Form 485BPOS FIRST AMERICAN FUNDS
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Act Registration No. 002-74747
1940 Act Registration No. 811-03313
As filed with the Securities and Exchange Commission on February 26, 2018
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
| Pre-Effective Amendment No. | ☐ |
| Post-Effective Amendment No. 98 | ☒ |
and/or
REGISTRATION
STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940
| Amendment No. 98 | ☒ |
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):
| ☒ | 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 |
PROSPECTUS
First American Funds, Inc.
February 26 , 2018
Money Market Funds
Class U Shares
Ticker
Symbols
Fund
Government Obligations Fund
FGUXX
As with all mutual funds, the Securities and Exchange Commission has not approved or disapproved the shares of these funds, or determined if the information in this prospectus is accurate or complete. Any statement to the contrary is a criminal offense.
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.
Investment Objective
Government 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 U |
| 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 | 0. 14 % |
| Total Annual Fund Operating Expenses | 0. 24 % |
| Less Fee Waivers1 | (0.12)% |
| Net Expenses1 | 0.12% |
| 1 | The advisor has contractually agreed to waive fees and reimburse other fund expenses through February 28, 2019, so that the total annual fund operating expenses, after waivers, do not exceed 0.12%. These fee waivers and expense reimbursements may be terminated at any time after February 28, 2019 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 U | |
| 1 year | $ 12 |
| 3 years | $ 65 |
| 5 years | $ 123 |
| 10 years | $ 294 |
| 1 | Prospectus – | First
American Money Market Funds Class U Shares |
Fund Summary
Government Obligations Fund continued
Principal Investment Strategies
Government Obligations Fund invests exclusively in short-term U.S. government securities, including repurchase agreements secured by U.S. government securities. U.S. government securities are bonds or other debt obligations issued or guaranteed as to principal and interest by the U.S. government or one of its agencies or instrumentalities. U.S. Treasury securities and some obligations of U.S. government agencies and instrumentalities are supported by the full faith and credit of the U.S. government. Other U.S. government securities are backed by the right of the issuer to borrow from the U.S. Treasury. Still others are supported only by the credit of the issuer or instrumentality.
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. 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 fund’s sponsor has no legal obligation to provide financial support to the fund, and you should not expect that the sponsor will provide financial support to the fund at any time.
Principal risks of investing in this fund include:
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.
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.
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 — 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 collateral and may experience losses if there is any delay in its ability to do so.
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Fund Summary
Government Obligations Fund continued
Fund Performance
The following bar chart and table provide some indication of the potential risks of investing in the fund by showing changes in the fund’s performance (for Class A shares). The fund’s past performance is not necessarily an indication of how the fund will perform in the future. Updated performance information is available online at firstamericanfunds.com or by calling 800 677-3863.
The bar chart shows you the variability of the fund’s Class A share performance from year to year. The table illustrates the fund’s average annual total returns over the time periods indicated. The bar chart does not reflect sales loads . Performance information for Class U shares will be provided after such shares have one full calendar year of performance.
| Best Quarter: | Quarter ended March 31, 2008 | 0.71 % |
| Worst Quarter: | Quarter ended March 31, 2017* | 0.00 % |
| *Most recent quarter with this return during the period of the chart. | ||
| AVERAGE ANNUAL TOTAL RETURNS1 | Inception | |||
| AS OF 12/31/17 | Date | One Year | Five Years | Ten Years |
| Government Obligations Fund – Class A | 9/24/01 | 0.21 % | 0,05 % | 0.20 % |
| 1 | This table shows the average annual total returns of the fund’s Class A shares. Although Class A and Class U shares would have similar average annual total returns (because all the fund’s shares represent interests in the same portfolio of securities), Class A and Class U average annual total returns would differ to the extent that Class A and Class U are subject to different expenses. |
Investment Advisor
U.S. Bancorp Asset Management, Inc. (the “advisor”)
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Fund Summary
Purchase and Sale of Fund Shares
Class U shares of the fund are only available for purchase or redemption by pension plan and other retirement or welfare benefit accounts established for the benefit of current or former employees of U.S. Bancorp and its subsidiaries. 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 objective. You should be aware that the fund may also use strategies and invest in securities that are not described in this prospectus, but that are described in the 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 Securities and Exchange Commission (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 allows 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, which determination must include an analysis of the capacity of the security’s issuer or guarantor (including the provider of a conditional demand feature, when applicable) to meet its financial obligations. With limited exceptions, the fund may not invest more than 5% of its total assets in securities issued by the same issuer. The fund must comply with weekly liquidity standards that require the 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 the 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
Government Obligations Fund
Government Obligations Fund pursues its objective by investing exclusively in short-term U.S. government securities, including repurchase agreements secured by U.S. government securities. U.S. government securities are bonds or other debt obligations issued or guaranteed as to principal and interest by the U.S. government or one of its agencies or instrumentalities. U.S. Treasury securities and some obligations of U.S. government agencies and instrumentalities are supported by the full faith and credit of the U.S. government. Other U.S. government securities are backed by the right of the issuer to borrow from the U.S. Treasury. Still others are supported only by the credit of the issuer or instrumentality.
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 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.
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 the 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.
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More about the Fund
The principal risks of investing in the fund are identified and further discussed below.
| ● | Credit Risk | ● | Liquidity Risk |
| ● | Cybersecurity Risk | ● | Redemption Risk |
| ● | Income Risk | ● | Regulatory Risk |
| ● | Interest Rate Risk | ● | Repurchase Agreement Risk |
Description of Principal Investment Risks
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, the 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 the 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.
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 the fund and its shareholders, the inability of fund shareholders to transact business, inability to calculate the 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 the fund invests, which could result in material adverse consequences for such issuers, and may cause the fund’s investment in such securities to lose value and may result in financial loss for fund shareholders.
Income Risk. The level of income you receive from the fund will be affected by movements in short-term interest rates. Because the fund invests solely in U.S. government securities, U.S. Treasury obligations, or repurchase agreements secured by those securities, the fund may offer less income than money market funds investing in other high-quality money market securities.
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.
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More about the Fund
Description of Principal Investment Risks continued
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. 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. 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 collateral and may experience losses if there is any delay in its ability to do so.
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 , 2017, U.S. Bancorp Asset Management had more than $ 71.3 billion in assets under management, including investment company assets of more than $ 52.4 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.
For the fund’s most recently completed fiscal year, the fund paid the investment advisor a monthly management fee equal to an annual rate of 0.10% of average daily net assets, after taking into account fee waivers, for providing investment advisory services to the fund.
U.S. Bancorp Asset Management may voluntarily waive or reimburse certain fees and expenses 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 appears in the fund’s annual report to shareholders for the fiscal year ended August 31, 2017.
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 0.015%, on an annual basis, of the aggregate average daily net assets attributable to Class U 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 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.
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Fund Management
Investment Advisor continued
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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The fund utilizes the amortized cost method of valuation to transact at a $1.00 share price. The fund’s net asset value (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 NAV is normally expected to be $1 per share.
The NAV per share of each share class of the fund is calculated at the times listed below under “Calculating Net Asset Value.” If a purchase order is received on a business day by the deadline listed below under “Calculating Net Asset Value” and payment in federal funds is received by the fund by the close of the Federal Reserve wire transfer system (normally, 5:00 p.m. Central time), then dividends will begin to accrue on the same business day that the wire purchase order is received. If a purchase order is received on a business day after the deadline specified above, you will begin to accrue dividends the next business day. Also, in the event a wire purchase order is placed by the deadline specified above but an anticipated wire payment is not received by the fund by the close of the Federal Reserve wire transfer system that same day, your purchase may be cancelled and you may be liable for any resulting losses or fees incurred by the fund, the transfer agent, or the fund’s custodian. For purchase orders accompanied by check, dividends will normally begin to accrue within two business days of receipt.
Redemption proceeds to be paid by wire will normally be paid to the domestic bank account designated in the current records of the fund’s transfer agent on the same day of the redemption order, if the redemption order is accepted in proper form by the transfer agent or a financial intermediary that has been authorized to accept orders on behalf of the fund, as described herein, by the deadline listed below under “Calculating Net Asset Value.” Redemption proceeds will normally be paid by the close of the Federal Reserve wire system (normally, 5:00 p.m. Central time). Redemption proceeds to be paid by check will normally be sent to the address of record designated in the current records of the fund’s transfer agent on the next business day, but in no event more than seven days, after the redemption order is accepted in proper form by the transfer agent or a financial intermediary that has been authorized to accept orders on behalf of the fund, as described herein, by the deadline listed below under “Calculating Net Asset Value.” You will not earn a dividend on the day a redemption order is accepted, except for redemption proceeds paid by check, which earn a dividend on the day a redemption order is accepted.
