U.S. domestic banks and companies. There is also generally less government regulation of securities exchanges, brokers and listed companies abroad than in the United States. Confiscatory taxation or diplomatic developments could also affect investment in those countries. Various provisions of federal law governing the establishment and operation of domestic branches of foreign banks do not apply to foreign branches of domestic banks. Obligations of U.S. branches of foreign banks may be general obligations of the parent bank in addition to the issuing branch, or may be limited by the terms of a specific obligation and by federal and state regulation as well as by governmental action in the country in which the foreign bank has its head office.
The Fund may invest in funding agreements as a non-principal investment strategy. Funding agreements are contracts issued by insurance companies that guarantee a return of principal plus some amount of interest. Funding agreements purchased by the Fund will typically be short-term and provide an adjustable rate of interest. Funding agreements may or may not allow the Fund to demand repayment of principal after an agreed upon waiting period or upon certain other conditions. The insurance company may also have a corresponding right to prepay the principal with accrued interest upon a specified number of days’ notice to the Fund. The maturity date of some funding agreements may be extended upon the mutual agreement and consent of the insurance company and the Fund. Generally, there is no active secondary market in short-term funding agreements. Consequently, short-term funding agreements may be considered by the Fund to be illiquid investments and therefore subject to the Fund’s non-fundamental policy limiting investments in illiquid securities to not more than 5% of total assets.
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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. The Fund does so as a principal investment strategy. If the Fund engages in securities lending, distributions paid to shareholders from the resulting income will not be excludable from a shareholder’s gross income for income tax purposes. 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. In these loan arrangements, the Fund will receive collateral in the form of cash, U.S. Government securities or other high-grade debt obligations equal to at least 102% of the value of the securities loaned at the inception of each loan. Collateral is marked to market daily. When the Fund lends portfolio securities, it continues to be entitled to the interest payable on the loaned securities and, in addition, receives interest on the amount of the loan at a rate negotiated with the borrower. 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 (including fees to U.S. Bank) in connection with these loans.
U.S. Bank acts as securities lending agent for the Fund and receives separate compensation for such services, subject to compliance with conditions contained in an SEC exemptive order permitting U.S. Bank to provide such services and receive such compensation. U.S. Bank receives fees up to 20% of the Fund’s net income from securities lending transactions and pays half of such fees to USBAM for certain securities lending services provided by USBAM. This may create a financial incentive for USBAM to increase its securities lending revenue by lending out as many portfolio securities as possible. To safeguard against this potential conflict of interest, the Board has adopted procedures designed to ensure that the fee arrangement and the other terms governing the relationship between each Fund and U.S. Bank, acting as securities lending agent for the Fund, are fair.
Certain of the debt obligations (including certificates of participation, variable rate demand notes, commercial paper and other short-term obligations) which the Fund may purchase may be backed by an unconditional and irrevocable letter of credit, or other form of credit or liquidity support, of a bank, savings and loan association or insurance company which assumes the obligation for payment and interest in the event of default by the issuer. Only banks, savings and loan associations, and insurance companies which, in the opinion of the Advisor, are of comparable quality to issuers of other permitted investments of the Fund, may be used for letter of credit-backed investments.
The Fund may invest in loan participation interests as a principal investment strategy. A loan participation interest represents a pro rata undivided interest in an underlying bank loan. Participation interests, like the underlying loans, may have fixed, floating, or variable rates of interest. The bank selling a participation interest generally acts as a mere conduit between its borrower and the purchasers of interests in the loan. The purchaser of an interest (for example, the Fund) generally does not have recourse against the bank in the event of a default on the underlying loan. Therefore, the credit risk associated with such instruments is governed by the creditworthiness of the underlying borrowers and not by the banks selling the interests. If the Fund invests in loan participation interests that can be sold within a seven-day period, the interests are deemed by the Advisor to be liquid investments. If the Fund invests in loan participation interests that are restricted from being sold within a seven-day period, the interests are deemed by the Advisor to be illiquid investments and therefore subject to the Fund’s 5% limitation on investments in illiquid securities.
The Fund may invest, to the extent permitted by the 1940 Act, in securities issued by other money market funds, provided that the permitted investments of such other money market funds constitute permitted investments of the Fund. The Fund may do so as a non-principal investment strategy. As a shareholder of another investment company, a Fund would bear, along with other shareholders, its pro rata portion of that company’s expenses,
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including advisory fees. These expenses would be in addition to the expenses that the Fund bears directly in connection with its own operations. Investment companies in which the Fund may invest may also impose a sales or distribution charge in connection with the purchase or redemption of their shares and other types of commissions or charges. Such charges will be payable by the Funds and, therefore, will be borne indirectly by their shareholders. The money market funds in which the Fund may invest include other money market funds advised by the Advisor.
The Fund may invest in municipal securities as a principal investment strategy. Municipal securities include municipal bonds and other debt securities issued by the states and by their local and special-purpose political subdivisions. The term “municipal bond” as used in this Section includes short-term municipal notes and other commercial paper issued by the states and their political subdivisions.
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 obligation. 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 solely 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 bonds 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 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.
The Fund’s investments in municipal bonds and other debt obligations that are purchased from financial institutions such as commercial and investment banks, savings associations and insurance companies may take the form of participations, beneficial interests in a trust, partnership interests or any other form of indirect ownership that allows the Fund to treat the income from the investment as exempt from federal income tax.
In addition, the Fund may invest in other federal income tax-free securities such as (i) tax anticipation notes (“TANs”) and revenue anticipation notes (“RANs”) issued to finance working capital needs in anticipation of receiving taxes or other revenues, (ii) bond anticipation notes (“BANs”) that are intended to be refinanced through a later issuance of longer-term bonds, (iii) variable and floating rate obligations including variable rate demand notes, described below under “—Variable and Floating Rate Instruments,” (iv) tender option bonds, and (v) participation, trust and partnership interests in any of the foregoing obligations. The obligations of TANs, RANs, and BANs are generally secured by the anticipated revenues from taxes, grants or bond financing. An investment in such instruments, however, presents a risk that the anticipated revenues will not be received or that such revenues will be insufficient to satisfy the issuer’s payment obligations under the notes or that refinancing will be otherwise unavailable. Tender option bonds are created when municipal instruments are transferred to a special purpose trust which issues two classes of certificates. The first class, commonly called floating rate certificates, pays an interest rate that is typically reset weekly based on a specified index. The second class, commonly called inverse floaters, pays an interest rate based on the difference between the interest rate earned on the underlying municipal instruments and the interest rate paid on the floating rate certificates, after expenses. In selecting tender option bonds, the Advisor may consider the creditworthiness of the issuer of the underlying bond deposited in the trust, the experience of the
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custodian, and the quality of the sponsor providing the tender option, among other factors. In certain instances, the tender option may be terminated.
Obligations of Banks and Other Financial Services Companies
As noted in the Prospectuses, the Fund invests as a principal investment strategy in U.S. dollar-denominated obligations of domestic and foreign banks with total assets of at least $500 million, including fixed and variable rate certificates of deposit, time deposits, bankers’ acceptances, and other short-term obligations. Certificates of deposit are negotiable certificates evidencing the obligation of a bank to repay funds deposited with it for a specified period of time. Time deposits are non-negotiable deposits maintained in a banking institution for a specified period of time at a stated interest rate. Time deposits that may be held by a Fund will not benefit from insurance from the Deposit Insurance Fund administered by the Federal Deposit Insurance Corporation (“FDIC”). 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 face amount of the instrument upon maturity. Bank obligations in which the Fund invests may include uninsured, direct obligations, bearing fixed, floating or variable interest rates. The Fund may also invest in securities issued by other financial services companies in various industries as a principal investment strategy. To the extent the Fund invests in securities issued by domestic and foreign banks and other financial services companies, the Fund’s performance will be susceptible to the risks associated with the banking and financial services sectors. These sectors are highly dependent on the supply of short-term financing. The value of securities of issuers in the banking and financial services sectors can be sensitive to changes in government regulation and interest rates and to economic downturns in the United States and abroad.
The Fund, as a non-principal investment strategy, may purchase securities that provide for the right to resell them to the issuer, a bank or a broker-dealer at a specified price within a specified period of time prior to the maturity date of such obligations. Such a right to resell, which is commonly known as a “put,” may be sold, transferred or assigned only with the underlying security or securities. A Fund may pay a higher price for a security with a put than would be paid for the same security without a put. The primary purpose of purchasing such securities with puts is to permit the Fund to be as fully invested as practicable in securities while at the same time providing the Fund with appropriate liquidity.
The Fund may engage in repurchase agreements as a principal investment strategy. A repurchase agreement involves the purchase by a Fund of securities with the agreement that, after a stated period of time, the original seller (the “counterparty”) will buy back the same securities (“collateral”) at a predetermined price or yield. Under normal market conditions, repurchase agreements permit the Funds to maintain liquidity and earn income over periods of time as short as overnight. The Fund may enter into repurchase agreement transactions that are collateralized fully as defined in Rule 5b-3(c)(1) of the 1940 Act, which has the effect of enabling a Fund to look to the collateral, rather than the counterparty, for determining whether its assets are “diversified” for 1940 Act purposes. In addition, for the Fund, collateral may include securities that the Fund is not otherwise permitted to purchase directly, such as long-term government bonds, investment and non-investment grade corporate bonds, asset- and mortgage-backed securities, collateralized mortgage obligations, agency real estate mortgage investment conduits, and equity securities. Irrespective of the type of collateral underlying a repurchase agreement, a Fund must determine that a repurchase obligation with a particular counterparty involves minimal credit risk to the Fund and otherwise satisfies the credit quality standards applicable to the acquisition of an instrument issued by such counterparty in compliance with Rule 2a-7.
Securities pledged as collateral for repurchase agreements are held by the custodian bank until the respective agreements mature. The Fund may also invest in tri-party repurchase agreements. Securities held as collateral for tri-party repurchase agreements are maintained in a segregated account by an unaffiliated third-party custodian bank until the maturity of the repurchase agreement. The market value of the collateral underlying the
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repurchase agreement will be determined on each business day. If at any time the market value of the collateral falls below the repurchase price under the repurchase agreement (including any accrued interest), the Fund will promptly receive additional collateral (so the total collateral is an amount at least equal to the repurchase price plus accrued interest).
Repurchase agreements involve certain risks not associated with direct investments in securities. If the counterparty defaults on its obligation to repurchase as a result of its bankruptcy or otherwise, the Fund will seek to sell the collateral, which could involve costs or delays. Although collateral will at all times be maintained in an amount at least equal to the repurchase price under the agreement (including accrued interest), a Fund would suffer a loss if the proceeds from the sale of the collateral were less than the agreed-upon repurchase price. As noted above, the Fund may engage in repurchase agreement transactions that are collateralized by securities that the Fund is not otherwise directly permitted to purchase, such as long-term government bonds, investment grade corporate bonds and equity securities. These collateral securities may be less liquid or more volatile than others or less liquid and more volatile than the securities that the Fund is permitted to purchase directly, thereby increasing the risk that the Fund will be unable to recover fully in the event of a counterparty’s default and potentially resulting in the Fund owning securities that it is not otherwise permitted to purchase. The Advisor will monitor the creditworthiness of the firms with which the Fund enters into repurchase agreements.
The Fund may invest in securities issued or guaranteed as to principal or interest by the U.S. Government, or agencies or instrumentalities of the U.S. Government. Making such investments is a principal investment strategy for the Fund. These investments include direct obligations of the U.S. Treasury, such as U.S. Treasury bonds, notes, and bills. These Treasury securities are essentially the same except for differences in interest rates, maturities, and dates of issuance. In addition to Treasury securities, the Fund may invest in securities, such as notes, bonds, and discount notes, which are issued or guaranteed by agencies of the U.S. Government and various instrumentalities which have been established or sponsored by the U.S. Government. Except for U.S. Treasury securities, these U.S. Government obligations, even those which are guaranteed by federal agencies or instrumentalities, may or may not be backed by the “full faith and credit” of the United States. In the case of securities not backed by the full faith and credit of the United States, the investor must look principally to the agency issuing or guaranteeing the obligation for ultimate repayment and may not be able to assert a claim against the United States itself in the event the agency or instrumentality does not meet its commitment. The Advisor considers securities guaranteed by an irrevocable letter of credit issued by a government agency to be guaranteed by that agency.
U.S. Treasury obligations include bills, notes and bonds issued by the U.S. Treasury and separately traded interest and principal component parts of such obligations that are transferable through the Federal book-entry system, which are known as Separately Traded Registered Interest and Principal Securities (“STRIPS”). STRIPS are sold as zero coupon securities, which means that they are sold at a substantial discount and redeemed at face value at their maturity date without interim cash payments of interest or principal. This discount is accreted over the life of the security, and such accretion will constitute the income earned on the security for both accounting and tax purposes. Because of these features, such securities may be subject to greater interest rate volatility than interest paying U.S. Treasury obligations. A Fund’s investments in STRIPS will be limited to components with maturities less than or equal to 397 days and the Fund will not actively trade such components.
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Variable and Floating Rate Instruments
Certain of the obligations in which the Fund may invest may be variable or floating rate obligations in which the interest rate is adjusted either at predesignated periodic intervals (variable rate) or when there is a change in the index rate of interest on which the interest rate payable on the obligation is based (floating rate). Interest rates on these securities are ordinarily tied to, and represent a percentage of, a widely recognized interest rate, such as the yield on 90-day U.S. Treasury bills or the prime rate of a specified bank. These rates may change as often as twice daily. Generally, changes in interest rates will have a smaller effect on the market value of variable and floating rate securities than on the market value of comparable fixed-income obligations. Thus, investing in variable and floating rate securities generally affords less opportunity for capital appreciation and depreciation than investing in comparable fixed-income securities. Variable or floating rate obligations may be combined with a put or demand feature (e.g., variable rate demand obligations or notes) that entitles the holder to the right to demand repayment in full or to resell at a specific price and/or time. Variable or floating rate obligations with a demand feature enable the Fund to purchase instruments with a stated maturity in excess of 397 calendar days in accordance with Rule 2a-7, which allows the Fund to consider certain of such instruments as having maturities that are less than the maturity date on the face of the instrument.
Variable and floating rate instruments may include variable amount master demand notes that permit the indebtedness thereunder to vary in addition to providing for periodic adjustments in the interest rate. There may be no active secondary market with respect to a particular variable or floating rate instrument. Nevertheless, the periodic readjustments of their interest rates tend to assure that their value to a Fund will approximate their par value. Illiquid variable and floating rate instruments (instruments that are not payable upon seven days’ notice and do not have an active trading market) that are acquired by a Fund are subject to the Fund’s percentage limitations regarding securities that are illiquid or not readily marketable. USBAM will continuously monitor the creditworthiness of issuers of variable and floating rate instruments in which the Fund invests and the ability of issuers to repay principal and interest.
When-Issued and Delayed Delivery Securities
The Fund may purchase securities on a when-issued or delayed delivery basis, although the Fund does not do so as a principal investment strategy. The settlement dates for these types of transactions are determined by mutual agreement of the parties and may occur a month or more after the parties have agreed to the transaction. Securities purchased on a when-issued or delayed delivery basis are subject to market fluctuation and no interest accrues to the Fund during the period prior to settlement. At the time a Fund commits to purchase securities on a when-issued or delayed delivery basis, it will record the transaction and thereafter reflect the value, each day, of such security in determining its net asset value. At the time of delivery of the securities, the value may be more or less than the purchase price. The Fund does not receive income from these securities until such securities are delivered. The Fund will maintain cash or cash equivalents or other portfolio securities equal in value to commitments for such when-issued or delayed delivery securities. A Fund will not purchase securities on a when issued or delayed delivery basis if, as a result thereof, more than 15% of the Fund’s net assets would be so invested.
Zero-Coupon and Step-Up Coupon Securities
The Fund may invest in zero-coupon securities and step-up coupon securities as a non-principal investment strategy. These securities are debt securities that do not make regular cash interest payments. Zero-coupon securities are securities that make no periodic interest payments, but are instead sold at discounts from face value. Step-up coupon bonds are debt securities that may not pay interest for a specified period of time and then, after the initial period, may pay interest at a series of different rates. If these securities do not pay current cash income, the market prices of these securities would generally be more volatile and likely to respond to a greater degree to changes in interest rates than the market prices of securities having similar maturities and credit qualities that pay cash interest periodically.
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The Fund generally intends to hold its portfolio securities to maturity. In certain instances, however, a Fund may dispose of its portfolio securities prior to maturity when it appears such action will be in the best interest of the Fund because of changing money market conditions, redemption requests, or otherwise. A Fund may attempt to maximize the total return on its portfolio by trading to take advantage of changing money market conditions and trends or to take advantage of what are believed to be disparities in yield relationships between different money market instruments. Because the Fund invests in short-term securities and manages its portfolio as described above in “Investment Restrictions” and “Additional Information Concerning Fund Investments” and, as set forth in the “Fund Summary” sections of the Fund’s Prospectuses, the Fund’s portfolio will turn over several times a year. Because brokerage commissions as such are not usually paid in connection with the purchase or sale of the securities in which the Fund invests and because the transactional costs are small, the high turnover is not expected to materially affect net asset values or yields. Securities with maturities of less than one year are excluded from required portfolio turnover rate calculations.
Disclosure of Portfolio Holdings
In order to comply with Rule 2a-7, information concerning the Fund’s portfolio holdings, as well as their weighted average maturity and weighted average life, is posted on the Fund’s website (www.firstamericanfunds.com) typically five business days after the end of each month and remains posted on the website for at least six months thereafter. In addition, the Fund files more detailed portfolio information with the SEC on Form N-MFP no later than five business days after the end of each month, which becomes publicly available on the SEC’s website (www.sec.gov) 60 days after the end of the month to which the information pertains. The Fund is also required to file its portfolio holdings schedule with the SEC on a quarterly basis. This schedule is filed with the Fund’s annual and semi-annual reports on Form N-CSR for the second and fourth fiscal quarters and on Form N-Q for the first and third fiscal quarters. These filings are generally available within 60 days of the end of the Fund’s fiscal quarter. A Fund may publish complete portfolio holdings information more frequently if it has a legitimate business purpose for doing so.
The Fund’s portfolio holdings are also posted on the Fund’s website on a weekly basis, typically on the first business day of each week. This weekly information generally reflects holdings as of the previous Thursday and remains posted on the website until the next publication date. Until such time as it is posted, it will be Undisclosed Holdings Information, as defined below, and subject to the Fund’s procedures regarding the disclosure of Undisclosed Holdings Information.
The Board has adopted policies and procedures (the “Disclosure Policies”), which prohibit the release of information concerning portfolio holdings, or information derived therefrom (“Undisclosed Holdings Information”), that has not been made public through SEC filings or the Fund’s website. Different exceptions to this prohibition may apply depending on the type of third party that receives the Undisclosed Holdings Information. The Disclosure Policies are designed to prevent the use of portfolio holdings information to trade against the Fund, or otherwise use the information in a way that would harm the Fund, and to prevent selected investors from having nonpublic information that will allow them to make advantageous decisions with respect to purchasing and selling Fund shares.
Disclosure within the Advisor and Its Affiliates and to Fund Directors
Undisclosed Holdings Information is provided, or otherwise made available, on a daily basis (a) without prior approval, to individuals who are employed by the Advisor and who have a need to know the information, such as investment, compliance and treasury personnel, and (b) to individuals employed by affiliates of the Advisor who are not otherwise entitled to receive such information under “Disclosure to Fund Service Providers and Prospective Service Providers,” below, if (1) such individuals are subject to the Advisor’s Code of Ethics, or that of an affiliate,
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which imposes a duty not to trade on such information; and (2) the Fund’s Chief Compliance Officer (“CCO”) has determined that improper use of such information by such individuals is not likely to affect the Fund in any material respect.
Undisclosed Holdings Information also may be provided without prior approval to directors of the Fund and the directors’ service providers, such as counsel, as part of the materials for regular or special board of directors meetings.
Disclosure to Fund Service Providers and Prospective Service Providers
The Fund’s officers may authorize disclosure of Undisclosed Holdings Information to eligible service providers and prospective service providers where such service providers require the information in the normal course of business in order to provide services to the Fund, or in anticipation of providing such services in the future. Undisclosed Holdings Information is provided, or otherwise made available, to the Advisor (as described above), custodians, auditors, accounting service providers, administrators, transfer agents, securities lending agents, outside accountants, outside counsel, financial printers, pricing services, companies that provide analytical or statistical information (including Factset Research Systems and Bloomberg LP), ratings and ranking agencies (including Morningstar, Lipper Analytical Services, Moody’s, and Standard & Poor’s Corporation), entities that provide trading, research and other investment-related services, information aggregators (including Crane Data and iMoneyNet), and financial intermediaries that include the Fund in their investment programs. The Undisclosed Holdings Information may be provided to eligible service providers as it is required, with any frequency and without any delay, provided that such organization has entered into a written agreement with the Fund, or the Fund’s authorized service providers, to maintain the information in confidence and to not use the information for any purpose other than the performance of its contractual responsibilities and duties.
Disclosure to Investors, Prospective Investors, and Investor Consultants
The Disclosure Policies provide that Undisclosed Holdings Information may be provided to individual and institutional investors, prospective investors, or investor consultants with the prior approval of the CCO in the specific instance. The CCO will only approve such disclosure after concluding that it is in the best interests of the Fund in question and its shareholders and if the recipient has agreed in writing to maintain the information in confidence and not to trade on the basis of any such information that is material nonpublic information. In considering a request for such approval, the CCO also shall identify and consider any conflict of interest between the Fund and its shareholders, on the one hand, and the Advisor and its affiliates, on the other, which is presented by the request. If the CCO determines that there is a conflict of interest, he or she will approve such disclosure only if he or she determines that such conflict is materially mitigated by the execution of a confidentiality agreement and that, despite such conflict of interest, disclosure is in the best interests of the relevant Fund and its shareholders. The CCO is responsible for the creation of a written record that states the basis for the conclusion that the disclosure is in the best interests of the relevant Fund and its shareholders.
Disclosure as Required by Applicable Law
Undisclosed Holdings Information may be disclosed to any person as required by applicable laws, rules and regulations. For example, such information may be disclosed in response to regulatory requests for information or in response to legal process in litigation matters.
Disclosure of Limited Holdings
Portfolio managers, analysts and other personnel of the Advisor may discuss portfolio information in interviews with members of the media, or in due diligence or similar meetings with clients or prospective purchasers of Fund shares or their representatives. In no case will a material number of portfolio holdings be provided that have not yet been posted on the Fund’s website or filed with the SEC unless the recipient has entered into a written agreement with the Fund to maintain the confidentiality of such information and not to trade on the basis of any such
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information that is material nonpublic information. In addition, brokers and dealers may be provided with individual portfolio holdings in order to obtain bids or bid and asked prices (if securities held by the Fund are not priced by the Fund’s regular pricing services) or in connection with portfolio transactions.
No Compensation or Consideration
Neither the Fund, nor the Advisor or any affiliate, including the CCO or his or her designee, will solicit or accept any compensation or other consideration in connection with the disclosure of Undisclosed Holdings Information or information derived therefrom.
Chief Compliance Officer Reports to Fund Board
The CCO must provide a quarterly report to the Board addressing exceptions to these policies and procedures during the preceding quarter, if any.
Detective and Corrective Action
Any unauthorized release of Undisclosed Holdings Information which comes to the attention of an employee of the Advisor shall be reported to the CCO. The CCO shall recommend an appropriate sanction to be imposed by the individual’s supervisor if the individual releasing such information is an employee of the Advisor or other appropriate action if the individual is not an employee of the Advisor.
Designee of Chief Compliance Officer
In the event of the absence or unavailability of the CCO, all of the obligations of the CCO may be performed by the Advisor’s Chief Counsel.
*****
The following is a list of persons, other than the Advisor and its affiliates, that have been approved to receive Undisclosed Holdings Information concerning the Fund; however, certain persons may not receive such information concerning the Fund:
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ADP Broker-Dealer, Inc. American Financial Printing, Inc. Aon Hewitt Ashland Partners & Company LLP Bank of America Merrill Lynch Bank of Montreal Bank of New York Mellon Bank of Nova Scotia Barclays Capital, Inc. Bloomberg LP BNP Paribas BNP Paribas Prime Brokerage, Inc. BNP Paribas Securities Corp. Broadridge Systems Ceridian Corporation Charles Schwab & Co., Inc. Comerica Bank Country Financial Crane Data Credit Agricole Corporate & Investment Bank Credit Suisse Securities (USA), LLC |
Deutsche Bank Securities, Inc. Dorsey & Whitney LLP Ernst & Young LLP FactSet Research Systems Fitch, Inc. FT Interactive Data Goldman Sachs & Co. HSBC Bank PLC HSBC Securities (USA), Inc. iMoneyNet, Inc. ING Financial Markets, LLC Jefferies & Company, Inc. J.P. Morgan Clearing Corp. J.P. Morgan Securities, Inc. KPMG LLP Lipper Analytical Services Markit Merrill Lynch Pierce Fenner & Smith, Inc. Moody’s Investor Services Morgan Stanley & Co. Morningstar, Inc. |
MS Securities Services, Inc. Piper Jaffray & Co. Pricing Direct RBC Capital Markets Corporation RBS Securities, Inc. Ropes & Gray LLP SG Americas Securities, LLC Societe Generale NY Standard & Poor’s Corporation /JJ Kenny Standard & Poor’s Rating Services State Street Bank & Trust Co. SunGard Institutional Brokerage, Inc. SVB Asset Management TD Securities (USA) LLC Thomson Reuters LLC UBS Securities, LLC Vision Financial Markets LLC Wells Fargo Bank, N.A. Wells Fargo Investments, LLC
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Directors and Executive Officers
Set forth below is information about the Directors and the officers of FAF. The Board consists entirely of Directors who are not “interested persons” of FAF, as that term is defined in the 1940 Act (“Independent Directors”).
Name, Address and Year of Birth |
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Time Served |
Past 5 Years and Other Relevant Experience1 |
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Held by Director2 |
David K. Baumgardner P.O. Box 1329 Minneapolis, MN 55440-1329 (1956) |
Director | Term expiring earlier of death, resignation, removal, disqualification, or successor duly elected and qualified; Director of FAF since January 2016 | CFO, Smyth Companies, LLC (commercial package printing) (1990 to present). Formerly, Certified Public Accountant at a large regional CPA firm (1978-1986). Independent Director, First American Fund Complex since 2016
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First American Fund Complex; 2 registered investment companies, including 8 portfolios | None |
Mark E. Gaumond P.O. Box 1329 Minneapolis, MN 55440-1329 (1950) |
Director | Term expiring earlier of death, resignation, removal, disqualification, or successor duly elected and qualified; Director of FAF since January 2016 | Retired. Formerly, Senior Vice Chair (Americas), Ernst & Young LLP (2006-2010). Certified Public Accountant and member of the American Institute of Certified Public Accountants. Director, Fishers Island Development Corporation and the Walsh Park Benevolent Corporation. Former Director, Cliffs Natural Resources and The California Academy of Sciences. Independent Director, First American Fund Complex since 2016 | First American Fund Complex; 2 registered investment companies, including 8 portfolios | Director, Booz Allen Hamilton Holding Corporation (management and technology consulting); Director, Rayonier Advanced Materials, Inc. (materials manufacturer) |
Roger A. Gibson P.O. Box 1329 Minneapolis, MN 55440-1329 (1946) |
Director | Term expiring earlier of death, resignation, removal, disqualification, or successor duly elected and qualified; Director of FAF since October 1997 | Advisor/Consultant, Future Freight™, a logistics/supply chain company; former Director, Charterhouse Group, Inc., a private equity firm; non-profit board member; prior to retirement in 2005, served in several executive positions for United Airlines, including Vice President and Chief Operating Officer – Cargo; Independent Director, First American Fund Complex since 1997 | First American Funds Complex: 2 registered investment companies, including 8 portfolios | Diversified Real Asset Income Fund (investment company) |
Leonard W. Kedrowski P.O. Box 1329 Minneapolis, MN 55440-1329 (1941) |
Chair; Director | Chair term three years; Director term expiring earlier of death, resignation, removal, disqualification, or successor duly elected and qualified; Chair of FAF’s Board since January 2011; Director of FAF since November 1993 | Owner and President, Executive and Management Consulting, Inc., a management consulting firm; Chief Executive Officer, Blue Earth Internet, a web site development company; Board member, GC McGuiggan Corporation (dba Smyth Companies), a label printer; Member, investment advisory committee, Sisters of the Good Shepherd; Certified Public Accountant; former Vice | First American Funds Complex: 2 registered investment companies, including 8 portfolios | Diversified Real Asset Income Fund (investment company) |
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Name, Address and Year of Birth |
|
Time Served |
Past 5 Years and Other Relevant Experience1 |
|
Held by Director2 |
| President, Chief Financial Officer, Treasurer, Secretary, and Director, Andersen Windows, a large privately-held manufacturer of wood windows; former Director, Protection Mutual Insurance Company, an international property and casualty insurer; Independent Director, First American Fund Complex since 1993 | |||||
Richard K. Riederer P.O. Box 1329 Minneapolis, MN 55440-1329 (1944) |
Director | Term expiring earlier of death, resignation, removal, disqualification, or successor duly elected and qualified; Director of FAF since August 2001 | Owner and Chief Executive Officer, RKR Consultants, Inc., a consulting company providing advice on business strategy, mergers and acquisitions; former Director, Cliffs Natural Resources, Inc.; Certified Financial Analyst; non-profit board member; former Chief Executive Officer and President, Weirton Steel Corporation; former Vice President and Treasurer, Harnischfeger Industries, a capital machinery manufacturer; former Treasurer and Director of Planning, Allis Chalmers Corporation, an equipment manufacturing company; former Chairman, American Iron & Steel Institute, a North American steel industry trade association; Independent Director, First American Fund Complex since 2001 and Firstar Funds 1988-2001 | First American Funds Complex: 2 registered investment companies, including 8 portfolios | Diversified Real Asset Income Fund (investment company) |
James M. Wade P.O. Box 1329 Minneapolis, MN 55440-1329 (1943) |
Director | Term expiring earlier of death, resignation, removal, disqualification, or successor duly elected and qualified; Director of FAF since August 2001 | Owner and President, Jim Wade Homes, a homebuilding company; formerly, Vice President and Chief Financial Officer, Johnson Controls, Inc.; Independent Director, First American Fund Complex since 2001 and Firstar Funds 1988-2001 | First American Funds Complex: 2 registered investment companies, including 8 portfolios | Diversified Real Asset Income Fund (investment company) |
| 1 | Includes each Director’s principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Director’s qualifications to serve as a Director, which contributed to the conclusion that each Director should serve as a Director for FAF. |
| 2 | Includes only directorships in a company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934 (the “Exchange Act”) or subject to the requirements of Section 15(d) of the Exchange Act, or any company registered as an investment company under the 1940 Act. |
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Name, Address, and Year of Birth |
Position(s) Held with Fund |
Term of Office and Length of Time Served |
Principal Occupation(s) During Past Five Years |
Eric J. Thole U.S. Bancorp Asset Management, Inc. 800 Nicollet Mall Minneapolis, MN 55402 (1972) 1 |
President | Re-elected by the Board annually; President of FAF since June 2014; Vice President of FAF from January 2011 through June 2014 | Chief Executive Officer and President, U.S. Bancorp Asset Management, Inc. since June 2014; Chief Operating Officer, U.S. Bancorp Asset Management, Inc. from August 2012 through June 2014; Head of Operations, Technology and Treasury, U.S. Bancorp Asset Management, Inc. from January 2011 through July 2012; prior thereto, Managing Director of Investment Operations, U.S. Bancorp Asset Management, Inc. |
James D. Palmer U.S. Bancorp Asset Management, Inc. 800 Nicollet Mall Minneapolis, MN 55402 (1964) 1 |
Vice President | Re-elected by the Board annually; Vice President of FAF since June 2014 | Chief Investment Officer, U.S. Bancorp Asset Management, Inc. since August 2012; Head of Investments, U.S. Bancorp Asset Management, Inc. from January 2011 through July 2012; prior thereto, Managing Director, U.S. Bancorp Asset Management, Inc. |
Jill M. Stevenson U.S. Bancorp Asset Management, Inc. 800 Nicollet Mall Minneapolis, MN 55402 (1965) 1 |
Treasurer | Re-elected by the Board annually; Treasurer of FAF since January 2011; Assistant Treasurer of FAF from September 2005 through December 2010 | Mutual Funds Treasurer and Head of Operations, U.S. Bancorp Asset Management, Inc. since September 2014; Mutual Funds Treasurer, U.S. Bancorp Asset Management, Inc. from January 2011 through September 2014; prior thereto, Mutual Funds Assistant Treasurer, U.S. Bancorp Asset Management, Inc. |
Brent G. Smith U.S. Bancorp Asset Management, Inc. 800 Nicollet Mall Minneapolis, MN 55402 (1981) 1 |
Assistant Treasurer | Re-elected by the Board annually; Assistant Treasurer of FAF since September 2014 | Assistant Mutual Funds Treasurer, U.S. Bancorp Asset Management, Inc. since September 2014; prior thereto, Senior Fund Accountant, U.S. Bancorp Asset Management, Inc. |
Ruth M. Mayr U.S. Bancorp Asset Management, Inc. 800 Nicollet Mall Minneapolis, MN 55402 (1959) 1 |
Chief Compliance Officer |
Re-elected by the Board annually; Chief Compliance Officer of FAF since January 2011 |
Chief Compliance Officer, U.S. Bancorp Asset Management, Inc. since January 2011; prior thereto, Director of Compliance, U.S. Bancorp Asset Management, Inc. |
Gayle M. Kasmani U.S. Bancorp Asset Management, Inc. 800 Nicollet Mall Minneapolis, MN 55402 (1948) 1 |
Anti-Money Laundering Officer | Re-elected by the Board annually; Anti-Money Laundering Officer of FAF since April 2015 | Compliance Manager, U.S. Bancorp Asset Management, Inc. since January 2011 |
Richard J. Ertel U.S. Bancorp Asset Management, Inc. 800 Nicollet Mall Minneapolis, MN 55402 (1967) 1 |
Secretary | Re-elected by the Board annually; Secretary of FAF since January 2011; Assistant Secretary of FAF from June 2006 through December 2010 and from June 2003 through August 2004 | Chief Counsel, U.S. Bancorp Asset Management, Inc. since January 2011; prior thereto, Counsel, U.S. Bancorp Asset Management, Inc. |
Scott F. Cloutier U.S. Bancorp Asset Management, Inc. 800 Nicollet Mall Minneapolis, MN 55402 (1973) 1 |
Assistant Secretary | Re-elected by the Board annually; Assistant Secretary of FAF since September 2012 | Senior Corporate Counsel, U.S. Bancorp Asset Management, Inc. since April 2011; prior thereto, Attorney, Steingart, McGrath & Moore, P.A., a Minneapolis-based law firm |
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| 1 | Messrs. Thole, Palmer, Smith, Ertel and Cloutier and Mses. Stevenson, Mayr and Kasmani are each officers and/or employees of U.S. Bancorp Asset Management, Inc., which serves as investment advisor and administrator for FAF. |
The Board is responsible for overseeing generally the operation of the Funds. The Board has approved an investment advisory agreement with USBAM, as well as other contracts with USBAM, its affiliates, and other service providers.
