-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Fm5gbrVRzBDWW3FUyGfEL+RTJuHFJVAeBIHSIWtIfjSDm1YabNNOZsz7GRCRTLYb CC56lBvIWxRJBYS+yKFBdA== 0000873929-99-000003.txt : 19990510 0000873929-99-000003.hdr.sgml : 19990510 ACCESSION NUMBER: 0000873929-99-000003 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990615 FILED AS OF DATE: 19990507 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RIGGS FUNDS CENTRAL INDEX KEY: 0000873929 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 251655043 STATE OF INCORPORATION: MA FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 811-06309 FILM NUMBER: 99613270 BUSINESS ADDRESS: STREET 1: FEDERATED INVESTORS TOWER CITY: PITTSBURGH STATE: PA ZIP: 15222 BUSINESS PHONE: 4122881900 FORMER COMPANY: FORMER CONFORMED NAME: RIMCO MONUMENT FUNDS DATE OF NAME CHANGE: 19920703 DEF 14A 1 SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 Filed by the Registrant [ X ] Filed by a Party other than the Registrant [ ] Check the appropriate box: [ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) [X] Definitive Proxy Statement [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12 Riggs Funds (Name of Registrant as Specified In Its Charter) Federated Investors (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): [x] No fee required. [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. 1. Title of each class of securities to which transaction applies: 2. Aggregate number of securities to which transaction applies: 3. Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): 4. Proposed maximum aggregate value of transaction: 5. Total fee paid: [ ] Fee paid previously with preliminary proxy materials. [ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. 1) Amount Previously Paid: ------------------------------------------------------------ 2) Form, Schedule or Registration Statement No.: ------------------------------------------------------------ 3) Filing Party: ------------------------------------------------------------ 4) Date Filed: ------------------------------------------------------------ 2 DEFINITIVE RIGGS FUNDS Riggs Prime Money Market Fund Riggs Small Company Stock Fund Riggs Stock Fund Riggs U.S. Government Securities Fund Riggs U.S. Treasury Money Market Fund NOTICE OF SPECIAL MEETING IN LIEU OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD JUNE 15, 1999 A Special Meeting in lieu of Annual Meeting of the shareholders of Riggs Funds (the "Trust"), which presently consists of five portfolios or series, Riggs Prime Money Market Fund ("Prime Fund"), Riggs Small Company Stock Fund ("Small Company Fund"), Riggs Stock Fund ("Stock Fund"), Riggs U.S. Government Securities Fund ("Government Fund") and Riggs U.S. Treasury Money Market Fund ("Treasury Fund") (individually, the "Fund" and collectively, the "Funds"), will be held at 5800 Corporate Drive, Pittsburgh, Pennsylvania 15237-7000, at 2:00 p.m. (Eastern time), on June 15, 1999 to consider proposals: (1) To elect seven Trustees. (2) To ratify the selection of the Trust's independent auditors. (3) To make changes to the Funds' fundamental investment policies: (a) To amend the Funds' fundamental investment policies regarding diversification; (b) To amend the Funds' fundamental investment policies regarding borrowing money and issuing senior securities; (c) To amend the Funds' fundamental investment policies regarding investments in real estate; (d) To amend the Funds' fundamental investment policies regarding investments in commodities; (e) To amend the Funds' fundamental investment policies regarding underwriting securities; (f) To amend the Funds' fundamental investment policies regarding lending by the Funds; (g) To amend the Funds' fundamental investment policies regarding concentration of the Funds' investments in the securities of companies in the same industry; (h) To amend, and to make non-fundamental, the Funds' fundamental investment policies regarding buying securities on margin; and (i) To amend, and to make non-fundamental, the Funds' fundamental investment policies regarding pledging assets. (4) To eliminate certain of the Funds' fundamental investment policies: (a) To remove the Funds' fundamental investment policies on selling securities short; and (b) To remove the Funds' fundamental investment policies on investments in restricted securities (Government Fund, Prime Fund, Small Company Fund and Stock Fund only). To transact such other business as may properly come before the meeting or any adjournment thereof. The Board of Trustees has fixed April 27, 1999 as the record date for determination of shareholders entitled to vote at the meeting. By Order of the Board of Trustees, John W. McGonigle Secretary May 11, 1999 YOU CAN HELP THE TRUST AVOID THE NECESSITY AND EXPENSE OF SENDING FOLLOW-UP LETTERS TO ENSURE A QUORUM BY PROMPTLY SIGNING AND RETURNING THE ENCLOSED PROXY. IF YOU ARE UNABLE TO ATTEND THE MEETING, PLEASE MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY SO THAT THE NECESSARY QUORUM MAY BE REPRESENTED AT THE SPECIAL MEETING IN LIEU OF ANNUAL MEETING. THE ENCLOSED ENVELOPE REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. 3 TABLE OF CONTENTS About the Proxy Solicitation and the Meeting..................................4 Election of Seven Trustees....................................................5 About the Election of Trustees................................................5 Trustees Standing for Election................................................6 Nominees Not Presently Serving as Trustees....................................6 Ratification of the Selection of Independent Auditors.........................7 Approval of Changes to the Fund's Fundamental Investment Policies.................................................................7 Approval of the Elimination of Certain Fundamental Investment Policies of the Funds............................................................16 Information About the Trust...................................................17 Proxies, Quorum and Voting at the Meeting.....................................17 Share Ownership of the Trustees...............................................18 Trustee Compensation..........................................................19 Officers of the Trust.........................................................21 Other Matters and Discretion of Attorneys Named in the Proxy..................22 24 DEFINITIVE PROXY STATEMENT RIGGS FUNDS Riggs Prime Money Market Fund Riggs Small Company Stock Fund Riggs Stock Fund Riggs U.S. Government Securities Fund Riggs U.S. Treasury Money Market Fund Federated Investors Funds 5800 Corporate Drive Pittsburgh, PA 15237-7000 About the Proxy Solicitation and the Meeting The enclosed proxy is solicited on behalf of the Board of Trustees of the Trust (the "Board" or "Trustees"), which presently consists of five portfolios or series, Riggs Prime Money Market Fund ("Prime Fund"), Riggs Small Company Stock Fund ("Small Company Fund"), Riggs Stock Fund ("Stock Fund"), Riggs U.S. Government Securities Fund ("Government Fund") and Riggs U.S. Treasury Money Market Fund ("Treasury Fund") (individually, a "Fund" and collectively, the "Funds"). The proxies will be voted at the special meeting in lieu of annual meeting of shareholders of the Trust to be held on June 15, 1999, at 5800 Corporate Drive, Pittsburgh, Pennsylvania 15237-7000, at 2:00 p.m. (such special meeting in lieu of annual meeting and any adjournment or postponement thereof are referred to as the "Meeting"). The cost of the solicitation, including the printing and mailing of proxy materials, will be borne by the Trust. In addition to solicitations through the mails, proxies may be solicited by officers, employees, and agents of the Trust or, if necessary, a communications firm retained for this purpose. Such solicitations may be by telephone, telegraph, through the Internet or otherwise. Any telephonic solicitations will follow procedures designed to ensure accuracy and prevent fraud, including requiring identifying shareholder information, recording the shareholder's instructions, and confirming to the shareholder after the fact. Shareholders who communicate proxies by telephone or by other electronic means have the same power and authority to issue, revoke, or otherwise change their voting instruction as shareholders submitting proxies in written form. The Trust may reimburse custodians, nominees, and fiduciaries for the reasonable costs incurred by them in connection with forwarding solicitation materials to the beneficial owners of shares held of record by such persons. The Board has reviewed the changes recommended in the investment policies of the Funds and approved them, subject to shareholder approval. The purposes of the Meeting are set forth in the accompanying Notice. The Trustees know of no business other than that mentioned in the Notice that will be presented for consideration at the Meeting. Should other business properly be brought before the Meeting, proxies will be voted in accordance with the best judgment of the persons named as proxies. This proxy statement and the enclosed proxy card are expected to be mailed on or about May 11, 1999, to shareholders of record at the close of business on April 27, 1999 (the "Record Date"). On the Record Date, the Funds had outstanding shares of beneficial interest as follows: Government Fund: 3,944,242,977 Prime Fund: 390,220,577,265 Small Company Fund: 3,477,703,951 Stock Fund: 6,433,566,803 Treasury Fund: 145,141,817,664 The Funds' annual prospectuses, which include audited financial statements for the fiscal year ended April 30, 1998, were previously mailed to shareholders. The Funds' semi-annual reports, which contain unaudited financial information for the period ended October 31, 1998, were also previously mailed to shareholders. The Trust's principal executive offices are located at Federated Investors Funds, 5800 Corporate Drive, Pittsburgh, Pennsylvania 15237-7000. The Trust's toll-free telephone number is 1-800-341-7400. PROPOSAL #1: ELECTION OF SEVEN TRUSTEES The persons named as proxies intend to vote in favor of the election of Thomas G. Bigley, Nicholas P. Constantakis, John F. Cunningham, J. Christopher Donahue, Charles F. Mansfield, Jr., John E. Murray, Jr. and John S. Walsh (collectively, the "Nominees") as Trustees of the Trust. Messrs. Bigley, Constantakis, Murray and Walsh are presently serving as Trustees. If elected by shareholders, Messrs. Cunningham, Donahue and Mansfield are expected to assume their responsibilities as Trustees effective July 1, 1999. Please see "About the Election of Trustees" below for current information about the Nominees. Messrs. Murray and Bigley were appointed Trustees on February 14, 1995 and October 1, 1995, respectively, to fill vacancies created by the decision to expand the size of the Board. Messrs. Constantakis and Walsh were appointed Trustees on February 23, 1998 and January 1, 1999, respectively, also to fill vacancies resulting from the decision to expand the size of the Board. Messrs. Cunningham, Donahue and Mansfield are being proposed for election as Trustees to fill vacancies anticipated to result from the resignations of three current Trustees. The anticipated resignations will not occur if Messrs. Cunningham, Donahue and Mansfield are not elected as Trustees. All Nominees have consented to serve if elected. If elected, the Trustees will hold office without limit in time until death, resignation, retirement, or removal or until the next meeting of shareholders to elect Trustees and the election and qualification of their successors. Election of a Trustee is by a plurality vote, which means that the seven individuals receiving the greatest number of votes at the Meeting will be deemed to be elected. If any Nominee for election as a Trustee named above shall by reason of death or for any other reason become unavailable as a candidate at the Meeting, votes pursuant to the enclosed proxy will be cast for a substitute candidate by the proxies named on the proxy card, or their substitutes, present and acting at the Meeting. Any such substitute candidate for election as a Trustee who is an "interested person" (as defined in the Investment Company Act of 1940, as amended (the "1940 Act")) of the Trust shall be nominated by the Executive Committee. The selection of any substitute candidate for election as a Trustee who is not an "interested person" shall be made by a majority of the Trustees who are not "interested persons" of the Trust. The Board has no reason to believe that any Nominee will become unavailable for election as a Trustee. THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS VOTE TO ELECT AS TRUSTEES THE NOMINEES FOR ELECTION TO THE BOARD OF TRUSTEES OF THE TRUST About the Election of Trustees When elected, the Trustees will hold office during the lifetime of the Trust except that: (a) any Trustee may resign; (b) any Trustee may be removed by written instrument signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become mentally or physically incapacitated may be retired by written instrument signed by a majority of the other Trustees; and (d) a Trustee may be removed at any special meeting of the shareholders by a vote of two-thirds of the outstanding shares of the Trust. In case a vacancy shall exist for any reason, the remaining Trustees will fill such vacancy by appointment of another Trustee. The Trustees will not fill any vacancy by appointment if, immediately after filling such vacancy, less than two-thirds of the Trustees then holding office