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 New York Stock Exchange (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 financial intermediary to determine the time by which it must receive your order to
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Shareholder Information
Pricing of Fund Shares continued
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 intermediaries may charge a transaction-based fee for helping you purchase or redeem shares or an asset-based fee. Contact your financial intermediary for more information.
The fund issues its shares in multiple classes. This prospectus offers Class U shares. Class U shares are offered at NAV, with no front-end or contingent deferred sales charge and no distribution (12b-1) or shareholder servicing fee.
Class U shares of the fund are only available for purchase or redemption by pension plan and other retirement or welfare benefit accounts established for the benefit of current or former employees of U.S. Bancorp and its subsidiaries.
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 U 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 Funds 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.
You may purchase or redeem shares of the fund on any business day through your financial intermediary. Additional information on redeeming shares through your financial intermediary can be found below under “Transactions through Financial Intermediaries.”
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Shareholder Information
Purchasing and Redeeming Fund Shares continued
Shares of the fund are generally offered to persons in the United States and are also available for purchase in certain foreign jurisdictions. These foreign purchases may only be made through qualifying financial intermediaries who have submitted a completed financial intermediary certification form to the fund’s administrator.
When purchasing shares, payment must be made by wire transfer, which can be arranged by your financial intermediary. 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, or as determined by the SEC, as a result of which disposal of portfolio securities or determination of the NAV of the fund is not reasonably practicable; |
| ● | for any period during which trading on the 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 intermediary 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 typically select a representative basket of securities and 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.
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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 is generally calculated at 1:00 p.m. Central time on days on which the bond markets have an “Early Close” (typically on the business day preceding a Federal holiday). Purchase and redemption orders received after closing time, including an Early Close, will be processed the next business day.
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.
Transactions through Financial Intermediaries
The fund has authorized one or more financial intermediaries to accept purchase and redemption orders on the fund’s behalf. Financial intermediaries may include financial advisors, investment advisers, brokers, financial planners, banks, insurance companies, retirement or 401(k) plan administrators and others, including various affiliates of the fund’s advisor, that have entered into agreements with the fund’s distributor, advisor, and/or transfer agent. Such financial intermediaries may be authorized to designate other intermediaries to accept purchase and redemption orders on the fund’s behalf. The fund will be deemed to have received a purchase or redemption order when such financial intermediary or, if applicable, such financial intermediary’s authorized designee, accepts the order. Such orders will be priced at the fund’s NAV next calculated after it is accepted by the financial intermediary. In such cases, if requested by the fund, a financial intermediary will be responsible for providing information with regard to the time that such order for purchase or redemption was received. Orders submitted through a financial intermediary that has not received such authorization to accept orders on the fund’s behalf will be priced at the fund’s NAV next calculated after the fund receives and accepts the order from the financial intermediary, which may not occur on the day you submitted the order to the financial intermediary. Since not all financial intermediaries have received such authorization, you may wish to contact your financial intermediary to determine if it has received such authorization.
| 14 | Prospectus – | First
American Money Market Funds Class U Shares |
Shareholder Information
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 intermediary, 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.”
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 funds 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.
| 15 | Prospectus – | First
American Money Market Funds Class U Shares |
Shareholder Information
Additional Payments to Institutions continued
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 their 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.
| 16 | Prospectus – | First
American Money Market Funds Class U Shares |
Because Class U shares have not been offered prior to the date of this prospectus, the table that follows presents performance information about the Class A shares of the fund, which are offered through another prospectus. Class U and Class A shares of the fund are invested in the same portfolio of securities; however Class U shares are expected to have lower operating expenses than Class A shares. This information is intended to help you understand the fund’s financial performance for the past five years. Some of this information reflects financial results for a single fund share held throughout the period. Total returns in the table represent the rate that you would have earned or lost on an investment in the fund, assuming you reinvested all of your dividends and distributions.
This information has been derived from the financial statements audited by Ernst & Young LLP, an independent registered public accounting firm, whose report, along with the fund’s financial statements, is included in the fund’s annual report, which is available upon request.
| 17 | Prospectus – | First
American Money Market Funds Class U Shares |
Financial Highlights
Government Obligations Fund
| Fiscal year ended August 31, | ||||||||||||||||||||
| Class A Shares | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||
| Per Share Data | ||||||||||||||||||||
| Net Asset Value, Beginning of Period | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | ||||||||||
| Net Investment Income | 0.001 | 0.000 | 1 | 0.000 | 1 | 0.000 | 1 | 0.000 | 1 | |||||||||||
| Distributions (from net investment income) | (0.001 | ) | (0.000 | )1 | (0.000 | )1 | (0.000 | )1 | (0.000 | )1 | ||||||||||
| Distributions (for net realized gains on investments) | (0.000 | )1 | — | — | — | — | ||||||||||||||
| Net Asset Value, End of Period | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | ||||||||||
Total Return2 | 0.08 | % | 0.01 | % | 0.01 | % | 0.01 | % | 0.02 | % | ||||||||||
Ratios/Supplemental Data Net Assets, End of Period (000) | $ | 313,106 | $ | 199,472 | $ | 315,649 | $ | 258,329 | $ | 245,783 | ||||||||||
| Ratio of Expenses to Average Net Assets | 0.62 | % | 0.29 | % | 0.11 | % | 0.09 | % | 0.14 | % | ||||||||||
| Ratio of Net Investment Income to Average Net Assets | 0.07 | % | 0.01 | % | 0.01 | % | 0.01 | % | 0.02 | % | ||||||||||
| Ratio of Expenses to Average Net Assets (excluding waivers) | 0.79 | % | 0.80 | % | 0.80 | % | 0.80 | % | 0.80 | % | ||||||||||
| Ratio of Net Investment Income (Loss) to Average Net Assets (excluding waivers) | (0.10 | )% | (0.50 | )% | (0.68 | )% | (0.70 | )% | (0.64 | )% | ||||||||||
| 1 | Rounds to zero. |
| 2 | Total return would have been lower had certain expenses not been waived. |
| 18 | Prospectus – | First
American Money Market Funds Class U Shares |
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| 19 | Prospectus – | First
American Money Market Funds Class U 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 funds and their policies and is incorporated into this prospectus by reference (which means that it is legally part of this prospectus).
Additional information about the funds’ investments is available in the funds’ annual and semi-annual reports to shareholders.
You can obtain a free copy of the funds’ most recent annual or semi-annual reports or the SAI, request other information about the funds, or make other shareholder inquiries by calling Investor Services at 800 677-3863 or by contacting the funds at the address above. Annual or semi-annual reports and the SAI are also available on the funds’ Internet site at www.firstamericanfunds.com.
Information about the funds (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 funds 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 | PROMMU 02 /18 |
FIRST AMERICAN FUNDS, INC.
Statement of Additional Information
February 26, 2018
Money Market Funds
| Share Classes/Ticker Symbols | ||||||||
Fund |
Class A |
Class D |
Class P |
Class U |
Class V |
Class X |
Class Y |
Class Z |
| Government Obligations Fund | FAAXX | FGDXX | FPPXX | FGUXX | FVIXX | FGXXX | FGVXX | FGZXX |
This Statement of Additional Information (“SAI”) relates to Government 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 Prospectus dated February 26, 2018. Class U shares are first being offered as of the date of this SAI. The financial statements included as part of the Fund’s Annual Report to shareholders for the fiscal year ended August 31, 2017 are incorporated by reference into this SAI. This SAI is incorporated into the Fund’s Prospectus by reference. To obtain copies of Prospectus 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.
Table of Contents
Page
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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. 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 are named on the cover.
Shareholders may purchase shares of the Fund through separate classes. The Fund offers its shares in eight classes: Class A, Class D, Class P, Class U, Class V, Class X, Class Y, and Class Z shares. Prior to December 1, 2003, the Class A shares were named “Class S” shares. Class U shares are first being offered as of the date of this SAI. Prior to October 14, 2016, the Class G shares were named “Reserve Class” shares and the Class V shares were named “Institutional Investor” shares. 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 D shares, the Class P shares, the Class U shares, the Class V shares, the Class X 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.
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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. The Fund’s concentration policy permits investment, without limit, in obligations of domestic commercial banks 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). For purposes of applying the limitation set forth in number 1 above, obligations of domestic commercial banks include fixed and variable rate certificates of deposit, time deposits, bankers’ acceptances, and other short-term obligations issued by such domestic commercial banks (not including commercial paper issued by such banks), as described under “Additional Information Concerning Fund Investments – Obligations of Banks and Other Financial Services Companies.” To the extent that such investments are consistent with the 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. Because the Fund invests solely in U.S. government securities, U.S. Treasury obligations, or repurchase agreements secured by such securities, these funds will not invest in any industry. For purposes of the Fund’s concentration limitation discussed above, with respect to any investment in another money market fund, the Fund looks through to the holdings of such underlying money market fund.