As noted above, the Board consists entirely of Independent Directors. The Directors also serve as trustees of the Mount Vernon Trust. Taking into account the number, the diversity and the complexity of the funds overseen by the Directors and the aggregate amount of assets under management in the Fund Complex, the Board has determined that the efficient conduct of its affairs makes it desirable to delegate responsibility for certain matters to committees of the Board. These committees, which are described in more detail below, review and evaluate matters specified in their charters and make recommendations to the Board as they deem appropriate. Each committee may use the resources of the Funds’ counsel and auditors, counsel to the Independent Directors, if any, as well as other experts. The committees meet as often as necessary, either in conjunction with regular meetings of the Board or otherwise.
The Funds are subject to a number of risks, including, among others, investment, compliance, operational, and valuation risks. The Board’s role in risk oversight of the Funds reflects its responsibility to oversee generally, rather than to manage, the operations of the Funds. The actual day-to-day risk management with respect to the Funds resides with USBAM and the other service providers to the Funds. In line with the Board’s oversight responsibility, the Board receives reports and makes inquiries at its regular meetings or otherwise regarding various risks. However, the Board relies upon the Funds’ Chief Compliance Officer, who reports directly to the Board, and USBAM (including its Senior Business Line Risk Manager and other members of its management team) to assist the Board in identifying and understanding the nature and extent of such risks and determining whether, and to what extent, such risks may be eliminated or mitigated. Although the risk management policies of USBAM and the other service providers are designed to be effective, those policies and their implementation vary among service providers and over time, and there is no guarantee that they will be effective. Not all risks that may affect the Funds can be identified or processes and controls developed to eliminate or mitigate their occurrence or effects, and some risks are simply beyond any control of the Funds or USBAM, its affiliates or other service providers.
Standing Committees of the Board of Directors
There are currently two standing committees of the Board: Audit Committee and Governance Committee. References to the “Funds” in the committee descriptions below are to the Fund Complex. All committee members are Independent Directors.
Committee Function |
Committee Members |
Number of Fund Complex Committee Meetings Held During FAF’s Fiscal Year Ended 8/31/15 | |
| Audit Committee | The purposes of the Committee are (1) to oversee the Funds’ accounting and financial reporting policies and practices, their internal controls and, as appropriate, the internal controls of certain service providers; (2) to oversee the quality of the Funds’ financial statements and the independent audit thereof; (3) to assist Board oversight of the Funds’ compliance with legal and regulatory requirements; and (4) to act as a liaison between the Funds’ independent auditors and the full Board. The Audit Committee, together with the Board, has the ultimate authority and responsibility to select, evaluate and, where appropriate, replace the outside auditor (or to nominate the outside auditor to be proposed for shareholder approval in any proxy statement). | Roger A. Gibson (Chair) David K. Baumgardner1 Mark E. Gaumond1 Leonard W. Kedrowski Richard K. Riederer James M. Wade |
6 |
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Committee Function |
Committee Members |
Number of Fund Complex Committee Meetings Held During FAF’s Fiscal Year Ended 8/31/15 | |
| Governance Committee | The Committee has responsibilities relating to (1) Board and Committee composition (including interviewing and recommending to the Board nominees for election as directors; reviewing the independence of all independent directors; reviewing Board composition to determine the appropriateness of adding individuals with different backgrounds or skills; reporting to the Board on which current and potential members of the Audit Committee qualify as Audit Committee Financial Experts; recommending a successor to the Board Chair when a vacancy occurs; consulting with the Board Chair on Committee assignments; and in anticipation of the Board’s request for shareholder approval of a slate of directors, recommending to the Board the slate of directors to be presented for Board and shareholder approval); (2) Committee structure (including, at least annually, reviewing each Committee’s structure and membership and reviewing each Committee’s charter and suggesting changes thereto); (3) director education (including developing an annual education calendar; monitoring independent director attendance at educational seminars and conferences; developing and conducting orientation sessions for new independent directors; and managing the Board’s education program in a cost-effective manner); and (4) governance practices (including reviewing and making recommendations regarding director compensation and director expenses; monitoring director investments in the Funds; monitoring compliance with director retirement policies; reviewing compliance with the prohibition from serving on the board of directors of mutual funds that are not part of the Fund Complex; if requested, assisting the Board Chair in overseeing self-evaluation process; in collaboration with outside counsel, developing policies and procedures addressing matters which should come before the Committee in the proper exercise of its duties; reviewing applicable new industry reports and “best practices” as they are published; reviewing and recommending changes in Board governance policies, procedures and practices; reporting the Committee’s activities to the Board and making such recommendations; reviewing and, as appropriate, recommending that the Board make changes to the Committee’s charter). | Richard K. Riederer (Chair) David K. Baumgardner1 Mark E. Gaumond1 Roger A. Gibson Leonard W. Kedrowski James M. Wade
|
5 |
1 Messrs. Baumgardner and Gaumond were appointed to the Board effective January 1, 2016.
The Governance Committee will consider shareholder recommendations for director nominees in the event there is a vacancy on the Board or in connection with any special shareholders meeting which is called for the purpose of electing directors. FAF does not hold regularly scheduled annual shareholders meetings. There are no differences in the manner in which the Governance Committee evaluates nominees for director based on whether the nominee is recommended by a shareholder.
A shareholder who wishes to recommend a director nominee should submit his or her recommendation in writing to the Chair of the Board (Mr. Kedrowski) or the Chair of the Governance Committee (Mr. Riederer), in either case at First American Funds, P.O. Box 1329, Minneapolis, Minnesota 55440-1329. At a minimum, the recommendation should include:
| · | the name, address, and business, educational, and/or other pertinent background of the person being recommended; |
| · | a statement concerning whether the person is “independent” within the meaning of New York Stock Exchange and NYSE MKT listing standards and is not an “interested person” as defined in the 1940 Act; |
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| · | any other information that the Funds would be required to include in a proxy statement concerning the person if he or she was nominated; and |
| · | the name and address of the person submitting the recommendation, together with the number of Fund shares held by such person and the period for which the shares have been held. |
The recommendation also can include any additional information that the person submitting it believes would assist the Governance Committee in evaluating the recommendation. Shareholder recommendations for nominations to the Board will be accepted on an ongoing basis and will be kept on file for consideration when there is a vacancy on the Board or prior to a shareholders meeting called for the purpose of electing directors.
Director Ownership of Securities of the Funds or Advisor
The information in the table below discloses the dollar ranges of (i) each Director’s beneficial ownership in FAF, and (ii) each Director’s aggregate beneficial ownership in all funds within the Fund Complex, including in each case the value of fund shares elected by Directors in the Directors’ deferred compensation plan. The dollar range disclosed is based on the value of the securities as of December 31, 2015.
| Directors | ||||||
| Baumgardner1 | Gaumond1 | Gibson | Kedrowski | Riederer | Wade | |
| Aggregate Holdings – Fund Complex | — | — | — | — | — | $1-$10,000 |
| Government Obligations Fund | — | — | — | — | — | — |
| Prime Obligations Fund | — | — | — | — | — | $1-$10,000 |
| Retail Prime Obligations Fund | — | — | — | — | — | — |
| Tax Free Obligations Fund | — | — | — | — | — | — |
| Treasury Obligations Fund | — | — | — | — | — | — |
| U.S. Treasury Money Market Fund | — | — | — | — | — | — |
1 Messrs. Baumgardner and Gaumond were appointed to the Board effective January 1, 2016.
As of September 30, 2015, none of the Independent Directors or their immediate family members owned, beneficially, or of record, any securities in (i) an investment advisor or principal underwriter of the Funds or (ii) a person (other than a registered investment company) directly or indirectly controlling, controlled by, or under common control with an investment advisor or principal underwriter of the Funds.
The Board has determined that each Director should serve or continue to serve as such based on several factors (none of which alone is decisive). Each Director has served in their role as Director of the Funds since at least October 2006 with the exception of Messrs. Baumgardner and Gaumond who were appointed effective January 1, 2016. Each Director is knowledgeable or will become knowledgeable regarding the Funds’ business and service provider arrangements. In addition, each Director other than Messrs. Baumgardner and Gaumond, has served for a number of years as a director of other funds in the Fund Complex, as indicated in the “Independent Directors” table above. Among the factors the Board considered when concluding that an individual should serve on the Board were the following: (i) the individual’s business and professional experience and accomplishments; (ii) the individual’s ability to work effectively with other members of the Board; (iii) the individual’s prior experience, if any, serving on the boards of public companies and other complex enterprises and organizations; and (iv) how the individual’s skills, experiences and attributes would contribute to an appropriate mix of relevant skills, diversity and experience on the Board. The Board believes that, collectively, the Directors have balanced and diverse qualifications, skills, experiences, and attributes, which allow the Board to operate effectively in governing the Funds and protecting the interests of shareholders. Information about the specific qualifications, skills, experiences, and attributes of each Director, which
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in each case contributed to the Board’s conclusion that the Director should serve (or continue to serve) as a Director of the Funds, is provided in the “Independent Directors” table above.
Effective January 1, 2016, FAF pays Directors who are not paid employees or affiliates of the Funds an annual retainer of $165,000 ($250,000 in the case of the Chair). The Audit Committee Chair receives an additional annual retainer of $15,000 and the Governance Committee Chair receives an additional annual retainer of $12,000. Prior to January 1, 2016, Directors were paid an annual retainer of $145,000 ($217,500 in the case of the Chair). The Audit Committee Chair and Governance Committee Chair each received an additional annual retainer of $11,250. Prior to January 1, 2015, Directors were paid an annual retainer of $120,000 ($198,750 in the case of the Chair). The Audit Committee Chair and Governance Committee Chair each received an additional annual retainer of $11,250. Prior to October 6, 2014, and with respect to their service as directors of FAF, Mount Vernon Trust and the Closed-End Funds, Directors were paid an annual retainer of $160,000 ($265,000 in the case of the Chair). The Audit Committee Chair and Governance Committee Chair each received an additional annual retainer of $15,000.
Directors also receive $3,500 per day when traveling, on behalf of a Fund, out of town on Fund business which does not involve a Board or committee meeting. In addition, Directors are reimbursed for their out-of-pocket expenses in traveling from their primary or secondary residence to Board and committee meetings, on Fund business and to attend mutual fund industry conferences or seminars. The amounts specified above are allocated evenly among the funds in FAF.
Prior to January 1, 2011, the Directors could elect to defer payment of up to 100% of the fees they received in accordance with a Deferred Compensation Plan (the “Plan”). Under the Plan, a Director could elect to have his or her deferred fees treated as if they had been invested in shares of one or more funds and the amount paid to the Director under the Plan would be determined based on the performance of such investments. Effective January 1, 2011, the Directors may no longer defer payments under the Plan. The prior deferral of 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. The Funds do not provide any other pension or retirement benefits to Directors.
The following table sets forth information concerning aggregate compensation estimated to be paid to each Director of FAF (i) by FAF (column 2), and (ii) by FAF and the Closed-End Funds, collectively (column 5) during the fiscal year ended August 31, 2016. Total compensation reflected does not include the portion of the annual retainer and any additional annual retainer attributable to Mount Vernon Trust, which is paid to Directors by USBAM. No executive officer or affiliated person of FAF received any compensation from FAF in excess of $60,000 during such fiscal period.
Estimated Compensation for Fiscal Year Ending August 31, 2016
Name of Person, Position |
Aggregate Compensation From Fund2 |
Pension or Retirement Benefits Accrued as Part of Fund Expenses |
Estimated Annual Benefits Upon Retirement |
Total Compensation from Fund3 and Fund Complex Paid to Directors |
| David K. Baumgardner1, Director | $2,882 | - | - | $ 91,667 |
| Mark Gaumond1, Director | 2,882 | - | - | 91,667 |
| Roger A. Gibson, Director | 3,144 | -0- | -0- | 143,167 |
| Leonard W. Kedrowski, Chair | 4,367 | -0- | -0- | 198,977 |
| Richard K. Riederer, Director | 3,092 | -0- | -0- | 141,500 |
| James M. Wade, Director | 2,882 | -0- | -0- | 131,726 |
1 Messrs. Baumgardner and Gaumond were appointed to the Board effective January 1, 2016.
2 For period from Fund inception July 18, 2016 through August 31, 2016.
3 For period from September 1, 2015 through August 31, 2016.
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FAF, USBAM, 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 SEC.
Investment Advisory and Other Services for the Funds
USBAM, 800 Nicollet Mall, Minneapolis, Minnesota 55402, serves as the investment advisor and manager of the Funds. The Advisor is a wholly owned subsidiary of U.S. Bank, 800 Nicollet Mall, Minneapolis, Minnesota 55402, the nation’s fifth-largest commercial bank. U.S. Bank is, in turn, a wholly-owned subsidiary of U.S. Bancorp, 800 Nicollet Mall, Minneapolis, Minnesota 55402, which is a regional multi-state bank holding company headquartered in Minneapolis, Minnesota. U.S. Bancorp provides a wide range of financial services for consumers, businesses, government entities and other financial institutions. At December 31, 2015, U.S. Bancorp and its subsidiaries had consolidated assets of $421 billion, consolidated deposits of $300.4 billion and shareholders’ equity of $46.1 billion.
Pursuant to an Investment Advisory Agreement, dated January 20, 1995 (the “Advisory Agreement”), 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 series of FAF then in existence. The Advisory Agreement was assigned to the Advisor on May 2, 2001. Under the terms of the Advisory Agreement, the Fund has agreed to pay the Advisor monthly fees calculated on an annual basis equal to 0.10% of the Fund’s average daily net assets (before any waivers).
The Advisory Agreement requires the Advisor to arrange, if requested by FAF, for officers or employees of the Advisor to serve without compensation from the Funds as Directors, officers, or employees of FAF if duly elected to such positions by the shareholders or Directors of FAF. 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. 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 the Board 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. FAF 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 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 may agree to a voluntary fee waiver for the Fund, which will be set forth in the Fund’s Prospectuses. Any such fee waiver (or reimbursement) may be discontinued at any time. The Advisor also may absorb or reimburse expenses of the Fund from time to time, in its discretion, while retaining the ability to be reimbursed by the Fund 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.
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Additional Payments to Financial Intermediaries
In addition to the sales charge payments and the distribution, service and transfer agency fees described in the Prospectuses and elsewhere in this SAI, the Advisor and/or the Distributor may make additional payments out of its own assets to selected intermediaries that attract assets to the Fund (such as brokers, dealers, banks, registered investment advisors, retirement plan administrators and other intermediaries; hereinafter, individually, “Intermediary,” and collectively, “Intermediaries”) pursuant to arrangements involving sales, distribution, shelf space, sub-accounting, administrative or shareholder processing services.
The amounts of these payments could be significant and may create an incentive for an Intermediary or its representatives to recommend or offer shares of the Fund to its customers. The Intermediary may elevate the prominence or profile of the Fund within the Intermediary’s organization by, for example, placing a Fund on a list of preferred or recommended funds, and/or granting the Advisor and/or the Distributor preferential or enhanced opportunities to promote the Fund in various ways within the Intermediary’s organization.
These payments are made pursuant to negotiated agreements with Intermediaries. The payments do not change the price paid by investors for the purchase of a share or the amount a Fund will receive as proceeds from such sales. Furthermore, these payments are not reflected in the fees and expenses listed in the fee table section of the Fund’s Prospectuses and described above because they are not paid by the Fund.
The categories of payments described below are not mutually exclusive, and a single Intermediary may receive payments under all categories.
Marketing Support Payments and Program Servicing Payments
The Advisor and/or the Distributor may make payments for marketing support and/or program servicing to selected Intermediaries that are registered as holders or dealers of record for accounts invested in one or more of the First American Funds or that make First American Fund shares available through employee benefit plans or fee-based advisory programs to compensate them for the variety of services they provide.
Marketing Support Payments. Services for which an Intermediary receives marketing support payments may include business planning assistance, advertising, educating the Intermediary’s personnel about the First American Funds in connection with shareholder financial planning needs, placement on the Intermediary’s preferred or recommended fund company list, and access to sales meetings, sales representatives and management representatives of the Intermediary. In addition, Intermediaries may be compensated for enabling Fund representatives to participate in and/or present at conferences or seminars, sales or training programs for invited registered representatives and other employees, client and investor events and other events sponsored by the Intermediary.
The Advisor and/or the Distributor compensates Intermediaries differently depending upon, among other factors, the number or value of Fund shares that the Intermediary sells or may sell, the value of the assets invested in the Fund by the Intermediary’s customers, redemption rates, ability to attract and retain assets, reputation in the industry and the level and/or type of marketing assistance and educational activities provided by the Intermediary. Such payments are generally asset based but also may include the payment of a lump sum.
Program Servicing Payments. Services for which an Intermediary receives program servicing payments typically include recordkeeping, reporting, or transaction processing, but may also include services rendered in connection with Fund/investment selection and monitoring, employee enrollment and education, plan balance rollover or separation, or other similar services. An Intermediary may perform program services itself or may arrange with a third party to perform program services.
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Program servicing payments typically apply to employee benefit plans, such as retirement plans, or fee-based advisory programs, but may apply to retail sales and assets in certain situations. The payments are based on such factors as the type and nature of services or support furnished by the Intermediary and are generally asset based.
Marketing Support and Program Servicing Payment Guidelines. In the case of any one Intermediary, marketing support and program servicing payments are not expected, with certain limited exceptions, to exceed, in the aggregate, 0.47% of the average net assets of Fund shares attributable to that Intermediary on an annual basis. U.S. Bank, N.A. and its affiliates are eligible to receive payments that exceed 0.47% of the average net assets of Fund shares attributable to U.S. Bank, N.A. or its affiliates on an annual basis.
Other Payments
From time to time, the Advisor and/or the Distributor, at its expense, may provide other compensation to Intermediaries that sell or arrange for the sale of shares of the Fund, which may be in addition to marketing support and program servicing payments described above. For example, the Advisor and/or the Distributor may: (i) compensate Intermediaries for National Securities Clearing Corporation networking system services (e.g., shareholder communication, account statements, trade confirmations, and tax reporting) on an asset based or per account basis; (ii) compensate Intermediaries for providing Fund shareholder trading information; (iii) make one-time or periodic payments to reimburse selected Intermediaries for items such as ticket charges (i.e., fees that an Intermediary charges its representatives for effecting transactions in Fund shares) of up to $25 per purchase or exchange order, operational charges (e.g., fees that an Intermediary charges for establishing a Fund on its trading system), and literature printing and/or distribution costs; and (iv) at the direction of a retirement plan’s sponsor, reimburse or pay direct expenses of an employee benefit plan that would otherwise be payable by the plan.
When not provided for in a marketing support or program servicing agreement, the Advisor and/or the Distributor may pay Intermediaries for enabling the Advisor and/or the Distributor to participate in and/or present at conferences or seminars, sales or training programs for invited registered representatives and other Intermediary employees, client and investor events and other Intermediary-sponsored events, and for travel expenses, including lodging incurred by registered representatives and other employees in connection with prospecting, asset retention and due diligence trips. These payments may vary depending upon the nature of the event. The Advisor and/or the Distributor makes payments for such events as it deems appropriate, subject to its internal guidelines and applicable law.
The Advisor and/or the Distributor occasionally sponsors due diligence meetings for registered representatives during which they receive updates on the Fund and are afforded the opportunity to speak with portfolio managers. Invitations to these meetings are not conditioned on selling a specific number of shares. Those who have shown an interest in the Fund, however, are more likely to be considered. To the extent permitted by their firm’s policies and procedures, all or a portion of registered representatives’ expenses in attending these meetings may be covered by the Advisor and/or the Distributor.
Certain affiliates of the Advisor and employees of the Advisor may receive cash compensation from the Advisor and/or the Distributor in connection with establishing new client relationships with the First American Funds. Total compensation of employees of the Advisor and/or the Distributor with marketing and/or sales responsibilities is based in part on their generation of new client relationships, including new client relationships with the First American Funds.
Other compensation may be offered to the extent not prohibited by state laws or any self-regulatory agency, such as FINRA. Investors can ask their Intermediary for information about any payments it receives from the Advisor and/or the Distributor and the services it provides for those payments.
Investors may wish to take Intermediary payment arrangements into account when considering and evaluating any recommendations relating to Fund shares.
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Intermediaries Receiving Additional Payments
The following is a list of Intermediaries eligible to receive one or more of the types of payments discussed above as of June 30, 2016:
ADP Broker-Dealer, Inc.
American Enterprise Investment Services, Inc.
Ameriprise Financial Services, Inc.
Bank of New York Mellon (The)
Benefit Plans Administrative Services, Inc.
Benefit Trust Company
Charles Schwab & Co., Inc.
Comerica Bank
Country Trust Bank
Digital Retirement Solutions, Inc.
ExpertPlan, Inc.
Fidelity Brokerage Services LLC / National Financial Services LLC / Fidelity Investments Institutional Operations Company, Inc.
Goldman, Sachs & Co.
GWFS Equities, Inc.
Hartford Securities Distribution Company, Inc.
Hightower Securities, LLC
ICMA Retirement Corporation
ING Life Insurance and Annuity Company / ING Institutional Plan Services LLC
J.M. Lummis Securities, Inc.
J.P. Morgan Clearing Corp.
Janney Montgomery Scott LLC
LaSalle Bank National Association
Lincoln Retirement Services Company LLC / AMG Service Corp.
LPL Financial LLC
Marshall & Ilsley Trust Company, N.A.
Massachusetts Mutual Life Insurance Company
Mercer HR Outsourcing LLC
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Merriman Curhan Ford & Co.
Mid Atlantic Capital Corporation
MSCS Financial Services, LLC
My Treasury Limited
Nationwide Financial Services, Inc.
Newport Retirement Services, Inc.
Pershing LLC
Piper Jaffray & Company
Principal Life Insurance Company
RBC Dain Rauscher, Inc.
Reliance Trust Company
Robert W. Baird & Co., Inc.
State Street Global Advisors
SunGard Institutional Brokerage, Inc.
SVB Asset Management
TD Ameritrade Trust Company
TIAA-CREF Individual & Institutional Services, LLC
Treasury Curve, LLC
U.S. Bancorp Fund Services, LLC
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U.S. Bancorp Investments, Inc.
U.S. Bank, N.A.
Union Bank, N.A.
VALIC Retirement Services Company
Wells Fargo Securities, LLC
Wilmington Trust Company
Wilmington Trust Retirement and Institutional Services Company
Any additions, modification or deletions to the list of Intermediaries identified above that have occurred since June 30, 2016, are not reflected.
U.S. Bancorp Asset Management, Inc. (the “Administrator”) serves as administrator pursuant to an Administration Agreement between the Administrator and the Funds, dated as of July 1, 2006. Under the Administration Agreement, the Administrator provides, or compensates others to provide, services to the Funds. These services include various oversight and legal services, accounting services and shareholder services. The Funds pay the Administrator fees which are calculated daily and paid monthly. Such fees are equal to each Fund’s pro rata share of an amount equal, on an annual basis, to 0.20% of the aggregate average daily Class A share net assets and 0.15% of the aggregate average daily net assets for all other share classes of the Funds up to $8 billion, 0.185% for Class A shares and 0.135% for all other share classes on the next $17 billion of aggregate average daily net assets, 0.17% for Class A shares and 0.12% for all other classes on the next $25 billion of aggregate average daily net assets, and 0.15% for Class A shares and 0.10% for all other classes of the aggregate average daily net assets in excess of $50 billion. The Administrator pays a portion of such fees to U.S. Bancorp Fund Services, LLC (“USBFS”), 615 East Michigan Street, Milwaukee, WI 53202, pursuant to a Sub-Administration Agreement dated July 1, 2005 whereby USBFS provides various sub-administration services. USBFS is a wholly-owned subsidiary of U.S. Bancorp.
Effective July 1, 2005, FAF entered into a Shareholder Service Plan and Agreement with USBAM, under which USBAM agreed to provide FAF, or enter into written agreements with other service providers pursuant to which the service providers will provide FAF, with non-distribution-related services to shareholders of Class A, Class T, and Class Y shares. The Shareholder Service Plan and Agreement was amended effective February 22, 2006, to add Class V shares.
In the Shareholder Services Plan and Agreement, USBAM agreed that the services provided thereunder will in no event be primarily intended to result in the sale of Fund shares. Pursuant to the Shareholder Service Plan and Agreement, the Funds have agreed to pay USBAM a fee at an annual rate of 0.25% of the average net asset value of the Class A and Class Y shares, a fee at an annual rate of 0.20% of the average net asset value of the Class T shares, and a fee at an annual rate of 0.10% of the average net asset value of the Class V shares computed daily and paid monthly.
USBFS serves as the Funds’ transfer agent pursuant to a Transfer Agency and Shareholder Servicing Agreement between USBFS and the Funds dated June 30, 2016. Pursuant to the Transfer Agency and Shareholder Servicing Agreement, the Funds are charged transfer agent fees on a per shareholder account basis, subject to a minimum per share class fee. These fees are charged to each Fund based on the number of accounts within the Fund. The Fund reimburses USBFS for out-of-pocket expenses incurred in providing transfer agent services.
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Quasar Distributors, LLC serves as the distributor for the Funds’ shares pursuant to distribution agreements applicable to the various share classes. These agreements are referred to collectively as the “Distribution Agreements.” The Distributor is a wholly owned subsidiary of U.S. Bancorp.
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 Deposit Insurance Fund, which is administered by the FDIC.
Under the Distribution Agreements, the Distributor has agreed to perform all distribution services and functions of the Funds to the extent such services and functions are not provided to the Funds pursuant to another agreement. The shares of the Funds are distributed through the Distributor and 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.
Under the Distribution Agreements, the Funds pay the Distributor distribution and/or shareholder servicing fees in connection with Class A shares. The Distributor receives no compensation for distribution or shareholder servicing of the Class T, Class V, Class Y, and Class Z.
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 and by the vote of the majority of those Board members who are not interested persons of FAF and who have no direct or indirect financial interest in the operation of FAF’s Rule 12b-1 Plan or in any agreement related to such plans.
FAF has also adopted Plans of Distribution with respect to the Class A shares of the Funds 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 Rule 12b-1. Each of the Plans is a “compensation-type” plan under which the Distributor is entitled to receive the fees payable regardless of whether its actual distribution expenses are more or less than the amount of the fees. The distribution fees under the Plans are used for the primary purpose of compensating broker-dealers for their sale of fund shares. The shareholder servicing fees payable under the Plans are used for the primary purpose of compensating third parties for their provision of services to Fund shareholders.
The Class A shares pay to the Distributor a distribution 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 compensate brokers for providing distribution-related services with respect to the Class A shares. This fee is calculated and paid each month based on average daily net assets of Class A shares of each Fund for that month.
The Plan recognizes 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 in connection with the distribution or shareholder servicing of Class A shares of the Funds. 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.
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Custodian and Independent Registered Public Accounting Firm
Custodian
U.S. Bank (the “Custodian”), 1555 N. Rivercenter Drive, Suite 302, Milwaukee, WI 53212, acts as custodian of the Funds’ assets and portfolio securities pursuant to a Custodian Agreement between First Trust National Association (“First Trust”) and the Funds. First Trust’s rights and obligations under the Custodian Agreement were assigned to U.S. Bank pursuant to an Assignment and Assumption Agreement between First Trust and U.S. Bank. The Custodian takes no part in determining the investment policies of the Funds or in deciding which securities are purchased or sold by the Funds. The duties of the Custodian are limited to receiving and safeguarding the assets and securities of the Funds and to delivering or disposing of them pursuant to the Funds’ order.
As compensation for its services as custodian to the Funds, the Custodian is paid a monthly fee calculated on an annual basis equal to 0.005% of each such Fund’s average daily net assets. In addition, the Custodian is reimbursed for its out-of-pocket expenses incurred while providing services to the Funds. The Custodian continues to serve so long as its appointment is approved at least annually by the Board including a majority of the Directors who are not “interested persons” of FAF, as that term is defined in the 1940 Act.
Independent Registered Public Accounting Firm
Ernst & Young LLP, Ernst & Young LLP, 155 North Wacker Drive, Chicago, Illinois, 60606, serves as the Fund’s independent registered public accounting firm, providing audit services, including audits of the annual financial statements.
Because the Fund invests primarily in short-term debt obligations, the probability of the Fund or USBAM receiving a proxy request on behalf of the Fund is remote. Nonetheless, the Fund has adopted Proxy Voting Policies and Procedures that delegate the responsibility of voting proxies to USBAM. The Proxy Voting Policies and Procedures of the Fund is attached as Appendix A.
Each year the First American family of funds files its proxy voting records with the SEC and makes them available by August 31 for the 12-month period ending June 30 of that year. The records can be obtained, without charge and upon request, by calling 800 677-3863 and on the SEC’s website at www.sec.gov.
The Fund’s portfolios are almost exclusively composed of fixed income securities and most of the portfolio transactions are made directly with the issuer of the securities or with broker-dealers acting for their own account or as agents. A Fund does not usually pay brokerage commissions on purchases and sales of fixed income securities, although the price of the securities generally includes compensation, in the form of a spread or mark-up or mark-down, which is not disclosed separately.
The Advisor determines the broker-dealers with or through which the Fund’s securities transactions are executed. The primary consideration in placing a portfolio transaction with a particular broker-dealer is efficiency in executing orders and obtaining the most favorable net prices for the Fund under the circumstances of each particular transaction. More specifically, the Advisor considers the full range and quality of the services offered by a broker-dealer. The determination may include the competitiveness of price; access to desirable securities; willingness and ability to execute difficult or large transactions; value, nature, and quality of any brokerage and research products and services provided; financial responsibility (including willingness to commit capital) of the broker-dealer; ability to minimize market impact; maintenance of the confidentiality of orders; responsiveness of the broker-dealer to the Advisor; and ability to settle trades. For transactions where competitiveness of price is the determining factor, all other factors being equal, the Advisor will seek to obtain more than one offer or bid on purchases and sales of securities to the extent they are available. The Advisor may, however, select a dealer to effect a particular transaction without communicating with all dealers who might be able to effect such transaction because of the volatility of the market and the Advisor’s desire to accept a particular price for a security because the price offered by the dealer
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meets the Advisor’s guidelines for profit, yield, or both. While it is the Advisor’s policy to seek the most advantageous price on each transaction, there is no assurance it will be successful in doing so on every transaction.
When consistent with the best execution objectives described above, business may be placed with broker-dealers who furnish brokerage and research products and services to the Advisor. Such brokerage and research products and services would include advice, both directly and in writing, as to the value of securities, the advisability of investing in, purchasing, or selling securities, and the availability of securities or purchasers or sellers of securities, as well as analyses and reports concerning issues, industries, securities, economic factors and trends and portfolio strategy. The research products and services may allow the Advisor to supplement its own investment research activities and enable it to obtain the views and information of individuals and research staffs of many different securities firms prior to making investment decisions for the Fund. To the extent portfolio transactions are effected with broker-dealers who furnish research services, the Advisor would receive a benefit, which is not capable of evaluation in dollar amounts, without providing any direct monetary benefit to the Funds from these transactions. As a general matter, the brokerage and research products and services that the Advisor receives from broker-dealers are used to service all of the Advisor’s accounts. However, any particular brokerage and research product or service may not be used to service each and every account, and may not benefit the particular accounts that generated the brokerage commissions used to acquire the product or service.
The Advisor has not entered into any formal or informal agreements with any broker-dealers, and does not maintain any “formula” that must be followed in connection with the placement of the Fund’s portfolio transactions in exchange for brokerage and research products and services provided to the Advisor. The Advisor may, from time to time, maintain an informal list of broker-dealers that will be used as a general guide in the placement of Fund business in order to encourage certain broker-dealers to provide the Advisor with brokerage and research products and services, which the Advisor anticipates will be useful to it. Any list, if maintained, would be merely a general guide, which would be used only after the primary criteria for the selection of broker-dealers (discussed above) has been met, and, accordingly, substantial deviations from the list could occur. While it is not expected that any Fund will pay brokerage commissions, if it does, 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-dealer would have charged only if the Advisor determined in good faith that such amount of commission was reasonable in relation to the value of the brokerage and research services provided by such broker-dealer, viewed in terms of either that particular transaction or the Advisor’s overall responsibilities with respect to the Funds.