would have been elected by the shareholders. If, at any time, less than a majority of the Trustees holding office have been elected by the shareholders, the Trustees then in office will call a shareholders' meeting for the purpose of electing Trustees to fill vacancies. Otherwise, there will normally be no meeting of shareholders called for the purpose of electing Trustees. Set forth below is a listing of: (i) Trustees standing for election, and (ii) Nominees standing for election who are not presently serving as Trustees, along with their addresses, birthdates, present positions with the Trust, if applicable, and principal occupations during the past five years: Trustees Standing for Election Thomas G. Bigley 15 Old Timber Trail Pittsburgh, PA Birthdate: February 3, 1934 Trustee Director or Trustee of the Federated Fund Complex; Director and Member of Executive Committee, Children's Hospital of Pittsburgh; formerly, Senior Partner, Ernst & Young LLP; Director, MED 3000 Group, Inc.; Director and Member of Executive Committee, University of Pittsburgh. Nicholas P. Constantakis 175 Woodshire Drive Pittsburgh, PA Birthdate: September 3, 1939 Trustee Director or Trustee of the Federated Fund Complex; formerly, Partner, Andersen Worldwide SC. John E. Murray, Jr., J.D., S.J.D. President, Duquesne University Pittsburgh, PA Birthdate: December 20, 1932 Trustee Director or Trustee of the Federated Fund Complex; President, Law Professor, Duquesne University; Consulting Partner, Mollica & Murray. John S. Walsh 2007 Sherwood Drive Valparaiso, IN Birthdate: November 28, 1957 Trustee Director or Trustee of some of the Funds in the Federated Fund Complex; President and Director, Heat Wagon, Inc.; President and Director, Manufacturers Products, Inc.; President, Portable Heater Parts, a division of Manufacturers Products, Inc.; Director, Walsh & Kelly, Inc.; formerly, Vice President, Walsh & Kelly, Inc. Nominees Not Presently Serving as Trustees John F. Cunningham 353 El Brillo Way Palm Beach, FL Birthdate: March 5, 1943 Trustee Director or Trustee of some of the Funds in the Federated Fund Complex; Chairman, President and Chief Executive Officer, Cunningham & Co., Inc. (specialized financial consulting organization); Trustee Associate, Boston College; Director, EMC Corporation; formerly, Director, Redgate Communications. J. Christopher Donahue Federated Investors Tower Pittsburgh, PA Birthdate: April 11, 1949 Executive Vice President President or Executive Vice President of the Federated Fund Complex; Director or Trustee of some of the Funds in the Federated Fund Complex; President and Director, Federated Investors, Inc.; President and Trustee, Federated Advisers, Federated Management, and Federated Research; President and Director, Federated Research Corp. and Federated Global Research Corp.; President, Passport Research, Ltd.; Trustee, Federated Shareholder Services Company; Director, Federated Services Company. Mr. Donahue is the son of John F. Donahue, Chairman and Trustee of the Trust. Charles F. Mansfield, Jr. 80 South Road Westhampton, NY Birthdate: April 10, 1945 Director or Trustee of some of the Funds in the Federated Fund Complex; management consultant. PROPOSAL #2: RATIFICATION OF THE SELECTION OF INDEPENDENT AUDITORS The 1940 Act requires that the Trust's independent auditors be selected by the Board, including a majority of those Board members who are not "interested persons" (as defined in the 1940 Act) of the Trust, and submitted for ratification or rejection at the next succeeding meeting of shareholders. The Board of the Trust, including a majority of its members who are not "interested persons" of the Trust, approved the selection of Ernst & Young LLP (the "Auditors") for the current fiscal year at a Board meeting held on May 12, 1998. The selection by the Board of the Auditors as independent auditors for the current fiscal year is submitted to the shareholders for ratification. Apart from their fees as independent auditors and certain consulting fees, neither the Auditors nor any of their partners have a direct, or material indirect, financial interest in the Trust or its investment adviser. The Auditors are a major international independent accounting firm. The Board believes that the continued employment of the services of the Auditors for the current fiscal year would be in the Trust's best interests. Representatives of the Auditors are not expected to be present at the Meeting. If a representative is present, he or she will have the opportunity to make a statement and would be available to respond to appropriate questions. The ratification of the selection of the Auditors will require the affirmative vote of a majority of the shares present and voting on the proposal at the Meeting. THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS VOTE TO RATIFY THE SELECTION OF INDEPENDENT AUDITORS APPROVAL OF CHANGES TO THE FUNDS' FUNDAMENTAL INVESTMENT POLICIES Introduction to Proposals #3(a) to #3(i) and #4(a) to #4(b). The 1940 Act (which was adopted to protect mutual fund shareholders) requires investment companies such as the Funds to adopt certain specific investment policies or restrictions that can be changed only by shareholder vote. An investment company may also elect to designate other policies or restrictions that may be changed only by shareholder vote. Both types of policies and restrictions are often referred to as "fundamental policies." These policies and restrictions limit the investment activities of the Funds' investment adviser. After the Trust was formed in 1991, legal and regulatory requirements applicable to mutual funds changed. For example, certain restrictions imposed by state laws and regulations were preempted by the National Securities Markets Improvement Act of 1996 ("NSMIA") and no longer apply. As a result, the Funds are subject to fundamental policies that are no longer required to be fundamental, and to other policies that are no longer required at all. Accordingly, the Trustees have authorized the submission to the Funds' shareholders for their approval, and recommend that shareholders approve, the amendment, reclassification and/or elimination of certain of the Funds' fundamental policies. The proposed amendments would: (i) simplify, modernize and standardize the fundamental policies that are required to be stated under the 1940 Act; (ii) reclassify as operating policies those fundamental policies that are not required to be fundamental under the 1940 Act; and (iii) eliminate those fundamental policies that are no longer required by the securities laws of the various states. By reducing the number of policies that can be changed only by shareholder vote, the Trustees believe that the Trust would be able to minimize the costs and delays associated with holding future shareholder meetings to revise fundamental policies that become outdated or inappropriate. The Trustees also believe that the investment adviser's ability to manage the Funds' assets in a changing investment environment will be enhanced and that investment management opportunities will be increased by these changes. The chart that follows briefly describes the differences between fundamental policies and non-fundamental policies.