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. |
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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 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 are securities (i) with remaining maturities of 397 calendar days or less that the Board or its delegee determines presents minimal credit risks to the Fund, which determination must include an analysis of the capacity of a security’s issuer or guarantor (including the provider of a conditional demand feature, when applicable) to meet its financial obligations. Such analysis must include, to the extent appropriate, consideration of the following factors with respect to the security’s issuer or guarantor: (a) financial condition, (b) sources of liquidity, (c) ability to react to future market-wide and issuer- or guarantor- specific events, including the ability to repay debt in a highly adverse situations; and (d) strength of the issuer or guarantor’s industry within the economy and relative to economic trends, and the issuer or guarantor’s competitive position within its industry; (ii) that are issues by a registered investment company that is a money market fund; or (iii) that is a government security. 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. 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
4
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.
As required by current SEC regulations, under normal market conditions, the Fund invests at least 80% of its net assets (plus any borrowings for investment purposes) in U.S. government securities, including repurchase agreements secured by U.S. government securities. The Fund will provide shareholders with at least 60 days advance notice before changing these policies. For purposes of the Fund’s policy, with respect to any investment in another money market fund, the Fund looks through to the holdings of such underlying money market fund.
Additional Information Concerning Fund Investments
The principal investment strategies of the Fund are set forth in the Fund’s current Prospectuses under “Fund Summaries.” 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 its 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, 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 its investment securities. Although each investment security, at the time it is purchased, must meet the 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.
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.
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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 the 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, 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 investing Fund as a non-principal investment strategy. As a shareholder of another investment company, the Fund would bear, along with other shareholders, its pro rata portion of that company’s expenses, 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 Fund 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 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 Fund 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. 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 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 appropriate Fund will promptly receive additional collateral (so the total collateral is an amount at least equal to the repurchase price plus accrued interest).
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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. 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.
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
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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 that 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.
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 objectives.
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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 Summaries” 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 each 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 relevant 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 Funds’ 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:
ADP Broker-Dealer, Inc. American Financial Printing, Inc. Bank of New York Mellon Bloomberg L.P. Broadridge Financial Solutions, Inc. Charles Schwab & Co., Inc. Comerica Bank Crane Data LLC Dorsey & Whitney LLP |
Ernst & Young LLP FactSet Research Systems Inc. FIS Brokerage & Securities Services LLC Fitch, Inc. Goldman Sachs & Co. LLC ICE Data Services/Interactive Data Pricing and Reference Data LLC iMoneyNet, Inc. J.P. Morgan Securities, LLC
|
Merrill Lynch Pierce Fenner & Smith Inc. Moody’s Investor Services, Inc. Piper Jaffray & Co. Pricing Direct Inc. Ropes & Gray LLP Standard & Poor’s Rating Services LLC State Street Global Markets, LLC SVB Asset Management, Inc. Thomson Reuters Corporation |
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”).
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Name, Address and Year of Birth |
Position Held with the Fund |
Term of Office and Length of Time Served |
Principal Occupation During Past 5 Years and Other Relevant Experience1 |
Number of Portfolios in FAF Fund Complex Overseen by Director |
Other Directorships 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
|
First American Funds Complex: 1 registered investment company, including 6 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, The California Academy of Sciences and Rayonier, Inc. Independent Director, First American Fund Complex since 2016 |
First American Funds Complex: 1 registered investment company, including 6 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, Diversified Real Asset Income Fund (investment 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: 1 registered investment company, including 6 portfolios | None | |||||
Richard K. Riederer P.O. Box 1329 Minneapolis, MN 55440-1329 (1944) |
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 2017; 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, Diversified Real Asset Income Fund (investment company); 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 | First American Funds Complex: 1 registered investment company, including 6 portfolios | None |
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Name, Address and Year of Birth |
Position Held with the Fund |
Term of Office and Length of Time Served |
Principal Occupation During Past 5 Years and Other Relevant Experience1 |
Number of Portfolios in FAF Fund Complex Overseen by Director |
Other Directorships Held by Director2 |
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
|
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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; former Director, Diversified Real Asset Income Fund (investment 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: 1 registered investment company, including 6 portfolios | None |
| 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. |
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 | |||
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. | |||
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 | Head of Operations and Mutual Funds Treasurer, U.S. Bancorp Asset Management, Inc. since September 2014; Mutual Funds Treasurer, U.S. Bancorp Asset Management, Inc. from January 2011 through September 2014 | |||
Brent G. Smith U.S. Bancorp Asset Management, Inc.
|
Assistant Treasurer | Re-elected by the Board annually; Assistant Treasurer of | Assistant Mutual Funds Treasurer, U.S. Bancorp Asset Management, Inc. since September 2014; prior thereto, Senior Fund Accountant, U.S. Bancorp Asset Management, Inc. |
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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 |
800 Nicollet Mall Minneapolis, MN 55402 (1981) 1
|
FAF since September 2014 | |||||
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. | |||
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. | |||
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. | |||
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. |
| 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 Fund. 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 directors of Institutional Prime Obligations Fund, Retail Prime Obligations Fund, Retail Tax Free Obligations Fund, Treasury Obligations Fund and U.S. Treasury Money Market Fund (collectively with the Funds, the “Fund Complex”). 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 Fund’s 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
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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 8/31/17 | ||||
| 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) Richard K. Riederer James M. Wade
|
2 | |||
| 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 | James M. Wade (Chair) David
K. Baumgardner Roger A. Gibson Richard K. Riederer
|
5 |
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Committee Function |
Committee Members |
Number of Fund Complex Committee Meetings Held During FAF’s Fiscal Year Ended 8/31/17 |
| 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). |
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. Riederer) or the Chair of the Governance Committee (Mr. Wade), 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; |
| ● | 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, 2017.
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| Directors | |||||
| Baumgardner | Gaumond | Gibson | Riederer | Wade | |
| Aggregate Holdings – Fund Complex | — | — | — | — | $1-$10.000 |
| Government Obligations Fund | — | — | — | — | — |
| Institutional Prime Obligations Fund | — | — | — | — | — |
| Retail Prime Obligations Fund | — | — | — | — | $1-$10.000 |
| Retail Tax Free Obligations Fund | — | — | — | — | — |
| Treasury Obligations Fund | — | — | — | — | — |
| U.S. Treasury Money Market Fund | — | — | — | — | — |
As of September 30, 2017, 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 Fund 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 Fund.
The Board has determined that each Director should 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 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.
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 the Fund Complex.
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.
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The following table sets forth information concerning aggregate compensation paid to each Director of FAF (i) by FAF (column 2), and (ii) by the fund complex (which is currently comprised of FAF only) (column 5) during the fiscal year ended August 31, 2017. 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.
Compensation during Fiscal Year Ended August 31, 2017
Name of Person, Position |
Aggregate Compensation From FAF |
Pension or Retirement Benefits Accrued as Part of Fund Expenses |
Estimated Annual Benefits Upon Retirement |
Total Compensation from Fund Complex Paid to Directors | ||||
| David K. Baumgardner, Director | $ 162,758 | -0- | -0- | $ 162,758 | ||||
| Mark E. Gaumond, Director | 162,758 | -0- | -0- | 162,758 | ||||
| Roger A. Gibson, Director | 177,554 | -0- | -0- | 177,554 | ||||
| Leonard W. Kedrowski1, retired Chair | 79,484 | -0- | -0- | 79,484 | ||||
| Richard K. Riederer2, Chair | 223,394 | -0- | -0- | 223,394 | ||||
| James M. Wade, Director | 170,780 | -0- | -0- | 170,780 |
1 Mr. Kedrowski retired from the Board effective December 31, 2016.
2 Mr. Riederer was appointed Chair of the Board effective January 1, 2017.
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 Fund. 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, 2017, U.S. Bancorp and its subsidiaries had consolidated assets of $46 2 billion, consolidated deposits of $347. 2 billion and shareholders’ equity of $ 49 billion.
Pursuant to an Investment Advisory Agreement, dated January 20, 1995 (the “Advisory Agreement”), the Fund 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, each 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 Fund 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
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services to the Fund, 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.
Prior to October 30, 2008, the Advisor had contractually agreed to waive fees and reimburse other fund expenses, so that total fund operating expenses (excluding fees paid for participation in the U.S. Department of the Treasury’s Temporary Guarantee Program for Money Market Funds), as a percentage of average daily net assets, would not exceed certain amounts through October 31, 2009. Effective December 22, 2008, the Board approved the termination of these fee waivers and reimbursements. However, the Advisor agreed to waive or reimburse certain fees and expenses, and the Board approved the suspension or reduction of 12b-1 payments, as needed, in order to maintain a yield for each share class of each Fund of at least 0%. These waivers and reimbursements by the Advisor are voluntary and may be terminated at any time by the Advisor, unless otherwise set forth in the Prospectuses. In addition, with respect to such voluntary waivers or reimbursements, the Advisor may retain 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.