Generally, the Advisor does not aggregate or “bunch” fixed income securities orders. The Advisor may, however, bunch orders in the same fixed income securities for all accounts, provided that no account is favored over any other participating account, in an effort to obtain best execution at the best price available. Any subsequent order for the same security is treated as a separate order, which may be aggregated with remaining unfilled orders for the same security. In some cases, this system could have a detrimental effect on the price or volume of the security as far as each account is concerned. In other cases, however, the ability of the accounts to participate in volume transactions will produce better executions for each account. It is the Advisor’s policy to allocate investment opportunities among all accounts in a fair and equitable manner that does not systematically favor one account over any other, by providing buy and sell opportunities to all accounts. Orders for fixed income securities will be allocated across participating accounts using one of three approved allocation methods: pro rata allocation, pro rata excluding accounts for which transaction and processing costs would exceed the expected benefit of the trade, and the good faith judgment method. Selection of the allocation method will consider one or more of the following factors:
| · | Nature of the security to be allocated; |
| · | Current holdings in the issuer; |
| · | Size of the available position; |
| · | Current duration; |
| · | Current credit score (short-term fixed income portfolios only); |
| · | Minimizing operational and trading risk; |
| · | Account investment policies, restrictions and constraints; |
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| · | Account liquidity needs; |
| · | Availability of cash; and |
| · | Any other information the Advisor considers relevant. |
The Fund does not effect brokerage transactions in its portfolio securities with any broker-dealer affiliated directly or indirectly with the Advisor or the Distributor unless such transactions, including the frequency thereof, the receipt of commissions payable in connection therewith, and the selection of the affiliated broker-dealer effecting such transactions, are not unfair or unreasonable to the shareholders of the Fund, as determined by the Board. Any transactions with an affiliated broker-dealer must be on terms that are both at least as favorable to the Fund as such Fund can obtain elsewhere and at least as favorable as such affiliated broker-dealer normally gives to others.
Each share of the Fund’s $.01 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 the Fund 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 only a particular Fund or class, the shares of that Fund or class will vote as a separate series. Examples of such issues would be proposals to alter a fundamental investment restriction pertaining to a Fund or to approve, disapprove or alter a distribution plan pertaining to a class.
The Bylaws of FAF provide that annual shareholders’ meetings are not required and that meetings of shareholders need be held only with such frequency as required under Minnesota law and the 1940 Act.
As of the date of this Statement of Additional Information, there were no shares of the Fund outstanding.
Net Asset Value and Public Offering Price
The public offering price of the shares of a Fund generally equals the Fund’s net asset value. The net asset value per share of a Fund is calculated on each day the Fund is open for business at the time indicated in the Fund’s Prospectuses. The net asset value may be calculated early on any business day when the bond markets close early (typically on the business day preceding a Federal holiday). The Fund is generally open for business each day that the Federal Reserve Bank of New York (the “Federal Reserve”) is open, except as noted below. In addition to weekends, the Federal Reserve is closed on the following Federal holidays: New Year’s Day, Martin Luther King, Jr. Day, Presidents’ Day, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving Day, and Christmas Day. A Fund may close when the Federal Reserve is open and the NYSE is closed, such as Good Friday. To the extent that the securities of a 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.
Valuation of Portfolio Securities
The Fund’s portfolio securities are valued on the basis of the amortized cost method of valuation. This involves valuing an instrument at its cost and thereafter assuming a constant amortization to maturity of any discount or premium, regardless of the impact of fluctuating interest rates on the market value of the instrument. While this method provides certainty in valuation, it may result in periods during which value, as determined by amortized cost, is higher or lower than the price a Fund would receive if it sold the instrument. During periods of declining interest rates, the daily yield on shares of a Fund computed as described above may tend to be higher than a like computation made by a fund with identical investments utilizing a method of valuation based upon market prices and estimates of
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market prices for all of its portfolio instruments. Thus, if the use of amortized cost by a Fund resulted in a lower aggregate portfolio value on a particular day, a prospective investor in the Fund would be able to obtain a somewhat higher yield than would result from investment in a fund utilizing solely market values, and existing investors in the Fund would receive less investment income. The converse would apply in a period of rising interest rates.
The valuation of the Fund’s portfolio instruments based upon their amortized cost and the concomitant maintenance of each Fund’s per share net asset value of $1.00 is permitted in accordance with Rule 2a-7, under which the Fund must adhere to certain conditions, including the conditions described above under “Investment Restrictions – Additional Restrictions.” It is the normal practice of the Fund to hold portfolio securities to maturity and realize par unless such sale or other disposition is mandated by redemption requirements or other extraordinary circumstances. The Board must establish procedures designed to stabilize, to the extent reasonably possible, the Fund’s price per share as computed for the purpose of sales and redemptions at a single value. It is the intention of each Fund to maintain a per share net asset value of $1.00. Such procedures will include review of each Fund’s portfolio holdings at such intervals as the Board may deem appropriate, to determine whether the Fund’s net asset value calculated by using available market quotations deviates from $1.00 per share and, if so, whether such deviation may result in material dilution or is otherwise unfair to existing shareholders. In the event the Board determines that a deviation which may have such a result exists, they will take such corrective action as they regard as necessary and appropriate.
The Fund intends to qualify and to elect to be treated each year as a regulated investment company under Subchapter M of the Internal Revenue Code (the “Code”). If so qualified, the Fund will not be liable for federal income taxes to the extent it distributes its taxable income to its shareholders.
The Fund expects to distribute net realized short-term capital gains (if any) once each year, although it may distribute them more frequently if necessary in order to maintain the Fund’s net asset value at $1.00 per share. Distributions of net investment income and net short-term capital gains are taxable to investors as ordinary income.
Under the Code, the Fund is required to withhold 28% of reportable payments (including dividends, capital gain distributions, if any, and redemptions) paid to certain shareholders who have not certified that (i) the social security number or taxpayer identification number supplied by them is correct and (ii) they are not subject to backup withholding because of previous under reporting to the IRS. These backup withholding requirements generally do not apply to shareholders that are corporations or governmental units or certain tax-exempt organizations.
Additional Information about Purchasing and Redeeming Shares
Under certain circumstances, if no activity
occurs in an account within a time period specified by state law, your shares in the fund may be transferred to that state.
Investment professionals or financial institutions may charge their customers a processing or service fee in connection with the purchase or redemption of Fund shares. The amount and applicability of such a fee is determined and disclosed to its customers by each individual investment professional or financial institution. Processing or service fees typically are fixed, nominal dollar amounts and are in addition to the sales and other charges described in the Prospectuses and this SAI. Your investment professional or financial institution will provide you with specific information about any processing or service fee you will be charged.
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Receipt of Orders by Financial Intermediaries
The Fund has authorized one or more Intermediaries to receive purchase and redemption orders on the Fund’s behalf. Intermediaries are authorized to designate other intermediaries to receive purchase and redemption orders on the Fund’s behalf. A Fund will be deemed to have received a purchase or redemption order when an authorized Intermediary or, if applicable, an Intermediary’s authorized designee, receives the order. An order will be priced at the applicable Fund’s net asset value next computed after the order is received by an authorized Intermediary or the Intermediary’s authorized designee and accepted by the Fund.
A shareholder may redeem shares of a Fund, if he or she elects the privilege on the initial shareholder application, by calling his or her financial institution to request the redemption. Pursuant to instructions received from the financial institution, redemptions will be made by check, by ACH transaction, or by wire transfer.
Shareholders who did not purchase their shares through a financial institution may redeem Fund shares by telephoning 800 677-3863. At the shareholder’s request, redemption proceeds will be paid by check and mailed to the shareholder’s address of record, or ACH or wire transferred to the shareholder’s account at a domestic commercial bank that is a member of the Federal Reserve System, normally within one business day, but in no event longer than seven days after the request. ACH and wire instructions must be previously established in the account or provided in writing. The minimum amount for a wire transfer is $1,000. If at any time a Fund determines it necessary to terminate or modify this method of redemption, shareholders will be promptly notified.
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 Administrator nor the Fund will be responsible for any loss, liability, cost or expense for acting upon wire transfer instructions or telephone instructions that they reasonably believe to be genuine. The Administrator and the Fund will each employ reasonable procedures to confirm that instructions communicated are genuine. These procedures may include recording of telephone conversations. To ensure authenticity of redemption or exchange instructions received by telephone, the Administrator examines each shareholder request by verifying the account number and/or tax identification number at the time such request is made. The Administrator subsequently sends confirmation of both exchange sales and exchange purchases to the shareholder for verification. If reasonable procedures are not employed, the Administrator and the Fund may be liable for any losses due to unauthorized or fraudulent telephone transactions.
Shareholders may redeem Fund shares by sending a written request to their investment professional, their financial institution, or the Fund. 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 Funds, shareholder servicing agent or financial institution for assistance in redeeming by mail. A check for redemption proceeds normally is mailed within one business day, but in no event more than seven business 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 Funds, or a redemption payable other than to the shareholder of record, must have signatures on written redemption requests guaranteed by:
| · | a trust company or commercial bank, the deposits of which are insured by the Deposit Insurance Fund, which is administered by the FDIC; |
| · | a member firm of the New York, NYSE MKT, Boston, Midwest, or Pacific Stock Exchanges or the Financial Industry Regulatory Authority; |
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| · | a savings bank or savings and loan association the deposits of which are insured by the Deposit Insurance Fund, which is administered by the FDIC; or |
| · | any other “eligible guarantor institution,” as defined in the Securities Exchange Act of 1934. |
The Fund does not accept signatures guaranteed by a notary public.
The Fund and the Transfer Agent have adopted standards for accepting signature guarantees from the above institutions. The Fund may elect in the future to limit eligible signature guarantees to institutions that are members of a signature guarantee program. The Fund and the Transfer Agent reserve the right to amend these standards at any time without notice.
Redeeming Shares By Checking Account – Class A Shares Only
At the shareholder’s request, the Transfer Agent will establish a checking account for redeeming Fund shares. With a Fund checking account, shares may be redeemed simply by writing a check for $100 or more, unless your investment professional or financial institution requires a higher minimum. The redemption will be made at the net asset value on the date that the Transfer Agent presents the check to a Fund. A check may not be written to close an account. If a shareholder wishes to redeem shares and have the proceeds available, a check may be written and negotiated through the shareholder’s bank. Checks should never be sent to the Transfer Agent to redeem shares. Copies of canceled checks are available upon request. A fee is charged for this service. For further information, contact the Funds.
Redemption Before Purchase Instruments Clear
When shares are purchased by check or with funds transferred through the Automated Clearing House, the proceeds of redemption of those shares are not available until the Transfer Agent is reasonably certain that the purchase payment has cleared, which could take up to 15 calendar days from the purchase date.
Exchanging Shares among Fund Families
The Fund is offered as money market exchange vehicles for certain other mutual fund families that have entered into agreements with the Fund’s distributor or transfer agent. If you are using the Fund as such an exchange vehicle, you may exchange your shares only for shares of the funds in that other mutual fund family; you may not exchange your shares for shares of another Fund. You may be assessed certain transactional or service fees by your original mutual fund family in connection with any such exchange. In addition, you may be subject to the following CDSC schedules of such fund family, also described below and believed to be current through the date of this SAI.
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The Fund reserves the right, upon notice, to charge you a fee to cover the costs of special requests for information that require extensive research or employee resources. Such requests could include a request for historical account transcripts or the retrieval of a significant number of documents.
The Fund’s investments are limited to securities that, at the time of acquisition, are “Eligible Securities.” Eligible Securities include, among others, securities that are rated by two Nationally Recognized Statistical Rating Organizations in one of the two highest categories for short-term debt obligations, such as A-1 or A-2 by Standard & Poor’s Rating Services, a division of The McGraw-Hill Companies, Inc., or Prime-1 or Prime-2 by Moody’s Investors Service, Inc.
A-1. A short-term obligation rated “A-1” is rated in the highest category by Standard & Poor’s. The obligor’s capacity to meet its financial commitment on the obligation is strong. Within this category, certain obligations are designated with a plus sign (+). This indicates that the obligor’s capacity to meet its financial commitment on these obligations is extremely strong.
A-2. A short-term obligation rated “A-2” is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher rating categories. However, the obligor’s capacity to meet its financial commitment on the obligation is satisfactory.
Prime-1. Issuers rated Prime-1 (or supporting institutions) have a superior ability for repayment of senior short-term debt obligations. Prime-1 repayment ability will often be evidenced by many of the following characteristics:
| · | Leading market positions in well-established industries. |
| · | High rates of return on funds employed. |
| · | Conservative capitalization structure with moderate reliance on debt and ample asset protection. |
| · | Broad margins in earnings coverage of fixed financial charges and high internal cash generation. |
| · | Well-established access to a range of financial markets and assured sources of alternate liquidity. |
Prime-2. Issuers rated Prime-2 (or supporting institutions) have a strong ability for repayment of senior short-term debt obligations. This will normally be evidenced by many of the characteristics cited above but to a lesser degree. Earnings trends and coverage ratios, while sound, may be more subject to variation. Capitalization characteristics, while still appropriate, may be more affected by external conditions. Ample alternate liquidity is maintained.
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Prior to the date of this SAI, the fund had not yet commenced operations and had no financial highlights to report.
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Proxy Voting - Fund
First American Funds and Mount Vernon Funds
Effective Date: 7/6/2016
Regulatory Highlights
Registered investment management companies are required to provide disclosure about how they vote proxies relating to portfolio securities they hold and to disclose the policies and procedures that they use to determine how to vote proxies relating to portfolio securities. They are also required to file with the SEC and to make available to shareholders the specific proxy votes that they cast in shareholder meetings of issuers of portfolio securities.
An investment adviser voting proxies on behalf of a fund must do so in a manner consistent with the best interests of the fund and its shareholders.
Regulatory Requirements
| · | Release Nos. 33-8188, 34-47304, IC-25922: Disclosure of Proxy Voting Policies and Proxy Voting Records by Registered Management Investment Companies | |
| · | Company Act: Rule 30b1-4 |
Entities Affected
First American Funds and Mount Vernon Funds
Policy Specific Terms (Refer to glossary for standard terms used)
| Institutional Advisory Clients | All clients other than the Money Market Funds whose portfolios are managed by USBAM pursuant to an investment management agreement. |
Policy Objective Statement
The objective of this policy is to ensure that proxies voted on behalf of the Funds were voted in a manner consistent with the best interests of the Funds and their shareholders.
Compliance Control Procedures
Conflicts of Interest
As an affiliate of U.S. Bancorp, a large multi-service financial institution, USBAM recognizes that there are circumstances wherein it may have a perceived or real conflict of interest in voting the proxies of issuers or proxy proponents (e.g., a special interest group) who are clients or potential clients of some part of the U.S. Bancorp enterprise. Directors and officers of such companies may have personal or familial relationships with the U.S.Bancorp enterprise and/or its employees that could give rise to potential conflicts of interest.
Proxy Voting
| · | When a Fund proxy is received, the vote will be directed by the Chief Investment Officer. |
Preventative Control Procedures
| · | USBAM will vote proxies in the best interest of the Funds regardless of real or perceived conflicts of interest. To minimize this risk, the IPC will discuss conflict avoidance at least annually to ensure that appropriate parties understand the actual and perceived conflicts of interest proxy voting may face. |
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| · | If any member of the IPC becomes aware of a material conflict for USBAM, they will bring the matter to the Chief Counsel to convene a meeting of the IPC which will determine a course of action designed to address the conflict. Such actions could include, but are not limited to: |
| - | Abstaining from voting; or |
| - | Voting in proportion to the other shareholders to the extent this can be determined. |
| - | Recusing an IPC member from all discussion or consideration of the matter, if the material conflict is due to such person’s actual or potential conflict of interest. |
Detective Control Procedures
| · | Employees must notify the CCO of any direct, indirect or perceived improper influence exerted by any employee, officer or director within the U.S. Bancorp enterprise or First American/Mount Vernon Fund complex with regard to how USBAM should vote proxies. |
| · | The CCO, or their designee, will investigate allegations of improper influence and will report the findings to the Chief Executive Officer and the Chief Counsel. |
| · | To ensure USBAM has met its fiduciary duty to the Funds, the Chief Investment Officer will certify quarterly that: |
| - | There were no proxies received for the Funds during the quarter; or, |
| - | If proxies were voted, that either no material conflict(s) of interest existed in connection with a proxy voted for any security held in the Funds, or if a material conflict of interest occurred in connection with a proxy voted for a security held in the Funds, the certification will require a description of the material conflict of interest, and a statement that any advice received regarding a proxy was not unduly influenced by an individual or group that may have an economic interest in the outcome of the proxy vote; and, |
| - | If proxies were received and voted against management recommendation, then the certification will require documentation of the reasons for voting against management recommendation. |
| · | Compliance reviews the Quarterly Proxy Voting Certification for material conflicts and undue influence. |
Corrective Control Procedures
| · | If it is determined that improper influence was attempted, appropriate action shall be taken. Such appropriate action may include disciplinary action, notification of the appropriate senior managers within the U.S. Bancorp enterprise, or notification of the appropriate regulatory authorities. In all cases, the IPC shall not consider any improper influence in determining how to vote proxies. |
Proxy Voting for Funds Participating in Securities Lending
Certain Funds participate in U.S. Bank’s securities lending program. If a portfolio security is on loan as of the shareholder meeting record date, then the Funds will not have the right to vote the proxies.
Preventative Control Procedures
| · | Portfolio managers and/or credit analysts, who become aware of upcoming proxy issues relating to any securities in portfolios they manage, or issuers they follow, will consider the desirability of recalling the affected securities that are on loan or restricting lending of the affected securities prior to the record date for the matter. |
| · | If the proxy issue is determined to be material, and the determination is made prior to the shareholder meeting record date the portfolio manager(s) will contact the Securities Lending Department to recall securities on loan or restrict the loaning of any security held in any portfolio they manage, if they determine that it is in the best interest of shareholders to do so. |
37
Review and Reports
Detective Control Procedures
| · | The Chief Counsel will review votes cast on behalf of portfolio securities held by the Funds, report on the results of such review to the Board at each of their regularly scheduled meetings. |
Disclosure to Shareholders
Preventative Control Procedures
| · | USBAM’s Legal Department will cause Form N-PX to be filed with the SEC, and ensure that any other proxy voting-related filings as required by regulation or contract are timely made. |
| · | USBAM shall make available the proxy voting record of the Funds to shareholders upon request. Additionally, USBAM shall disclose in the Funds’ registration statement that shareholders can receive, on request, the voting records for the Funds by calling a toll free number. |
| · | The Funds’ proxy voting policy and procedures will also be made available to the public in the Funds’ registration statement which is available to the public on the SEC website. Additionally, shareholders can receive, on request, the proxy voting policies for the Funds by calling a toll free number. |
Policy Owner
| · | Compliance Manager | |
Responsible Parties
| · | Operations |
| · | IPC |
| · | Compliance |
| · | Investments |
| · | Legal |
Related Policies
| · | Recordkeeping & Retention |
Related Disclosures
| · | Form N-PX | |
| · | Registration Statement |
38
Glossary of Standard Terms
| Advisor or USBAM | U.S. Bancorp Asset Management, Inc. |
| Board | First American Funds, Inc. and Mount Vernon Securities Lending Trust Board of Directors |
| CCO | Chief Compliance Officer |
| Company Act | Investment Company Act of 1940 |
| Compliance | USBAM Compliance |
| CRIMS | Charles River Investment Management System |
| Employee(s) | Includes USBAM permanent employees and temporary or contract employees whose assignments exceed four weeks in a 12 month period. |
| Exchange Act | Securities Exchange Act of 1934 |
| FINRA | Financial Industry Regulatory Authority |
| First American Funds | Each series of First American Funds, Inc. whether now existing or organized in the future. |
| Funds or Money Market Funds | Each series of First American Funds, Inc. and Mount Vernon Securities Lending Trust, whether now existing or organized in the future. |
| ICCC | Internal Compliance Controls Committee |
| IPC | Investment Practices Committee |
| Legal or Legal Department | USBAM Legal |
| Mount Vernon Funds | Each series of Mount Vernon Securities Lending Trust, whether now existing or organized in the future. |
| NAV | Net asset value |
| Quasar | Quasar Distributors, LLC – First American Funds, Inc. FINRA member distributor |
| SAI | Statement of Additional Information |
| SEC or Commission | U.S. Securities and Exchange Commission |
| Securities Act | Securities Act of 1933 |
| USBFS | U.S. Bancorp Fund Services, LLC |
| USBI or USBII | U.S. Bancorp Investments, Inc. |
39
FIRST AMERICAN FUNDS, INC.
PART C: OTHER INFORMATION
Item 28. Exhibits
(a)(1) Amended and Restated Articles of Incorporation, as amended through January 20, 1995 (Incorporated by reference to Exhibit (1) to Post-Effective Amendment No. 22, filed on January 22, 1996 (File Nos. 002-74747 and 811-03313)).
(a)(2) Certificate of Designation dated October 2, 1997, designating Class A, B, C and D shares for Tax Free Obligations Fund and Class A shares for Treasury Obligations Fund (Incorporated by reference to Exhibit (1)(b) to Post-Effective Amendment No. 25, filed on October 7, 1997 (File Nos. 002-74747 and 811-03313)).
(a)(3) Certificate of Designation dated March 2, 1998, designating Class A or Retail shares for Government Obligations Fund (Incorporated by reference to Exhibit (1)(b) to Post-Effective Amendment No. 28, filed on March 3, 1998 (File Nos. 002-74747 and 811-03313)).
(a)(4) Certificate of Designation dated June 1, 2001, designating Class A, Y and S shares of Ohio Tax Free Obligations Fund; Class I and S shares of Prime Obligations Fund; Class S shares of Government Obligations Fund; Class S shares of Treasury Obligations Fund; and Class S shares of Tax Free Obligations Fund (Incorporated by reference to Exhibit (a)(2) to Post-Effective Amendment No. 36, filed on June 27, 2001 (File Nos. 002-74747, 811-03313)).
(a)(5) Articles of Amendment to Articles of Incorporation dated November 26, 2001 (Incorporated by reference to Exhibit (a)(3) to Post-Effective Amendment No. 40, filed on November 30, 2001 (File Nos. 002-74747, 811-03313)).
(a)(6) Certificate of Designation dated June 5, 2003, designating Class Z shares of Prime Obligations Fund (Incorporated by reference to Exhibit (a)(4) to Post-Effective Amendment No. 44, filed on June 6, 2003 (File Nos. 002-74747, 811-03313)).
(a)(7) Certificate of Designation dated December 2003, designating Class Z shares of Government Obligations Fund, Tax Free Obligations Fund, and Treasury Obligations Fund (Incorporated by reference to Exhibit (a)(5) to Post-Effective Amendment No. 47, filed on December 1, 2003 (File Nos. 002-74747, 811-03313)).
(a)(8) Certificate of Designation dated September 20, 2004, designating Class A, D, Y and Z shares of U.S. Treasury Money Market Fund (Incorporated by reference to Exhibit (a)(6) to Post-Effective Amendment No. 50, filed on October 15, 2004 (File Nos. 002-74747, 811-03313)).
(a)(9) Certificate of Designation dated May 5, 2005, designating Reserve shares of Treasury Obligations Fund (Incorporated by reference to Exhibit (1)(i) to the initial registration statement on Form N-14, filed on May 20, 2005 (File Nos. 333-125098, 811-03313)).
(a)(10) Articles of Amendment to Articles of Incorporation dated August 30, 2005 (Incorporated by reference to Exhibit (a)(10) to Post-Effective Amendment No. 55, filed on October 28, 2005 (File Nos. 002-74747, 811-03313)).
(a)(11) Certificate of Designation filed February 23, 2006, designating Institutional Investor shares of Prime Obligations Fund, Government Obligations Fund, Treasury Obligations Fund, Tax Free Obligations Fund, and U.S. Treasury Money Market Fund (Incorporated by reference to Exhibit (b) to Post-Effective Amendment No. 58, filed on October 31, 2006 (File Nos. 002-74747, 811-03313)).
(a)(12) Articles of Correction to Certificate of Designation filed February 23, 2006 (Incorporated by reference to Exhibit (b) to Post-Effective Amendment No. 58, filed on October 31, 2006 (File Nos. 002-74747, 811-03313)).
(a)(13) Certificate of Designation dated February 5, 2016 designating Class X shares of Government Obligations Fund, Prime Obligations Fund and Treasury Obligations Fund filed on February 5, 2016 (Incorporated by reference to Exhibit (a)(13) to Post-Effective Amendment No. 75, filed on February 5, 2016 (File Nos. 002-74747, 811-03313)).
(a)(14) Certificate of Designation dated July 15, 2016 designating Class A, T, V, X, Y and Z shares of Retail Prime Obligations Fund filed on July 18, 2016.*
(b) Bylaws, as amended July 15, 2016.*
(c) Not applicable.
(d)(1) Investment Advisory Agreement, dated January 20, 1995, between the Registrant and First Bank National Association (Incorporated by reference to Exhibit (5) to Post-Effective Amendment No. 22, filed on January 22, 1996 (File Nos. 002-74747, 811-03313)).
(d)(2) Assignment and Assumption Agreement, dated May 2, 2001, relating to assignment of Investment Advisory Agreement to U.S. Bancorp Piper Jaffray Asset Management, Inc. (Incorporated by reference to Exhibit (d)(2) to Post-Effective Amendment No. 51, filed on November 30, 2004 (File Nos. 002-74747, 811-03313)).
(d)(3) Amendment to Exhibit A to Investment Advisory Agreement effective October 25, 2004 (series and fees) (Incorporated by reference to Exhibit (d)(2) to Post-Effective Amendment No. 50, filed on October 15, 2004 (File Nos. 002-74747, 811-03313)).
(d)(4) Amendment to Investment Advisory Agreement dated as of June 21, 2005, permitting First American Funds, Inc. to purchase securities from Piper Jaffray & Co. (Incorporated by reference to Exhibit (d)(5) to Post-Effective Amendment No. 54, filed on August 16, 2005 (File Nos. 002-74747, 811-03313)).
(d)(5) Amendment to Exhibit A to Investment Advisory Agreement effective June 30, 2015.
2
(d)(6) Expense Limitation Agreement effective October 30, 2015, between the Registrant and U.S. Bancorp Asset Management, Inc. (Incorporated by reference to Exhibit (d)(5) to Post-Effective Amendment No. 73, filed on October 30, 2015 (File Nos. 002-74747, 811-03313)).
(d)(7) Expense Limitation Agreement effective April 1, 2016, between the Registrant and U.S. Bancorp Asset Management, Inc. (Incorporated by reference to Exhibit (d)(7) to Post-Effective Amendment No. 81, filed on June 10, 2016 (File Nos. 002-74747, 811-03313)).
(d)(8) Expense Limitation Agreement effective April 5, 2016, between the Registrant and U.S. Bancorp Asset Management, Inc. (Incorporated by reference to Exhibit (d)(7) to Post-Effective Amendment No. 77, filed on April 5, 2016 (File Nos. 002-74747, 811-03313)).
(d)(9) Expense Limitation Agreement effective June 1, 2016, between the Registrant and U.S. Bancorp Asset Management, Inc. (Incorporated by reference to Exhibit (d)(9) to Post-Effective Amendment No. 81, filed on June 10, 2016 (File Nos. 002-74747, 811-03313)).
(e)(1) Distribution Agreement dated July 1, 2007, between Registrant and Quasar Distributors, LLC (Incorporated by reference to Exhibit (e)(1) to Post-Effective Amendment No. 59, filed on October 31, 2007 (File Nos. 002-74747, 811-03313)).
(e)(2) Form of Dealer Agreement (Incorporated by reference to Exhibit (e)(2) to Post-Effective Amendment No. 65, filed on October 28, 2011 (File Nos. 002-74747, 811-03313)).
(f) Not applicable.
(g)(1) Custody Agreement dated July 1, 2006, between Registrant and U.S. Bank National Association (Incorporated by reference to Exhibit (g) to Post-Effective Amendment No. 58, filed on October 31, 2006 (File Nos. 002-74747, 811-03313)).
(g)(2) Amendment to Custody Agreement dated July 1, 2007 (Incorporated by reference to Exhibit (g)(2) to Post-Effective Amendment No. 59, filed on October 31, 2007 (File Nos. 002-74747, 811-03313)).
(g)(3) Amendment to Custody Agreement dated February 19, 2009 (Incorporated by reference to Exhibit (g)(3) to Post-Effective Amendment No. 62, filed on October 30, 2009 (File Nos. 002-74747, 811-03313)).
(g)(4) Amendment to Custody Agreement dated June 9, 2016. (Incorporated by reference to Exhibit (g)(4) to Post-Effective Amendment No. 81, filed on June 10, 2016 (File Nos. 002-74747, 811-03313)).
(h)(1) Administration Agreement dated as of July 1, 2006, by and between Registrant and U.S. Bancorp Asset Management, Inc. (formerly known as FAF Advisors, Inc.) (Incorporated by reference to Exhibit (h)(1) to Post-Effective Amendment No. 58, filed on October 31, 2006 (File Nos. 002-74747, 811-03313)).
(h)(2) Amended Schedule A to Administration Agreement, dated July 1, 2011, between Registrant and U.S. Bancorp Asset Management, Inc. (Incorporated by reference to Exhibit
3
(h)(2) to Post-Effective Amendment No. 65, filed on October 28, 2011 (File Nos. 002-74747, 811-03313)).
(h)(3) Sub-Administration Agreement effective as of July 1, 2005, by and between U.S. Bancorp Asset Management Inc. and U.S. Bancorp Fund Services, LLC. (Incorporated by reference to Exhibit (h)(2) to Post-Effective Amendment No. 54, filed on August 16, 2005 (File Nos. 002-74747, 811-03313)).
(h)(4) Amended and Restated Transfer Agent and Shareholder Servicing Agreement dated as of June 30, 2016, by and among Registrant, U.S. Bancorp Fund Services, LLC, and U.S. Bancorp Asset Management, Inc.*
(h)(5) Amended Shareholder Service Plan and Agreement effective July 1, 2005, as further amended effective February 22, 2006, between Registrant and U.S. Bancorp Asset Management, Inc. for Class A, Class D, Class I, Class Y, Institutional Investor, and Reserve shares (Incorporated by reference to Exhibit (h)(5) to Post-Effective Amendment No. 58, filed on October 31, 2006 (File Nos. 002-74747, 811-03313)).
(h)(6) Securities Lending Agreement dated January 1, 2007, by and between First American Funds, Inc. - Government Obligations Fund and U.S. Bank National Association (Incorporated by reference to Exhibit (h)(8) to Post-Effective Amendment No. 60, filed on October 31, 2008 (File Nos. 002-74747, 811-03313)).
(h)(7) Amendment to Securities Lending Agreement effective January 1, 2011, by and between First American Funds, Inc. – Government Obligations Fund and U.S. Bank National Association (Incorporated by reference to Exhibit (h)(8) to Post-Effective Amendment No. 67, filed on October 30, 2012 (File Nos. 002-74747, 811-03313)).
(h)(8) Securities Lending Agreement dated January 1, 2007, by and between First American Funds, Inc. - Treasury Obligations Fund and U.S. Bank National Association (Incorporated by reference to Exhibit (h)(9) to Post-Effective Amendment No. 60, filed on October 31, 2008 (File Nos. 002-74747, 811-03313)).
(h)(9) Amendment to Securities Lending Agreement effective January 1, 2011, by and between First American Funds, Inc. – Treasury Obligations Fund and U.S. Bank National Association (Incorporated by reference to Exhibit (h)(10) to Post-Effective Amendment No. 67, filed on October 30, 2012 (File Nos. 002-74747, 811-03313)).
(h)(10) Securities Lending Agreement dated October 1, 2011, by and between First American Funds, Inc. – Prime Obligations Fund and U.S. Bank National Association (Incorporated by reference to Exhibit (h)(9) to Post-Effective Amendment No. 65, filed on October 28, 2011 (File Nos. 002-74747, 811-03313)).
(i) Opinion and Consent of Dorsey & Whitney LLP.*
(j) Consent of Ernst & Young LLP.*
(k) Not applicable.
4
(l) Not applicable.
(m)(1) Amended and Restated Distribution and Service Plan effective September 19, 2006, for Class A, Class B, Class C, Class D, and Reserve shares (Incorporated by reference to Exhibit (m) to Post-Effective Amendment No. 59, filed on October 31, 2007 (File Nos. 002-74747, 811-03313)).
(m)(2) Form of Rule 12b-1 Fee Agreement (Incorporated by reference to Exhibit (m)(2) to Post-Effective Amendment No. 67, filed on October 30, 2012 (File Nos. 002-74747, 811-03313)).
(n) Amended and Restated Multiple Class Plan Pursuant to Rule 18f-3, effective July 15, 2016.*
(o) Reserved.
(p)(1) First American Funds Code of Ethics adopted under Rule 17j-1 of the Investment Company Act of 1940 and Section 406 of the Sarbanes-Oxley Act.*
(p)(2) U.S. Bancorp Asset Management, Inc. Code of Ethics adopted under Rule 17j-1 of the Investment Company Act of 1940.*
(p)(3) Quasar Distributors, LLC Code of Ethics adopted under Rule 17j-1 of the Investment Company Act of 1940 (Incorporated by reference to Exhibit (p)(3) to Post-Effective Amendment No. 73, filed on October 30, 2015 (File Nos. 002-74747, 811-03313)).
(q)(1) Power of Attorney dated September 23, 2015 (Incorporated by reference to Exhibit (q) to Post-Effective Amendment No. 73, filed on October 30, 2015 (File Nos. 002-74747, 811-03313)).
(q)(2) Power of Attorney dated February 2, 2016 (Incorporated by reference to Exhibit (q)(2) to Post-Effective Amendment No. 75, filed on February 5, 2016 (File Nos. 002-74747, 811-03313)).
* Filed herewith.
Item 29. Persons Controlled by or Under Common Control with the Fund
Not applicable.