Fundamental Policies Non-Fundamental Policies -------------------------------------- --------------------------------------- Who must approve changes in the Board of Trustees and shareholders Board of Trustees policies? How quickly can a change in the Fairly slowly, since a vote of Fairly quickly, because the change policies be made? shareholders is required can be accomplished by action of the Board of Trustees What is the relative cost to Costly to change because a Less costly to change because a change a policy? shareholder vote requires holding a change can be accomplished by action meeting of shareholders of the Board of Trustees
The recommended changes are specified below. Each Proposal will be voted on separately by each Fund (unless otherwise noted), and the approval of each Proposal by each Fund will require the approval of a majority of the outstanding voting shares of the Fund as defined in the 1940 Act. (See "Proxies, Quorum and Voting at the Meeting" below.) Description of Proposed Changes The proposed standardized fundamental investment policies cover those areas for which the 1940 Act requires the Funds to have a fundamental restriction. They satisfy current regulatory requirements and are written to provide flexibility to respond to future legal, regulatory, market or technical changes. The proposed standardized changes will not affect the Funds' investment objectives. Although the proposed changes in fundamental policies will allow the Funds greater flexibility to respond to future investment opportunities, the Board of Trustees of the Trust does not anticipate that the changes, individually or in the aggregate, will result at this time in a material change in the level of investment risks associated with investments in the Funds. Nor does the Board of Trustees anticipate that the proposed changes in fundamental investment policies will, individually or in the aggregate, change materially the manner in which the Funds are managed. The following is the text and a summary description of the proposed changes to the Funds' fundamental policies and restrictions. Any non-fundamental policy may be modified or eliminated by the Trustees at any future date without any further approval of shareholders. Shareholders should note that certain of the fundamental policies that are treated separately below currently are combined within a single existing fundamental policy. Presently, if a Fund adheres to a fundamental or non-fundamental percentage restriction at the time of an investment or transaction, a later increase or decrease in the percentage resulting from a change in the value of the Fund's portfolio securities or the amount of its total assets does not create a violation of the policy. This policy will continue to apply for any of the proposed changes that are approved. PROPOSAL #3: APPROVAL OF AMENDMENTS TO THE FUNDS' FUNDAMENTAL INVESTMENT POLICIES PROPOSAL #3(a): TO AMEND THE FUNDS' FUNDAMENTAL INVESTMENT POLICIES REGARDING DIVERSIFICATION Under the 1940 Act, the Funds' policies relating to the diversification of their investments must be fundamental. The 1940 Act prohibits a "diversified" mutual fund from purchasing securities of any one issuer if, at the time of purchase, more than 5% of the fund's total assets would be invested in securities of that issuer or the fund would own or hold more than 10% of the outstanding voting securities of that issuer, except that up to 25% of the fund's total assets may be invested without regard to this limitation. The 5% limitation does not apply to securities issued by or guaranteed by the U.S. government, its agencies or instrumentalities or to securities issued by other open-end investment companies. The Funds' present policies regarding diversification state: Each Fund Except Treasury Fund: "With respect to 75% of the value of its total assets, the Fund will not purchase securities issued by any one issuer (other than cash, cash items or securities issued or guaranteed by the government of the United States or its agencies or instrumentalities and repurchase agreements collateralized by such securities), if as a result more than 5% of the value of its total assets would be invested in the securities of that issuer. The Fund will not acquire more than 10% of the outstanding voting securities of any one issuer." Treasury Fund: "The Fund will not acquire more than 10% of the outstanding voting securities of any one issuer." In order to afford the Funds' investment adviser maximum flexibility in managing the Funds' assets, the Trustees propose to amend the Funds' diversification policy to be consistent with the definition of a diversified investment company under the 1940 Act. The amended policy complies with the U.S. Securities and Exchange Commission's (the "SEC" or "Commission") general definition of diversification. The new policy would specifically add securities of other investment companies to the list of issuers which are excluded from the 5% limitation. Upon approval of the Funds' shareholders, the fundamental investment policy governing diversification will be amended as follows: "With respect to securities comprising 75% of the value of its total assets, the Fund will not purchase securities of any one issuer (other than cash; cash items; securities issued or guaranteed by the government of the United States or its agencies or instrumentalities and repurchase agreements collateralized by such U.S. government securities; and securities of other investment companies) if, as a result, more than 5% of the value of its total assets would be invested in securities of that issuer, or the Fund would own more than 10% of the outstanding voting securities of that issuer." The Prime Fund and the Treasury Fund are governed by Rule 2a-7 of the 1940 Act. This rule imposes stricter diversification requirements on money market funds. It generally requires that the Prime Fund and the Treasury Fund not invest more than 5% of their total assets in the securities of any issuer. THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE PROPOSAL PROPOSAL #3(b): TO AMEND THE FUNDS' FUNDAMENTAL INVESTMENT POLICIES REGARDING BORROWING MONEY AND ISSUING SENIOR SECURITIES The 1940 Act requires the Funds to have a fundamental investment policy defining their ability to borrow money or issue senior securities. In general, limitations