The Advisor has contractually agreed to limit fund expenses, so that total fund operating expenses, as a percentage of average daily net assets, do not exceed certain amounts through February 28, 2019.
The following table sets forth total advisory fees before and after contractual and/or voluntary waivers for the Funds for the fiscal years ended August 31, 2015, August 31, 2016 and August 31, 2017.
Fiscal Year Ended August 31, 2015 |
Fiscal Year Ended August 31, 2016 |
Fiscal Year Ended August 31, 2017 | ||||||
Fund |
Advisory Fee Before Waivers | Advisory Fee After Waivers | Advisory Fee Before Waivers | Advisory Fee After Waivers | Advisory Fee Before Waivers | Advisory Fee After Waivers | ||
| Government Obligations Fund | $ 18,636,497 | $ 17,137,706 | $ 19,720,746 | $ 19,720, 746 | $ 31,069,743 | $ 31,069,743 | ||
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
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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.
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.
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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 Funds 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.
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 January 31, 2018 :
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.
Chicago Mercantile Exchange, Inc.
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Comerica Bank
Country Trust Bank
ExpertPlan, Inc.
Fidelity Brokerage Services LLC / National Financial Services LLC / Fidelity Investments Institutional Operations Company, Inc.
FIS Brokerage & Securities Services LLC
Goldman Sachs & Co. LLC
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 Securities, LLC
Janney Montgomery Scott LLC
Lincoln Retirement Services Company LLC / AMG Service Corp.
LPL Financial LLC
Marshall & Ilsley Trust Company, N.A.
Massachusetts Mutual Life Insurance Company
Mercer HR Services 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
Quasar Distributors, LLC
RBC Dain Rauscher, Inc.
Reliance Trust Company
Robert W. Baird & Co., Inc.
State Street Global Markets
SVB Asset Management
TD Ameritrade Trust Company
TIAA-CREF Individual & Institutional Services, LLC
Treasury Curve, LLC
U.S. Bancorp Fund Services, LLC
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 January 31, 2018 , are not reflected.
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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 Government Obligations Fund’s pro rata share of an amount equal, on an annual basis, to 0.015% of the aggregate average daily Class U share net assets. For other share classes of the Funds, 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 each other share class of the Funds up to $8 billion, 0.185% for Class A shares and 0.135% for each other share class on the next $17 billion of aggregate average daily net assets, 0.17% for Class A shares and 0.12% for each other share class on the next $25 billion of aggregate average daily net assets, and 0.15% for Class A shares and 0.10% for each other share class 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.
The following table sets forth total administrative fees, after waivers, paid by the Fund listed below to the Administrator for the fiscal years ended August 31, 2015, August 31, 2016 and August 31, 2017:
| Fund | Fiscal
Year Ended August 31, 2015 | Fiscal
Year Ended August 31, 2016 | Fiscal
Year Ended August 31, 2017 | ||||||||||
| Government Obligations Fund | $ 938,108 | $ 16,789,233 | $ 25,378,491 | ||||||||||
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.
During the fiscal years ended August 31, 2015, August 31, 2016 and August 31, 2017 the Fund paid to USBFS transfer agent fees in the following amounts:
| Fiscal
Year Ended August 31, 2015 | Fiscal
Year Ended August 31, 2016 | Fiscal
Year Ended August 31, 2017 | |||||||||||
| Government Obligations Fund | $ 108,000 | $ 115,500 | $ 126,000 | ||||||||||
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.
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The Distributor receives no compensation for distribution or shareholder servicing of the Class U shares.
The Distribution Agreements provide that they will continue in effect for a period of more than one year from the date of their execution only so long as such continuance is specifically approved at least annually by the vote of a majority of the Board 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.
The Distributor received the following compensation from the Fund during the Fund’s most recent fiscal year ended August 31, 2017:
Fiscal Year Ended August 31, 2017
| Fund | Net Underwriting Discounts and Commissions | Compensation
on Redemptions and Repurchases | Brokerage Commissions | Other Compensation1 | |||||||
| Government Obligations Fund | None | None | None | $ 3,847,307 | |||||||
| 1 | Primarily represents Rule 12b-1 fees paid to the Distributor as dealer of record on certain shareholder accounts under FAF’s Rule 12b-1 Distribution and Service Plan. Total fees paid by the Funds under FAF’s Rule 12b-1 Distribution and Service Plan are provided below. |
FAF has also adopted Plans of Distribution with respect to the Class A, Class D, and Class G shares of the Funds pursuant to Rule 12b-1 under the 1940 Act. No 12b-1 fees are paid with respect to Class U shares.
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 the 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, 220 South Sixth Street, Suite 1400, Minneapolis, Minnesota, 55402, 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
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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.
Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12 month period ended June 30, 2017 is available, 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 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
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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. 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.
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.
During its three most recent fiscal years ended August 31, the Fund paid no brokerage commissions to any brokers, including affiliated brokers. At August 31, 2017, the Fund did not hold securities of broker-dealers which are deemed to be “regular brokers or dealers” of the Funds under the 1940 Act (or of such broker-dealers’ parent companies).
Each share of the Fund’s $.01 par value common stock is fully paid, non-assessable, 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 January 31 , 2018, the Directors and officers of FAF as a group owned less than one percent of the Fund’s outstanding shares and the Fund was aware that the persons set forth in the following table owned of record five percent or more of the outstanding shares of each class of stock of the Fund.
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Class A |
Class D |
Class P | Class V | Class X | Class Y |
Class Z | |
| GOVERNMENT OBLIGATIONS FUND | |||||||
BAND & CO C/O US BANK ATTN ACM DEPT PO BOX 1787 MILWAUKEE WI 53201-1787 |
66.53% | ||||||
FBS INVESTMENT SERVICES INC FOR THE EXCLUSIVE BENEFIT OF ITS CUSTOMERS ATTN MONEY FUNDS UNIT R/R 60 LIVINGSTON AVE SAINT PAUL MN 55107-2292 |
30.45% | ||||||
BAND & CO C/O US BANK ATTN ACM DEPT PO BOX 1787 MILWAUKEE WI 53201-1787 |
100% | ||||||
US BANCORP ASSET MANAGEMENT INC 800 NICOLLET MALL FL 4 MINNEAPOLIS MN 55402-7000 |
100% | ||||||
BAND & CO C/O US BANK ATTN ACM DEPT PO BOX 1787 MILWAUKEE WI 53201-1787 |
99.83% | ||||||
BAND & CO C/O US BANK ATTN ACM DEPT PO BOX 1787 MILWAUKEE WI 53201-1787 |
80.36% | ||||||
HUMANA INSURANCE COMPANY ATTN KEVIN HORSLEY 500 WEST MAIN STREET LOUISVILLE, KY 40202-2946 |
7.41% | ||||||
US BANK N A CUST FBO FIRST AMERICAN C/C ATTN: WILLY BLOOM 1555 N RIVERCENTER DR STE 302 MILWAUKEE WI 53212 |
6.53% | ||||||
BAND & CO C/O US BANK ATTN ACM DEPT PO BOX 1787 MILWAUKEE WI 53201-1787 |
86.40% | ||||||
US BANK NA – MONEY CENTER FBO INVESTMENT SWEEP CUSTOMERS ATTN: TINA EUMURIAN 800 NICOLLET AVE MINNEAPOLIS MN 55402-7000 |
12.74% | ||||||
BAND & CO C/O US BANK ATTN ACM DEPT PO BOX 1787 MILWAUKEE WI 53201-1787 |
84.13 | ||||||
HARE & CO ATTN FRANK NOTARO 111 SANDERS CREEK PKWY EAST SYRACUSE, NY 13057-1382 |
7.14% |
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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. On August 31, 2017, the net asset value per share for the Fund was calculated as set forth below.
Fund | Net Assets | Shares Outstanding | Net Asset Value Per Share | |||||||||
| Government Obligations Fund | ||||||||||||
| Class A | $ | 313,105,934 | 313,103,665 | $ | 1.00 | |||||||
| Class D | 3,195,440,977 | 3,195,408,590 | 1.00 | |||||||||
| Class V | 1,995,444,537 | 1,995,433,050 | 1.00 | |||||||||
| Class X | 3,553,517,459 | 3,553,504,902 | 1.00 | |||||||||
| Class Y | 8,694,560,265 | 8,694,500,317 | 1.00 | |||||||||
| Class Z | 16,442,190,928 | 16,442,086,564 | 1.00 | |||||||||
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 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 its 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.