Item 30. Indemnification
The Registrant’s Articles of Incorporation and Bylaws provide that the Registrant shall indemnify such persons for such expenses and liabilities, in such manner, under such circumstances, and to the full extent as permitted by Section 302A.521 of the Minnesota Statutes, as now enacted or hereafter amended; provided, however, that no such indemnification may be made if it would be in violation of Section 17(h) of the Investment Company Act of 1940, as now enacted or hereafter amended, and any rules, regulations, or releases promulgated thereunder. Section 302A.521 of the Minnesota Statutes, as now enacted, provides that a corporation shall indemnify a person made or threatened to be made a party to a proceeding by
5
reason of the former or present official capacity of the person against judgments, penalties, fines, settlements and reasonable expenses, including attorneys’ fees and disbursements, incurred by the person in connection with the proceeding if, with respect to the acts or omissions of the person complained of in the proceeding, the person has not been indemnified by another organization for the same judgments, penalties, fines, settlements, and reasonable expenses incurred by the person in connection with the proceeding with respect to the same acts or omissions; acted in good faith, received no improper personal benefit, and the Minnesota Statutes dealing with directors’ conflicts of interest, if applicable, have been satisfied; in the case of a criminal proceeding, had no reasonable cause to believe that the conduct was unlawful; and reasonably believed that the conduct was in the best interests of the corporation or, in certain circumstances, reasonably believed that the conduct was not opposed to the best interests of the corporation. 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.
Item 31. Business and Other Connections of the Investment Adviser
Information on the business of the Registrant’s investment adviser, U.S. Bancorp Asset Management, Inc. (the “Manager”), is described in the section of each series’ Statement of Additional Information, filed as part of this Registration Statement, entitled “Investment Advisory and Other Services.” 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.
|
Name and Address |
Principal Occupation(s) During the Past Two Years |
|
Eric J. Thole U.S. Bancorp Asset Management, Inc. 800 Nicollet Mall Minneapolis, MN 55402 |
Chief Executive Officer and President, U.S. Bancorp Asset Management, Inc. since June 2014; prior thereto, Chief Operating Officer, U.S. Bancorp Asset Management, Inc.; Director, U.S. Bancorp Asset Management, Inc.; President, FAF and Mount Vernon since June 2014; prior thereto, Vice President, FAF and Mount Vernon |
|
James D. Palmer U.S. Bancorp Asset Management, Inc. |
Chief Investment Officer, U.S. Bancorp Asset Management, Inc. since August 2012; Director, U.S. Bancorp Asset Management, Inc. since June |
6
|
Name and Address |
Principal Occupation(s) During the Past Two Years |
800 Nicollet Mall Minneapolis, MN 55402 |
2014; Vice President, FAF and Mount Vernon since June 2014 |
|
Richard J. Ertel U.S. Bancorp Asset Management, Inc. 800 Nicollet Mall Minneapolis, MN 55402 |
Director, Chief Counsel and Secretary, U.S. Bancorp Asset Management, Inc.; Secretary, FAF and Mount Vernon |
|
Jill M. Stevenson U.S. Bancorp Asset Management, Inc. 800 Nicollet Mall Minneapolis, MN 55402 |
Mutual Funds Treasurer and Head of Operations, U.S. Bancorp Asset Management, Inc. since September 2014; prior thereto, Mutual Funds Treasurer, U.S. Bancorp Asset Management, Inc.; Treasurer, FAF and Mount Vernon |
|
Louis G. Martine U.S. Bancorp Asset Management, Inc. 800 Nicollet Mall Minneapolis, MN 55402 |
Head of Distribution, U.S. Bancorp Asset Management, Inc. |
|
Kenneth L. Delecki U.S. Bancorp Asset Management, Inc. 800 Nicollet Mall Minneapolis, MN 55402 |
Head of Securities Lending, U.S. Bancorp Asset Management, Inc. |
|
Scott F. Cloutier U.S. Bancorp Asset Management, Inc. 800 Nicollet Mall Minneapolis, MN 55402 |
Senior Corporate Counsel, U.S. Bancorp Asset Management, Inc.; Assistant Secretary, FAF and Mount Vernon |
|
Ruth M. Mayr U.S. Bancorp Asset Management, Inc. 800 Nicollet Mall Minneapolis, MN 55402 |
Chief Compliance Officer, U.S. Bancorp Asset Management, Inc.; Chief Compliance Officer, FAF and Mount Vernon |
|
Brett E. Scribner U.S. Bank National Association 800 Nicollet Mall Minneapolis, MN 55402 |
Senior Vice President, U.S. Bancorp Asset Management, Inc.; Corporate Tax Director, U.S. Bank National Association |
7
Item 32. Principal Underwriters
Registrant’s distributor, Quasar Distributors, LLC (the “Distributor”) acts as principal underwriter and distributor for the following investment companies:
| 1919 Funds | Falah Capital | Perritt Funds, Inc. |
| AC One China Fund | Fiera Capital Funds | PIA Funds |
| Academy Asset ETF Funds | First American Funds, Inc. | Poplar Forest Funds |
| Academy Fund Trust | Fort Pitt Capital Group, Inc. | Port Street Funds |
| Advantus Mutual Funds | Fulcrum Funds | Primecap Odyssey Funds |
| Aegis Funds | Fund X Funds | Prospector Funds |
| Akre Funds | Geneva Advisors Funds | Provident Mutual Funds, Inc. |
| Allied Asset Advisors Funds | Glenmede Fund, Inc. | Purisima Funds |
| Alpha Architect Funds | Glenmede Portfolios | Pzena Funds |
| Alpha Funds | GoodHaven Funds | Rainier Funds |
| AlphaClone ETF Fund | Great Lakes Funds | RBC Funds Trust |
| AlphaMark ETFs | Greenspring Fund | Reinhart Funds |
| Alpine Equity Trust | Guinness Atkinson Funds | RiverNorth Funds |
| Alpine Income Trust | Harding Loevner Funds | Rockefeller Funds |
| Alpine Series Trust | Hennessy Funds Trust | Scharf Funds |
| American Trust | Hodges Funds | Schooner Investment Group |
| Amplify ETFs | Hood River Funds | Semper Funds |
| Angel Oak Funds | Horizon Investment Funds | Shenkman Funds |
| Appleton Group | Hotchkis & Wiley Funds | SIMS Total Return Fund |
| Appleton Partners Inc | Huber Funds | Smith Group Funds |
| Aptus ETF | Infinity Q Funds | Snow Capital Family of Funds |
| Barrett Growth Fund | Infusive Funds | Soundwatch Fund |
| Barrett Opportunity Fund | Intrepid Capital Management | Spencer Capital Funds |
| Becker Value Equity Fund | IronBridge Funds | Stone Ridge Funds |
| Boston Common Funds | Jackson Square Partners | Stone Ridge Trust II |
| Bramshill Funds | Jacob Funds, Inc. | Stone Ridge Trust III |
| Bridge Builder Trust | Jensen Funds | Stone Ridge Trust IV |
| Bridge City Capital | Kellner Funds | Stone Ridge Trust V |
| Bridges Investment Fund, Inc. | Kensho ETFs | Thomas White Funds |
| Bright Rock Funds | Kirr Marbach Partners Funds, Inc | Thompson IM Funds, Inc. |
| Brookfield Investment Funds | Lawson Kroeker Funds | Tiedemann Funds |
| Brown Advisory Funds | LKCM Funds | Torray Funds |
| Buffalo Funds | LoCorr Investment Trust | TorrayResolute Funds |
| Bushido Funds | Logan Capital Funds | Tortoise Funds |
| CAN SLIM Select Growth Fund | Lyxor Asset Management Funds | Trillium Funds |
| Capital Advisors Funds | MainGate MLP Funds | Trust and Fiduciary Management |
| CG Funds Trust | Marketfield Fund | Services ETF |
| Chase Funds | Matrix Asset Advisors, Inc. | Tygh Capital Management |
| Coho Partners | Mar Vista Funds | US Global ETFs |
| Coldstream Funds | MD Sass | USA Mutuals Funds |
| Collins Capital Funds | Monetta Trust | Validea Funds |
| Congress Funds | Morgan Dempsey Funds | Victory Portfolios II |
| Consilium Funds | Muhlenkamp Fund | Vident Funds |
| Convergence Funds | Muzinich Funds | Villere & Co. |
| Cove Street Capital Funds | Nicholas Funds | Wasmer Schroeder Funds |
| CSat ETF | Nuance Funds | WBI Funds |
| Cushing Funds | Oaktree Funds | Weiss Multi-Strategy Funds |
| Davidson Funds | Orinda Funds | Welton Partners |
| Dearborn Funds | O’Shaughnessy Funds | Westchester Capital Funds |
| Diamond Hill | Osterweis Funds | Wisconsin Capital Funds, Inc. |
| DoubleLine Funds | Otter Creek Funds | YCG Funds |
| DSM Mutual Funds | Pension Partners Funds | Zevenbergen Capital Investment |
| Edgar Lomax Value Fund | Permanent Portfolio Funds | Funds |
| Evermore Global Investors Trust | Permberwick Funds | Ziegler Strategic Income Fund |
8
The board members and officers of Quasar Distributors, LLC and their positions or offices with the Registrant are identified in the following table. Unless otherwise noted, the business address for each board member or officer is Quasar Distributors, LLC 615 East Michigan Street, Milwaukee, WI 53202.
|
Name |
Position and Offices with Underwriter |
Position and Offices with Registrant | |
| James R. Schoenike | President, Board Member, General Securities Principal and FINRA Executive Officer | None | |
| Joseph Neuberger | Board Member | None | |
| Robert Kern 777 East Wisconsin Avenue Milwaukee, WI 53202 |
Board Member | None | |
| Peter Hovel | Chief Financial Officer | None | |
| Susan L. LaFond | Vice President and Treasurer | None | |
|
Brett E. Scribner 800 Nicollet Mall Minneapolis, MN 55402 |
Assistant Treasurer | None | |
|
Andrew M. Strnad 6602 E. 75th Street Indianapolis, IN 46250 |
Vice President and Secretary | None | |
| Teresa Cowan | Senior Vice President, Assistant Secretary, General Securities Principal and Chief Compliance Officer | None |
Item 33. 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, and U.S. Bancorp Fund Services, LLC, 615 E. Michigan Street, Milwaukee, Wisconsin 53202.
Item 34. Management Services
Not applicable.
Item 35. Undertakings
Not applicable.
9
SIGNATURES
Pursuant to the requirements of 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) under the Securities Act and has duly caused this Post-Effective Amendment to its Registration Statement Nos. 002-74747 and 811-03313 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Minneapolis, State of Minnesota, on the 18th day of July, 2016.
| FIRST AMERICAN FUNDS, INC. | |||
| By: | /s/ Eric J. Thole | ||
| Eric J. Thole, President | |||
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 capacities indicated and on July 18, 2016.
| SIGNATURE | TITLE |
| /s/ Eric J. Thole | President |
| Eric J. Thole | |
| /s/ Jill M. Stevenson | Treasurer (principal financial/accounting officer) |
| Jill M. Stevenson | |
| * | Director |
| David K. Baumgardner | |
| * | Director |
| Mark E. Gaumond | |
| * | Director |
| Roger A. Gibson | |
| * | Director |
| Leonard W. Kedrowski | |
| * | Director |
| Richard K. Riederer | |
| * | Director |
| James M. Wade | |
| * Richard J. Ertel, by signing his name hereto, does hereby sign this document on behalf of each of the above-named Directors of First American Funds, Inc. pursuant to the powers of attorney duly executed by such persons. | |
| By: /s/ Richard J. Ertel | Attorney-in-Fact |
| Richard J. Ertel | |
10
Index to Exhibits
| Exhibit Number | Name of Exhibit | |
| (a)(14) | Certificate of Designation dated July 15, 2016 | |
| (b) | Bylaws, as amended | |
| (h)(4) | Amended and Restated Transfer Agent and Shareholder Servicing Agreement | |
| (i) | Opinion and Consent of Dorsey & Whitney, LLP | |
| (j) | Consent of Ernst & Young LLP | |
| (n) | Amended and Restated Rule 18f-3 Plan | |
| (p)(1) | First American Funds Code of Ethics | |
| (p)(2) | Advisor Code of Ethics |
11
Exhibit (a)(14)
FIRST AMERICAN FUNDS, INC.
CERTIFICATE OF DESIGNATION OF
SERIES
J, CLASS ONE, TWO, THREE, FOUR, FIVE AND SIX COMMON SHARES
PURSUANT TO MINNESOTA STATUTES,
SECTION 302A.401, SUBD.3
The undersigned, being the duly elected Secretary of First American Funds, Inc., a Minnesota corporation (the “Fund”), hereby certifies that the following is a true, complete and correct copy of resolutions duly adopted by a majority of the directors of the Board of Directors of the Fund on July 15, 2016:
Designation of Series and Classes for Retail Prime Obligations Fund
WHEREAS, the Board of Directors (the “Board”) of First American Funds, Inc. (“FAF”) previously approved the creation of Retail Prime Obligations Fund (the “Fund”); and
WHEREAS, the Board of Directors desires to take the actions necessary in order to establish certain share classes of the Fund: Class A Shares, Class T Shares, Class V Shares, Class X Shares, Class Y Shares and Class Z Shares of the Fund.
NOW, THEREFORE, BE IT RESOLVED, that pursuant to the authority contained in Article 5 of the Articles of Incorporation of FAF, 500,000,000,000 of the authorized, unissued and undesignated shares of the Common Shares of FAF be, and hereby are, designated as Series J, to be known as Retail Prime Obligations Fund.
RESOLVED, FURTHER, that pursuant to the authority contained in Article 5 of the Articles of Incorporation of FAF, 20,000,000,000 of the authorized, unissued and undesignated shares of Series J Common Shares of FAF be, and hereby are, designated as Series J, Class One Common Shares, to be known as Retail Prime Obligations Fund, Class A Shares.
RESOLVED, FURTHER, that pursuant to the authority contained in Article 5 of the Articles of Incorporation of FAF, 20,000,000,000 of the authorized, unissued and undesignated shares of Series J Common Shares of FAF be, and hereby are, designated as Series J, Class Two Common Shares, to be known as Retail Prime Obligations Fund, Class T Shares.
RESOLVED, FURTHER, that pursuant to the authority contained in Article 5 of the Articles of Incorporation of FAF, 20,000,000,000 of the authorized, unissued and undesignated shares of Series J Common Shares of FAF be, and hereby are, designated as Series J, Class Three Common Shares, to be known as Retail Prime Obligations Fund, Class V Shares.
RESOLVED, FURTHER, that pursuant to the authority contained in Article 5 of the Articles of Incorporation of FAF, 20,000,000,000 of the authorized, unissued and undesignated shares of
Series J Common Shares of FAF be, and hereby are, designated as Series J, Class Four Common Shares, to be known as Retail Prime Obligations Fund, Class X Shares.
RESOLVED, FURTHER, that pursuant to the authority contained in Article 5 of the Articles of Incorporation of FAF, 20,000,000,000 of the authorized, unissued and undesignated shares of Series J Common Shares of FAF be, and hereby are, designated as Series J, Class Five Common Shares, to be known as Retail Prime Obligations Fund, Class Y Shares.
RESOLVED, FURTHER, that pursuant to the authority contained in Article 5 of the Articles of Incorporation of FAF, 20,000,000,000 of the authorized, unissued and undesignated shares of Series J Common Shares of FAF be, and hereby are, designated as Series J, Class Six Common Shares, to be known as Retail Prime Obligations Fund, Class Z Shares.
RESOLVED, FURTHER, that the balance of 380,000,000,000 Series J Common Shares may be issued in one or more additional classes with such designations, preferences, and relative, participating, optional or other special rights, or qualifications, limitations, or restrictions thereof, as shall be stated or expressed in a resolution or resolutions providing for the issuance of such class as may be adopted from time to time by the Board pursuant to the authority vested in the Board by these resolutions and FAF’s Articles of Incorporation.
RESOLVED, FURTHER, that each share of each such class shall have all the preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications, and terms and conditions of redemption that are set forth in FAF’s Articles of Incorporation with respect to its shares of capital stock.
RESOLVED, FURTHER, that these resolutions supersede the resolutions of the Board adopted on July 13, 2016 and June 8, 2016.
IN WITNESS WHEREOF, the undersigned has signed this Certificate of Designation this 15th day of July, 2016.
| /s/ Richard J. Ertel | ||
| Richard J. Ertel, Secretary |
Exhibit (b)
As approved at Board of Directors Meeting on December 4, 1990; Amendment to Section 1.01 approved at Board of Directors Meeting on 6/1/93; Amendments to Article IV approved at Board of Directors Meeting on 9/7/93; Amendments to Section 1.01 approved at Board of Directors Meeting on 12/7/94; Amendments to Section 1.01 approved at Board of Directors Meeting on 6/4/97; Amendment to Section 1.01 approved at Board of Directors Meeting on 2/23/98; Amendment to Section 1.01 approved at Board of Directors Meeting on 12/9/98; Amendment to Section 3.13 approved at Board of Directors Meeting on 2/23/99; Amendment to Section 2.06 approved at Board of Directors Meeting on 12/8/99; Amendment to Section 1.01 approved at Board of Directors Meeting on 6/1/01; Amendment to Section 1.01 approved at Board of Directors Meeting on 6/4/03; Amendment to Section 1.01 approved at Board of Directors Meeting on 9/4/03; Amendment to Section 1.01 approved at Board of Directors Meeting on 12/3/03; Amendment to Section 1.01 approved at Board of Directors Meeting on 9/16/04; Amendment to Section 1.01 approved at Board of Directors Meeting on 2/22/06; Amendment to Section 1.01 approved at Board of Directors Meeting on 9/19/06; Amendment to Section 1.01 approved at Board of Directors Meeting on 9/23/15; Amendment to Section 13.03 approved at Board of Directors Meeting on 12/17/15. Amendment to Section 1.01 approved by Board of Directors Written Consent on 07/15/16.
BYLAWS
OF
FIRST AMERICAN FUNDS, INC.
ARTICLE I.
OFFICES, CORPORATE SEAL
Section 1.01. Name. The name of the corporation is “FIRST AMERICAN FUNDS, INC.” The names of the series represented by the series of shares designated in the corporation’s articles of incorporation shall be as follows:
Series B, Class One: Prime Obligations Fund, “Class Y”
Series B, Class Two: Prime Obligations Fund, “Class D”
Series B, Class Three: Prime Obligations Fund, “Class X” (formerly Prime Obligations Fund, “Piper Shares”)
Series B, Class Four: Prime Obligations Fund, “Class B”
Series B, Class Five: Prime Obligations Fund, “Class C”
Series B, Class Six: Prime Obligations Fund, “Class A” (formerly “Class S”)
Series B, Class Seven: Prime Obligations Fund, “Class I”
Series B, Class Eight: Prime Obligations Fund, “Class Z”
Series B, Class Nine: Prime Obligations Fund, “Institutional Investor Shares”
Series B, Class Ten: Prime Obligations Fund, “Class Q”
Series C, Class One: Government Obligations Fund, “Class Y”
Series C, Class Two: Government Obligations Fund, “Class D”
Series C, Class Three: Government Obligations Fund, “Class X” (formerly Government Obligations Fund, “Piper Shares”)
Series C, Class Four: Government Obligations Fund, “Class A” (formerly “Class S”)
Series C, Class Five: Government Obligations Fund, “Class Z”
Series C, Class Six: Government Obligations Fund, “Institutional Investor Shares”
Series C, Class Ten: Government Obligations Fund, “Class Q”
Series D, Class One: Treasury Obligations Fund, “Class Y”
Series D, Class Two: Treasury Obligations Fund, “Class D”
Series D, Class Three: Treasury Obligations Fund, “Class X” (formerly Treasury Obligations Fund, “Piper Shares”)
Series D, Class Four: Treasury Obligations Fund, “Class A” (formerly “Class S”)
Series D, Class Five: Treasury Obligations Fund, “Class Z”
Series D, Class Six: Treasury Obligations Fund, “Reserve Shares”
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Series D, Class Seven: Treasury Obligations Fund, “Institutional Investor Shares”
Series D, Class Ten: Treasury Obligations Fund, “Class Q”
Series F, Class One: Reserved (formerly Tax Free Obligations Fund, “Piper Shares”)
Series F, Class Two: Tax Free Obligations Fund, “Class B”
Series F, Class Three: Tax Free Obligations Fund, “Class Y”
Series F, Class Four: Tax Free Obligations Fund, “Class D”
Series F, Class Five: Tax Free Obligations Fund, “Class A” (formerly “Class S”)
Series F, Class Six: Tax Free Obligations Fund, “Class Z”
Series F, Class Seven: Tax Free Obligations Fund, “Institutional Investor Shares”
Series G, Class One: Reserved (formerly Treasury Reserve Fund, “Class A”)
Series H, Class One: Reserved (formerly Ohio Tax Free Obligations Fund, “Class A”)
Series H, Class Two: Reserved (formerly Ohio Tax Free Obligations Fund, “Class Y”)
Series H, Class Three: Reserved (formerly Ohio Tax Free Obligations Fund, “Class S”)
Series I, Class One: U.S. Treasury Money Market Fund, “Class A”
Series I, Class Two: U.S. Treasury Money Market Fund, “Class D”
Series I, Class Three: U.S. Treasury Money Market Fund, “Class Y”
Series I, Class Four: U.S. Treasury Money Market Fund, “Class Z”
Series I, Class Five: U.S. Treasury Money Market Fund, “Institutional Investor Shares”
Series J, Class One: Retail Prime Obligations Fund, “Class A”
Series J, Class Two: Retail Prime Obligations Fund, “Class T”
Series J, Class Three: Retail Prime Obligations Fund, “Class V”
Series J, Class Four: Retail Prime Obligations Fund, “Class X”
Series J, Class Five: Retail Prime Obligations Fund, “Class Y”
Series J, Class Six: Retail Prime Obligations Fund, “Class Z”
Section 1.02. Registered Office. The registered office of the corporation in Minnesota shall be that set forth in the Articles of Incorporation or in the most recent amendment of the Articles of Incorporation or resolution of the directors filed with the Secretary of State of Minnesota changing the registered office.
Section 1.03. Other Offices. The corporation may have such other offices, within or without the State of Minnesota, as the directors shall, from time to time, determine.
Section 1.04. Corporate Seal. The corporate seal shall be circular in form and shall have inscribed thereon the name of the corporation and the word “Minnesota” and the words “Corporate Seal.” The form of the seal shall be subject to alteration by the Board of Directors, and the seal may be used by causing it or a facsimile to be impressed or affixed or printed or otherwise reproduced. Any officer or director of the corporation shall have authority to affix the corporate seal of the corporation to any document requiring the same.
ARTICLE II.
MEETINGS OF SHAREHOLDERS
Section 2.01. Place and Time of Meeting. Except as provided otherwise by Minnesota Statutes Chapter 302A, meetings of the shareholders may be held at any place, within or without the State of Minnesota, designated by the directors and, in the absence of such designation, shall be held at the registered office of the corporation in the State of Minnesota.
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The directors shall designate the time of day for each meeting and, in the absence of such designation, every meeting of shareholders shall be held at ten o’clock a.m.
Section 2.02. Regular Meetings. Annual meetings of shareholders are not required by these Bylaws. Regular meetings shall be held only with such
frequency and at such times and places as provided in and required by Minnesota Statutes Section 302A.431.
Section 2.03. Special Meetings. Special meetings of the shareholders may be held at any time and for any purpose and may be called by the Chairman of the Board, the President, any two directors, or by one or more shareholders holding ten percent (10%) or more of the shares entitled to vote on the matters to be presented to the meeting.
Section 2.04. Quorum, Adjourned Meetings. The holders of ten percent (10%) of the shares outstanding and entitled to vote shall constitute a quorum for the transaction of business at any regular or special meeting. In case a quorum shall not be present at a meeting, those present in person or by proxy shall adjourn the meeting to such day as they shall, by majority vote, agree upon without further notice other than by announcement at the meeting at which such adjournment is taken. If a quorum is present, a meeting may be adjourned from time to time without notice other than announcement at the meeting. At adjourned meetings at which a quorum is present, any business may be transacted which might have been transacted at the meeting as originally noticed. If a quorum is present, the shareholders may continue to transact business until adjournment notwithstanding the withdrawal of enough shareholders to leave less than a quorum.
Section 2.05. Voting. At each meeting of the shareholders, every shareholder having the right to vote shall be entitled to vote either in person or by proxy. Each shareholder, unless the Articles of Incorporation provide otherwise, shall have one vote for each share having voting power registered in his name on the books of the corporation. Except as otherwise specifically provided by these Bylaws or as required by provisions of the Investment Company Act of 1940 or other applicable laws, all questions shall be decided by a majority vote of the number of shares entitled to vote and represented at the meeting at the time of the vote. If the matter(s) to be presented at a regular or special meeting relates only to particular classes or series of the corporation, then only the shareholders of such classes or series are entitled to vote on such matter(s).
Section 2.06. Voting - Proxies. At any meeting of the shareholders, every shareholder having the right to vote shall be entitled to vote by proxy submitted by any means permitted by Minnesota Statutes Section 302A.449 or any successor provision of Minnesota Statutes. No proxy shall be voted after eleven months from its date unless it provides for a longer period.
Section 2.07. Closing of Books. The Board of Directors may fix a time, not exceeding sixty (60) days preceding the date of any meeting of shareholders, as a record date for the determination of the shareholders entitled to notice of, and to vote at, such meeting, notwithstanding any transfer of shares on the books of the corporation after any record date so
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fixed. The Board of Directors may close the books of the corporation against the transfer of shares during the whole or any part of such period. If the Board of Directors fails to fix a record date for determination of the shareholders entitled to notice of, and to vote at, any meeting of shareholders, the record date shall be the thirtieth (30th) day preceding the date of such meeting.
Section 2.08. Notice of Meetings. There shall be mailed to each shareholder, shown by the books of the corporation to be a holder of record of voting shares, at his address as shown by the books of the corporation, a notice setting out the date, time and place of each regular meeting and each special meeting, except where the meeting is an adjourned meeting and the date, time and place of the meeting were announced at the time of adjournment, which notice shall be mailed within the period required by law. Every notice of any special meeting shall state the purpose or purposes for which the meeting has been called, pursuant to Section 2.03, and the business transacted at all special meetings shall be confined to the purpose stated in such notice.
Section 2.09. Waiver of Notice. Notice of any regular or special meeting may be waived either before, at or after such meeting orally or in a writing signed by each shareholder or representative thereof entitled to vote the shares so represented. A shareholder by his attendance at any meeting of shareholders, shall be deemed to have waived notice of such meeting, except where the shareholder objects at the beginning of the meeting to the transaction of business because the item may not lawfully be considered at that meeting and does not participate at that meeting in the consideration of the item at that meeting.
Section 2.10. Written Action. Any action which might be taken at a meeting of the shareholders may be taken without a meeting if done in writing and signed by all of the shareholders entitled to vote on that action. If the action to be taken relates to particular classes or series of the corporation, then only shareholders of such classes or series are entitled to vote on such action.
ARTICLE III.
DIRECTORS
Section 3.01. Number, Qualification and Term of Office. Until the first meeting of shareholders, the number of directors shall be the number named in the Articles of Incorporation. Thereafter, the number of directors shall be established by resolution of the shareholders (subject to the authority of the Board of Directors to increase or decrease the number of directors as permitted by law). In the absence of such shareholder resolution, the number of directors shall be the number last fixed by the shareholders, the Board of Directors or the Articles of Incorporation. Directors need not be shareholders. Each of the directors shall hold office until the regular meeting of shareholders next held after his election and until his successor shall have been elected and shall qualify, or until the earlier death, resignation, removal or disqualification of such director.
Section 3.02. Election of Directors. Except as otherwise provided in Sections 3.11 and 3.12 hereof, the directors shall be elected at the regular shareholders’ meeting. In the event that directors are not elected at a regular shareholders’ meeting, then directors may be elected at a special shareholders’ meeting, provided that the notice of such meeting shall contain
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mention of such purpose. At each shareholders’ meeting for the election of directors, the directors shall be elected by a plurality of the votes validly cast at such election. Each holder of shares of each class or series of stock of the corporation shall be entitled to vote for directors and shall have equal voting power for each share of each class or series of the corporation.
Section 3.03. General Powers.
(a) Except as otherwise permitted by statute, the property, affairs and business of the corporation shall be managed by the Board of Directors, which may exercise all the powers of the corporation except those powers vested solely in the shareholders of the corporation by statute, the Articles of Incorporation or these Bylaws, as amended.
(b) All acts done by any meeting of the Directors or by any person acting as a director, so long as his successor shall not have been duly elected or appointed, shall, notwithstanding that it be afterwards discovered that there was some defect in the election of the directors or such person acting as aforesaid or that they or any of them were disqualified, be as valid as if the directors or such other person, as the case may be, had been duly elected and were or was qualified to be directors or a director of the corporation.
Section 3.04. Power to Declare Dividends.
(a) The Board of Directors, from time to time as they may deem advisable, may declare and pay dividends in cash or other property of the corporation, out of any source available for dividends, to the shareholders of each class or series of stock of the corporation according to their respective rights and interests in the investment portfolio of the corporation issuing such class or series of stock.
(b) The Board of Directors shall cause to be accompanied by a written statement any dividend payment wholly or partly from any source other than
(i) the accumulated and accrued undistributed net income of each class or series (determined in accordance with generally accepted accounting practice and the rules and regulations of the Securities and Exchange Commission then in effect) and not including profits or losses realized upon the sale of securities or other properties; or
(ii) the net income of each class or series so determined for the current or preceding fiscal year.
Such statement shall adequately disclose the source or sources of such payment and the basis of calculation and shall be in such form as the Securities and Exchange Commission may prescribe.
(c) Notwithstanding the above provisions of this Section 3.04, the Board of Directors may at any time declare and distribute pro rata among the shareholders of each class or series of stock a “stock dividend” out of the authorized but unissued shares of stock of each class or series, including any shares previously purchased by a class or series of the corporation.
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Section 3.05. Board Meetings. Meetings of the Board of Directors may be held from time to time at such time and place within or without the State of Minnesota as may be designated in the notice of such meeting.
Section 3.06. Calling Meetings, Notice. A director may call a board meeting by giving ten (10) days notice to all directors of the date, time and place of the meeting; provided that if the day or date, time and place of a board meeting have been announced at a previous meeting of the board, no notice is required.
Section 3.07. Waiver of Notice. Notice of any meeting of the Board of Directors may be waived by any director either before, at or after such meeting orally or in a writing signed by such director. A director, by his attendance and participation in the action taken at any meeting of the Board of Directors, shall be deemed to have waived notice of such meeting, except where the director objects at the beginning of the meeting to the transaction of business because the item may not lawfully be considered at that meeting and does not participate at that meeting in the consideration of the item at that meeting.
Section 3.08. Quorum. A majority of the directors holding office immediately prior to a meeting of the Board of Directors shall constitute a quorum for the transaction of business at such meeting; provided however, notwithstanding the above, if the Board of Directors is taking action pursuant to the Investment Company Act of 1940, as now enacted or hereafter amended, a majority of directors who are not “interested persons” (as defined by the Investment Company Act of 1940, as now enacted or hereafter amended) of the corporation shall constitute a quorum for taking such action.
Section 3.09. Advance Consent or Opposition. A director may give advance written consent or opposition to a proposal to be acted on at a meeting of the Board of Directors. If such director is not present at the meeting, consent or opposition to a proposal does not constitute presence for purposes of determining the existence of a quorum, but consent or opposition shall be counted as a vote in favor of or against the proposal and shall be entered in the minutes or other record of action at the meeting, if the proposal acted on at the meeting is substantially the same or has substantially the same effect as the proposal to which the director has consented or objected. This procedure shall not be used to act on any investment advisory agreement or plan of distribution adopted under Rule 12b-1 of the Investment Company Act of 1940, as amended.
Section 3.10. Conference Communications. Any or all directors may participate in any meeting of the Board of Directors, or of any duly constituted committee thereof, by any means of communication through which the directors may simultaneously hear each other during such meeting. For the purposes of establishing a quorum and taking any action at the meeting, such directors participating pursuant to this Section 3.11 shall be deemed present in person at the meeting, and the place of the meeting shall be the place of origination of the conference communication. This procedure shall not be used to act on any investment advisory agreement or plan of distribution adopted under Rule 12b-1 of the Investment Company Act of 1940, as amended.
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Section 3.11. Vacancies; Newly Created Directorships. Vacancies in the Board of Directors of this corporation occurring by reason of death, resignation, removal or disqualification shall be filled for the unexpired term by a majority of the remaining directors of the Board although less than a quorum; newly created directorships resulting from an increase in the authorized number of directors by action of the Board of Directors as permitted by Section 3.01 may be filled by a two-thirds (2/3) vote of the directors serving at the time of such increase; and each person so elected shall be a director until his successor is elected by the shareholders at their next regular or special meeting; provided, however, that no vacancy can be filled as provided above if prohibited by the provisions of the Investment Company Act of 1940.
Section 3.12. Removal. The entire Board of Directors or an individual director may be removed from office, with or without cause, by a vote of the shareholders holding a majority of the shares entitled to vote at an election of directors. In the event that the entire Board or any one or more directors be so removed, new directors shall be elected at the same meeting, or the remaining directors may, to the extent vacancies are not filled at such meeting, fill any vacancy or vacancies created by such removal. A director named by the Board of Directors to fill a vacancy may be removed from office at any time, with or without cause, by the affirmative vote of the remaining directors if the shareholders have not elected directors in the interim between the time of the appointment to fill such vacancy and the time of the removal.
Section 3.13. Committees. A resolution approved by the affirmative vote of a majority of the Board of Directors may establish committees having the authority of the board in the management of the business of the corporation to the extent provided in the resolution. A committee shall consist of one or more persons, who need not be directors, appointed by affirmative vote of a majority of the directors present. Committees are subject to the direction and control of, and vacancies in the membership thereof shall be filled by, the Board of Directors.
Except as set forth in the following paragraph, a majority of the members of the committee present at a meeting is a quorum for the transaction of business, unless a larger or smaller proportion or number is provided in a resolution approved by the affirmative vote of a majority of the directors present.
If a Pricing Committee is appointed, a quorum of such committee shall consist of one member of the committee.
Section 3.14. Written Action. Any action which might be taken at a meeting of the Board of Directors, or any duly constituted committee thereof, may be taken without a meeting if done in writing and signed by all of the directors or committee members.