on borrowing are designed to protect shareholders and their investments by restricting a Fund's ability to subject its assets to any claims of creditors or senior security holders who would be entitled to dividends or rights on liquidation of the Fund prior to the rights of shareholders. Shareholders of the Funds are being asked to approve a new standardized fundamental policy for borrowing and the issuance of senior securities designed to reflect all current regulatory requirements. The Funds' current policies state: Government Fund, Small Company Fund and Stock Fund: "The Fund will not issue senior securities except that the Fund may borrow money directly or through reverse repurchase agreements in amounts up to one-third of the value of its total assets, including the amount borrowed; and except to the extent that the Fund may enter into futures contracts. The Fund will not borrow money or engage in reverse repurchase agreements for investment leverage, but rather as a temporary, extraordinary, or emergency measure or to facilitate management of the portfolio by enabling the Fund to meet redemption requests when the liquidation of portfolio securities is deemed to be inconvenient or disadvantageous. The Fund will not purchase any securities while any borrowings in excess of 5% of its total assets are outstanding. During the period any reverse repurchase agreements are outstanding, the Fund will restrict the purchase of portfolio securities to money market instruments maturing on or before the expiration date of the reverse repurchase agreements, but only to the extent necessary to assure completion of the reverse repurchase agreements." Prime Fund and Treasury Fund: "The Fund will not issue senior securities except that the Fund may borrow money directly or through reverse repurchase agreements in amounts up to one-third of the value of its total assets, including the amount borrowed. The Fund will not borrow money or engage in reverse repurchase agreements for investment leverage, but rather as a temporary, extraordinary, or emergency measure or to facilitate management of the portfolio by enabling the Fund to meet redemption requests when the liquidation of portfolio securities is deemed to be inconvenient or disadvantageous. The Fund will not purchase any securities while any borrowings in excess of 5% of its total assets are outstanding. During the period any reverse repurchase agreements are outstanding, the Fund will restrict the purchase of portfolio securities to money market instruments maturing on or before the expiration date of the reverse repurchase agreements, but only to the extent necessary to assure completion of the reverse repurchase agreements." Senior Securities-Generally. A "senior security" is an obligation of a fund with respect to its earnings or assets that takes precedence over the claims of the fund's shareholders with respect to the same earnings or assets. The 1940 Act generally prohibits a fund from issuing senior securities, in order to limit the use of leverage. In general, an investment company uses leverage when it borrows money to enter into securities transactions, or acquires an asset without being required to make payment until a later time. SEC staff interpretations allow a fund to engage in a number of types of transactions which might otherwise be considered to create "senior securities" or "leverage," so long as the fund meets certain collateral requirements designed to protect shareholders. For example, some transactions that may create senior security concerns include short sales, certain options and futures transactions, reverse repurchase agreements and securities transactions that obligate the fund to pay money at a future date (such as when-issued, forward commitment or delayed delivery transactions). When engaging in such transactions, the fund must set aside money or securities to meet the SEC staff's collateralization requirements. This procedure effectively eliminates the fund's ability to engage in leverage for these types of transactions. Borrowing-Generally. Under the 1940 Act, an investment company is permitted to borrow up to 5% of its total assets for temporary purposes. A fund may borrow only from banks. If borrowings exceed 5%, the fund must have assets totaling at least 300% of the borrowing when the amount of the borrowing is added to the fund's other assets. The effect of this provision is to allow the fund to borrow from banks in amounts up to one-third (33 1/3%) of its total assets (including the amount borrowed). Investment companies typically borrow money to meet redemptions in order to avoid a forced, unplanned sale of portfolio securities. This technique allows the fund greater flexibility to buy and sell portfolio securities for investment or tax considerations, rather than for cash flow considerations. The costs of borrowing, however, can also reduce the fund's total return. The proposed investment policy would provide greater flexibility to the Funds by permitting the Funds to borrow money, directly or indirectly (such as through reverse repurchase agreements), and issue senior securities within the limits established under the 1940 Act or under any rule or regulation of the Commission, or any SEC staff interpretation thereof. As a matter of operating policy, the Funds do not presently intend to engage in leveraging. Upon shareholder approval, the fundamental investment policy governing borrowing money and issuing senior securities for each Fund will state: "The Fund may borrow money, directly or indirectly, and issue senior securities to the maximum extent permitted under the 1940 Act." THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE PROPOSAL PROPOSAL #3(c): TO AMEND THE FUNDS' FUNDAMENTAL INVESTMENT POLICIES REGARDING INVESTMENTS IN REAL ESTATE Under the 1940 Act, the Funds' policies concerning investments in real estate must be fundamental. The Funds currently have fundamental investment policies prohibiting the purchase or sale of real estate. The current policies (with the exception of the policy for the Treasury Fund), however, allow the Funds to invest in companies that deal in real estate, or to invest in securities that are secured by real estate, and state: Each Fund Except Treasury Fund: "The Fund will not purchase or sell real estate, including limited partnership interests, although the Fund may invest in securities of issuers whose business involves the purchase or sale of real estate or in securities which are secured by real estate or interests in real estate." Treasury Fund: "The Fund will not purchase or sell real estate, including limited partnership interests." The proposed fundamental investment policy will not permit the Funds to purchase real estate directly, but will permit the purchase of