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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 capital gains (if any) once each year, although it may distribute them more frequently if it is 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.
The IRS has issued final regulations that permit a simplified method of accounting for gains and losses realized upon the disposition of shares of a regulated investment company that is a money market fund, including as a result of the imposition of a liquidity fee. Very generally, rather than realizing gain or loss upon each redemption of a share, a shareholder of a money market fund using such method of accounting will recognize gain or loss with respect to such a Fund’s shares for a given computation period (the shareholder’s taxable year or shorter period selected by the shareholder) equal to the value of all the Fund shares held by the shareholder on the last day of the computation period, less the value of all Fund shares held by the shareholder on the last day of the preceding computation period, less the shareholder’s net investment in the Fund (generally, purchases minus redemptions) made during the computation period.
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.
Shareholders of a Fund are urged to consult their own tax advisors regarding their investment in the Fund.
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 funds may be transferred to that state.
Additional Charges
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.
A shareholder may redeem shares of the Fund, if he or she elects the privilege on the initial shareholder application, by calling his or her financial institution to request the redemption. Pursuant to instructions received from the financial institution, redemptions will be made by check, by wire transfer or, if available, by ACH transaction.
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 (if available) 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 the 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.
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 CDSC schedules, if any, of such fund family.
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 financial statements of FAF included in its Annual Report to shareholders for the fiscal period ended August 31, 2017, are incorporated herein by reference.
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First American Funds
Effective Date: 10/4/2016
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
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. |
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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. |
| ● | 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 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. |
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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. |
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 |
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Related Policies
| ● | Recordkeeping & Retention |
Related Disclosures
| ● | Form N-PX |
| ● | Registration Statement |
35
Glossary of Standard Terms
| Advisor or USBAM | U.S. Bancorp Asset Management, Inc. | |
| Board | First American Funds, Inc. 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, Funds or Money Market Funds | Each series of First American Funds, Inc. whether now existing or organized in the future. | |
| ICCC | Internal Compliance Controls Committee | |
| IPC | Investment Practices Committee | |
| Legal or Legal Department | USBAM Legal | |
| 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. |
36
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 (Incorporated by reference to Exhibit (a)(14) to Post-Effective Amendment No. 84, filed on July 18, 2016 (File Nos. 002-74747, 811-03313)).
(a)(15) Certificate of Designation dated October 11, 2016 renaming certain series and classes, filed on October 12, 2016. (Incorporated by reference to Exhibit (a)(15) to Post-Effective Amendment No. 90, filed on October 14, 2016 (File Nos. 002-74747, 811-03313)).
(a)(16) Certificate of Designation dated September 28, 2017 designating Class P shares of Government Obligations Fund and Treasury Obligations Fund, filed on September 28, 2017 (Incorporated by reference to Exhibit (a)(16) to Post-Effective Amendment No. 92, filed on October 13, 2017 (File Nos. 002-74747, 811-03313)).
(a)(17) Certificate of Designation dated December 6, 2017 designating Class U shares of Government Obligations Fund, filed on December 6, 2017 (Incorporated by reference to Exhibit (a)(17) to Post-Effective Amendment No. 97, filed on December 21, 2017 (File Nos. 002-74747, 811-03313)).
(b) Bylaws, as amended December 5, 2017 (Incorporated by reference to Exhibit (b) to Post-Effective Amendment No. 97, filed on December 21, 2017 (File Nos. 002-74747, 811-03313)).
(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)).
2
(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 (Incorporated by reference to Exhibit (d)(5) to Post-Effective Amendment No. 76, filed on February 19, 2016 (File Nos. 002-74747, 811-03313)).
(d)(6) Expense Limitation Agreement effective October 1, 2017, between the Registrant and U.S. Bancorp Asset Management, Inc. (Incorporated by reference to Exhibit (d)(6) to Post-Effective Amendment No. 92, filed on October 13, 2017 (File Nos. 002-74747, 811-03313)).
(d)(7) Expense Limitation Agreement effective October 30, 2017, between the Registrant and U.S. Bancorp Asset Management, Inc. (Incorporated by reference to Exhibit (d)(7) to Post-Effective Amendment No. 93, filed on October 30, 2017 (File Nos. 002-74747, 811-03313)).
(d)(8) Expense Limitation Agreement effective February 26, 2018, between the Registrant and U.S. Bancorp Asset Management, Inc.*
(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.*
(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)).
3
(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 (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) Amendment to Sub-Administration Agreement effective as of January 1, 2017 by and between U.S. Bancorp Asset Management, Inc. and U.S. Bancorp Fund Services, LLC (Incorporated by reference to Exhibit (h)(4) to Post-Effective Amendment No. 92, filed on October 13, 2017 (File Nos. 002-74747, 811-03313)).
(h)(5) 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. (Incorporated by reference to Exhibit (h)(4) to Post-Effective Amendment No. 84, filed on July 18, 2016 (File Nos. 002-74747, 811-03313)).
(h)(6) Amended Shareholder Service Plan and Agreement effective July 1, 2005, as further amended effective February 22, 2006 and June 13, 2017 between Registrant and U.S. Bancorp Asset Management, Inc. for Class A, Class D, Class G, Class T, Class V and Class Y shares (Incorporated by reference to Exhibit (h)(6) to Post-Effective Amendment No. 92, filed on October 13, 2017 (File Nos. 002-74747, 811-03313)).
(h)(7) 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)(8) 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)(9) 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
4
reference to Exhibit (h)(9) to Post-Effective Amendment No. 60, filed on October 31, 2008 (File Nos. 002-74747, 811-03313)).
(h)(10) 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)(11) Securities Lending Agreement dated October 1, 2011, by and between First American Funds, Inc. – Institutional 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 (Incorporated by reference to Exhibit (i) to Post-Effective Amendment No. 97, filed on December 21, 2017 (File Nos. 002-74747, 811-03313)).
(j) Consent of Ernst & Young LLP.*
(k) Not applicable.
(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 December 5, 2017 (Incorporated by reference to Exhibit (n) to Post-Effective Amendment No. 97, filed on December 21, 2017 (File Nos. 002-74747, 811-03313)).
(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. (Incorporated by reference to Exhibit (p)(1) to Post-Effective Amendment No. 92, filed on October 13, 2017 (File Nos. 002-74747, 811-03313)).
(p)(2) U.S. Bancorp Asset Management, Inc. Code of Ethics adopted under Rule 17j-1 of the Investment Company Act of 1940 (Incorporated by reference to Exhibit (p)(2) to Post-Effective Amendment No. 97, filed on December 21, 2017 (File Nos. 002-74747, 811-03313)).