Section 3.15. Compensation. Directors shall receive such fixed sum per meeting attended or such fixed annual sum as shall be determined, from time to time, by resolution of the Board of Directors. All directors shall receive their expenses, if any, of attendance at meetings of the Board of Directors or any committee thereof. Nothing herein contained shall be construed to preclude any director from serving this corporation in any other capacity and receiving proper compensation therefor.
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ARTICLE IV.
OFFICERS AND CHAIRMAN OF THE BOARD OF DIRECTORS
Section 4.01. Number. The officers of the corporation shall consist of the President, one or more Vice Presidents (if desired by the Board), a Secretary, a Treasurer and such other officers and agents as may, from time to time, be elected by the Board of Directors. Any number of offices may be held by the same person.
Section 4.02. Election, Term of Office and Qualifications. The Board of Directors shall elect, from within or without their number, the officers referred to in Section 4.01 of these Bylaws, each of whom shall have the powers, rights, duties, responsibilities and terms in office provided for in these Bylaws or a resolution of the Board not inconsistent therewith. The President and all other officers who may be directors shall continue to hold office until the election and qualification of their successors, notwithstanding an earlier termination of their directorship.
Section 4.03. Resignation. Any officer (or the Chairman of the Board of Directors) may resign his office at any time by delivering a written resignation to the corporation. Unless otherwise specified therein, such resignation shall take effect upon delivery.
Section 4.04. Removal and Vacancies. Any officer (or the Chairman of the Board of Directors) may be removed from his office by a majority of the Board of Directors with or without cause. Such removal, however, shall be without prejudice to the contract rights of the person so removed. If there be a vacancy among the officers (or the Chairman of the Board of Directors) of the corporation by reason of death, resignation or otherwise, such vacancy shall be filled for the unexpired term by the Board of Directors.
Section 4.05. Chairman of the Board. The Board of Directors may elect one of its members as Chairman of the Board. The Chairman of the Board, if one is elected, shall preside at all meetings of the shareholders and directors and shall have such other duties as may be prescribed, from time to time, 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 4.06. President. The President shall have general active management of the business of the corporation. In the absence of the Chairman of the Board, he shall preside at all meetings of the shareholders and directors. He shall be the chief executive officer of the corporation and shall see that all orders and resolutions of the Board of Directors are carried into effect. He shall be ex officio a member of all standing committees. He may execute and deliver, in the name of the corporation, any deeds, mortgages, bonds, contracts or other instruments pertaining to the business of the corporation and, in general, shall perform all duties usually incident to the office of the President. He shall have such other duties as may, from time to time, be prescribed by the Board of Directors.
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Section 4.07. Vice President. Each Vice President shall have such powers and shall perform such duties as may be specified in the Bylaws or prescribed by the Board of Directors or by the President. In the event of absence or disability of the President, Vice Presidents shall succeed to his power and duties in the order designated by the Board of Directors.
Section 4.08. Secretary. The Secretary shall be secretary of, and shall attend, all meetings of the shareholders and Board of Directors and shall record all proceedings of such meetings in the minute book of the corporation. He shall give proper notice of meetings of shareholders and directors. He shall keep the seal of the corporation and shall affix the same to any instrument requiring it and may, when necessary, attest the seal by his signature. He shall perform such other duties as may, from time to time, be prescribed by the Board of Directors or by the President.
Section 4.09. Treasurer. The Treasurer shall be the chief financial officer and shall keep accurate accounts of all money of the corporation received or disbursed. He shall deposit all moneys, drafts and checks in the name of, and to the credit of, the corporation in such banks and depositories as a majority of the Board of Directors shall, from time to time, designate. He shall have power to endorse, for deposit, all notes, checks and drafts received by the corporation. He shall disburse the funds of the corporation, as ordered by the Board of Directors, making proper vouchers therefor. He shall render to the President and the directors, whenever required, an account of all his transactions as Treasurer and of the financial condition of the corporation, and shall perform such other duties as may, from time to time, be prescribed by the Board of Directors or by the President.
Section 4.10. Assistant Secretaries. At the request of the Secretary, or in his absence or disability, any Assistant Secretary shall have power to perform all the duties of the Secretary, and, when so acting, shall have all the powers of, and be subject to all restrictions upon, the Secretary. The Assistant Secretaries shall perform such other duties as from time to time may be assigned to them by the Board of Directors or the President.
Section 4.11. Assistant Treasurers. At the request of the Treasurer, or in his absence or disability, any Assistant Treasurer shall have power to perform all the duties of the Treasurer, and when so acting, shall have all the powers of, and be subject to all the restrictions upon, the Treasurer. The Assistant Treasurers shall perform such other duties as from time to time may be assigned to them by the Board of Directors or the President.
Section 4.12. Compensation. The officers (and the Chairman of the Board of Directors) of this corporation shall receive such compensation for their services as may be determined, from time to time, by resolution of the Board of Directors.
Section 4.13. Surety Bonds. The Board of Directors may require any officer or agent of the corporation to execute a bond (including, without limitation, any bond required by the Investment Company Act of 1940 and the rules and regulations of the Securities and Exchange Commission) to the corporation in such sum and with such surety or sureties as the Board of Directors may determine, conditioned upon the faithful performance of his duties to the
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corporation, including responsibility for negligence and for the accounting of any of the corporation’s property, funds or securities that may come into his hands. In any such case, a new bond of like character shall be given at least every six years, so that the dates of the new bond shall not be more than six years subsequent to the date of the bond immediately preceding.
ARTICLE V.
SHARES AND THEIR TRANSFER AND REDEMPTION
Section 5.01. Certificate for Shares.
(a) The corporation may have certificated or uncertificated shares, or both, as designated by resolution of the Board of Directors. Every owner of certificated shares of the corporation shall be entitled to a certificate, to be in such form as shall be prescribed by the Board of Directors, certifying the number of shares of the corporation owned by him. Within a reasonable time after the issuance or transfer of uncertificated shares, the corporation shall send to the new shareholder the information required to be stated on certificates. Certificated shares shall be numbered in the order in which they shall be issued and shall be signed, in the name of the corporation, by the President or a Vice President and by the Secretary or an Assistant Secretary or by such officers as the Board of Directors may designate. Such signatures may be by facsimile if authorized by the Board of Directors. Every certificate surrendered to the corporation for exchange or transfer shall be cancelled, and no new certificate or certificates shall be issued in exchange for any existing certificate until such existing certificate shall have been so cancelled, except in cases provided for in Section 5.08.
(b) In case any officer, transfer agent or registrar who shall have signed any such certificate, or whose facsimile signature has been placed thereon, shall cease to be such an officer (because of death, resignation or otherwise) before such certificate is issued, such certificate may be issued and delivered by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue.
Section 5.02. Issuance of Shares. The Board of Directors is authorized to cause to be issued shares of the corporation up to the full amount authorized by the Articles of Incorporation in such classes or series and in such amounts as may be determined by the Board of Directors and as may be permitted by law. No shares shall be allotted except in consideration of cash or other property, tangible or intangible, received or to be received by the corporation under a written agreement, of services rendered or to be rendered to the corporation under a written agreement, or of an amount transferred from surplus to stated capital upon a share dividend. At the time of such allotment of shares, the Board of Directors making such allotments shall state, by resolution, their determination of the fair value to the corporation in monetary terms of any consideration other than cash for which shares are alloted. No shares of stock issued by the corporation shall be issued, sold or exchanged by or on behalf of the corporation for any amount less than the net asset value per share of the shares outstanding as determined pursuant to Article X hereunder.
Section 5.03. Redemption of Shares. Upon the demand of any shareholder, this corporation shall redeem any share of stock issued by it held and owned by such shareholder at
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the net asset value thereof as determined pursuant to Article X hereunder. The Board of Directors may suspend the right of redemption or postpone the date of payment during any period when: (a) trading on the New York Stock Exchange is restricted or such Exchange is closed for other than weekends or holidays; (b) the Securities and Exchange Commission has by order permitted such suspension; or (c) an emergency as defined by rules of the Securities and Exchange Commission exists, making disposal of portfolio securities or valuation of net assets of the corporation not reasonably practicable.
If following a redemption request by any shareholder of this corporation, the value of such shareholder’s interest in the corporation falls below the required minimum investment, as may be set from time to time by the Board of Directors, the corporation’s officers are authorized, in their discretion and on behalf of the corporation, to redeem such shareholder’s entire interest and remit such amount, provided that such a redemption will only be effected by the corporation following: (a) a redemption by a shareholder, which causes the value of such shareholder’s interest in the corporation to fall below the required minimum investment; (b) the mailing by the corporation to such shareholder of a “notice of intention to redeem”; and (c) the passage of at least sixty (60) days from the date of such mailing, during which time the shareholder will have the opportunity to make an additional investment in the corporation to increase the value of such shareholder’s account to at least the required minimum investment.
Section 5.04. Transfer of Shares. Transfer of shares on the books of the corporation may be authorized only by the shareholder named in the certificate, or the shareholder’s legal representative, or the shareholder’s duly authorized attorney-in-fact, and upon surrender of the certificate or the certificates for such shares or a duly executed assignment covering shares held in unissued form. The corporation may treat, as the absolute owner of shares of the corporation, the person or persons in whose name shares are registered on the books of the corporation.
Section 5.05. Registered Shareholders. The corporation shall be entitled to treat the holder of record of any share or shares of stock as the holder in fact thereof and accordingly shall not be bound to recognize any equitable or other claim to or interest in such share on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise expressly provided by the laws of Minnesota.
Section 5.06. Transfer of Agents and Registrars. The Board of Directors may from time to time appoint or remove transfer agents and/or registrars of transfers of shares of stock of the corporation, and it may appoint the same person as both transfer agent and registrar. Upon any such appointment being made all certificates representing shares of capital stock thereafter issued shall be countersigned by one of such transfer agents or by one of such registrars of transfers or by both and shall not be valid unless so countersigned. If the same person shall be both transfer agent and registrar, only one countersignature by such person shall be required.
Section 5.07. Transfer Regulations. The shares of stock of the corporation may be freely transferred, and the Board of Directors may from time to time adopt rules and regulations with reference to the method of transfer of shares of stock of the corporation.
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Section 5.08. Lost, Stolen, Destroyed and Mutilated Certificates. The holder of any stock of the corporation shall immediately notify the corporation of any loss, theft, destruction or mutilation of any certificate therefor, and the Board of Directors may, in its discretion, cause to be issued to him a new certificate or certificates of stock, upon the surrender of the mutilated certificate or in case of loss, theft or destruction of the certificate upon satisfactory proof of such loss, theft or destruction. A new certificate or certificates of stock will be issued to the owner of the lost, stolen or destroyed certificate only after such owner, or his legal representatives, gives to the corporation and to such registrar or transfer agent as may be authorized or required to countersign such new certificate or certificates a bond, in such sum as they may direct, and with such surety or sureties, as they may direct, as indemnity against any claim that may be made against them or any of them on account of or in connection with the alleged loss, theft or destruction of any such certificate.
ARTICLE VI.
DIVIDENDS
Section 6.01. The net investment income of each class or series of the corporation will be determined, and its dividends shall be declared and made payable at such time(s) as the Board of Directors shall determine; dividends shall be payable to shareholders of record as of the date of declaration.
It shall be the policy of each class or series of the corporation to qualify for and elect the tax treatment applicable to regulated investment companies under the Internal Revenue Code, so that such class or series will not be subjected to federal income tax on such part of its income or capital gains as it distributes to shareholders.
ARTICLE VII.
BOOKS AND RECORDS, AUDIT, FISCAL YEAR
Section 7.01. Share Register. The Board of Directors of the corporation shall cause to be kept at its principal executive office, or at another place or places within the United States determined by the board:
| (1) | a share register not more than one year old, containing the names and addresses of the shareholders and the number and classes or series of shares held by each shareholder; and |
| (2) | a record of the dates on which certificates or transaction statements representing shares were issued. |
Section 7.02. Other Books and Records. The Board of Directors shall cause to be kept at its principal executive office, or, if its principal executive office is not in Minnesota, shall make available at its registered office within ten days after receipt by an officer of the corporation of a written demand for them made by a shareholder or other person authorized by Minnesota Statutes Section 302A.461, originals or copies of:
| (1) | records of all proceedings of shareholders for the last three years; |
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| (2) | records of all proceedings of the Board of Directors for the last three years; |
| (3) | its articles and all amendments currently in effect; |
| (4) | its bylaws and all amendments currently in effect; |
| (5) | financial statements required by Minnesota Statutes Section 302A.463 and the financial statement for the most recent interim period prepared in the course of the operation of the corporation for distribution to the shareholders or to a governmental agency as a matter of public record; |
| (6) | reports made to shareholders generally within the last three years; |
| (7) | a statement of the names and usual business addresses of its directors and principal officers; |
| (8) | any shareholder voting or control agreements of which the corporation is aware; and |
| (9) | such other records and books of account as shall be necessary and appropriate to the conduct of the corporate business. |
Section 7.03. Audit; Accountant.
(a) The Board of Directors shall cause the records and books of account of the corporation to be audited at least once in each fiscal year and at such other times as it may deem necessary or appropriate.
(b) The corporation shall employ an independent public accountant or firm of independent public accountants as its Accountant to examine the accounts of the corporation and to sign and certify financial statements filed by the corporation. The Accountant’s certificates and reports shall be addressed both to the Board of Directors and to the shareholders.
(c) A majority of the members of the Board of Directors shall select the Accountant annually at a meeting held within thirty (30) days before or after the beginning of the fiscal year of the corporation or before the regular shareholders’ meeting in that year. Such selection shall be submitted for ratification or rejection at the next succeeding regular shareholders’ meeting. If such meeting shall reject such selection, the Accountant shall be selected by majority vote, either at the meeting at which the rejection occurred or at a subsequent meeting of shareholders called for the purpose.
(d) Any vacancy occurring between annual meetings, due to the death, resignation or otherwise of the Accountant, may be filled by the Board of Directors.
Section 7.04. Fiscal Year. The fiscal year of the corporation shall be determined by the Board of Directors.
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ARTICLE VIII.
INDEMNIFICATION OF CERTAIN PERSONS
Section 8.01. The corporation shall indemnify such persons, for such expenses and liabilities, in such manner, under such circumstances, and to such extent as permitted by Section 302A.521 of the Minnesota Statutes, as now enacted or hereafter amended, provided, however, that no such indemnification may be made if it would be in violation of Section 17(h) of the Investment Company Act of 1940, as now enacted or hereinafter amended.
ARTICLE IX.
VOTING OF STOCK HELD
Section 9.01. Unless otherwise provided by resolution of the Board of Directors, the President, any Vice President, the Secretary or the Treasurer, may from time to time appoint an attorney or attorneys or agent or agents of the corporation, in the name and on behalf of the corporation, to cast the votes which the corporation may be entitled to cast as a stockholder or otherwise in any other corporation or association, any of whose stock or securities may be held by the corporation, at meetings of the holders of the stock or other securities of any such other corporation or association, or to consent in writing to any action by any such other corporation or association, and may instruct the person or persons so appointed as to the manner of casting such votes or giving such consent, and may execute or cause to be executed on behalf of the corporation and under its corporate seal, or otherwise, such written proxies, consents, waivers or other instruments as it may deem necessary or proper; or any of such officers may themselves attend any meeting of the holders of stock or other securities of any such corporation or association and thereat vote or exercise any or all other rights of the corporation as the holder of such stock or other securities of such other corporation or association, or consent in writing to any action by any such other corporation or association.
ARTICLE X.
VALUATION OF NET ASSET VALUE
10.01. The net asset value per share of each class or series of stock of the corporation shall be determined in good faith by or under supervision of the officers of the corporation as authorized by the Board of Directors as often and on such days and at such time(s) as the Board of Directors shall determine, or as otherwise may be required by law, rule, regulation or order of the Securities and Exchange Commission.
ARTICLE XI.
CUSTODY OF ASSETS
Section 11.01. All securities and cash owned by this corporation shall, as hereinafter provided, be held by or deposited with a bank or trust company having (according to its last published report) not less than Two Million Dollars ($2,000,000) aggregate capital, surplus and undivided profits (the “Custodian”).
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This corporation shall enter into a written contract with the custodian regarding the powers, duties and compensation of the Custodian with respect to the cash and securities of this corporation held by the Custodian. Said contract and all amendments thereto shall be approved by the Board of Directors of this corporation. In the event of the Custodian’s resignation or termination, the corporation shall use its best efforts promptly to obtain a successor Custodian and shall require that the cash and securities owned by this corporation held by the Custodian be delivered directly to such successor Custodian.
ARTICLE XII.
AMENDMENTS
Section 12.01. These Bylaws may be amended or altered by a vote of the majority of the Board of Directors at any meeting provided that notice of such proposed amendment shall have been given in the notice given to the directors of such meeting. Such authority in the Board of Directors is subject to the power of the shareholders to change or repeal such bylaws by a majority vote of the shareholders present or represented at any regular or special meeting of shareholders called for such purpose, and the Board of Directors shall not make or alter any Bylaws fixing a quorum for meetings of shareholders, prescribing procedures for removing directors or filling vacancies in the Board of Directors, or fixing the number of directors or their classifications, qualifications or terms of office, except that the Board of Directors may adopt or amend any Bylaw to increase or decrease their number.
ARTICLE XIII.
MISCELLANEOUS
Section 13.01. Interpretation. When the context in which words are used in these Bylaws indicates that such is the intent, singular words will include the plural and vice versa, and masculine words will include the feminine and neuter genders and vice versa.
Section 13.02. Article and Section Titles. The titles of Sections and Articles in these Bylaws are for descriptive purposes only and will not control or alter the meaning of any of these Bylaws as set forth in the text.
Section 13.03. Forum for Adjudication of Disputes. Unless the corporation consents in writing to the selection of an alternative forum, the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the corporation to the corporation or the corporation’s shareholders, (iii) any action asserting a claim arising pursuant to any provision of the Minnesota Business Corporation Act or the Articles of Incorporation or these Bylaws, (iv) any action to interpret, apply, enforce or determine the validity of the Articles of Incorporation or these Bylaws or (v) any action asserting a claim governed by the internal affairs doctrine shall be the courts of the State of Minnesota (each, a “Covered Action”). Any person purchasing or otherwise acquiring or holding any interest in shares of beneficial interest of the corporation shall be (i) deemed to have notice of and consented to the provisions of this Section 13.03, and (ii) deemed to have waived any argument
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relating to the inconvenience of the forums referenced above in connection with any action or proceeding described in this Section 13.03.
If any Covered Action is filed in a court other than the courts of the State of Minnesota (a “Foreign Action”) in the name of any shareholder, such shareholder shall be deemed to have consented to (i) the personal jurisdiction of the courts of the State of Minnesota in connection with any action brought in any such courts to enforce the first paragraph of this Section 13.03 (an “Enforcement Action”) and (ii) having service of process made upon such shareholder in any such Enforcement Action by service upon such shareholder’s counsel in the Foreign Action as agent for such shareholder. Furthermore, except to the extent prohibited by any provision of the Minnesota Business Corporation Act or the Articles of Incorporation, if any shareholder shall initiate or assert a Foreign Action without the written consent of the corporation, then each such shareholder shall be obligated jointly and severally to reimburse the corporation and any officer or trustee of the corporation made a party to such proceeding for all fees, costs and expenses of every kind and description (including, but not limited to, all reasonable attorneys’ fees and other litigation expenses) that the parties may incur in connection with any successful motion to dismiss, stay or transfer such Foreign Action based upon non-compliance with this Section 13.03.
If any provision or provisions of this Section 13.03 shall be held to be invalid, illegal or unenforceable as applied to any person or circumstance for any reason whatsoever, then, to the fullest extent permitted by law, the validity, legality and enforceability of such provision(s) in any other circumstance and of the remaining provisions of this Section 13.03 (including, without limitation, each portion of any sentence of this Section 13.03 containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) and the application of such provision to other persons and circumstances shall not in any way be affected or impaired thereby.
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Exhibit (h)(4)
AMENDED AND RESTATED
TRANSFER AGENT AND SHAREHOLDER SERVICING AGREEMENT
THIS AMENDED AND RESTATED AGREEMENT (this “Agreement”) is made and entered into effective as of June 30, 2016, by and among First American Funds, Inc., a Minnesota corporation (the “Fund”), U.S. Bancorp Fund Services, LLC, a Wisconsin limited liability company ("USBFS") and U.S. Bancorp Asset Management, Inc., a Delaware corporation (“USBAM”).
WHEREAS, the Fund is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end management investment company consisting of several series of shares of common stock (“Shares”);
WHEREAS, USBFS is, among other things, in the business of administering transfer and dividend disbursing agent functions for the benefit of its customers;
WHEREAS, USBAM is, among other things, the investment adviser and administrator of the Fund;
WHEREAS, pursuant to a Transfer Agent and Shareholder Servicing Agreement dated September 19, 2006 (the “Prior Agreement”), the Fund retained USBFS to provide transfer and dividend disbursing agent services to all series of Shares of the Fund set forth on Exhibit A (as amended from time-to-time) (each a “Portfolio” and, collectively, the “Portfolios”); and
WHEREAS, the Fund, USBFS and USBAM wish to amend and restate the Prior Agreement in its entirety on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the promises and mutual covenants herein contained, and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto, intending to be legally bound, do hereby agree as follows:
Section 1 Appointment of USBFS as Transfer Agent
The Fund hereby appoints USBFS as transfer agent for Shares of the Fund on the terms and conditions set forth in this Agreement, and USBFS hereby accepts such appointment and agrees to perform the services and duties set forth in this Agreement. The Fund hereby also authorizes USBFS to contract with qualifying financial institutions for the establishment and maintenance of omnibus accounts and for the provision of customary services related to such omnibus accounts.
Section 2 Services and Duties of USBFS
USBFS shall perform all of the customary services of a transfer agent and dividend disbursing agent for the Fund and each of its Portfolios, and as relevant, of an agent in connection with accumulation, open account or similar plans (including without limitation any periodic investment plan or periodic withdrawal program), including but not limited to:
| 2.1 | Receive and process all orders for the purchase, exchange, and/or redemption of Shares in accordance with Rule 22c-1 of the 1940 Act, including the calculation and collection of any applicable sales charges. USBFS also will determine the |
| 1 |
| portion of each sales charge, if any, payable by the Fund’s principal underwriter to the dealer participating in the sale in accordance with such schedules as the Fund delivers from time to time to USBFS. | ||
| 2.2 | Process purchase orders with prompt delivery, where appropriate, of payment and supporting documentation to the Fund’s custodian, and register the appropriate number of uncertificated Shares with such uncertificated Shares being held in the appropriate Shareholder account. In the event that any check or other payment of money on the account of any Shareholder or new investor is returned or dishonored for any reason, USBFS shall stop redemptions of all Shares owned by the Shareholder or new investor related to that payment, place a stop payment on any checks that have been issued to redeem Shares of the Shareholder, cancel such Shares for which payment was returned or dishonored and take such other action as it or the Fund deems appropriate. |
| 2.3 | Arrange for issuance of Shares obtained through transfers of funds from Shareholders’ accounts at financial institutions and arrange for the exchange of Shares for shares of other eligible investment companies, when permitted by the Fund’s current prospectuses (“Prospectuses”). |
| 2.4 | Process redemption requests received in good order and, where relevant, deliver appropriate documentation to the Fund's custodian. USBFS will impose and collect any redemption fees imposed by the Fund in accordance with the terms set forth in the Prospectuses. |
| 2.5 | Pay monies upon receipt from the Fund's custodian, where relevant, in accordance with the instructions of redeeming Shareholders. USBFS will replace lost or stolen checks issued to Shareholders upon receipt of proper notification and will maintain any stop payment orders against the lost or stolen checks as it is economically desirable to do. |
| 2.6 | Register transfers of Shares in accordance with the Shareholder's instructions. |
| 2.7 | Process exchanges between Portfolios and/or classes of Shares of Portfolios and between a Portfolio and any other investment company or series thereof for which USBAM acts as investment adviser. |
| 2.8 | Prepare and transmit payments for dividends and distributions declared by the Fund with respect to each series and class of Shares, after deducting any amount required to be withheld by any applicable laws, rules and regulations and in accordance with Shareholder instructions. |
| 2.9 | Transmit daily dividend factors for each class of Shares to the registered holders of omnibus accounts, third-party administrators and other intermediaries. |
| 2.10 | Serve as agent of the Fund in connection with accumulation, open account or similar plans (e.g., periodic investment plans and periodic withdrawal plans. |
| 2.11 | Make changes to Shareholder records, including, but not limited to, address changes in plans (e.g., systematic withdrawal, automatic investment, dividend reinvestment). |
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| 2.12 | Handle load and multi-class processing, including rights of accumulation and purchases by letters of intent. |
| 2.13 | Record the issuance of Shares of the Fund and maintain, pursuant to Rule 17Ad-10(e) promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), a record of the total number of Shares of the Fund which are authorized, issued and outstanding. Provide daily and other periodic reports or data transmissions reasonably requested by the Fund regarding daily Share activity and cash received from and deposited to the Custodian on behalf of each Portfolio. |
| 2.14 | Prepare Shareholder meeting lists and, if applicable, mail, receive and tabulate proxies. |
| 2.15 | Mail Shareholder reports and Prospectuses to current Shareholders. |
| 2.16 | Prepare and file U.S. Treasury Department Forms 1099 and other appropriate information returns required with respect to dividends and distributions for Shareholders. |
| 2.17 | Provide Shareholder account information upon request, and prepare and mail confirmations and statements of account to Shareholders for purchases, redemptions and other confirmable transactions as agreed upon with the Fund. |
| 2.18 | Mail requests for Shareholders’ certifications under penalties of perjury and pay on a timely basis to the appropriate federal or state authorities any taxes to be withheld on dividends and distributions paid by the Fund, all as required by applicable federal and state tax laws and regulations. |
| 2.19 | Provide a Blue Sky system that will enable the Fund to monitor the total number of Shares of the Fund sold in each state. In addition, the Fund shall identify to USBFS in writing those classes of Shares or transactions to be treated as exempt from the Blue Sky reporting for each state. |
| 2.20 | USBFS shall (i) accept and effectuate the registration and maintenance of accounts through Networking and the purchase, redemption, transfer and exchange of Shares in such accounts through Fund/SERV (Networking and Fund/SERV being programs operated by the National Securities Clearing Corporation (“NSCC”) on behalf of NSCC’s participants, including the Fund), in accordance with instructions transmitted to and received by USBFS by transmission from the NSCC on behalf of broker-dealers and banks that have been established by, or in accordance with, the instructions of authorized persons, (ii) issue instructions to the Fund’s designated NSCC participant banks for the settlement of transactions between the Fund and NSCC (acting on behalf of its broker-dealer and bank participants), (iii) provide account and transaction information from the affected Fund’s records on USBFS’s computer system (“System”) in accordance with NSCC’s Networking and Fund/SERV rules for those broker-dealers, and (iv) maintain shareholder accounts on the System through Networking. |
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| 2.21 | USBFS shall provide services to the Fund relating to escheatments, abandoned property, garnishment orders, bankruptcy and divorce proceedings, Internal Revenue Service or state tax and authority levies and summonses and all matters relating to the foregoing. |
| 2.22 | Answer correspondence from Shareholders, securities brokers and others relating to USBFS’s duties hereunder and such other correspondence as may from time to time be mutually agreed upon between USBFS and the Fund. |
| 2.23 | Reimburse the Fund each month for all material losses resulting from “as of” processing errors for which USBFS is responsible in accordance with the “as of” processing guidelines agreed to by USBFS and USBAM. |
Section 3 Lost Shareholder Due Diligence Searches and Servicing
The Fund hereby acknowledges that USBFS has an arrangement with an outside vendor to conduct lost shareholder searches required by Rule 17Ad-17 under the Exchange Act. Costs associated with such searches will be passed through to the Fund as an out-of-pocket expense in accordance with the fee schedule set forth in Exhibit B hereto. If a shareholder remains lost and the shareholder’s account unresolved after completion of the mandatory Rule 17Ad-17 search, the Fund hereby authorizes vendor to enter, at its discretion, into fee sharing arrangements with the lost shareholder (or such lost shareholder’s representative or executor) to conduct a more in-depth search in order to locate the lost shareholder before the shareholder’s assets escheat to the applicable state. The Fund hereby acknowledges that USBFS is not a party to these arrangements and does not receive any revenue sharing or other fees relating to these arrangements. Furthermore, the Fund hereby acknowledges that vendor may receive up to 35% of the lost shareholder’s assets as compensation for its efforts in locating the lost shareholder.
Section 4 Anti-Money Laundering and Red Flag Identity Theft Prevention Programs
| 4.1 | The Fund acknowledges that it has had an opportunity to review, consider and comment upon the written procedures provided by USBFS describing various tools used by USBFS which are designed to promote the detection and reporting of potential money laundering activity and identity theft by monitoring certain aspects of shareholder activity as well as written procedures for verifying a customer’s identity (collectively, the “Procedures”). Further, the Fund and USBFS have each determined that the Procedures, as part of the Fund’s overall Anti-Money Laundering Program and Red Flag Identity Theft Prevention Program, are reasonably designed to: (i) prevent each Portfolio from being used for money laundering or the financing of terrorist activities; (ii) prevent identity theft; and (iii) achieve compliance with the applicable provisions of the Bank Secrecy Act, Fair and Accurate Credit Transactions Act of 2003 and the USA Patriot Act of 2001 and the implementing regulations thereunder. |
| 4.2 | Based on this determination, the Fund hereby instructs and directs USBFS to implement the Procedures on the Fund’s behalf, as such may be amended or revised from time to time. It is contemplated that these Procedures will be amended from time to time by the parties as additional regulations are adopted and/or regulatory guidance is provided relating to the Fund’s anti-money laundering and identity theft responsibilities. |
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| 4.3 | USBFS agrees to provide to the Fund: |
| (a) | Prompt written notification of any transaction or combination of transactions that USBFS believes, based on the Procedures, evidence money laundering or identity theft activities in connection with the Fund or any Shareholder; |
| (b) | Prompt written notification of any customer(s) that USBFS reasonably believes, based upon the Procedures, to be engaged in money laundering or identity theft activities, provided that the Fund agrees not to communicate this information to the customer; |
| (c) | Any reports received by USBFS from any government agency or applicable industry self-regulatory organization pertaining to USBFS’ Anti-Money Laundering Program or the Red Flag Identity Theft Prevention Program on behalf of the Fund; |
| (d) | Prompt written notification of any action taken in response to anti-money laundering violations or identity theft activity as described in (a), (b) or (c) immediately above; and |
| (e) | Certified annual and quarterly reports of its monitoring and customer identification activities pursuant to the Procedures on behalf of the Fund. |
| 4.4 | The Fund hereby directs, and USBFS acknowledges, that USBFS shall (i) permit federal regulators access to such information and records maintained by USBFS and relating to USBFS’ implementation of the Procedures, on behalf of the Fund, as they may request, and (ii) permit such federal regulators to inspect USBFS’ implementation of the Procedures on behalf of the Fund. |
Section 5 Representations of USBFS
USBFS represents and warrants to the Fund, which representations and warranties shall be deemed to be continuing throughout the term of this Agreement, that:
| 5.1 | It is a limited liability corporation duly organized, existing and in good standing under the laws of Wisconsin; |
| 5.2 | It is a registered transfer agent under the Exchange Act; |
| 5.3 | It is duly qualified to carry on its business in the State of Wisconsin; |
| 5.4 | It is empowered under applicable laws and by its charter and bylaws to enter into and perform this Agreement; |
| 5.5 | All requisite corporate proceedings have been taken to authorize it to enter and perform this Agreement; |
| 5.6 | It has and will continue to have access to the necessary facilities, equipment and personnel to perform its duties and obligations under this Agreement; and |
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| 5.7 | It is conducting its business in compliance in all material respects with all applicable laws and regulations, both state and federal, and has obtained all regulatory approvals necessary to carry on its business as now conducted; there is no statute, rule, regulation, order or judgment binding on it and no provision of its charter, bylaws or any contract binding it or affecting its property which would prohibit its execution or performance of this Agreement. |
| 5.8 | This Agreement has been duly authorized, executed and delivered by USBFS in accordance with all requisite action and constitutes a valid and legally binding obligation of USBFS, enforceable in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting the rights and remedies of creditors and secured parties. |
Section 6 Representations of the Fund
The Fund represents and warrants to USBFS, which representations and warranties shall be deemed to be continuing throughout the term of this Agreement, that:
| 6.1 | The Fund is an open-end investment company under the 1940 Act; |
| 6.2 | The Fund is a corporation organized, existing, and in good standing under the laws of the State of Minnesota; |
| 6.3 | The Fund is empowered under applicable laws and by its Articles of Incorporation and Bylaws to enter into and perform this Agreement; |
| 6.4 | The Fund will comply with all applicable requirements of the Securities Act of 1933, as amended, the Exchange Act, the 1940 Act, and any laws, rules and regulations of governmental authorities having jurisdiction; |
| 6.5 | The Fund is conducting its business in compliance in all material respects with all applicable laws and regulations, both state and federal, and has obtained all regulatory approvals necessary to carry on its business as now conducted; there is no statute, rule, regulation, order or judgment binding on it and no provision of its charter, bylaws or any contract binding it or affecting its property which would prohibit its execution or performance of this Agreement; |
| 6.6 | A registration statement under the 1940 Act and the Securities Act of 1933, as amended, is made effective and will remain effective, and appropriate state securities law filings have been made and will continue to be made, with respect to all Shares of the Fund being offered for sale; and |
| 6.7 | This Agreement has been duly authorized, executed and delivered by the Fund in accordance with all requisite action and constitutes a valid and legally binding obligation of the Fund, enforceable in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting the rights and remedies of creditors and secured parties. |
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Section 7 Service Standards
On a monthly basis, USBFS shall submit a written report to USBAM concerning the performance of its obligations under this Agreement, including the accuracy and timeliness of the various services provided pursuant to this Agreement (the “Service Standards Report”). The Service Standards Report shall include such measures as are agreed to by the parties from time to time. In addition, USBFS agrees to make such reports and presentations to the Board of Directors as may be reasonably requested from time to time.