securities whose payments of interest or principal are secured by mortgages or other rights to real estate in the event of default. The investment policy will also enable the Funds to invest in companies within the real estate industry, provided such investments are consistent with the Funds' investment objectives and policies. Upon shareholder approval, the fundamental investment policy governing investments in real estate will state: "The Fund may not purchase or sell real estate, provided that this restriction does not prevent the Fund from investing in issuers which invest, deal, or otherwise engage in transactions in real estate or interests therein, or investing in securities that are secured by real estate or interests therein. The Fund may exercise its rights under agreements relating to such securities, including the right to enforce security interests and to hold real estate acquired by reason of such enforcement until that real estate can be liquidated in an orderly manner." THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE PROPOSAL PROPOSAL #3(d): TO AMEND THE FUNDS' FUNDAMENTAL INVESTMENT POLICIES REGARDING INVESTMENTS IN COMMODITIES Under the 1940 Act, the Funds' policies concerning investments in commodities must be fundamental. The Funds are currently subject to fundamental restrictions prohibiting the purchase or sale of commodities or commodity contracts: Government Fund, Small Company Fund and Stock Fund: "The Fund will not invest in commodities except that it may engage in transactions involving futures contracts or options on futures contracts." Prime Fund and Treasury Fund: "The Fund will not invest in commodities." Historically, the most common types of commodities have been physical commodities such as wheat, cotton, rice and corn. However, under federal law, futures contracts are considered to be commodities and, therefore, financial futures contracts, such as futures contracts related to currencies, stock indices or interest rates are considered to be commodities. Financial futures contracts enable an investment company to buy (or sell) the right to receive the cash difference between the contract price for an underlying asset or index and the future market price, if the market price is higher. If the future price is lower, the investment company is obligated to pay (or, if the investment company sold the contract, the investment company receives) the amount of the decrease. Investment companies often desire to invest in financial futures contracts and options related to such contracts for hedging or other investment reasons. The proposed policy would provide appropriate flexibility for the Government Fund, Small Company Fund and Stock Fund to invest in financial futures contracts and related options. As proposed, the policy is broad enough to permit investment in financial futures instruments for either investment or hedging purposes, which is broader than the Funds' current policies. Using financial futures instruments can involve substantial risks, and would be utilized only if the Funds' investment adviser determined that such investments are advisable and such practices were affirmatively authorized by the Board and disclosed in the Funds' prospectuses or statement of additional information. As a matter of non-fundamental operating policy, for purposes of the proposed policy, investments in transactions involving futures contracts and options, forward currency contracts, swap transactions and other financial contracts that settle by payment of cash are not deemed to be investments in commodities. Upon shareholder approval, the fundamental investment policies governing investments in commodities for the Funds will state: "The Fund may not purchase or sell physical commodities, provided that the Fund may purchase securities of companies that deal in commodities." THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE PROPOSAL PROPOSAL #3(e): TO AMEND THE FUNDS' FUNDAMENTAL INVESTMENT POLICIES REGARDING UNDERWRITING SECURITIES Under the 1940 Act, the Funds' policy relating to underwriting is required to be fundamental. The Funds currently are subject to a fundamental investment policy prohibiting them from acting as an underwriter of the securities of other issuers that states: "The Fund will not underwrite any issue of securities, except as the Fund may be deemed to be an underwriter under the Securities Act of 1933 in connection with the sale of securities in accordance with its investment objective, policies, and limitations." A person or company generally is considered an underwriter under the federal securities laws if it participates in the public distribution of securities of other issuers, usually by purchasing the securities from the issuer and re-selling the securities to the public. From time to time, a mutual fund may purchase a security for investment purposes which it later sells or redistributes to institutional investors or others under circumstances where the fund could possibly be considered to be an underwriter under the technical definition of underwriter contained in the securities laws. Upon shareholder approval, the fundamental investment policy concerning underwriting for each Fund will state: "The Fund may not underwrite the securities of other issuers, except that the Fund may engage in transactions involving the acquisition, disposition or resale of its portfolio securities, under circumstances where it may be considered to be an underwriter under the Securities Act of 1933." This does not constitute a substantive change in the Funds' policy. Rather, it reflects a restatement to standardized language, and is submitted to shareholders to comply with the 1940 Act's requirements. THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE PROPOSAL PROPOSAL #3(f): TO AMEND THE FUNDS' FUNDAMENTAL INVESTMENT POLICIES REGARDING LENDING BY THE FUNDS Under the 1940 Act, the Funds' policy concerning lending must be fundamental. The Funds currently are subject to a fundamental investment restriction limiting their ability to make loans that states: "The Fund will not lend any of its assets except portfolio securities up to one-third of the value of total assets. This shall not prevent the Fund from purchasing or holding U.S. government obligations, money market instruments, variable amount demand master notes, bonds, debentures, notes, certificates of indebtedness, or other debt securities, entering into repurchase agreements, or engaging in other transactions where permitted by the Fund's investment objective, policies, and limitations or the Trust's Declaration of Trust." In order to ensure that each Fund may invest in certain debt securities or repurchase agreements, which could technically be characterized as the making of loans, the Funds' current