5
(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) Power of Attorney dated September 28, 2017 (Incorporated by reference to Exhibit (q) to Post-Effective Amendment No. 92, filed on October 13, 2017 (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 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
6
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; Director, U.S. Bancorp Asset Management, Inc.; President, FAF since June 2014 |
James D. Palmer U.S. Bancorp Asset Management, Inc. 800 Nicollet Mall Minneapolis, MN 55402
|
Chief Investment Officer, U.S. Bancorp Asset Management, Inc. since August 2012; Director, U.S. Bancorp Asset Management, Inc. since June 2014; Vice President, FAF 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 |
Jill M. Stevenson U.S. Bancorp Asset Management, Inc. 800 Nicollet Mall Minneapolis, MN 55402
|
Head of Operations and Mutual Funds Treasurer, U.S. Bancorp Asset Management, Inc. since September 2014; Treasurer, FAF |
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 |
Ruth M. Mayr |
Chief Compliance Officer, U.S. Bancorp Asset Management, Inc.; Chief |
7
Name and Address |
Principal Occupation(s) During the Past Two Years |
|
U.S. Bancorp Asset Management, Inc. 800 Nicollet Mall Minneapolis, MN 55402
|
Compliance Officer, FAF |
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 |
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 | Fiera Capital Funds | Orinda Funds |
| Abbey Capital Futures Strategy Fund | First American Funds, Inc. | O’Shaughnessy Funds |
| AC One China Fund | First State Investments Funds | Osterweis Funds |
| Academy Asset ETF Funds | Fort Pitt Capital Group, Inc. | Otter Creek Funds |
| Academy Fund Trust | Fulcrum Funds | Pension Partners Funds |
| Advantus Mutual Funds | Fund X Funds | Permanent Portfolio Funds |
| Advisors Asset Management Funds | Gerstein Fisher Funds | Pemberwick Funds |
| Aegis Funds | Glenmede Fund, Inc. | Perritt Funds, Inc. |
| Akre Funds | Glenmede Portfolios | PIA Funds |
| Allied Asset Advisors Funds | GoodHaven Funds | Poplar Forest Funds |
| Alpha Architect Funds | Great Lakes Funds | Port Street Funds |
| AlphaClone ETF Fund | Greenspring Fund | Primecap Odyssey Funds |
| AlphaMark ETFs | Green Square | Prospector Funds |
| Alpine Equity Trust | Harding Loevner Funds | Provident Mutual Funds, Inc. |
| Alpine Income Trust | Heitman Funds | Pzena Funds |
| Alpine Series Trust | Hennessy Funds Trust | Rareview Funds |
| Altair Funds | Highmore Funds | RBC Funds Trust |
| American Trust | Hodges Funds | Reinhart Funds |
| Amplify ETFs | Hood River Funds | RiverNorth Funds |
| Angel Oak Funds | Horizon Investment Funds | Rockefeller Funds |
| Aptus ETF | Hotchkis & Wiley Funds | Scharf Funds |
| Barrett Growth Fund | Huber Funds | Schneider Funds |
| Barrett Opportunity Fund | Infinity Q Funds | Semper Funds |
| Becker Value Equity Fund | Innovator ETFs Trust | SerenityShares |
| BMT Investment Funds | Intrepid Capital Management | Shenkman Funds |
| Bogle Investment Management | IronBridge Funds | SIMS Total Return Fund |
| Boston Common Funds | Jackson Square Partners | SL Advisors ETF |
| Boston Partners Fund | Jacob Funds, Inc. | Smith Group Funds |
| Bramshill Funds | Jensen Funds | Snow Capital Family of Funds |
| Bridge Builder Trust | Kellner Funds | Soundwatch Fund |
| Bridges Investment Fund, Inc. | Kensho ETFs | StrongVest |
| Bright Rock Funds | Kirr Marbach Partners Funds, Inc | Summit Global Funds |
| Brookfield Investment Funds | Lawson Kroeker Funds | Thomas White Funds |
| Brown Advisory Funds | LKCM Funds | Thompson IM Funds, Inc. |
| Buffalo Funds | LoCorr Investment Trust | Tiedemann Funds |
| Campbell Funds | Logan Capital Funds | TorrayResolute Funds |
| CAN SLIM Select Growth Fund | Loncar ETFs | Tortoise Funds |
| Capital Advisors Funds | Lyxor Asset Management Funds | Trillium Funds |
| CG Funds Trust | MainGate MLP Funds | TrimTabs ETF |
| Change Finance, Inc. | Marketfield Fund | Tygh Capital Management |
| Chase Funds | Marmont Funds | US Global ETFs |
| ClearShares ETF | Matrix Asset Advisors, Inc. | USA Mutuals Funds |
8
| Coho Partners | Matson Money Funds | USCA Shield Fund |
| Coldstream Funds | MD Sass | USQ Funds |
| Collins Capital Funds | Miller Value Funds | Validea Funds |
| Congress Funds | Monetta Trust | Vert Global REITs |
| Convergence Funds | Morgan Dempsey Funds | Vident Funds |
| Cove Street Capital Funds | Motley Fool | Villere & Co. |
| CrossingBridge Funds | Muhlenkamp Fund | Wasmer Schroeder Funds |
| Cushing Funds | Muzinich Funds | Weiss Multi-Strategy Funds |
| Dearborn Funds | Nationwide Funds | Westchester Capital Funds |
| Diamond Hill | Nicholas Funds | Wisconsin Capital Funds, Inc. |
| DoubleLine Funds | Nuance Funds | YCG Funds |
| Edgar Lomax Value Fund | Oakhurst Funds | Zevenbergen Capital Investment |
| Evercore Equity Fund | Oaktree Funds | Funds |
| Evermore Global Investors Trust |
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.
9
Item 34. Management Services
Not applicable.
Item 35. Undertakings
Not applicable.
10
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) 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 26th day of February, 2018.
| 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 February 26, 2018.
| 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 | |
| * | Chair
|
| 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 |
11
Index to Exhibits
| Exhibit Number | Name of Exhibit | |
| (d)(8) | Expense Limitation Agreement | |
| (e)(2) | Form of Dealer Agreement | |
| (j) | Consent of Ernst & Young LLP |
12
Exhibit 99(d)(8)
EXPENSE LIMITATION AGREEMENT
THIS AGREEMENT is effective as of the 26th day of February, 2018, between U.S. Bancorp Asset Management, Inc., as investment advisor (the “Advisor”), and First American Funds, Inc. (“FAF”).
WHEREAS, FAF is comprised of multiple investment portfolios (each a “Fund” and, collectively, the “Funds”), each of which offers one or more classes of shares; and
WHEREAS, the Advisor wishes to contractually limit fees and reimburse expenses for certain Funds within FAF through February 28, 2019; and
WHEREAS, it is in the interests of both the Advisor and the shareholders of the Funds to limit Fund expenses as set forth herein.
NOW, THEREFORE, in consideration of the foregoing, the parties hereto agree that the Advisor will limit its fees and/or reimburse Fund expenses to the extent necessary to limit the annual operating expenses net of acquired fund fees and expenses of the Funds to the amounts set forth in Exhibit A hereto (which limits are set forth for each Fund on a class-by-class basis). The Advisor agrees that it may not be reimbursed by FAF for the fees waived or reimbursements made by the Advisor under the terms of this agreement. The Advisor agrees to continue the foregoing expense limits through February 28, 2019. Thereafter, any expense limit may be changed upon prior notice to FAF’s Board of Directors.
IN WITNESS WHEREOF, the parties have signed this agreement as of the day and year first above written.
| U.S. BANCORP ASSET MANAGEMENT, INC. | FIRST AMERICAN FUNDS, INC. | |||
| By: | /s/ Jill M. Stevenson | By: | /s/ James D. Palmer | |
| Name: | Jill M. Stevenson | Name: | James D. Palmer | |
| Title: | Head of Operations and Mutual Funds Treasurer | Title: | Vice President | |
Exhibit A
| Money Market Funds | Annual
Operating Expense as a Percentage of Average Daily Net Assets |
|
Government Obligations Fund – Class U |
0.1200% |
Exhibit 99(e)(2)
Quasar Distributors, LLC
615 East Michigan Street
Milwaukee, WI 53202
DEALER AGREEMENT
This Agreement is made and effective as of this ____ day of __________, 20__, between Quasar Distributors, LLC (“Quasar”), a Delaware limited liability company, and (“Dealer”), a .
WHEREAS, First American Funds, Inc. (the “Fund Company”) is registered under the Investment Company Act of 1940, as amended (“1940 Act”), as an open-end investment company and currently offers for public sale shares of common stock or beneficial interest (“Shares”) in the separate series of the Fund Company listed on Schedule A, as may be amended from time to time (each, a “Fund”);
WHEREAS, the Shares are registered for public sale under the Securities Act of 1933 and are qualified for sale in certain states and jurisdictions of the United States;
WHEREAS, Quasar serves as principal underwriter in connection with the offering and sale of the Shares of each Fund pursuant to a Distribution Agreement; and
WHEREAS, Dealer desires to serve as a selected dealer for the Shares of the Funds.
NOW, THEREFORE, in consideration of the promises and the mutual covenants contained herein, Quasar and Dealer agree as follows:
1. Offers and Sales of Shares.
(a) Dealer agrees to offer and sell Shares only at the public offering price currently in effect, in accordance with the terms of the then-current prospectus(es), including any supplements or amendments thereto, of each Fund (“Prospectus”). Dealer agrees to act only as agent on behalf of its customers (“Customers”) in such transactions and shall not have authority to act as agent for the Funds, for Quasar, or for any other dealer in any respect. All purchase orders are subject to acceptance by Quasar and the relevant Fund and become effective only upon confirmation by Quasar or an agent of the Fund. In its sole discretion, either the Fund or Quasar may reject any purchase order and may, provided notice is given to Dealer, suspend sales or withdraw the offering of Shares entirely.
(b) Dealer understands and acknowledges that each Fund offers its Shares in multiple classes, each subject to differing sales charges and financing structures. Dealer hereby represents and warrants that it has established compliance procedures designed to ensure that Customers are made aware of the terms of each available class of the applicable Fund’s Shares, to ensure that each Customer is offered only Shares that are suitable investments of that Customer and to
First American 12/1/2017
ensure proper supervision of Dealer’s registered representatives in recommending and offering multiple classes of Shares to its Customers.
(c) Dealer understands and acknowledges that certain Shares may be subject to a contingent deferred sales charge when such Shares are redeemed. As to such Shares which are not networked, Dealer agrees either (i) to refrain from issuing such Shares in street name, or (ii) to monitor the time period during which the applicable contingent deferred sales charge remains in effect, to deduct from any redemption proceeds the applicable contingent deferred sales charge and to promptly remit to Quasar any such contingent deferred sales charge.