Section 8 Compliance.
| 8.1 | USBFS agrees to comply with all applicable federal, state and local laws and regulations, codes, orders and government rules in the performance of its duties under this Agreement. USBFS agrees to provide the Fund with such certifications, reports and other information as the Fund may reasonably request from time to time to assist it in complying with, and monitoring for compliance with, applicable laws, rules and regulations (it being understood that such reports to be provided by USBFS to the Fund shall include the annual report of USBFS pursuant to Rule 17Ad-13 under the Exchange Act.) Specifically, USBFS shall reasonably cooperate with the Chief Compliance Officer of the Fund with respect to requests for information and other assistance regarding the obligations of the Fund and the Portfolios regarding compliance with Rule 38a-1 under the 1940 Act (“Rule 38a-l”), including providing the Fund with necessary information which may include (but is not limited to) SSAE16 reports (as applicable). |
| 8.2 | USBFS represents that: |
| (a) | it has adopted and implemented written policies and procedures reasonably designed to prevent violations of the “Federal Securities Laws” (as defined in Rule 38a-1) related to the services provided by USBFS to the Fund; |
| (b) | it will review, no less frequently than annually, the adequacy of the policies and procedures and the effectiveness of their implementation and will report to the Fund any material changes made to the policies and procedures since the date of the last report, and any material changes made to the policies and procedures recommended as a result of the annual review; and |
| (c) | it will promptly notify the Fund of any “Material Compliance Matter” (as defined in Rule 38a-1) affecting any Fund and will provide the Fund with an annual report of each Material Compliance Matter that occurred since the date of the last report. |
Section 9 Compensation
| 9.1 | The Fund shall compensate USBFS for providing the services set forth in this Agreement and for such out-of-pocket expenses as are reasonably incurred by USBFS in performing its duties hereunder in accordance with the fee schedule set forth on Exhibit B hereto (as amended from time to time), provided that USBAM agrees to pay certain of the fees and out-of-pocket expenses set forth on Exhibit B, as indicated thereon, out of its own assets. |
| 7 |
| 9.2 | The Fund and/or USBAM, as applicable, shall pay all fees and reimbursable expenses within thirty (30) calendar days following receipt of the billing notice, except for any fee or expense subject to a good faith dispute. Either the Fund or USBAM, as applicable, shall notify USBFS in writing within thirty (30) calendar days following receipt of each invoice if such party is disputing any amounts in good faith. The Fund or USBAM, as applicable, shall settle such disputed amounts within ten (10) calendar days of the day on which the parties agree to the amount to be paid. |
Section 10 Standard of Care; Indemnification; Limitation of Liability
| 10.1 | The duties of the USBFS shall be confined to those expressly set forth herein, and no implied duties are assumed by or may be asserted against USBFS hereunder. USBFS shall not be liable for any error of judgment or mistake of law or for any loss arising out of any act or omission in carrying out its duties hereunder, except a loss resulting from willful misfeasance, bad faith or negligence in the performance of its duties, or by reason of reckless disregard of its obligations and duties hereunder, except as may otherwise be provided under provisions of applicable law which cannot be waived or modified hereby. (As used in this Section 10, the term “USBFS” shall include directors, officers, employees and other corporate agents of USBFS as well as that corporation itself.) |
| 10.2 | So long as USBFS acts in good faith and with due diligence and without negligence, the Fund assumes full responsibility and shall indemnify USBFS and hold it harmless from and against any and all actions, suits and claims, whether groundless or otherwise, and from and against any and all losses, damages, costs, charges, reasonable counsel fees and disbursements, payments, expenses and liabilities (including reasonable investigation expenses) arising directly or indirectly out of USBFS’ relationship with the Fund, including USBFS’ actions taken or nonactions with respect to the performance of services hereunder. The indemnity and defense provisions set forth herein shall survive the termination of this Agreement. |
| (a) | The rights hereunder shall include the right to reasonable advances of defense expenses in the event of any pending or threatened litigation with respect to which indemnification hereunder may ultimately be merited; provided, however, that in the event that it is ultimately determined that indemnification is not warranted, any such amounts advanced hereunder shall be repaid. In order that the indemnification provision contained herein shall apply, however, it is understood that if in any case the Fund may be asked to indemnify or hold USBFS harmless, the Fund shall be fully and promptly advised of all pertinent facts concerning the situation in question, and it is further understood that USBFS will use all reasonable care to identify and notify the Fund promptly concerning any situation which presents or appears likely to present the probability of such a claim for indemnification against the Fund. |
| (b) | The Fund shall be entitled to participate at its own expense or, if it so elects, to assume the defense of any suit brought to enforce any claims subject to this indemnity provision. If the Fund elects to assume the defense of any |
| 8 |
| such claim, the defense shall be conducted by counsel chosen by the Fund and satisfactory to USBFS, whose approval shall not be unreasonably withheld. In the event that the Fund elects to assume the defense of any suit and retain counsel, USBFS shall bear the fees and expenses of any additional counsel retained by it. If the Fund does not elect to assume the defense of a suit, it will reimburse USBFS for the reasonable fees and expenses of any counsel retained by USBFS. |
| 10.3 | USBFS may apply to the Fund at any time for instructions and may consult outside counsel for the Fund or its own counsel and with accountants and other experts with respect to any matter arising in connection with USBFS’ duties, and, except for such actions or omissions constituting negligence, USBFS shall not be liable or accountable for any action taken or omitted by it in good faith and in accordance with such instruction or with the opinion of such counsel, accountants or other experts. |
Section 11 Proprietary and Confidential Information
| 11.1 | USBFS agrees on behalf of itself and its directors, officers, and employees to treat confidentially and as proprietary information of the Fund all records and other information relative to the Fund and prior, present, or potential Shareholders (and clients of said Shareholders) and not to use such records and information for any purpose other than the performance of its responsibilities and duties hereunder, except (i) after prior notification to and approval in writing by the Fund, which approval shall not be unreasonably withheld and may not be withheld where USBFS may be exposed to civil or criminal contempt proceedings for failure to comply, or (ii) when so requested by the Fund. Records and other information which have become known to the public through no wrongful act of USBFS or any of its employees, agents or representatives, and information that was already in the possession of USBFS prior to receipt thereof from the Fund or its agent, shall not be subject to this paragraph. |
| 11.2 | Further, USBFS will adhere to the privacy policies adopted by the Fund pursuant to Title V of the Gramm-Leach-Bliley Act, as may be modified from time to time (the “Act”). USBFS shall have in place and maintain physical, electronic, and procedural safeguards reasonably designed to protect the security, confidentiality and integrity of, and to prevent unauthorized access to or use of, records and information relating to the Fund or its Shareholders. Notwithstanding the foregoing, USBFS will not share any nonpublic personal information concerning any of the Shareholders with any third party unless specifically directed by the Fund or allowed under one of the exceptions noted under the Act. |
Section 12 Retail Money Market Portfolios
With respect to each Portfolio identified on Exhibit A as a retail money market fund (a “Retail Portfolio”), USBFS will follow the procedures set forth in this Section 12.
| 12.1 | Retail Portfolio Accounts Report. No later than July 30, 2016, USBFS will provide the Fund with a written report (the “Tax Free Portfolio Accounts Report”) identifying which of its accounts holding Shares of the First American Tax Free Obligations Fund (the “Tax Fee Portfolio”) are: |
| 9 |
| (a) | Omnibus accounts; |
| (b) | Other accounts beneficially owned by natural persons (as such terms are interpreted by the Securities Exchange Commission and its staff); |
| (c) | Other accounts not beneficially owned by natural persons (“Disqualified Accounts”); and |
| (d) | Other accounts for which USBFS does not have sufficient information to determine whether natural persons beneficially own the accounts. |
To assist USBFS in preparing this report, the Fund has provided USBFS with a copy of the policies and procedures reasonably designed to limit all beneficial owners of the Retail Portfolios to natural persons (“Retail Portfolio Procedures”) adopted by the Fund. USBAM will assist USBFS in (i) determining when an account may be treated as beneficially owned by natural persons in accordance with the Retail Portfolio Procedures and (ii) obtaining additional information to determine whether natural persons beneficially own the accounts identified in paragraph (d) above. If such information cannot be obtained by August 12, 2016, the account will be included in the Disqualified Accounts.
| 12.2 | Verification of Beneficial Ownership; Redemption of Disqualified Accounts. |
| (a) | USBFS will provide the Fund with the information necessary to contact each omnibus accountholder identified in the Tax Free Portfolio Accounts Report so that the Fund may determine whether such omnibus account is subject to Retail Portfolio Procedures. If the Fund cannot confirm that an omnibus account is subject to Retail Portfolio Procedures prior to August 12, 2016, it will notify USBFS that the omnibus account is to be treated as a Disqualified Account. |
| (b) | Prior to August 12, 2016, USBFS will provide the Fund with the information necessary to contact the holders of Disqualified Accounts so that the Fund may notify such Shareholders that the Tax Free Portfolio will redeem all Shares held in each Disqualified Account not later than October 14, 2016, unless earlier redeemed by the Shareholder. |
| (c) | Unless otherwise directed by the Fund, on October 14, 2016, USBFS will redeem all Shares of the Tax Free Portfolio held in any Disqualified Account and, unless otherwise directed by the Shareholder, pay the redemption proceeds in accordance with the agreement governing such Disqualified Account. |
| 12.3 | New Omnibus Accounts. After the delivery of the Tax Free Portfolio Accounts Report, USBFS will promptly notify the Fund of any application to open a new omnibus account for Shares of a Retail Portfolio and request confirmation by the Fund that the intermediary applying for the omnibus account has adopted Retail Fund Procedures before opening the account. After October 14, 2016, USBFS will register Shares of a Retail Portfolio to only those omnibus accounts that the Fund has confirmed in writing to be subject to Retail Portfolio Procedures. |
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| 12.4 | Other New Accounts. USBFS will only open new accounts (other than omnibus accounts) for Shares of Retail Portfolios in accordance with the Fund’s Retail Portfolio Procedures. After the date specified in the Retail Portfolio Procedures, USBFS will only register Shares of Retail Portfolio to accounts in accordance with the Retail Portfolio Procedures. |
| 12.5 | Recordkeeping. Any documents or other information relied upon to establish that an account is beneficially owned by a natural person shall be subject to the provision of Section 19 below. |
Section 13 Suspensions of Redemptions and Liquidity Fees
| 13.1 | The Fund will promptly notify USBFS of any determination by the Fund’s Board of Directors to suspend redemption of a Portfolio’s Shares in accordance with Rules 2a-7 or 22e-3 under the 1940 Act. Upon receipt of such notice, USBFS will use commercially reasonable efforts to cease processing redemptions of such Shares and wiring redemption proceeds. |
| 13.2 | The Fund will promptly notify USBFS of any determination by the Fund’s Board of Directors to charge a liquidity fee for redemptions of a Portfolio’s Shares in accordance with Rule 2a-7 under the 1940 Act. Such notice will specify the amount of the liquidity fee (as a percentage of the redemption proceeds) and the time as of which the liquidity fee will take effect. |
| (a) | Except as provided in paragraph (b) below, upon receipt of such notice, USBFS will calculate and collect the liquidity fee for each redemption and remit such liquidity fee to the Portfolio. When calculating a liquidity fee for redemptions from an omnibus account, USBFS shall assume that the redemptions have not been offset by the purchases of other underlying Shareholders. USBFS may remit liquidity fees by either (i) deducting the liquidity fee from redemption proceeds and returning them to the Fund’s custodian or (ii) reducing the monies requested from the Fund’s custodian to pay redemptions of the Portfolio’s Shares by the amount of the liquidity fees. |
| (b) | The Fund will notify USBFS in writing of any accounts subject to an undertaking by the intermediaries for such accounts to collect and remit liquidity fees to the Portfolio. Unless otherwise directed by the Fund, USBFS shall not deduct any liquidity fees from redemptions made by such designated accounts. Upon the request of the Fund, USBFS will provide the Fund with redemption activity and other information required to reconcile the liquidity fees remitted by such accounts to the Portfolio. |
| 13.3 | If a Portfolio suspends redemptions or imposes a liquidity fee during the course of a business day, USBFS will provide any information requested by the Fund and in USBFS’s possession to determine when the Fund was deemed to receive a redemption order. If the Fund determines, in its sole discretion, that it received a redemption order in good form prior to the effective time of the suspension or liquidity fee, USBFS will process and pay such redemption (without deducting any liquidity fee) if so directed by the Fund. If so directed by the Fund, USBFS |
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| will also rebate to the Shareholder any liquidity fee deducted from such redemption. | ||
| 13.4 | The Fund will promptly notify USBFS of any change in the amount of the liquidity fee and the time at which such change will take effect. The Fund will also notify USBFS of the termination of any suspension of redemptions or liquidity fee and of the time such termination will take effect. |
| 13.5 | For the avoidance of doubt, any claim by a Shareholder against USBFS arising from USBFS’s conduct in accordance with this Section 13 shall be subject to indemnification as provided in Section 10.2 above. |
Section 14 Agent of the Fund
Unless otherwise notified in writing by an authorized officer of the Fund, USBAM will act as the Fund’s agent for purposes of this Agreement. USBFS may deliver any notices or requests hereunder to USBAM and may follow any directions or instructions given by USBAM on behalf of the Fund or any Portfolio.
Section 15 Insurance
USBFS will not reduce or allow to lapse any of its insurance coverage from time to time in effect, including but not limited to Errors and Omissions, Fidelity Bond and Electronic Data Processing coverage, without the prior written consent of the Fund.
Section 16 Disaster Recovery Plan
| 16.1 | USBFS warrants and represents that it has reasonably designed disaster recovery plans, and that upon request of the Fund, it shall provide evidence of its disaster recovery plan. |
| 16.2 | USBFS shall continuously maintain and periodically test such reasonably designed back-up systems and disaster recovery plans, and shall report to the Fund and its Board of Directors no less than annually regarding such maintenance and testing. Upon the request of the Fund, USBFS shall provide supplemental information concerning the aspects of its disaster recovery and business continuity plan that are relevant to the services provided hereunder. Notwithstanding the foregoing or any other provision of this Agreement, USBFS shall not be responsible for any damage, loss of data, delay or any other loss whatsoever caused by events beyond its reasonable control. Events beyond the reasonable control of USBFS ("Force Majeure Events") include, without limitation, natural disasters, actions or decrees of governmental bodies, terrorist actions, communication lines failures that are not the fault of either party, flood or catastrophe, acts of God or other similar events beyond its control. |
| 16.3 | In the event of a Force Majeure Event, USBFS shall follow applicable procedures in its disaster recovery and business continuity plan and use all commercially reasonable efforts to minimize any service interruption. |
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Section 17 Term of Agreement; Amendment
| 17.1 | This Agreement shall become effective as of the date first written above and will continue in effect for a period of one year. This Agreement shall continue in effect from year to year thereafter, but only so long as such continuance is specifically approved at least annually by the Fund’s Board of Directors, including the specific approval of a majority of the directors who are not interested persons of the Fund. Subsequent to the initial one-year term, this Agreement may be terminated by the Fund or USBFS upon giving ninety (90) days’ prior written notice to the other party or such shorter period as is mutually agreed upon by the parties. Notwithstanding the foregoing, this Agreement may be terminated by either the Fund or USBFS upon a material breach of this Agreement by the other party if such breach is not cured within 15 days of notice of such material breach to the breaching party. |
| 17.2 | This Agreement may not be amended or modified in any manner except by written agreement executed by USBFS, USBAM and the Fund, and authorized or approved by the Board of Directors. Notwithstanding the foregoing, the Fund may amend this Agreement to add or remove Portfolios by delivering to USBFS a revised version of Exhibit A, which (in the absence of any written objection by USBFS) will take effect [__] calendar days after such delivery. |
Section 18 Duties in the Event of Termination
In the event that, in connection with termination, a successor to any of USBFS’s duties or responsibilities hereunder is designated by the Fund by written notice to USBFS, USBFS will promptly, upon such termination and at the expense of the Fund, transfer to such successor all relevant books, records, correspondence, and other data established or maintained by USBFS under this Agreement in a form reasonably acceptable to the Fund (if such form differs from the form in which USBFS has maintained, the Fund shall pay any expenses associated with transferring the data to such form), and will cooperate in the transfer of such duties and responsibilities, including provision for assistance from USBFS’s personnel in the establishment of books, records, and other data by such successor. If no successor is designated, such books, records, and other data will be returned to the Fund.
Section 19 Records
USBFS shall keep records relating to the services to be performed hereunder in the form and manner, and for such period, as it may deem advisable and is agreeable to the Fund, but not inconsistent with the rules and regulations of appropriate government authorities, in particular, Section 31 of the 1940 Act and the rules thereunder. USBFS agrees that all such records prepared or maintained by USBFS relating to the services to be performed by USBFS hereunder are the property of the Fund and will be preserved, maintained, and made available in accordance with such applicable sections and rules of the 1940 Act and will be promptly surrendered to the Fund on and in accordance with its request. Further, federal examiners shall have access to information and records relating to anti-money laundering activities performed by USBFS hereunder and USBFS consents to any inspection authorized by law or regulation in connection thereof.
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Section 20 Governing Law
This Agreement shall be construed in accordance with the laws of the State of Minnesota, without regard to conflicts of law principles. To the extent that the applicable laws of the State of Minnesota, or any of the provisions herein, conflict with the applicable provisions of the 1940 Act, the latter shall control, and nothing herein shall be construed in a manner inconsistent with the 1940 Act or any rule or order of the Securities and Exchange Commission thereunder.
Section 21 Data Necessary to Perform Services
The Fund or its agent shall furnish to USBFS the data necessary to perform the services described herein at such times and in such form as mutually agreed upon.
Section 22 Assignment
This Agreement may not be assigned by the Fund without the written consent of USBFS, or by USBFS without the written consent of the Fund accompanied by the authorization or approval of the Board of Directors.
Section 23 Services Not Exclusive
Nothing in this Agreement shall limit or restrict USBFS from providing services to other parties that are similar or identical to some or all of the services provided hereunder.
Section 24 Invalidity
Any provision of this Agreement which may be determined by competent authority to be prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. In such case, the parties shall in good faith modify or substitute such provision consistent with the original intent of the parties.
Section 25 Notices
Any notice required or permitted to be given by either party to the other shall be in writing and shall be deemed to have been given on the date delivered personally or by courier service, or three (3) days after sent by registered or certified mail, postage prepaid, return receipt requested, or on the date sent and confirmed received by facsimile transmission to the other party’s address set forth below: Notice to USBFS shall be sent to:
U.S. Bancorp Fund Services, LLC
615 East Michigan Street
Milwaukee, WI 53202
Attn: President
and notice to the Fund or USBAM shall be sent to:
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First American Funds
800 Nicollet Mall, 4th Fl.
Minneapolis, MN 55402
Attn: Fund Treasurer
Section 26 Merger of Agreement
This Agreement constitutes the entire agreement between the parties hereto and supersedes any prior agreement (including the Prior Agreement) with respect to the subject matter hereof whether oral or written.
Section 27 Multiple Originals
This Agreement may be executed on two or more counterparts, each of which when so executed shall be deemed to be an original, but such counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by a duly authorized officer on one or more counterparts as of the date first above written.
| First American Funds, Inc. | ||
| By: | /s/ Jill M. Stevenson | |
| Name: | Jill M. Stevenson | |
| Title: | Mutual Funds Treasurer & Head of Operations | |
| U.S. Bancorp Fund Services, LLC | ||
| By: | /s/ Michael R. McVoy | |
| Name: | Michael R. McVoy | |
| Title: | Executive Vice President | |
| U.S. Bancorp Asset Management, Inc. | ||
| By: | /s/ James D. Palmer | |
| Name: | James D. Palmer | |
| Title: | Chief Investment Officer | |
| 15 |
EXHIBIT A
Effective June 30, 2016
| Portfolio | Type of Money Market Fund |
| First American Government Obligations Fund | Government Money Market Fund |
| First American Prime Obligations Fund | Institutional Money Market Fund |
| First American Retail Prime Obligations Fund | Retail Money Market Fund |
| First American Tax Free Obligations Fund | Retail Money Market Fund |
| First American Treasury Obligations Fund | Government Money Market Fund |
| First American U.S. Treasury Money Market Fund | Government Money Market Fund |
16
EXHIBIT B
See Exhibit B attached.
17
| Exhibit B | |
|
TRANSFER AGENT & SHAREHOLDER SERVICES ANNUAL FEE SCHEDULE | |
|
Service Charges to the Fund
Shareholder Account Fee (Subject to Minimums) ¨ No-Load - $15.00 /account ¨ Load Fund - $16.00 /account ¨ Daily Accrual Fund - $21.00 /account (money market funds); $18.00/account (bond funds) ¨ Closed Accounts - $2.50 /account Annual Minimums (Existing Funds) ¨ $30,000 per no-load fund ¨ $36,000 per load or daily accrual fund ¨ $18,000 each additional class ¨ $12,500 per each B share class (Eff. 1/1/2010) New Funds/Classes Annual Minimums (Eff. 2/1/2010) ¨ $12,500 per class – Year 1 ¨ $15,000 per class – Year 2 ¨ Per Class Fee Review – Year 3
Activity Charges ¨ Telephone Calls - $1.00 /minute ¨ Voice Response Call - $.35/call ¨ E-mail Services $200 /month administration $3.00 /e-mail received ¨ Draft Check Processing - $3.00 /draft ¨ Daily Valuation Trades - $10.00 /trade ¨ Lost Shareholder Search - $5.00 /search ¨ AML New Account Service - $1.00/new domestic accounts and $2.00/new foreign account ¨ AML Annual Base fee $5,000 (Per Fund Complex) ¨ ACH/EFT Shareholder Services: $125.00 /month/fund group $0.50 /ACH item, setup, change $5.00 /correction, reversal Out-of-pocket Costs
¨ Telephone toll-free lines, call transfers, etc. ¨ Mailing, sorting and postage ¨ Stationery ¨ Programming, special reports ¨ Insurance, record retention, microfilm/fiche ¨ NSCC charges ¨ Any additional expenses, agreed to in advance by the Fund, reasonable incurred by USBFS in the performance of its duties and obligations under this Agreement.
|
Service Charges to Investors Qualified Plan Fees (Billed to Investors) ¨ $25.00 /transfer to successor trustee ¨ $25.00 /participant distribution (Excluding SWPs) ¨ $25.00 /refund of excess contribution Additional Shareholder Fees (Billed to Investors)
¨ $15.00 /outgoing wire transfer ¨ $15.00 /overnight delivery ¨ $25.00 /return check or ACH ¨ $25.00 /stop payment ¨ $ 5.00 /research request per account (Cap at $25.00/request) (For requested items of the second calendar year [or previous] to the request)
Technology Charges 1. Fund Setup - $750 /cusip 2. NSCC Service Interface – All NSCC Services ¨ Annual - $1,400 /cusip/year 3. Telecommunications and Voice Services ¨ Service Setup - $1,650 ATT transfer connect ¨ VRU Setup - $500 /fund group ¨ VRU Maintenance · $100 /cusip/month (Class A shares) · $75/cusip/month (Class B shares) · $50/cusip/month (Class C shares) ¨ $.35 /voice response call ¨ $.40 /voice recognition call 4. 12b-1 Aging - $1.50 /account/year 5. Average Cost - $.36 /account/year 6. Development/Programming - $150 /hour 7. File Transmissions – subject to requirements 8. Selects - $300 per select 9. Extraordinary services – charged as incurred ¨ Conversion of Records (if necessary) – Estimate to be provided. ¨ Custom processing, re-processing ¨ All other extraordinary services
Fees are billed monthly. |
18
|
INTERNET SERVICES ANNUAL FEE SCHEDULE (TO BE PAID BY USBAM) |
|
FAN WEB – Shareholder internet access to account information and transaction capabilities. Internet service is connected directly to the fund group’s web site through a transparent hyperlink. Shareholders can access account information, portfolio listing within a fund family, view transaction history, purchase additional shares through ACH, etc. Implementation - $15,000 per management company – includes up to 10 hours of assistance from BSAs and technical staff (additional assistance - $150/hour)
Annual Base Fee - $36,000 per year
Activity (Session) Fees: · Inquiry - $.15 per event · Account Maintenance - $.25 per event · Transaction – financial transactions, reorder statements, etc. - $.50 per event · New Account Set-up - $3.00 per event · Strong Authentication- $0.045 per month per active* FAN Web ID.
*Defined as any ID that has had activity within the 180-day period prior to the billing cycle. |
|
VISION MUTUAL FUND GATEWAY – Permits broker/dealers, financial planners, and RIAs to us a web-based system to perform order and account inquiry, execute trades, print applications, review prospectuses, and establish new accounts. Inquiry Only · Inquiry - $.05 per event · Per broker ID - $5.00 per month per ID Transaction Processing · Implementation - $5,000 per management company · Transaction – purchase, redeem, exchange, literature order - $.50 per event · New Account Set-up – may contain multiple fund/accounts - $3.00 per event · Monthly Minimum Charge - $500.00 per month
|
|
FAN MAIL – Financial planner mailbox provides transaction, account and price information to financial planners and small broker/dealers for import into a variety of financial planning software packages.
Base Fee Per Management Company – file generation and delivery - $6,000 per year Per Record Charge · Rep/Branch/ID - $.018 · Dealer - $.012 · Price Files - $.002 or $1.75/user/month, whichever is less
|
|
IMAGE AND/OR COLD ON-LINE ACCESS – On-line internet access to U.S. Bancorp shareholder document images, statements and tax advices (COLD)
Setup -- $1,500 initial setup per concurrent connection (up to 5 workstations each) Service -- $325/month/concurrent connection
|
19
Exhibit (i)
July 18, 2016
First American Funds, Inc.
800 Nicollet Mall
Minneapolis, Minnesota 55402
Ladies and Gentlemen:
We have acted as counsel to First American Funds, Inc., a Minnesota corporation (the “Company”), in rendering the opinion hereinafter set forth with respect to the authorization of the following series and classes of the Company’s common shares, par value $0.01 per share, which are also known by the names set forth opposite their respective series and class designations:
| Series and Class | Name | Number of Shares |
| Series J, Class One | Retail Prime Obligations Fund, Class A | 20,000,000,000 |
| Series J, Class Two | Retail Prime Obligations Fund, Class T | 20,000,000,000 |
| Series J, Class Three | Retail Prime Obligations Fund, Class V | 20,000,000,000 |
| Series J, Class Four | Retail Prime Obligations Fund, Class X | 20,000,000,000 |
| Series J, Class Five | Retail Prime Obligations Fund, Class Y | 20,000,000,000 |
| Series J, Class Six | Retail Prime Obligations Fund, Class Z | 20,000,000,000 |
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 (File No. 2-74747) 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 articles of incorporation as in effect at the respective dates of issuance; and that the Company will maintain its corporate existence and
First American Funds
July 18, 2016
good standing under the laws of the State of Minnesota 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 Minnesota. We hereby consent to the filing of this opinion letter as an exhibit to the Registration Statement.
Very truly yours,
/s/ Dorsey & Whitney LLP
JVH/CFS
Exhibit (j)
Consent of Independent Registered Public Accounting Firm
We consent to the reference to our firm under the caption “Independent
Registered Public Accounting Firm” in the Statement of Additional Information in the Registration Statement (Form N-1A) of
First American Funds, Inc. filed with the Securities and Exchange Commission in this Post-Effective Amendment No. 84 under the
Securities Act of 1933 (Registration No. 002-74747).
| /s/ Ernst & Young LLP |
Chicago, Illinois
July 18, 2016
Exhibit (n)
FIRST AMERICAN FUNDS, INC.
Amended and Restated Multiple Class Plan Pursuant to Rule 18f-3
Effective July 15, 2016
| I. | Preamble. |
Each of the funds listed below (each a “Fund,” and collectively the “Funds”), each a portfolio of First American 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:
| Government Obligations Fund | Treasury Obligations Fund | |
| Prime Obligations Fund | U.S. Treasury Money Market Fund | |
| Tax Free Obligations Fund | Retail Prime Obligations 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.
| II. | Attributes of Share Classes. |
The attributes of each existing class of the existing Funds (i.e. Class A, Class D, Class I, Class T, Class V, Class X, Class Y, and Class Z shares, Institutional Investor shares and Reserve shares), with respect to distribution arrangements, shareholder services, transfer agency services, recordkeeping services, and conversion and exchange options shall be as set forth in the following materials:
| A. | Prospectuses of the various share classes 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. |
| B. | Statement of Additional Information of the Funds in the form most recently filed with the SEC prior to the date of this Plan as amended. |
| C. | First American Funds, Inc. Amended and Restated Distribution and Service Plan effective September 19, 2006. |
| D. | First American Funds, Inc. Amended Shareholder Service Plan and Agreement effective July 1, 2005, as amended effective February 22, 2006. |
| E. | Administration Agreement with FAF Advisors, Inc. dated July 1, 2006, as amended Schedule A effective July 1, 2011. |
| F. | Amended and Restated Transfer Agent and Shareholder Servicing Agreement with U.S. Bancorp Fund Services, LLC and U.S. Bancorp Asset Management, Inc. dated June 30, 2016. |
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.
| III. | Expense Allocations. |
Expenses of the existing classes of the existing Funds shall be allocated as follows:
| A. | Distribution fees, service fees, administration fees, transfer agency fees and recordkeeping 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 Fund-wide 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 Procedures 96-47 and 99-40 (Internal Revenue Code, Section 562) of the Internal Revenue Service.
| IV. | Amendment of Plan; Periodic Review. |
| 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. |
2
Exhibit (p)(1)
Code of Ethics - Fund
First American Funds and Mount Vernon Funds
Effective Date: 7/5/2016
Regulatory Highlights
This Code of Ethics (the “Code”) has been adopted by the Board of Directors of the Mount Vernon Securities Lending Trust and First American Funds, Inc. (the “Funds”) pursuant to Rule 17j-1 under the Investment Company Act of 1940 (the “1940 Act”) and Section 406 of the Sarbanes-Oxley Act as implemented by Sub-Item 102P3 of Form N-SAR. Part One of this Code addresses the topics contemplated by Rule 17j-1. Part Two of this Code addresses the topics contemplated by Section 406 and Sub-Item 102P3. The Board of Directors may, by Board resolution, make this Code applicable to additional Funds, which are formed in the future.
This Code is an expression of our commitment to an ethical work place and is an integral element of the control environment required under federal law. If you know of (i) any violation of the Code; (ii) any issue that you believe should be reviewed by Compliance to determine whether it meets the statutory definition of a Material Compliance Matter;(i.e., a matter about which the management of U.S. Bancorp Asset Management or the Funds’ Board of Directors would reasonably need to know to oversee compliance) or (iii) any violation of the federal securities laws, you must promptly report it to Funds’ Chief Compliance Officer. It is a violation of the Code to retaliate against or harass, in any manner, any person who reports any violation or suspected violation of the Code.
Part One
Rule 17j-1 under the 1940 Act requires that registered investment companies adopt a written Code of Ethics containing provisions reasonably necessary to prevent Access Persons from engaging in certain activities prohibited by Rule 17j-1, and to use reasonable diligence and implement procedures reasonably necessary to prevent violations of such Code of Ethics.