fundamental restrictions specifically permits such investments. In addition, the Funds' fundamental policies explicitly permit each Fund to lend its portfolio securities to broker-dealers or institutional investors. Securities lending is a practice that has become common in the mutual fund industry and involves the temporary loan of portfolio securities to parties who use the securities for the settlement of securities transactions. The collateral delivered to a Fund in connection with such a transaction is then invested to provide the Fund with additional income it might not otherwise have. Securities lending involves certain risks if the borrower fails to return the securities. However, management believes that with appropriate controls, such as 100% or greater collateralization of the loan and regular monitoring of the creditworthiness of the counterparty, the ability to engage in securities lending does not materially increase the risks to which a Fund currently is subject. In addition, securities on loan cannot generally be sold until the term of the loan is over. Upon approval of the Funds' shareholders, the fundamental investment policy governing lending assets by each Fund will state: "The Fund may not make loans, provided that this restriction does not prevent the Fund from purchasing debt obligations, entering into repurchase agreements, lending its assets to broker/dealers or institutional investors and investing in loans, including assignments and participation interests." THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE PROPOSAL PROPOSAL #3(g): TO AMEND THE FUNDS' FUNDAMENTAL INVESTMENT POLICIES REGARDING CONCENTRATION OF THE FUNDS' INVESTMENTS IN THE SECURITIES OF COMPANIES IN THE SAME INDUSTRY Under the 1940 Act, the Funds' policies relating to the concentration of their investments in securities of companies in a single industry must be fundamental. The SEC staff considers a mutual fund to "concentrate" its investments if 25% or more of its total assets are invested in a particular industry (not counting U.S. government securities, bank instruments issued by domestic banks and municipal securities). The Funds currently have fundamental investment policies prohibiting them from concentrating their investments in a single industry: Each Fund Except Prime Fund: "The Fund will not invest 25% or more of the value of its total assets in any one industry (other than securities issued by the U.S. government, its agencies, or instrumentalities or repurchase agreements collateralized by these securities)." Prime Fund: "The Fund may not invest 25% or more of the value of its total assets in any one industry, except that the Fund may invest 25% or more of the value of its total assets in cash or cash items (including instruments issued by a U.S. branch of a domestic bank or savings and loan having capital, surplus, and undivided profits in excess of $100,000,000 at the time of investment), securities issued or guaranteed by the U.S. government, its agencies, or instrumentalities, or instruments secured by these money market instruments, i.e., repurchase agreements." Upon the approval by the Funds' shareholders, the fundamental investment policy governing concentration by each Fund will provide: "The Fund will not make investments that will result in the concentration of its investments in the securities of issuers primarily engaged in the same industry. Government securities, municipal securities and bank instruments will not be deemed to constitute an industry. To conform to the current view of the SEC staff that only domestic bank instruments may be excluded from industry concentration limitations, as a matter of non-fundamental policy, the Fund will not exclude foreign bank instruments from industry concentration tests so long as the policy of the SEC remains in effect. As a non-fundamental operating policy, the Fund will consider concentration to be the investment of more than 25% of the value of its total assets in any one industry." The Trust's Board has also approved a related non-fundamental policy for each Fund, which will be adopted if the new fundamental policy is approved by shareholders, and which provides that in applying the concentration restriction: (1) utility companies will be divided according to their services, for example, gas, gas transmission, electric and telephone will each be considered a separate industry; (2) financial service companies will be classified according to the end users of their services, for example, automobile finance, bank finance and diversified finance will each be considered a separate industry; and (3) asset-backed securities will be classified according to the underlying assets securing such securities. THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE PROPOSAL PROPOSAL #3(h): TO AMEND, AND TO MAKE NON-FUNDAMENTAL, THE FUNDS' FUNDAMENTAL INVESTMENT POLICIES REGARDING BUYING SECURITIES ON MARGIN The Funds are not required to have a fundamental restriction on margin transactions. Accordingly, it is proposed that the Funds' existing fundamental policies be replaced with non-fundamental restrictions. The Funds' current policies provide: Government Fund, Small Company Fund and Stock Fund: "The Fund will not purchase any securities on margin, but may obtain such short-term credits as are necessary for clearance of purchases and sales of securities. The deposit or payment by the Fund of initial or variation margin in connection with futures contracts or related options transactions is not considered the purchase of a security on margin." Prime Fund and Treasury Fund: "The Fund will not purchase any securities on margin, but may obtain such short-term credits as are necessary for the clearance of purchases and sales of securities." The proposed non-fundamental policies make minor changes in wording from the existing fundamental restrictions and, in the case of the policies of the Government Fund, Small Company Fund and Stock Fund, expand the list of margin transactions excepted from the prohibition to include margin deposits in connection with financial options and futures, forward and spot currency contracts, swap transactions and other financial contracts or derivative instruments. Upon the approval of the elimination of the existing fundamental policies on engaging in margin transactions, the Funds would become subject to the following non-fundamental policies: Government Fund, Small Company Fund and Stock Fund: "The Fund will not purchase securities on margin, provided that the Fund may obtain short-term credits necessary for the clearance of purchases and sales of securities, and further provided that the Fund may make margin deposits in connection with its use of financial options and futures, forward and spot currency