(d) Dealer agrees that it will arrange for the provision of shareholder services for Customers who have purchased Shares. Dealer may perform these shareholder services itself or subcontract them to a third party of its choice. These shareholder services include, but are not limited to: (i) maintaining accounts relating to Customers that invest in Shares; (ii) providing information periodically to Customers showing their positions in Shares; (iii) arranging for bank wires; (iv) responding to Customer inquiries relating to the services performed by Dealer; (v) responding to routine inquiries from Customers concerning their investments in Shares; (vi) forwarding shareholder communications from the Funds (such as proxies, annual and semi-annual shareholder reports and dividend, distribution and tax notices) to Customers; (vii) processing purchase, exchange and redemption requests from Customers and placing such orders with the Funds’ service providers; (viii) assisting Customers in changing dividend options, account designations, and addresses; and (ix) processing dividend payments from the Funds on behalf of Customers. The Dealer may also provide subaccounting with respect to Shares beneficially owned by Customers and provide such other similar services to the extent Dealer is permitted to do so under applicable laws or regulations.
2. Procedures for Purchases. The procedures relating to all orders and the handling of them shall be made in accordance with the procedures set forth in each Fund’s Prospectus, and to the extent consistent with the Prospectus, written instructions forwarded to Dealer by Quasar from time to time.
Dealer shall be permitted to accept orders for the purchase, exchange or redemption of Shares of the Funds on each business day that the New York Stock Exchange is open for business and a Fund’s net asset value is determined (“Business Day”). Dealer shall not be required to accept orders on any Business Day on which Dealer is not open for business. If orders are accepted by Dealer prior to the latest time at which a Fund’s net asset value is to be calculated as determined by its Board of Directors/Trustees, which is typically as of the close of the New York Stock Exchange on that Business Day (“Close of Trading”), such orders shall be treated as having been received on that Business Day. If such orders are received after Close of Trading on a Business Day, they shall not be treated as having been accepted by Dealer on such Business Day.
All purchase orders shall be placed at, and in accordance with the applicable discount schedules set forth in the Fund’s Prospectus.
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3. Settlement and Delivery for Purchases. Transactions shall be settled by Dealer by payment in federal funds of the full purchase price to the Fund’s transfer agent in accordance with applicable procedures. Payment for Shares shall be received by the Fund’s transfer agent by the later of (a) the end of the third business day following Dealer’s receipt of the Customer’s order to purchase such Shares or (b) the end of one business day following Dealer’s receipt of the Customer’s payment for such Shares, but in no event later than the end of the sixth business day following Dealer’s receipt of the Customer’s order. If such payment is not received within the time specified, the sale may be canceled forthwith without any responsibility or liability on Quasar’s part or on the part of the Funds to Dealer or its Customers. In addition, Dealer will be responsible to the Fund and/or Quasar for any losses suffered on the transaction.
4. Procedures for Redemption, Repurchase and Exchange. Redemptions or repurchases of Shares as well as exchange requests shall be made in accordance with the procedures set forth in each Fund’s Prospectus, and to the extent consistent with the Prospectus, written instructions forwarded to Dealer by Quasar from time to time.
5. Compensation. On each purchase of Shares by Dealer from Quasar, Dealer shall be entitled to receive such dealer allowances, concessions, finder’s fees, sales charges, discounts and other compensation, if any, as described and set forth in each Fund’s Prospectus. Sales charges and discounts to dealers, if any, may be subject to reductions under a variety of circumstances if described in each Fund’s Prospectus. To obtain any such reductions, Quasar must be notified when a sale takes place that would qualify for the reduced charge. If any Shares sold by Dealer under the terms of this Agreement are redeemed by a Fund or tendered for redemption or repurchased by a Fund or by Quasar as agent within seven business days after the date Dealer purchased such Shares, Dealer shall notify Quasar in writing and shall forfeit its right to any discount or commission received by or allowed to Dealer from the original sale. Dealer shall not be entitled to any compensation for its services under any 12b-1 plan in effect for a Fund unless Dealer has signed a related agreement.
6. Expenses. Dealer agrees that it will bear all expenses incurred in connection with its performance of this Agreement.
7. Dealer Registration.
(a) Dealer represents and warrants that it (i) is registered as a broker-dealer under the Securities Exchange Act of 1934 (the “1934 Act”) or is exempt from registration as a broker-dealer under the 1934 Act, (ii) is qualified as a broker-dealer in all states or other jurisdictions in which it sells Fund Shares or is exempt from registration as a broker-dealer in all states or other jurisdictions in which it sells Fund Shares, and, (iii) if it sells Shares in additional states or jurisdictions in the future, will become qualified to act as a broker-dealer in each such state or jurisdiction prior to selling any Fund Shares or will confirm an exemption from registration as a broker-dealer in each such state or jurisdiction prior to selling any Fund Shares.
(b) Dealer shall maintain any filings and licenses required by federal and state laws to conduct the business contemplated under this Agreement. Dealer agrees to notify Quasar
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immediately in the event of any finding that it violated any applicable federal or state law, rule or regulation arising out of its activities as a broker-dealer or in connection with this Agreement, or which may otherwise affect in any material way its ability to act in accordance with the terms of this Agreement.
(c) If Dealer is registered as a “bank,” as such term is defined in Section 3(a)(6) of the 1934 Act, Dealer further represents and warrants that it is a member of the Federal Deposit Insurance Corporation (“FDIC”) in good standing and agrees to notify Quasar immediately of any changes in Dealer’s status with the FDIC.
(d) If Dealer is registered as a broker-dealer under the 1934 Act, Dealer represents and warrants that it is a member in good standing of the Financial Industry Regulatory Authority (“FINRA”) and that it agrees to abide by the Conduct Rules of the FINRA. Dealer agrees to notify Quasar immediately in the event of its expulsion or suspension from the FINRA.
(e) If Dealer is registered as a broker-dealer under the 1934 Act, Dealer further represents and warrants that it is a member of the Securities Investor Protection Corporation (“SIPC”) in good standing and agrees to notify Quasar immediately of any changes in Dealer’s status with SIPC.
8. Compliance With Federal and State Laws.
(a) Dealer will not sell any of the Shares except in compliance with all applicable federal and state securities and banking laws. In connection with sales and offers to sell Shares, Dealer will furnish or cause to be furnished to each person to whom any such sale or offer is made, at or prior to the time of offering or sale, a copy of the Prospectus and, if requested, the related Statement of Additional Information (“SAI”). Quasar shall be under no liability to Dealer except for lack of good faith and for obligations expressly assumed by Quasar herein. Nothing herein contained, however, shall be deemed to be a condition, stipulation or provision binding any persons acquiring any security to waive compliance with, or to relieve the parties hereto from any liability arising under, the federal securities laws.
(b) Quasar or its agent shall, from time to time, inform Dealer as to the states and jurisdictions in which Quasar believes the Shares have been qualified for sale under, or are exempt from the requirements of, the respective securities laws of such states and jurisdictions. Dealer agrees that it will not knowingly offer or sell Shares in any state or jurisdiction in which such Shares are not qualified, unless any such offer or sale is made in a transaction that qualifies for an exemption from registration.
(c) Quasar assumes no responsibility in connection with the registration of Dealer under the laws of the various states or under federal law or Dealer’s qualification under any such law to offer or sell Shares.
9. Unauthorized Representations. No person is authorized to make any representations concerning Shares of the Funds except those contained in the Prospectus, SAI and printed
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information issued by each Fund or by Quasar as information supplemental to each Prospectus. Quasar shall, upon request, supply Dealer with reasonable quantities of Prospectuses and SAIs. Dealer agrees not to use other advertising or sales material relating to the Funds unless approved by Quasar in advance of such use. Neither party shall use the name of the other party in any manner without the other party’s written consent, except as required by any applicable federal or state law, rule or regulation, and except pursuant to any mutually agreed upon promotional programs.
10. Confirmations. Dealer agrees to send confirmations of orders to its Customers as required by Rule 10b-10 of the 1934 Act and applicable banking laws and regulations. In the event the Customers of Dealer place orders directly with the Fund or any of its agents, confirmations will be sent to such Customers, as required, by the Fund’s transfer agent.
11. Records. Dealer agrees to maintain all records required by applicable state and federal laws and regulations relating to the offer and sale of Shares to its Customers, and upon the reasonable request of Quasar, or of the Funds, to make these records available to Quasar or the Fund’s administrator as reasonably requested. On orders placed directly with the Fund or its agents, the Fund’s transfer agent will maintain all records required by state and federal laws and regulations relating to the offer and sale of Shares.