The purpose of Part One of this Code is to establish policies consistent with Rule 17j-1 and with the following general principles:
| · | Access Persons have the duty at all times to place the interests of clients and shareholders ahead of their own personal interests in any decision relating to their personal investments. |
| · | All Personal Securities Transactions shall be conducted consistent with Part One of this Code and in such manner as to avoid any actual, potential or appearance of a conflict of interest, or any abuse of an individual’s position of trust and responsibility. |
| · | Access Persons shall not take inappropriate advantage of their position and must avoid any situation that might compromise, or call into question, |
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| their exercise of fully independent judgment in the interest of shareholders. |
A. Definitions
| 1. | “Access Person” means any director or officer of the Funds. An employee of the Funds” investment adviser is not an Access Person under Part One of this Code. |
| 2. | “Beneficial Ownership” of a Security is to be determined in the same manner as it is for purposes of Rule 16a-1(a)(2) under the Securities Exchange Act of 1934 (the “1934 Act”). This means that a person should generally consider themselves the “Beneficial Owner” of any Security in which they have a direct or indirect financial interest. In addition, persons should consider themselves the “Beneficial Owner” of any Security held by their spouse, registered domestic partner, minor children, relatives who share their home, or other persons by reason of any contract, arrangement, understanding, or relationship that provides them with sole or shared voting or investment power with respect to such Security. Although the following list is not exhaustive, under the 1934 Act and Part One of this Code, a person generally would be regarded to be the “Beneficial Owner” of the following Securities: |
| · | Securities held in the person’s own name; |
| · | Securities held with another in joint tenancy, community property, or other joint ownership; |
| · | Securities held by a bank or broker as nominee or custodian on such person’s behalf or pledged as collateral for a loan; |
| · | Securities held by members of the person’s immediate family sharing the same household (“immediate family” means any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, registered domestic partner, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law, including adoptive relationships); |
| · | Securities held by a relative not residing in the person’s home if the person is a custodian, guardian or otherwise has or shares control over the purchase, sale, or voting of such Securities; |
| · | Securities held by a trust in which the person is a beneficiary and has or shares the power to make purchase or sale decisions; |
| · | Securities held by a trust for which the person serves as a trustee and in which the person has a pecuniary interest (including pecuniary interests by virtue of performance fees and by virtue of holdings by the person’s immediate family); |
| · | Securities held by a general partnership or limited partnership in which the person is a general partner; |
| · | Securities owned by a corporation in which the person has a control position or in which the person has or shares investment control over the portfolio Securities (other than a registered investment company); |
| · | Securities in a portfolio giving the person certain performance-related fees; and |
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| · | Securities held by another person or entity pursuant to any agreement, understanding, relationship or other arrangement giving the person any direct or indirect pecuniary interest. |
| 3. | “Disinterested Director” means a director of the Funds who is not an “interested person” of the Funds within the meaning of Section 2(a)(19) of the 1940 Act. |
| 4. | “U.S. Bancorp Asset Management Compliance” means the department within U.S. Bancorp Asset Management responsible for monitoring compliance with the requirements of Part One of this Code. |
| 5. | “Insider Trading” means the use of Material Non-Public Information to trade in a Security (whether or not one is an Access Person) or the communication of Material Non-Public Information to others. Insider Trading generally includes: |
a. Trading in a Security by an Access Person, while in possession of Material Non-Public Information;
b. Trading in a Security by a person who is not an Access Person, while in possession of Material Non-Public Information, where the information either was disclosed to such person in violation of an Access Person’s duty to keep it confidential or was misappropriated; and
c. Communicating Material Non-Public Information to any person, who then trades in a Security while in possession of such information.
| 6. | “Material Non-Public Information” means information that has not been effectively communicated to the marketplace, and for which there is a substantial likelihood that a reasonable investor would consider it important in making investment decisions, or information that is reasonably certain to have a substantial effect on the price of a company’s Securities. Examples of Material Non-Public Information include information regarding dividend changes, earnings estimates, changes in previously released earnings estimates, significant merger or acquisition proposals or agreements, major litigation, liquidation problems, and extraordinary management developments. Material non-public information about the Funds’ holdings, the Funds’ transactions, and the securities recommendations of the Funds’ investment advisers is also included in this definition. Access Persons (including Disinterested Directors) are reminded that they have a duty to keep such information confidential. |
| 7. | “Security” shall have the same meaning as it has in Section 2(a)(36) of the 1940 Act, but excluding direct obligations of the United States Government, bankers’ acceptances, bank certificates of deposit, commercial paper and high quality short-term debt instruments, including repurchase agreements, and shares of registered open-end investment companies. |
| 8. | “1940 Act” means the Investment Company Act of 1940, as amended. |
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B. Prohibited Securities Transactions
| 1. | No Access Person shall, in connection with the purchase or sale, directly or indirectly, by such person of a Security held or to be acquired by any Fund: |
| a. | Employ any device, scheme or artifice to defraud the Fund; |
| b. | Make any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they are made, not misleading; |
| c. | Engage in any act, practice or course of business which operates or would operate as a fraud or deceit upon any Fund; or |
| d. | Engage in any manipulative practice with respect to any Fund. |
| 2. | No Access Person shall purchase or sell, directly or indirectly, any Security in which he or she has or thereby acquires any Beneficial Ownership where such purchase or sale constitutes Insider Trading, or take any other action that constitutes or may result in Insider Trading. |
| 3. | No Access Person shall purchase or sell, directly or indirectly, any Security in which he or she has or thereby acquires any Beneficial Ownership and which to his or her actual knowledge at the time of such purchase or sale such Security is being purchased or sold by any Fund, or has been recommended to be purchased or sold by any Fund. |
| 4. | Paragraphs 2 and 3 of this section shall not apply to the following: |
| a. | Transactions for any account over which the Access Person has no direct or indirect influence or control; |
| b. | Involuntary transactions by the Access Person or any Fund; |
| c. | Purchases under an automatic dividend reinvestment plan; or |
| d. | Purchases affected by the exercise of rights, issued by an issuer pro-rata to all holders of a class of its securities, to the extent such rights were acquired from such issuer. |
C. Reports
| 1. | Access Persons. Each Access Person (except Disinterested Directors, whose entire reporting requirements are set forth in subsection B below) shall make the following reports required by Rule 17j-1(d) under the 1940 Act: |
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| a. | Initial and Annual Securities Holdings Reports. Within 10 calendar days of becoming an Access Person, and annually thereafter as required by the Adviser, Access Persons shall disclose all personal Securities holdings other than the exempt securities set forth in Section A.7. Compliance with this reporting requirement will be satisfied by providing monthly statements of brokerage accounts provided the statements are current within 30 days. Reports for Securities not included in such brokerage statements (for example, Securities held in trust accounts in which an Access Person has Beneficial Ownership) must contain: |
| 1) | the title, number of shares, and principal amount of each Security in which the Access Person has any Beneficial Ownership; |
| 2) | the name of any broker, dealer, or bank with whom the Access Person maintains an account in which any Securities are held for the direct or indirect benefit of the Access Person; and |
| 3) | the date the report is submitted by the Access Person. |
| b. | Quarterly Transaction Reports. Within 30 calendar days of the end of each quarter, Access Persons shall report all Securities transactions other than the exempt Securities set forth in the definition of “Security” above in which each has, or by reason of such transactions acquires, any Beneficial Ownership. In the event that no reportable transactions occurred during the quarter, Access Persons should note this on the report. Compliance with this reporting requirement will be satisfied by providing brokerage account statements current as of quarter end. Reports for Securities not included in such brokerage statements (for example, Securities held in trust accounts in which an Access Person has Beneficial Ownership) must contain: |
| 1) | the date of each transaction, the title, the interest rate and maturity (if applicable), the number of shares and the principal amount of each Security; |
| 2) | the nature of each transaction (i.e., purchase, sale, or any type of acquisition or disposition); |
| 3) | the price of the Security at which each transaction was effected; |
| 4) | the name of the broker, dealer or bank with or through which each transaction was effected; |
| 5) | the name of any broker, dealer, or bank with whom the Access Person established an account in which any Securities are held for the direct or indirect benefit of the Access Person and the date on which the account was established; and |
| 6) | the date the report is submitted by the Access Person. |
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| 2. | Disinterested Directors. A Disinterested Director need not file Initial or Annual Securities Holdings Reports, and need only file Quarterly Transaction Reports. In the Quarterly Transaction Reports a Disinterested Director shall only report transactions in a Security if such Disinterested Director knows at the time of such transaction or, in the ordinary course of fulfilling his or her official duties as director, should have known during the 15 day period immediately preceding or after the date of the transaction, that such Security was or would be purchased or sold by any Fund or was or would be considered for purchase or sale by any Fund or its investment adviser. The “should have known” standard implies no duty of inquiry, does not presume there should have been any deduction or extrapolation from discussions or memoranda dealing with tactics to be employed meeting the Funds’ investment objectives, or that any knowledge is to be imputed because of prior knowledge of the Funds’ portfolio holdings, market considerations, or the Funds’ investment policies, objectives and restrictions. |
D. Enforcement
U.S. Bancorp Asset Management Compliance shall review reports filed under Part One of this Code to determine whether any violation may have occurred. Access Persons who discover a violation or apparent violation of Part One of this Code by any other person covered by Part One of this Code shall bring the matter to the attention of U.S. Bancorp Asset Management Compliance.
Each violation of or issue arising under Part One of this Code shall be reported to the Board of Directors of the Funds at or before the next regular meeting of the Board.
The Board of Directors of the Funds may impose such sanctions or penalties upon a violator of Part One of this Code as it deems appropriate under the circumstances.
E. Recordkeeping
U.S. Bancorp Asset Management Compliance shall maintain the appropriate records and reports related to Part One of this Code as required by Rule 17j-1(d) under the 1940 Act.
F. Whistleblower Provision
Any officer, director, employee or agent of the Funds or any of their service providers who receives a complaint regarding accounting, internal account controls, and auditing matters with respect to any of the Funds, or any other matter that could reasonably be expected to affect or lead to special disclosure in the financial statement of any Fund promptly shall forward the complaint to the Chair of the Audit Committee, outside counsel (or, if the complaint is given verbally, promptly shall advise the Audit Committee Chair and such outside counsel). Any such complaint shall be reported by the Chair of the Audit Committee to the Chair of the Board. If complaints are received by any officer, director, employee or agent of the Funds or any Funds’
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service providers which allege wrongdoing affecting any Fund in areas other than those noted above, those complaints shall be forwarded to the Chair of the Board.
Part Two
A. Covered Officers; Purpose of Part Two; Definitions
1. Covered Officers. The persons who are subject to Part Two of this Code (the “Covered Officers”) are the Funds’ principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the Funds or by a third party. At the date set forth in the caption of this Code, the only Covered Officers of the Funds were the Funds’ President ,Treasurer and Assistant Treasurer.
Part Two of this Code also applies to members of each Covered Officer’s immediate family who live in the same household as the Covered Officer. Therefore, for purposes of interpretation, each obligation, requirement or prohibition that applies to a Covered Officer also applies to such immediate family members. For this purpose, the term “immediate family” has the meaning set forth in Section 1B(4) of Part One of this Code.
2. Purpose. The purpose of Part Two of this Code is to deter wrongdoing and to promote:
a. Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
b. Full, fair, accurate, timely and understandable disclosure in reports and documents that a registrant files with, or submits to, the SEC and in other public communications made by the Funds;
c. Compliance with applicable laws and governmental rules and regulations;
d. The prompt internal reporting of violations of Part Two of this Code to U.S. Bancorp Asset Management Compliance; and
e. Accountability for adherence to Part Two of this Code.
3. Defined Terms. Capitalized terms which are used in Part Two of this Code and which are not otherwise defined in Part Two have the meanings assigned to them in Part One of this Code.
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B. Covered Officers Should Handle Actual and Apparent Conflicts of Interest Ethically
1. General. A “conflict of interest” occurs when a Covered Officer’s private interest interferes with the interests of, or his or her service to, the Funds. For example, a conflict of interest would arise if a Covered Officer, or a member of his or her immediate family living in the same household, received improper personal benefits as a result of his or her position with the Funds.
Certain conflicts of interest to which Covered Officers may be subject arise out of the relationships between Covered Officers and the Funds and already are subject to conflict of interest provisions in the 1940 Act and the Investment Advisers Act of 1940 (the “Investment Advisers Act”). For example, under the 1940 Act, Covered Officers may not individually engage in certain transactions (such as the purchase or sale of securities or other property) with the Funds because of their status as “affiliated persons” of the Funds. The Funds and U.S. Bancorp Asset Management’s compliance policies and procedures are designed to prevent, or identify and correct, violations of these provisions. Part Two of this Code does not, and is not intended to, repeat or replace these policies and procedures, and such conflicts fall outside of the parameters of Part Two.
Although typically not presenting an opportunity for improper personal benefit, conflicts also may arise from, or as a result of, the contractual relationships between the Funds and other entities of which the Covered Officers are also officers or employees, such as U.S. Bancorp Asset Management. As a result, Part Two of this Code recognizes that the Covered Officers may, in the normal course of their duties for the Funds and such other entities, be involved in establishing policies and implementing decisions, which will have different effects on the Funds and such other entities. The participation of the Covered Officers in such activities is inherent in the contractual relationship between the Funds and such other entities and is consistent with the performance by the Covered Officers of their duties as officers of the Funds. Thus, if performed in conformity with the provisions of the 1940 Act and, to the extent applicable, the Investment Advisers Act, such activities will be deemed to have been handled ethically. In addition, it is recognized by the Funds’ Board of Directors that the Covered Officers may also be officers or employees of one or more other investment companies covered by this or other Codes.
Other conflicts of interest to which Covered Officers are subject are covered by Part Two of this Code, even if such conflicts of interest are not subject to provisions in the 1940 Act and the Investment Advisers Act. The following list provides examples of conflicts of interest under Part Two of this Code, but Covered Officers should keep in mind that these examples are not exhaustive. The overarching principle is that the personal interest of a Covered Officer should not be placed before the interest of the Funds.
Each Covered Officer must:
a. Not use his or her personal influence or personal relationships improperly to influence investment decisions or financial reporting by the Funds whereby the Covered Officer would benefit personally;
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b. Not cause the Funds to take action, or fail to take action, for the individual personal benefit of the Covered Officer rather than the benefit of the Funds; and
c. Not intentionally or recklessly take or direct any action or failure to act that results in any SEC filing or other public communication by the Funds being materially misleading, while personally benefiting such Covered Officer.
2. Gifts and Entertainment. A Covered Officer must not solicit, allow himself or herself to be solicited, or accept gifts, entertainment, or other gratuities intended to or appearing to influence decisions or favors toward the Funds’ business to or from any client, potential client, Fund vendor or potential vendor. A Covered Officer may not give or accept gifts with a value exceeding $100, even if the gift does not oblige or influence the Covered Officer, or is not intended to influence another. Notwithstanding this, a Covered Officer may accept or provide reasonable business meals and entertainment if the client, potential client, Fund vendor or potential vendor is physically present at the business meal or entertainment. In the event that any such business meal or entertainment has a value exceeding $200 per person, the Covered Officer must promptly report the meal or entertainment to U.S. Bancorp Asset Management Compliance, which shall maintain a record of such meals and entertainment and shall report such matter to the Board of Directors of the Funds at or before the next regular meeting of the Board.
C. Disclosure and Compliance
1. Familiarity with Disclosure Requirements. Each Covered Officer shall familiarize himself or herself with the disclosure requirements generally applicable to the Funds.
2. Avoiding Misrepresentations. Each Covered Officer shall not knowingly misrepresent, or knowingly cause others to misrepresent, facts about the Funds to others, whether within or outside the Funds, including to the Funds’ directors, auditors or counsel, or to governmental regulators or self-regulatory organizations.
3. Promoting Accurate Disclosure. Each Covered Officer shall, to the extent appropriate within his or her area of responsibility, consult with other officers and employees of the Funds and their service providers with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents the Funds file with, or submit to, the SEC and in other public communications made by the Funds.
4. Promoting Compliance. Each Covered Officer shall, to the extent appropriate within his or her area of responsibility, promote compliance with the Funds’ compliance policies and procedures adopted pursuant to Rule 38a-1 under the 1940 Act and with the laws, rules and regulations applicable to the Funds.
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D. Reporting; Amendment and Waivers
1. Acknowledgement of Part Two. Upon first becoming subject to Part Two of this Code and annually at the end of each calendar year, each Covered Officer shall affirm in writing to U.S. Bancorp Asset Management Compliance that he or she has received, read and understands Part Two of this Code.
2. Reporting of Violations. Each Covered Officer shall report any violation of Part Two of this Code of which he or she becomes aware (whether committed by himself or herself or by another Covered Officer) to U.S. Bancorp Asset Management Compliance promptly after becoming aware of such violation. U.S. Bancorp Asset Management Compliance shall report any material violation of Part Two of this Code of which it becomes aware, whether though a report by a Covered Officer or otherwise, to the Board of Directors of the Funds at or before the next regular meeting of the Board, together with U.S. Bancorp Asset Management Compliance recommendation for the action, if any, to be taken with respect to such violation. The Board of Directors of the Funds may impose such sanctions or penalties upon a violator of Part Two of this Code as it deems appropriate under the circumstances.
3. Amendments and Waivers. Amendments to, and waivers of the provisions of, Part Two of this Code may be adopted or granted by the Funds’ Board of Directors. Such amendments and waivers shall be disclosed to the public in one of the manners specified in Sub-Item 102P3 of Form N-SAR.
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Exhibit (p)(2)
Code of Ethics - Advisor
U.S. Bancorp Asset Management, Inc.
First American Funds and Mount Vernon Funds
Effective: 7/6/2016
INTRODUCTION
Why Do We Need the Code of Ethics?
As an investment adviser, client and fund shareholder trust is our most valuable asset. Our success largely depends on the degree of trust our clients and fund investors bestow upon us. All of us at U.S. Bancorp Asset Management (“USBAM”) are responsible for maintaining that trust, and must conduct ourselves in the very highest ethical standards. We must always place the interests of clients and fund shareholders ahead of our own and avoid actual and apparent conflicts of interest. Under Rule 204A-1 of the Investment Advisers Act of 1940, USBAM is required to establish a Code of Ethics outlining standards of conduct and compliance with federal securities laws. However, it is not enough for us to simply comply with the letter of the law. We must observe exemplary standards of honesty and integrity above and beyond the minimal legal requirements. To that end, we have adopted this Code of Ethics to help guide our conduct when the interests of our clients may not be aligned with our individual interests or the interests of USBAM. In particular, this Code deals with:
| · | Our commitment to honest and ethical conduct; |
| · | Individual accountability; |
| · | Personal securities transactions; |
| · | Trading on inside or confidential information; |
| · | Safeguarding client and fund confidential information; |
| · | Giving and receiving gifts; |
| · | Outside professional opportunities; and |
| · | Adherence to the laws, rules, and regulations that govern our business. |
This Code does not attempt to identify all possible conflicts of interest, and literal compliance with each of its specific provisions will not shield you from liability for personal trading or other conduct that violates a fiduciary duty to clients and shareholders. Violations of this Code and federal securities laws may result in sanctions, fines, suspension and/or termination of employment, SEC administrative actions, and in some cases civil or criminal penalties.
This Code is an expression of our commitment to an ethical work place and is an integral element of the control environment required under federal law. If you know of (1) any violation of the Code; (2) any issue that you believe should be reviewed by Compliance to determine whether it meets the statutory definition of a Material Compliance Matter (a matter about which
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USBAM’s management or the First American Funds’ Board of Directors would reasonably need to know to oversee compliance); or (3) any violation of the federal securities laws, you must promptly report it to USBAM’s Chief Compliance Officer, or designee. It is a violation of the Code to retaliate against or harass, in any manner, any person who reports any violation or suspected violation of the Code. In addition to this Code, you are subject to U.S. Bank’s Code of Ethics and may be subject to the Code of Ethics Conduct adopted by the First American Funds (the “Funds”). Copies of these Codes may be obtained from the Compliance Department. While these codes of conduct are designed to address differing business environments and legal obligations, they are all designed to promote honest and ethical conduct. If you believe that these or other codes of conduct impose conflicting obligations on you, you should contact the Compliance Department immediately.
The Code applies to all USBAM Access Persons, and you must certify quarterly that you have received a copy of the Code, that you have been in compliance, and that you will continue to comply with its terms (Exhibit 1).
NOTE: With the exception of the Gifts & Entertainment section, this Code applies to temporary or contract workers and consultants whose assignments exceed four weeks or whose cumulative assignments exceed eight weeks over a twelve-month period.
This Code is divided into five sections:
| 1. | Personal transactions in securities and related financial instruments by Access Persons; |
| 2. | Access to and the use of confidential and non-public information when trading for client or personal accounts; |
| 3. | Safeguarding client and fund confidential information; |
| 4. | Other types of conduct that may impact or appear to impact our objectivity in dealing with our clients, suppliers, and business partners; and |
| 5. | Sanctions for violation of the Code. |
If you have any questions about USBAM’s policies on personal securities transactions, insider trading, conflicts of interest or any other aspect of the Code, please refer to the Contact List (Exhibit 2).
PERSONAL SECURITIES TRANSACTIONS
Buying and selling Securities for accounts in which you have a Beneficial Interest may conflict (or appear to conflict) with the interests of our clients for many reasons, including buying or selling a Security close in time to a client transaction, or buying or selling a Security for yourself instead of our clients. Typically, you have a Beneficial Interest in accounts maintained in your own name, joint accounts and accounts of your spouse or registered domestic partner, dependents, and other immediate family members sharing the same household. If you have any doubt about the status of an account, please contact the Compliance Department. This section of the Code establishes rules for minimizing and managing these conflicts.
In the sections that follow, we will explain whether you (including your immediate family and possible others who are closely connected to you, see “Beneficial Interest”) are covered by these
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personal transaction rules and describe the types of accounts, Securities, and transactions that are subject to these rules. Securities include exchange- and OTC-traded instruments, as well as financial futures, derivatives and other related instruments. See the Glossary for a full definition.
If you are covered by these rules and are involved in a covered transaction you must take the following steps:
| 1. | Quarterly, you must disclose to USBAM each account (other than bank checking or other deposit account) that you maintain for holding, buying or selling Securities and related financial instruments. |
| 2. | Annually, you must disclose to USBAM all of your personal holdings in Securities and related financial instruments. |
| 3. | Quarterly, you must disclose to USBAM all of your transactions in Securities and related financial instruments. |
| 4. | Before buying or selling any covered Security, you may be required to pre-clear that purchase or sale. |
| 5. | Following each purchase or sale of a Security, your broker-dealer (or other agent) must send to USBAM a duplicate confirmation of the terms of the transaction. |
There are certain times when you may not buy or sell for your own account, and there are certain types of transactions that you may not enter into. Detailed information on these restrictions is provided below.
In addition, to streamline our monitoring process, USBAM requires you (and accounts in which you hold securities) to effect transactions through accounts maintained at:
| · | E*Trade; |
| · | Fidelity Investments; |
| · | Merrill Lynch; |
| · | UBS Financial Services; |
| · | Schwab; |
| · | TD Ameritrade; |
| · | U.S. Bancorp Investments; |
| · | U.S. Bancorp Private Client Group; or |
| · | Morgan Stanley Smith Barney for the holding of granted USB Stock and Stock Options. |
An exception to this requirement may only be granted under very limited circumstances, must be specifically authorized by the Compliance Department, a signed copy of the exception must be kept in your file, and you must submit reports of personal transactions. Dividend Reinvestment Plan (“DRIP”) and previous employer-sponsored plans for you or your spouse holding company stock funds may be held at non-approved brokers. Reporting and pre-clearance requirements still apply to these accounts.
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As an USBAM Access Person, your ability to conduct personal securities transactions is a privilege, not a right. At USBAM we must put our Funds’ and clients’ interests first. Please note that there may be times when you are unable to pre-clear or effect transactions because the system is unavailable (or for any other reason).
A. Who Is Covered by this Section?
The potential for a conflict of interest arises if you have access to non-public information about our clients’ or Funds’ transactions or holdings or about securities research and recommendations. This Code refers to employees with access to this kind of information as Access Persons. Access Persons generally include any employees who are in a position to exploit information about client securities transactions or holdings. Access Persons typically include trading and portfolio management assistants, sales and marketing, product, operations and IT employees. All USBAM employees are deemed Access Persons, with certain employees being classified as Restricted Access Persons. Restricted Access Persons include research analysts, traders, portfolio/fund managers, executive management, members of the Legal and Compliance Departments, and their executive or departmental assistants. If you are actually involved in making investment recommendations to our clients, participate in the determination of which investment recommendations will be made, have the power to influence management of the Funds, execute trades for any Fund or client accounts , this Code refers to you as a Restricted Access Person. Restricted Access Persons are subject to all the requirements imposed on Access Persons. Restricted Access Persons are also subject to certain other requirements. Each employee will be advised with respect to their status as an Access Person or Restricted Access Person.
B. Which Securities and Accounts Are Covered?
This Code applies to Securities and accounts in which you have Beneficial Interest. Generally, you have a Beneficial Interest in any Security or account in which you have a financial interest or have or share investment discretion. There may be accounts in which you have a financial interest but do not have investment discretion. Because these accounts involve lower risks of a conflict with our clients, USBAM may exempt them from the pre-clearance or reporting obligations of the Code. These Accounts may include trust accounts and accounts over which you have given investment discretion to a third party. If you believe an exemption should apply to an Account in which you have an interest, please contact the Compliance Department. Exceptions will be granted under very limited circumstances, must be specifically authorized by the Compliance Department, a signed copy of the exception must be kept in your file, and you must submit reports of personal transactions.
Access Persons must pre-clear transactions in Securities, with the Compliance Department:
| 1. | Publicly traded Securities (including options and futures on Securities); |
| 2. | Privately placed Securities (including options on Securities); |
| 3. | Initial Public Offerings; and |
| 4. | Corporate and municipal bonds, and new issue debt offerings. |
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Exceptions to the above exist:
| (1) | For granted USB stock and stock options held in Morgan Stanley Smith Barney accounts only. Transactions of USB stock and/or stock options held in these accounts do not require pre-clearance but do require reporting. |
| (2) | For accounts where full discretion is held by a third-party, these accounts do not require pre-clearance of transactions or reporting. Please see section “G. Discretionary Accounts” for more information regarding discretionary accounts. |
NOTE: Approval for Initial Public Offerings and Private Placements will take into account, among other factors, whether the investment opportunity should be reserved for clients and whether the opportunity is being offered to the Access Person by virtue of his or her relationship to USBAM or any fund sponsored or managed by USBAM.
Transactions, except those involving Private Placements, must be executed by the close of the NYSE the same day approval is given. If a transaction is not executed that day, a new approval must be obtained from the Compliance Department.
NOTE: Only day orders will be approved. Good until cancelled (“GTC”), stop loss, and similar orders are not permitted. Limit orders must be executed the day approved.
Transactions in the following Exempt Securities do not require reporting or pre-clearance:
| 1. | Direct obligations of the Government of the United States; |
| 2. | Bankers’ acceptance, bank certificates of deposit, commercial paper; |
| 3. | High-quality short-term debt instruments including repurchase agreements; |
| 4. | Shares of open-end mutual funds for which USBAM does not serve as investment adviser or sub-adviser, or for which Quasar is not the distributor; and |
| 5. | First American Money-Market Funds. |
NOTE: Brokered certificates of deposit are publicly traded Securities and not bank products. Therefore, brokered certificates of deposit must be pre-cleared.
In addition, while the transactions in the securities listed below require pre-clearance, they will normally be approved in the absence of special circumstances. Pre-clearance is essential for compliance with federal securities laws. Failure to pre-clear these or any other transaction under the Code will be treated as a serious violation of the Code. In addition, some Securities are not subject to a Blackout Period, which are periods when you may not be permitted to buy or sell a Security. See Section E, below for more details. These Securities are:
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| 1. | Securities whose performance are directly tied to a broad-based, publicly traded market basket or index of stocks (e.g., SPDRS, QQQ, Diamonds); |
| 2. | Shares of issuers included in the S&P 100; |
| 3. | Shares of issuers included in the S&P 500 stocks by Access Persons who are not Restricted Access Persons in amounts less than $25,000 in any single trading day; and |
| 4. | Shares of issuers included in the Russell 1000 stocks by Access Persons who are not Restricted Access Persons in amounts less than $10,000 in any single trading day. |
C. What Types of Transactions Require Reporting but not Pre-clearing?
Pre-clearance and Blackout Periods do not apply to the following transactions:
| 1. | Purchases of an employer’s stock under an employer-sponsored plan (including the employer of a spouse or registered domestic partner); |
| 2. | Purchases effected upon the exercise of rights issued by an issuer pro rata to all holders of a class of its securities, to the extent the rights were acquired from the issuer; and any sales of these rights; |
| 3. | Purchases or sales that are non-volitional on the part of the Access Person, including purchases or sales upon exercise of puts or calls written by the person (please note that you are prohibited from engaging in short-term trading), non-volitional sales from a margin account pursuant to a bona fide margin call; purchases or sales as part of divorce settlement or decree, and any other purchases or sales as determined by the Compliance Department upon request; |
| 4. | Purchases or sales of units of common/collective trust funds; |
| 5. | Transactions in derivative Securities linked to physical commodities, such as exchange-trade futures contracts on physical commodities, options on such contracts and over-the-counter derivatives related to physical commodities; and |
| 6. | Purchases and sales of open-end mutual funds for which Quasar serves as distributor that are not through an automatic investment plan, and that are not otherwise reported electronically, must be reported to the Compliance Department in writing. |
| 7. | Transactions from a Morgan Stanley Smith Barney of granted USB stock or stock options. |
D. What Are Blackout Periods?
Because of the potential for a conflict of interest, USBAM has established certain Blackout Periods when Access Persons are not permitted to effect transactions in certain Securities:
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| 1 | Access Persons may not buy or sell any Security on the same business day as any client of USBAM or Funds. |
| 2. | Restricted Access Persons may not buy or sell any Security for a period of 5 business days before or after any client account or the Funds |
In the event that a client trade takes place within 5 business days after you have received preclearance approval, Compliance will send you a form asking if you had any knowledge of the client trade to help detect front running. Once you have completed and returned the form, Compliance will determine if further action is necessary.
Transactions for the accounts of our clients are confidential and may contain market sensitive data. Portfolio managers, trading personnel and others shall maintain the confidentiality of such information and should only disclose transactional and holdings information on a need-to-know basis.
| E. | Are There any Restrictions on Short-Term Trading? |
Restricted Access Persons are prohibited from profiting from a purchase and sale, or sale and purchase, of the same Security (other than Exempt Securities and derivative Securities linked to physical commodities) within 60 calendar days. The restriction may be waived by the Compliance Department in special circumstances provided that the transaction would not be inconsistent with the expressed purpose of this Code and any client transaction.
This prohibition may limit your ability to use options and futures strategies. In addition, special rules apply to roll transactions. Prior to engaging in these types of transactions you should consult with the Compliance Department.
F. What Reports and Disclosures Do Access Persons Need to Make?
In order to ensure that the provisions of this Code are being observed, each Access Person is required to make the following disclosures to USBAM:
| 1. | Accounts Disclosure. Within 10 calendar days of hire date, and within 30 days of the end of each quarter, you must disclose all accounts in which you have a Beneficial Interest. Account and holdings disclosure requirements may be satisfied electronically. |
| 2. | Initial Holdings Disclosure. Within 10 calendar days of hire date, you must disclose all personal holdings of Securities in which you have a Beneficial Interest to the Compliance Department in writing. Rule 204A-1 requires that these holdings must be current as of a date no more than 45 days prior to your hire date. |
| 3. | Annual Holdings Disclosure. You must certify within 45 days of the end of each calendar year that the electronic record of your holdings provided by your broker is complete and accurate. Rule 204A-1 requires that these holdings must be current as of a date no more than 45 days prior to the date of the certification. Annual reporting requirements include holdings in DRIP programs, purchases of stock under an employer-sponsored plan, purchases affected upon the exercise of rights and non-volitional purchases or sales, such as the exercise of options. |
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| 4. | Duplicate Confirmations. Each Access Person must have each broker-dealer carrying an account in which he or she has a Beneficial Interest to send to USBAM a duplicate copy of all transaction confirmations generated for the account. This can be achieved either by the employee instructing the broker-dealer to provide these duplicates, or by Compliance requesting the duplicates by sending the broker-dealer a 407 Letter. We have arranged to receive electronic copies of trade confirmations from the approved brokers. |
| 5. | Quarterly Transaction Statements. You must certify quarterly all Securities transactions other than transactions in exempt securities for accounts in which you have Beneficial Interest during the previous quarter. In the event no reportable transactions occurred during the quarter, the report should be so noted. Quarterly reports must be made no later than 30 days after the end of the calendar quarter and will be completed electronically through the CTI iTrade application. |
If an Access Person is on leave during the certification period and does not have access to the applicable applications, they will be asked to complete the certifications upon their return.
G. Discretionary Accounts
For Accounts where the Access Person or Restricted Access Person has given full investment authority to a third-party, there are the following differences in how the account is monitored for personal trading:
| · | To have an account coded as a Discretionary Account in the Code of Ethics system, you will need to provide a signed and executed copy of the discretionary account to the Code of Ethics Administrator. |
| · | Discretionary accounts do not require pre-clearance or reporting of transactions. Annually, the third-party discretionary provider will certify that the account owner exercised no discretion over the account at any point during the year. |
H. Special Discretion
The Chief Compliance Officer, or designee, shall have the authority to exempt any person or class of persons from all or a portion of the Code provided that:
| 1. | The Chief Compliance Officer, or designee, determines, that the particular application of all or a portion of the Code is not legally required; |
| 2. | The Chief Compliance Officer, or designee, determines that the likelihood of any abuse of the Code by such exempted person(s) is remote; and |
| 3. | The terms or conditions upon which any such exemption is granted is evidenced in a written instrument. |
The Chief Compliance Officer, or designee, shall also have the authority to impose such additional requirements or restrictions as it, in its sole discretion, determines appropriate or necessary.
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Any exemption, and any additional requirement or restriction, may be withdrawn by the Chief Compliance Officer, or designee, at any time.
INSIDER TRADING POLICY AND PROCEDURES
The purpose of this section of the Code is to provide reasonable assurance that material nonpublic information possessed by persons employed with USBAM is: (a) not used in connection with the purchase or sale of securities, (b) not revealed to inappropriate persons, and (c) not used improperly.
Federal law requires USBAM to establish and maintain effective policies and supervisory procedures to both detect and prevent insider trading violations. USBAM Compliance implements what are commonly referred to as “Information Barriers.” Information Barriers are designed to fulfill two roles: 1) segregate and prevent the improper dissemination of material nonpublic information that may be possessed by certain employees of USBAM; and 2) detect illegal transactions or violations of insider trading. This section is intended to protect USBAM and its employees from insider trading violations from allegations of such violations and from the appearance of impropriety.
USBAM has implemented the following policies and procedures to prevent the misuse and the appearance of misuse of material nonpublic information concerning publicly traded companies. USBAM is committed to conducting its business activities within the letter and spirit of all applicable laws and regulations and in accordance with the highest ethical standards.
Statutory Provisions and Regulations Regarding Insider Trading
Congress amended the Securities Exchange Act of 1934 (the “Exchange Act”) in 1988 with the Insider Trading and Securities Fraud Enforcement Act of 1988. In doing so, Congress explicitly mandated closer securities industry supervision of its employees.
Furthermore, under Section 204A of the Investment Advisers Act of 1940, as amended, investment advisers are required to “establish, maintain, and enforce written policies and procedures reasonably designed,” taking into consideration the nature of the entity’s business, “to prevent the misuse of material, nonpublic information.”
The misuse of material nonpublic information constitutes fraud; a term broadly defined under the federal securities laws. Rule 10b-5 under the Exchange Act provides that it is unlawful for any person, in connection with the purchase or sale of any security:
| · | To employ any device, scheme, or artifice to defraud; |
| · | To make any untrue statement of a material fact or to omit to state a material fact necessary to make the statements made, in light of the circumstances under which they were made, not misleading; or |
| · | To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person. |
It is a violation of insider trading laws to trade on the basis of material nonpublic information when one owes a duty of trust or confidence to the source of the information or when one has
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misappropriated the information in breach of a duty of trust or confidence. Rule 10b5-1 under the Exchange Act provides that a trade is “on the basis of” material nonpublic information if the trader was aware of the material, non-public information when the person made the purchase or sale. While it is not necessarily a violation of Rule 10b-5 merely to trade on the basis of material nonpublic information, as a matter of USBAM policy its employees are directed not to trade on, or to tip others with respect to, material nonpublic information, whether or not the information has been obtained under circumstances that give rise to a duty of trust or confidence or claim of misappropriation.
Persons who fraudulently misuse material nonpublic information are subject to individual civil and criminal penalties (including imprisonment), U.S. Securities and Exchange Commission (“SEC”) administrative actions and discipline including fines and suspension from the industry and USBAM disciplinary sanctions that may include fines or dismissal from employment. In addition, USBAM employees who fraudulently misuse material nonpublic information subject USBAM to potential civil and criminal penalties as well as regulatory sanctions.
Definition of Material Nonpublic Information
Information is “material” if it has “market significance” in the sense that disseminating the information is likely to affect the market price of any outstanding securities, or is likely to be considered important by reasonable investors in deciding whether to trade the securities. Information is not considered “public” unless it has been reported in the news media, revealed by the issuer in a public forum, discussed in a publicly disseminated research report or otherwise made publicly available.
Materiality is a legal concept that involves an objective test based upon what a hypothetical reasonable investor would consider to be material. Therefore, for example, an analyst -- through some combination of persistence, knowledge and insight -- may consider a particular piece of information to be material to him because it completes his mosaic of information on a company as a whole, while the significance of that discrete piece of information would not be apparent to a reasonable investor. The law generally does not consider such “mosaic” information to be material.
Examples of potentially “material” information that should be reviewed carefully to determine whether they are material in the context of a particular situation include:
| · | Earnings information, including new or changed earnings estimates; |
| · | Mergers, acquisitions, tender offers, joint ventures, or changes in assets; |
| · | New products or discoveries, or developments regarding customers or suppliers (e.g., the acquisition or loss of a contract); |
| · | Significant corporate developments, such as results of tests regarding safety or effectiveness of products that may impact regulatory approvals (e.g., Federal Drug Administration testing); |
| · | Changes in control or in management; |
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| · | Auditor resignation, change in auditors or auditor notification that the issuer may no longer rely on an auditor’s audit report; |
| · | Events regarding the issuer’s securities (e.g., defaults on senior securities, calls of securities for redemption, repurchase plans, stock splits or changes in dividends, changes to the rights of security holders, changes in debt ratings, advanced re-fundings, public or private sales of additional securities, including Private Investments in Public Entities; |
| · | Bankruptcies or receiverships; |
| · | Status of union or other significant contract negotiations; |
| · | Confidential government information relating to government-issued securities; |
| · | Major litigation; and |
| · | Any other significant information that would have an impact on the price of a company’s securities. |
In addition, material nonpublic information possessed by USBAM employees could be material to a particular class of a company’s securities, all of that company’s securities, the securities of another company, or the securities of several companies. The law against “insider” trading does not exempt any type of security; in other words, it is unlawful to trade, or recommend the trading of, any security (whether taxable or tax-exempt fixed income, equity or commercial paper) based on “inside” information that is material to the market value of that security. For example, nonpublic information that a company will redeem or tender a class of its debt securities may be “material” to the market value of those securities. If so, trading those debt securities on the basis of the nonpublic information is prohibited. A recapitalization, merger or leveraged buyout may be “material” to all the equity and debt securities of the company. An acquisition may be material to the securities of both the acquirer and the acquiree. Material nonpublic information is also not limited to “company” or “corporate” information; it can relate to confidential government information relating to government-issued securities.
If there is ever a question with respect to whether information is material or public, employees are expected to contact Compliance for advice.
Tippees May Be Insiders
USBAM personnel may, depending on the circumstances, also become “insiders” or “tippees” when they obtain apparently material nonpublic information through “tips” from “insiders,” consultants, research providers, broker-dealer personnel, family members, or even by happenstance, including information derived from social situations, business gatherings, overheard conversations, or third parties. In these situations, USBAM personnel who receive such information must treat the information as material nonpublic information and must fully comply with the procedures set forth herein to prevent the misuse of that information. Under such circumstances, and as provided more specifically below, employees must immediately contact Compliance.
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Duty of Confidentiality
Just as USBAM and its personnel are prohibited from trading while in possession of material nonpublic information, they are likewise required to maintain the confidentiality of such information and not disclose, or “tip,” that information to others. In this regard, it is important to note that except as expressly provided in the following sections, this duty of confidentiality prohibits USBAM personnel from disclosing material nonpublic information to other USBAM personnel. The prohibition against disclosure or misuse of material nonpublic information also applies fully to USBAM and its employees even though USBAM (or any affiliate) is not requested or engaged to provide any services in connection with the transaction or development underlying the material nonpublic information.
Material Nonpublic Information about U.S. Bancorp
USBAM personnel are “insiders” when they possess material nonpublic information about the business or activities of U.S. Bancorp (such as unannounced results of operations, the proposed issuance of U.S. Bancorp securities or other major developments or transactions by U.S. Bancorp or its affiliates) that, when publicly disclosed, may affect the market values of U.S. Bancorp securities or securities of other companies. USBAM personnel who possess “inside” information about U.S. Bancorp must comply with all of the policies set forth herein against misuses of that information. See also the U.S. Bancorp Code of Ethics and Business Conduct.
Material Nonpublic Information about Mutual Funds
USBAM personnel are “insiders” when they possess material nonpublic information about the business or activities of any of the funds for which USBAM is an investment adviser or sub-adviser. USBAM personnel who possess “inside” information about any of the funds must comply with all of the policies set forth herein against misuses of that information. This includes the following prohibitions:
| · | USBAM personnel may not disclose the portfolio holdings of the funds to an outside party without formal approval from the Chief Compliance Officer, or designee; and |
| · | USBAM personnel may not buy or sell shares of the funds for personal accounts, or recommend that anyone else do so, in a manner that is designed to profit from inside information. |
Contacts with Management
In nonpublic meetings with management or any insider, whether formal or informal, it is important for USBAM personnel to remember:
| · | USBAM personnel may not attempt to force or prompt a corporate spokesperson to selectively disclose material nonpublic information. If selective disclosure does occur as a result of such actions it is possible that the USBAM personnel involved and USBAM itself could be charged with aiding and abetting or causing a selective disclosure violation by the company; |
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| · | Extreme care must be taken in seeking to have a corporate spokesperson comment on an analyst’s financial model or comment on the issuer’s earnings forecast. Depending on the circumstances, such comments can be deemed to be “material.” The SEC has recognized that such comments are not always material, but their materiality will be determined in hindsight. Key considerations identified by the SEC staff include the amount of time that has elapsed since the company’s last public comment (comments late in the quarter are more likely to be material) and whether there have been intervening events (confirmation of a forecast despite the loss of a key customer may be material). The staff has also cautioned that reference to a forecast, without more, could be considered a confirmation of the forecast that might “entangle” USBAM in the company’s selective disclosure. An issuer can comment on an analyst’s financial model without disclosing material nonpublic information. For example, an issuer ordinarily would not be conveying material nonpublic information if it corrected historical facts that were a matter of public record. An issuer also would not be conveying inside information if it shared seemingly inconsequential data, which, pieced together with public information by a skilled analyst with knowledge of the issuer and the industry, helps form a mosaic that reveals material nonpublic information. Further, an issuer may reveal this type of data even if, when added to the analyst’s own fund of knowledge, it is used to construct her ultimate judgments about the issuer. An issuer may not use the discussion of an analyst’s model as a vehicle for selectively communicating - either expressly or in code - material nonpublic information; |
| · | If, in a meeting with management, USBAM personnel receive selectively disclosed material nonpublic information, USBAM personnel must comply with all of the policies and procedures set forth herein, including the prohibition against trading on the inside information. |
Consultants
Neither USBAM nor USBAM personnel may retain consultant (including research providers) to obtain material nonpublic information. Extreme caution should be exercised with regard to any consultant that claims they can obtain information before the media or promises the “first call” on investment issues. In dealing with consultants USBAM personnel should remember:
| · | USBAM personnel are responsible for assessing all information received from consultants to determine if it constitutes, or may constitute, material nonpublic information. If material nonpublic information is received from a consultant the Procedures set forth below must be followed. |
Creditors’ Committees
In connection with high yield and distressed debt investment strategies, USBAM personnel may serve on an insolvent issuer’s creditors’ committee, or similar group, which provides USBAM with access to material nonpublic information (e.g., internal financial projections, validity of claims, likelihood of reorganization, etc.). In such situations you must notify the Chief Compliance Officer, or designee, before you agree to participate in creditors’ committees or similar groups. Members of
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the Compliance Department and/or Legal Department will review your request and notify you whether you may participate in the creditors’ committee. These situations generally require special controls beyond those contained in these Policies and Procedures. The issuer of the security for whom such committee was formed will be added to a restricted list, and the Legal and Compliance Departments will determine if additional controls should be implemented.
No less than annually, the Compliance Department will send a communication to employees who may potentially serve on a Creditors’ Committee to remind them of their responsibilities.
USBAM Policy on Insider Trading
USBAM’s policy on insider trading is that any USBAM employee in possession of material nonpublic information must preserve the confidentiality of such information and abstain from trading until the inside information is publicly disclosed. It is fundamental to this policy that:
| · | No USBAM employee, while in possession of material nonpublic information relevant to a security, shall purchase or sell or recommend or direct the purchase or sale of such security for the account of an advisory client (including mutual funds), proprietary account or anyone else. |
| · | No USBAM employee shall utilize or take advantage of material nonpublic information to purchase or sell securities for his or her own account, any account in which he or she has a direct or indirect beneficial interest (including accounts for family members), or any other account over which the employee has discretionary authority, a power of attorney or otherwise an ability to control. |
| · | No USBAM employee shall disclose material nonpublic information to any other person, except for privileged discussions with USBAM’s legal counsel (in-house or outside counsel) as authorized by the Chief Compliance Officer, or designee, or the Legal Department. |
| · | Any USBAM employee who obtains material nonpublic information that is later disclosed to the general public must allow sufficient time to elapse for the investing public to assimilate and evaluate the information before taking any action for an advisory account or his/her personal account on the basis of the disclosed facts. |
| · | The foregoing prohibitions apply not only to the securities of the issuers to which the material nonpublic information is directly related but also to any other securities (for example, securities of companies in the same industry) that may reasonably be expected to be affected by the public disclosure of the material nonpublic information. |
Placing Companies on a Restricted List
All USBAM employees who believe they may have come into possession of material nonpublic information should immediately contact the Chief Compliance Officer, or designee. The following is the information that is generally needed when adding a company to a restricted list, although further information may be required:
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| · | Company name |
| · | Trading symbol (“ticker”) |
| · | The nature of material nonpublic information and how it was obtained |
| · | Who reported the item |
| · | All people who have knowledge of the information |
Compliance is responsible for the adding and deleting of securities on a restricted list. The Chief Compliance Officer, designee, or Legal Department, shall take appropriate action, which may include consultation with counsel (in-house or outside), for the placing or removal of the subject company on or from a restricted list. The Compliance Department shall monitor the trading of securities of companies identified on a restricted list. If suspicious activity is detected, the Compliance Department will determine the most appropriate course of action.
Reference Securities Also Included
Trading restrictions and monitoring activity for the period in which companies are included on a restricted list will apply to the securities of such companies and to any reference securities. Reference securities are any securities into which the security of a listed company may be converted, exchanged, exercised or which may determine the value of such security.
Bringing Additional Persons “Over the Wall”
Senior management, the Chief Compliance Officer, or designee, or the Legal Department, depending on the circumstances and at their discretion, may bring some or all of USBAM’s portfolio managers, traders or research analysts “Over the Wall” (effectively limiting their trading and recommendations) to help avoid the appearance of impropriety. Such an action may be warranted, for example, where a concern exists that certain material nonpublic information known to some USBAM individuals may be attributed to others. For instance, in a case where material nonpublic information is known by one of two portfolio managers who co-manage a fund, it may, depending on the circumstances, help in avoiding the appearance of impropriety to bring the other portfolio manager “Over the Wall.”
Failure to Comply
Any violation of this section of the Code may result in disciplinary action, and, when appropriate, termination of employment and/or referral to appropriate governmental agencies.
Education and Training of Employees
USBAM requires all employees to attest to their understanding of the Code of Ethics and the Insider Trading Policy. This policy may be implemented through the use of training sessions, memos, educational articles and the following:
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| · | All employees are required to initially sign an Acknowledgement and Agreement to Comply with USBAM’s Insider Trading Policy and Procedures. Thereafter, additional sign-offs are received on a quarterly basis. |
| · | Code of Ethics and Insider Trading training will be conducted for all USBAM employees at least annually. |
| · | Training sessions will be held for all new USBAM employees for the Code of Ethics, which will include training on the Insider Trading Policy. These training sessions will be held on an as needed basis with each new hire. |
Contract and temporary employees are also subject to this training unless a written exemption is provided by their direct manager.
Record Retention
The Compliance Department will retain all documents and records created in accordance with these Policies and Procedures. These records will be retained for at least six years, the first two years in an easily accessible location.
OTHER CONFLICTS OF INTEREST
A. May I Provide Investment Advice to Others?
You are prohibited from engaging in outside business or investment activities that may interfere with your duties with USBAM or potentially impair USBAM’s reputation. For these reasons, you may not provide investment advice to anyone other than USBAM clients (including the Funds) without prior written authorization from the Legal or Compliance Department.
B. May I Serve as a Director of Another Company?
You are prohibited from serving as a member of the board of directors (or other advisory board) of any publicly traded company absent prior authorization by the Chief Compliance Officer and the Funds’ Board of Directors. Authorization, when granted, will only be given if (i) the Funds’ Board determines that service on a board is consistent with the interests of the Funds, and the Funds’ shareholders; (ii) the Chief Compliance Officer determines that service of a board is consistent with the interest of USBAM and its clients; and (iii) both the Funds’ Board and the Chief Compliance Officer determine that service on a board presents a limited potential for any conflict of interest (at the time of the determination or in the future). In addition, U.S. Bancorp has developed additional limitations on service on a board of directors by USBAM employees. For additional information see U.S. Bancorp’s Code of Ethics or USBAM’s Compliance Department.
C. When May I Disclose Confidential Information?
Information about our clients (including former clients) and fund shareholders, for example, their identities, financial circumstances and holdings, is highly confidential. So is information about our securities recommendations, pending transactions for a client or Fund, and Fund portfolio
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holdings. All of us at USBAM must keep confidential information in strict confidence. Confidential information must not be disclosed to anyone outside USBAM, including family members, except as required to effect securities transactions on behalf of a client or Fund or for other legitimate business purposes. You must observe USBAM’s procedures to safeguard the security of any confidential information.
| D. | May I Give or Receive Gifts? |
USBAM, as a policy, follows U.S. Bank’s policy regarding gifts. As a general rule, employees of USBAM must not solicit, allow yourself to be solicited, or accept gifts, entertainment, or other gratuities intended to or appearing to influence decisions or favors toward USBAM’s business to or from any client, potential client, USBAM vendor or potential vendor.
The Compliance Department shall periodically review such records and provide Department heads with exceptions.
A copy of the Bank’s policy is available on the intranet.
Meals and Entertainment
You may accept or provide reasonable business meals and entertainment if the client, potential client, USBAM vendor, or potential vendor is physically present at the business meal or entertainment. In the event that any such business meal and/or entertainment has a value exceeding $100 per person you must report the meal or entertainment no later than 30 days following the end of the quarter in which the activity occurred. The Compliance Department will review all reported gifts/entertainment on a quarterly basis and inform Department heads of any exceptions to the policy.
Governmental Entity and Official Exception to Meals and Entertainment Value Threshold
All meals and/or entertainment given to or received by a governmental official or entity must be reported no matter the dollar amount no later than 30 days following the end of the quarter in which the activity occurred.
Gifts
Receipt of Gifts: You may not accept individual gifts with a value exceeding $100 from any entity or individual in aggregate, over one calendar year, even if the gift is not intended to influence your behavior, or to influence another. Additionally gift cards and gift certificates, whether to a specific establishment or for general use, are limited to a $25 maximum. The receipt of gifts should also be limited to commonly recognized events or occasions, such as promotions, new jobs, weddings, retirement, holidays or birthdays. Any gift given or received with a value in excess of $30 must be reported no later than the end of the quarter in which the item was received.
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In isolated circumstances, when a gift is received with a value in excess of $100 and returning the gift would offend the giver, the employee may contact the Compliance Department to request an exception to the policy. If granted the employee must:
| 1. | Obtain written consent of the exception from the Compliance Department; |
| 2. | Disgorge the value above $100 via a check made out to USBAM, who will then donate it to charity; and, |
| 3. | Report the total value of the gift, with explanation of the exception, and amount disgorged. |
You may retain a gift above $100 in value if you share it among USBAM employees, which will not require reporting.
When representing USBAM, an employee may participate in random drawings where the prize has a value above $100, or $25 if a cash equivalent item. If the employee wins the prize, he or she should inform the Compliance Department as soon as practicable and provide evidence that there was no bias to the drawing (e.g., limited to specific groups, or organizations of a certain size or assets under management). If there was no bias in the random drawing, the Compliance Department will determine if any disgorgement of the amount above the acceptable level is required. The employee still has the requirement to report the entire value of the prize no later than the end of the quarter the prize was received.
Giving of Gifts: You may not give individual gifts with a value exceeding $100 to any entity or individual either doing business with USBAM or intending to influence business with USBAM during one calendar year. Gifts with a value exceeding $30 must be no later than the end of the quarter in which the item was given. This includes USBAM’s logo merchandise above the $30 threshold. Additionally gift cards and gift certificates, whether to a specific establishment or for general use, are limited to a $25 maximum.
Every quarter you must certify that you have been in compliance and will continue to comply with USBAM’s policies, including those related to gifts, meals, and entertainment. The quarterly certification is completed at the same time as your personal securities transactions certification.
Governmental Entity and Official Exception to Gifts Value Threshold
All gifts given to or received by a governmental official or entity must be reported no matter the dollar amount no later than 30 days following the end of the quarter in which the activity occurred.
E. May I Make Political and Charitable Contributions?
You must not make political contributions for the purposes of obtaining or retaining advisory contracts with government entities. In soliciting political or charitable donations from various people in the business community, you must never allow the present or anticipated business relationships with USBAM or any of its affiliates to be a factor in soliciting any contributions.
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USBAM limits the amount of Political Contributions that can be made by its employees. For more information on these restrictions, please see the USBAM Pay to Play policy.
ENFORCEMENT OF THE CODE AND SANCTIONS
This Code has been adopted by USBAM and is administered by the Compliance Department. Failure of an employee to comply with all policies, rules and regulations may lead to disciplinary action. In considering actions to enforce the Code, the Compliance Department will consider all of the relevant facts and circumstances of the incident and the employee’s prior record of compliance with the Code. Following its review, the Compliance Department may impose or recommend sanctions as it deems appropriate, including oral reprimand, a letter of censure, a fine, a reduction in salary or position, suspension without pay, termination of personal trading privileges, and/or termination of the employment of the violator. A violator will be obligated to pay any sums due resulting from a violation by a member of his/her immediate family.
The imposition of sanctions under this Code does not preclude the imposition of additional sanctions by the Funds’ Board of Directors and cannot be deemed a waiver of any rights by any Fund or client. In addition to sanctions that may be imposed, persons who violate this Code may be subject to various penalties and sanctions including, for example, injunctions, treble damages, disgorgement of profits, fines of up to three times the profit gained or loss avoided (whether or not the violator actually benefited), and jail sentences.
NOTE: Transaction costs associated with an action and any loss realized on the transaction must be borne by the responsible employee. Gains from a sanction must be transferred to an account maintained by USBAM for distribution to charity.
Reporting to the Board
No less than annually, the Chief Compliance Officer shall submit to the Board of Directors a written report that describes any issues that have arisen under the Code (including procedures implementing the Code) since the last report to the Board of Directors, including, but not limited to, information about any material violations of the Code or procedures and sanctions imposed in response to any material violations. The Chief Compliance Officer shall also certify, in writing to the Board of Directors, that USBAM has adopted procedures reasonably necessary to prevent all Access Persons from violating the Code.
Whistleblowing Provision
The Advisor is committed to high standards of ethical, moral and legal business conduct and obligates any employee or contractor to report suspected violations or concerns regarding compliance with laws, regulations, the Code of Ethic or any policy, or suspected wrongdoings affecting the Advisor or the Funds. These may include violations of state and federal law, malfeasance, bribery, theft, gross misconduct, improper accounting, internal accounting controls, auditing matters relating to the Funds, or any fraud or illegal activity involving the Advisor’s business that could harm the good reputation of the Advisor and/or the Funds.
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In line with this commitment, the Advisor encourages employees and contractors to raise concerns within the organization and provides reassurances that they will be protected from reprisals or harassment for Whistleblowing.
No employee or contractor of the Advisor may interfere with the good faith reporting of suspected or actual misconduct or intimidate or retaliate against any employee or contractor who makes such a report in good faith. No employee or contractors who makes a good faith report or cooperates in good faith with the Advisor’s investigation shall be subject to retaliation, including harassment or any adverse employment consequence as a result of making a report. No employee may directly or indirectly use or attempt to use their official authority or influence of their positions for the purpose of interfering with the right of another employee to make a good faith report.
The Advisor will take whatever action is necessary and appropriate to address allegations of activity that may be considered fraudulent or illegal in nature, or could potentially damage the reputation of the Advisor or the Funds.
Reporting of Suspected or Actual Concern
It is every employee and contractors obligation to report suspected or actual violations of laws, regulations and/or Advisor Policy.
Communication regarding actual or suspected wrongful conduct engaged in by an employee, contractor, third party service provider or vendor must be based on a good faith and reasonable belief that the activity both occurred and is a violation of applicable rules and regulations and/or policies. Employees who are aware of or have reason to suspect wrongful conduct should report the conduct either verbally or in writing to any of the individuals listed below.
Employee’s immediate supervisor or other Advisor senior manager
USBAM Chief Executive Officer
USBAM Legal Counsel
USBAM/Fund Chief Compliance Officer
The U.S. Bank Ethics Line at 866-ETHICS4 (866-384-4274)
Securities and Exchange Commission (https://www.sec.gov/about/offices/owb/owb-tips.shtml)
Prompt disclosure of suspected violations to the appropriate parties is vital to ensuring a thorough and timely investigations and resolution.
Good faith allegations may be made on a confidential basis or may be submitted anonymously. Confidentiality will be maintained to the fullest extent possible, regardless of the method used to report possible unethical conduct. All questions or concerns will be handled discreetly and thoroughly. Anonymous reports may be mailed along with a description of the suspected violation or other complaint or concern to:
Ruth Mayr, Chief Compliance Officer
800 Nicollet Mall, BC-MN--H04N
Minneapolis, MN 55402
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Investigation and Enforcement
Investigation – When an alleged violation is reported, the Advisor will take prompt and appropriate action depending on the nature of the concern. Initial inquiries will be made to determine whether the allegation appears credible and what type of investigation is appropriate based on the severity of the allegation.
The First American Fund Audit Committee and/or Board of Directors may receive information on each report of concern and follow-up information on actions taken. The SEC and/or other regulator may be notified.
The Advisor encourages employees to put their names to allegations because appropriate follow-up questions and investigation may not be possible unless the source of the information is identified. Every effort will be made to treat the complainant’s identity with appropriate regard for confidentiality. In the course of its investigation, however, the Advisor may find it necessary to share information with others on a “need to know” basis.
To the degree possible, the complainant will be notified of the results of any investigation.
The Chief Compliance Officer will maintain a log of all allegations, tracking their receipt, investigation and resolution.
Enforcement – the Chief Compliance Officer will be responsible for implementing and recommending the appropriate disciplinary action depending upon the severity of the violation. The actions may include documenting the incident of non-compliance in the employee’s personnel file, a fine, suspension of trading privileges and termination of employment. For more serious violations, the individual risks indictment, prosecution and penalties, and civil actions. For licensed individuals, serious violations may be reported to FINRA.
Any employee who knowingly or with reckless disregard for the truth gives false information or knowingly makes a false report of wrongful conduct or a subsequent false report of retaliation will be subject to disciplinary action, up to and including termination.
Safeguards
USBAM does not tolerate any retaliatory action against any individual for good-faith reporting of ethics violations, illegal conduct, suspicious activity or other serious issues. Allegations of retaliation will be appropriately investigated and, if substantiated, appropriate disciplinary action will be taken, up to and including termination. Diligent enforcement of non-retaliation measures is vital to the success of the reporting process because employees must feel they can report problems without fear of reprisals.
No employee who makes a good faith report will suffer harassment, retaliation or adverse employment consequences. Any person who retaliates against any employee who makes a good faith report is subject to discipline up to and including termination.
If you have made a good faith allegation and feel you have suffered harassment, retaliation or adverse employment consequences you should contact any of the individuals listed below.
Employee’s immediate supervisor or other Advisor senior manager
USBAM Chief Executive Officer
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USBAM Legal Counsel
USBAM/Fund Chief Compliance Officer
U.S. Bancorp’s Human Resources department
Securities and Exchange Commission (https://www.sec.gov/about/offices/owb/owb-tips.shtml)
Policy Owner
| · | Compliance Department |
Responsible Parties
| · | All USBAM employees |
| · | Chief Compliance Officer, or designee, |
| · | Compliance Department |
Related Policies
| · | Exception Escalation |
Related Disclosures
| · | None |
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GLOSSARY
| A. | Access Persons means any directors or officer of USBAM, as well as any employee who has access to nonpublic information regarding any clients’ purchase or sale of securities, or nonpublic information regarding the portfolio holdings of any Fund. See also Restricted Access Person. |
| B. | Beneficial Ownership of a Security is to be determined generally in the same manner as it would be under Rule 16a-1(a)(2) of the Securities Exchange Act of 1934 (“1934 Act”). This means that persons should generally consider themselves the “Beneficial Owner” of any Security in which they have a direct or indirect financial interest. In addition, persons should consider themselves the “Beneficial Owner” of any Security held by their spouse, minor children, relatives who share their home, or other persons by reason of any contract, arrangement, understanding, or relationship that provides them with sole or shared voting or investment power over that Security. |
Although the following list is not exhaustive, under the 1934 Act and this Code, a person generally would be regarded to be the “Beneficial Owner” of the following Securities:
| 1. | Securities held in the person’s own name; |
| 2. | Securities held with another in joint tenancy, community property, or other joint ownership; |
| 3. | Securities held by a bank or broker as nominee or custodian on such person’s behalf or pledged as collateral for a loan; |
| 4. | Securities held by members of the person’s immediate family sharing the same household (“immediate family” means any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law, including adoptive relationships and also includes a registered domestic partner); |
| 5. | Securities held by a relative not residing in the person’s home if the person is a custodian, guardian or otherwise has or shares control over the purchase, sale, or voting of the Securities; |
| 6. | Securities held by a trust in which the person is a beneficiary and has or shares the power to make purchase or sale decisions; |
| 7. | Securities held by a trust for which the person serves as a trustee (other than an administrative trustee with no investment discretion); |
| 8. | Securities held by a general partnership or limited partnership in which the person is a general partner; |
| 9. | Securities owned by a corporation in which the person has a control position or in which the person has or shares investment control over the portfolio Securities (other than a registered investment company); |
| 10. | Securities in a portfolio giving the person certain performance-related fees; |
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| 11. | Securities held by another person or entity pursuant to any agreement, understanding, relationship or other arrangement giving the person any direct or indirect pecuniary interest. |
| C. | Blackout Periods means the time period during which buying or selling a security is prohibited. See Section E under Personal Securities Transactions. |
| D. | Control shall have the meaning as set forth in Section 2(a)(9) of the 1940 Act. For example, “control” means the power to exercise a controlling influence over the management or policies of a company. Beneficial Ownership of more than 25% of the voting securities of a company is presumed to be “control” of that company. |
| E. | Discretionary Accounts are accounts where full investment authority has been granted to a third-party via a contract or agreement between the Access Person or Restricted Access Person and the third-party. |
| F. | Exempt Security includes: |
| 1. | Direct obligations of the Government of the United States; |
| 2. | Bankers’ acceptances, bank certificates of deposit, commercial paper; |
| 3. | High-quality short-term debt instruments including repurchase agreements; |
| 4. | Shares issued by registered open-end investment companies for which USBAM does not serve as investment adviser or subadviser, and neither does Quasar serve as a distributor; and |
| 5. | Shares of any money market series of the Funds. |
| G. | Funds means each series of First American Funds, Inc. and Mount Vernon Securities Lending Trust, whether now existing or organized in the future |
| H. | Initial Public Offering means an offering of Securities registered under the 1933 Act, the issuer of which, immediately before the registration, was not subject to the reporting requirements of Section 13 or 15(d) of the 1934 Act. |
| I. | Material Non-Public Information |
Information is “material” if it has “market significance” in the sense that disseminating the information is substantially likely to affect the market price of any outstanding securities, or is substantially likely to be considered important by reasonable investors in deciding whether to trade the securities. Information is not considered “public” unless it has been reported in the news media, revealed by the issuer in a public forum, discussed in a publicly disseminated research report, or otherwise made publicly available.
Examples of potentially “material” information that should be reviewed carefully to determine whether they are material in the context of a particular situation include:
| 1. | Information about any First American Fund’s or client account’s portfolio holdings, trading strategies, and securities transactions; |
| 2. | Earnings information, including new or changed earnings estimates; |
| 3. | Mergers, acquisitions, tender offers, joint ventures, or changes in assets; |
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| 4. | New products or discoveries, or developments regarding customers or suppliers (e.g., the acquisition or loss of a contract); |
| 5. | Significant corporate developments, such as results of tests regarding safety or effectiveness of products that may impact regulatory approvals (e.g., FDA testing); |
| 6. | Changes in control or in management; |
| 7. | Auditor resignation, change in auditors, or auditor notification that the issuer may no longer rely on an auditor’s audit report; |
| 8. | Events regarding the issuer’s securities (e.g., defaults on senior securities, calls of securities for redemption, repurchase plans, stock splits or changes in dividends, changes to the rights of security holders, changes in debt ratings, advanced refundings, public or private sales of additional securities, including Private Investments in Public Entities - “PIPES”); |
| 9. | Bankruptcies or receiverships; |
| 10. | Status of union or other significant contract negotiations; |
| 11. | Confidential government information relating to government-issued securities; |
| 12. | Major litigation; and |
| 13. | Any other significant information that would have an impact on the price of a company’s securities. |
| J. | Private Placement means an offering that is exempt from registration under the Securities Act of 1933 (“1933 Act”) pursuant to Section 4(2) or Section 4(6), or pursuant to rule 504, rule 505 or rule 506 under the 1933 Act. |
| K. | Restricted Access Person means any Access Person who is actually involved in making investment recommendations to USBAM clients, participate in the determination of which investment recommendations will be made, or has the power to influence management of the Funds, or execute trades for any Fund or client accounts. Restricted Access Persons generally include research analysts, traders, portfolio/fund managers, executive management of USBAM, members of the Legal and Compliance Departments, and their executive or departmental assistants. |
| L. | “Security” or “Securities” shall include all the instruments set forth in Section 2(a)(36) of the 1940 Act, i.e., any note, stock, treasury stock, security future, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, brokered or brokerage certificates of deposit, collateral-trust certificate, reorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas, or other mineral rights, any put, call, straddle, option, or privilege on any security (including a certificate of deposit) or on any group or index of securities (including any interest therein or based on the value thereof), or any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency, or, in general, any interest or instrument commonly known as a ‘Security’ or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing. For purposes of this Code, “Security” or “Securities” shall |
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| also include any futures contract, option on a futures contract, forward agreement, SWAP agreement (including caps, floors, and collars), and any other derivative instrument. “Security” or “Securities” shall not include checking and other demand or time deposits maintained at a bank or similar financial institution. |
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EXHIBIT 1
ACKNOWLEDGMENT AND AGREEMENT TO COMPLY
By signing this Acknowledgement and Agreement to Comply I certify the following:
| · | I have read and understand the Code of Ethics, (the “Code”) and have had an opportunity to ask any questions that I may have had concerning the Code. |
| · | I understand that I am responsible for complying with the Code and agree to comply. |
| · | I agree that I will not execute any prohibited transactions or trade without obtaining the necessary pre-clearance. |
| · | I agree that I will not trade on the basis of insider information. |
| · | I agree to comply with USBAM’s policies regarding other conflicts of interest, including its Gift Policy. |
| · | I understand that the Legal and Compliance Departments can assist me with questions I may have concerning the Code. I agree to contact them if I have any questions concerning the Code or the interpretation or application of the Code to a particular situation. |
| · | I understand that my compliance with this Code and all applicable laws is a condition of my involvement with USBAM. |
| · | I have reported all material violations of the Code within the scope of my knowledge to the appropriate officer of USBAM. |
| · | I understand that my violation of the Code may subject me to personal civil and criminal liability, regulatory fines and/or suspensions. I also understand that my violation of the Code subjects USBAM to civil and criminal liability as well as regulatory discipline. |
| Print Name Legibly | ||
| Signature | ||
| Date |
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EXHIBIT 2
CODE OF ETHICS CONTACT LIST
If
you think you or any other employee has violated the Code of Ethics, please call:
Julie Barton, Compliance Manager: 612-303-7623; Fax 612-303-4362
Ruth Mayr, Chief Compliance Officer: 612-303-4096; Fax 612-303-4767
Richard Ertel, Chief Counsel: 612-303-7987; Fax 612-303-4223
Eric Thole, CEO, USBAM: 612-303-3437
Please contact the following people with any questions concerning:
Code of Ethics Policy and Procedures:
Julie Barton, Compliance Manager: 612-303-7623; Fax 612-303-4362
Craig Jensen, Compliance Analyst: 612.303.3677; Fax 612-303-4362
Jacqueline Korus, Compliance Manager: 612-303-3441; Fax 612-303-4362
Insider Trading:
Julie Barton, Compliance Manager: 612-303-7623
Portfolio Compliance:
Ted Lautzenheiser, Compliance Manager: 612-303-0874
Jeanette Murphy, Compliance Manager: 612-303-6745
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