12. Taxpayer Identification Numbers. Dealer agrees to obtain any taxpayer identification number certification from its Customers required under the Internal Revenue Code and any applicable Treasury regulations, and to provide Quasar or its designee with timely written notice of any failure to obtain such taxpayer identification number certification in order to enable the implementation of any required backup withholding.
13. Indemnification.
(a) Dealer shall indemnify and hold harmless Quasar, each Fund, the transfer agent and administrator of the Funds, and their respective affiliates, officers, directors, agents, employees and controlling persons from all direct or indirect liabilities, losses or costs (including reasonable attorneys’ fees) arising from, related to or otherwise connected with any breach by Dealer of any provision of this Agreement.
(b) Quasar shall indemnify and hold harmless Dealer and its affiliates, officers, directors, agents, employees and controlling persons from and against any and all direct or indirect liabilities, losses or costs (including reasonable attorneys’ fees) arising from, related to or otherwise connected with any breach by Quasar of any provision of this Agreement.
(c) The agreement of the parties in this Paragraph to indemnify each other is conditioned upon the party entitled to indemnification (the “Indemnified Party”) notifying the other party (the “Indemnifying Party”) promptly after the summons or other first legal process for any claim as to which indemnity may be sought is served on the Indemnified Party, unless failure to give such notice does not prejudice the Indemnifying Party. The Indemnified Party shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting from it,
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provided that counsel for the Indemnifying Party who shall conduct the defense of such claim or litigation shall be approved by the Indemnified Party (which approval shall not unreasonably be withheld), and that the Indemnified Party may participate in such defense at its expense. The failure of the Indemnified Party to give notice as provided in this subparagraph (c) shall not relieve the Indemnifying Party from any liability other than its indemnity obligation under this Paragraph. No Indemnifying Party, in the defense of any such claim or litigation, shall, without the written consent of the Indemnified Party, consent to entry of any judgment or enter into any settlement that does not include as an unconditional term the giving by the claimant or plaintiff to the Indemnified Party of a release from all liability in respect to such claim or litigation.
14. No Agency Created. Nothing in this Agreement shall be deemed or construed to make Dealer an employee, agent, representative or partner of any of the Funds or of Quasar, and Dealer is not authorized to act for Quasar or for any Fund or to make any representations on Quasar’s or the Funds’ behalf. Dealer acknowledges that this Agreement is not exclusive and that Quasar may enter into similar arrangements with other institutions.
15. Term, Termination, Assignment and Amendment.
(a) This Agreement shall commence on the date first set forth above and shall continue in effect with respect to a Fund for more than one year only so long as such continuance is specifically approved by such Fund at least annually in conformity with the requirements of the 1940 Act.
(b) Either party to this Agreement may terminate this Agreement by giving ten days’ written notice to the other.
(c) This Agreement shall terminate automatically with respect to any Fund if (i) any bankruptcy, insolvency or receivership proceedings, or an assignment for the benefit of creditors, is brought under any federal or state law by or against Dealer, (ii) Dealer’s registration, if any, as a broker-dealer with the Securities and Exchange Commission is suspended or revoked, (iii) Dealer’s FINRA membership, if any, is suspended or revoked, (iv) Dealer is not registered as a broker-dealer under the 1934 Act or in a state or other jurisdiction in which it sells Fund Shares and there is not an applicable exemption from registration as a broker-dealer under the 1934 Act or in the state or other jurisdiction in which it sells Fund Shares, (v) an application for a protective decree under the provisions of the Securities Investor Protection Act of 1970 is filed against Dealer, or (vi) the Distribution Agreement between Quasar and such Fund is terminated (including as a result of an assignment). This Agreement also shall terminate automatically in the event of its “assignment,” within the meaning of the 1940 Act.
(d) Termination of this Agreement by operation of this Paragraph 15 shall not affect any unpaid obligations under Paragraphs 3, 5 or 6 of this Agreement or the liability, legal and indemnity obligations set forth under Paragraphs 7, 8, 9 or 13 of this Agreement.
(e) This Agreement may be amended by Quasar upon written notice to Dealer, and Dealer shall be deemed to have consented to such amendment upon effecting any purchases of
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Shares for its own account or on behalf of any Customer’s accounts following Dealer’s receipt of such notice.
16. Notices. Except as otherwise specifically provided in this Agreement, 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 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 Quasar shall be sent to:
Quasar Distributors, LLC
Attn: Dealer Agreement Department
615 East Michigan Street
Milwaukee, WI 53202
notice to Dealer shall be sent to:
________________________________
________________________________
________________________________
________________________________
17. Miscellaneous. The captions in this Agreement are included for convenience of reference only and in no way define or delimit any of the provisions hereof or otherwise affect their construction or effect. If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors.
18. Governing Law. This Agreement shall be construed in accordance with the laws (without regard, however, to conflicts of law principles) of the State of Wisconsin, provided that no provision shall be construed in a manner not consistent with the 1940 Act or any rule or regulation thereunder.
19. Arbitration. Any controversy or claim arising out of or relating to this Agreement, or any breach thereof, shall be settled by arbitration in accordance with the then existing FINRA Code of Arbitration Procedure. Any arbitration shall be conducted in Milwaukee, Wisconsin, and each arbitrator shall be from the securities industry. Judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof.
20. Confidentiality. Quasar and Dealer agree to preserve the confidentiality of any and all materials and information furnished by either party in connection with this Agreement. The provisions of this Paragraph shall not apply to any information which is: (a) independently developed by the receiving party, provided the receiving party can satisfactorily demonstrate such
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independent development with appropriate documentation; (b) known to the receiving party prior to disclosure by the disclosing party; (c) lawfully disclosed to the receiving party by a third party not under a separate duty of confidentiality with respect thereto to the disclosing party; or (d) otherwise publicly available through no fault or breach by the receiving party.
In accordance with Regulation S-P, the parties hereto will not disclose any non-public personal information, as defined in Regulation S-P, regarding any Customer; provided, however, that Dealer or Quasar may disclose such information to any party as necessary in the ordinary course of business to carry out the purposes for which such information was disclosed to Dealer or Quasar, or as may be required by law. Both parties agree to use reasonable precautions to protect and prevent the unintentional disclosure of such non-public personal information.
21. Anti-Money Laundering Program. Dealer represents and warrants that it has adopted an anti-money laundering program (“AML Program”) that complies with the Bank Secrecy Act, as amended by the USA PATRIOT Act, and any future amendments (the “PATRIOT Act,” and together with the Bank Secrecy Act, the “Act”), the rules and regulations under the Act, and the rules, regulations and regulatory guidance of the SEC, the FINRA or any other applicable self-regulatory organization (collectively, “AML Rules and Regulations”). Dealer further represents that its AML Program, at a minimum, (a) designates a compliance officer to administer and oversee the AML Program, (b) provides ongoing employee training, (c) includes an independent audit function to test the effectiveness of the AML Program, (d) establishes internal policies, procedures, and controls that are tailored to its particular business, (e) will include a customer identification program consistent with the rules under section 326 of the Act, (f) provides for the filing of all necessary anti-money laundering reports including, but not limited to, currency transaction reports and suspicious activity reports, (g) provides for screening all new and existing customers against the Office of Foreign Asset Control (“OFAC”) list and any other government list that is or becomes required under the Act, and (h) allows for appropriate regulators to examine Dealer’s AML books and records.
22. Market Timing. Dealer represents that it has and will maintain policies and procedures to detect and prevent any market timing transaction that contravenes the restrictions or prohibitions on market timing, if any, as found in the Funds’ Prospectus and/or SAI. Dealer acknowledges that it is responsible for the sales activities of its licensed representatives including, among other things, improper trading activity in violation of the terms and conditions of the Funds’ Prospectus.
(signature page follows)
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their officers designated as of the day and year first written above.
| QUASAR DISTRIBUTORS, LLC | |||
| By: | |||
| Name and Title: James R. Schoenike, President | |||
| [DEALER] | |||
| By: | |||
| Name and Title: | |||
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Schedule A
First American Funds
First American Funds, Inc.
| Government Obligations Fund |
| Institutional Prime Obligations Fund |
| Retail Prime Obligations Fund |
| Retail Tax Free Obligations Fund |
| Treasury Obligations Fund |
| U.S. Treasury Money Market Fund |
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Exhibit 99(j)
Consent of Independent Registered Public Accounting Firm
We consent to the reference to our firm under the caption “Financial Highlights” in the Prospectus and “Independent Registered Public Accounting Firm” in the Statement of Additional Information, and to the incorporation by reference of our report dated October 23, 2017, in the Registration Statement (Form N-1A No. 002-74747) of First American Funds, Inc. filed with the Securities and Exchange Commission in this Post-Effective Amendment No. 98 under the Securities Act of 1933.
/s/ Ernst & Young LLP
Minneapolis, MN
February 26, 2018
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