contracts, swap transactions and other financial contracts or derivative instruments." Prime Fund and Treasury Fund: "The Fund will not purchase securities on margin, provided that the Fund may obtain short-term credits necessary for the clearance of purchases and sales of securities." THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE PROPOSAL PROPOSAL #3(i): TO AMEND, AND TO MAKE NON-FUNDAMENTAL, THE FUNDS' FUNDAMENTAL INVESTMENT POLICIES ON PLEDGING ASSETS The Funds are not required to have a fundamental investment restriction with respect to the pledging of assets. To maximize the Funds' flexibility in this area, the Board of the Trust believes that the Funds' policies on pledging assets should be made non-fundamental. The non-fundamental policies would be similar to the fundamental policies proposed to be eliminated that state: Government Fund: "The Fund will not mortgage, pledge, or hypothecate any assets, except to secure permitted borrowings. In these cases, the Fund may pledge assets having a value of 15% of assets taken at cost. For purposes of this restriction, (a) the deposit of assets in escrow in connection with the writing of covered put or call options and the purchase of securities on a when-issued basis; and (b) collateral arrangements with respect to initial or variation margin for futures contracts, will not be deemed to be pledges of the Fund's assets. Margin deposits for the purchase and sale of futures contracts and related options are not deemed to be a pledge." Small Company Fund and Stock Fund: "The Fund will not mortgage, pledge, or hypothecate any assets, except to secure permitted borrowings. In these cases, the Fund may pledge assets having a value of 15% of assets taken at cost. For the purposes of this restriction, (a) the deposit of assets in escrow in connection with the writing of covered put or call options and the purchases of securities on a when-issued basis; and (b) collateral arrangements with respect to (i) the purchase and sale of stock options and (ii) initial or variation margin for futures contacts will not be deemed to be pledges of the Fund's assets. Margin deposits for the purchase and sale of futures contracts and related options are not deemed to be a pledge." Prime Fund and Treasury Fund: "The Fund will not mortgage, pledge, or hypothecate any assets, except to secure permitted borrowings. In these cases, the Fund may pledge assets having a market value not exceeding the lesser of the dollar amounts borrowed or 10% of the value of total asserts of the Fund at the time of the pledge." The Board does not expect this change to have a material impact on the Funds' operations. Establishing the policies as non-fundamental, however, would enable the Board to change the policies in the future without shareholder approval. While the Funds are proposing to eliminate the percentage limitation (10% or 15%, as applicable) on the amount of the Funds' assets that may be pledged, the Funds do not presently intend to exceed these limitations in the future. Upon the approval of the elimination of the existing fundamental policies on pledging assets, each Fund would become subject to the following non-fundamental policy: "The Fund will not mortgage, pledge, or hypothecate any of its assets, provided that this shall not apply to the transfer of securities in connection with any permissible borrowing or to collateral arrangements in connection with permissible activities." THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE PROPOSAL PROPOSAL #4: ELIMINATION OF CERTAIN OF THE FUNDS' FUNDAMENTAL INVESTMENT POLICIES The Board has determined that certain of the current fundamental investment policies are unnecessary and should be removed. Until NSMIA was adopted in 1996, the securities laws of several states required every investment company which intended to sell its shares in those states to adopt policies governing a variety of operational issues, including investment in certain securities. As a consequence of those restrictions, the Funds adopted the investment policies described below and agreed that they would be changed only upon the approval of shareholders. Since these prohibitions are no longer required under current law, the management of the Trust has recommended, and the Board has determined, that these policies should be removed. The removal of these policies would provide greater flexibility in the management of the Funds by permitting the Funds to purchase a broader range of securities that are permitted investments and that are consistent with their investment objectives and policies. The policies being removed are listed below. Each Proposal will be voted on separately by each Fund (unless otherwise noted), and the approval of each change by each Fund will require the affirmative vote of a majority of the outstanding voting shares of the Fund as defined in the 1940 Act. (See "Proxies, Quorum and Voting at the Meeting" below.) PROPOSAL #4(a): TO ELIMINATE THE FUNDS' FUNDAMENTAL INVESTMENT POLICIES ON SELLING SECURITIES SHORT The Funds are not required to have a fundamental restriction with respect to short sales of securities. To maximize the Funds' flexibility in this area, the Board believes that the Funds' restrictions on short sales of securities should be eliminated. This restriction was imposed by state laws and NSMIA preempts that requirement. Notwithstanding the elimination of this fundamental restriction, the Funds expect to continue not to engage in short sales of securities, except to the extent that the Funds contemporaneously own or have the right to acquire at no additional cost securities identical to, or convertible into or exchangeable for, those sold short. Moreover, the Prime Fund and the Treasury Fund, as money market funds, are subject to substantive regulation pursuant to Rule 2a-7 under the 1940 Act, that has the effect of precluding the Funds from selling securities short. Upon the approval of Proposal #4(a), the existing fundamental restrictions on selling securities short for the Funds will be eliminated. THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE PROPOSAL PROPOSAL #4(b): TO ELIMINATE THE FUNDS' FUNDAMENTAL INVESTMENT POLICIES ON INVESTING IN RESTRICTED SECURITIES This Proposal Pertains to All Funds Except the Treasury Fund. Each Fund, except the Treasury Fund, is presently subject to a fundamental investment policy that provides: "The Fund will not invest more than 10% of its net assets in securities subject to restrictions on resale under the Securities Act of 1933, except for commercial paper issued under Section 4(2) of the Securities Act of 1933 and certain other restricted securities which meet the criteria for liquidity as established by the Board of Trustees." This policy was adopted by the Funds because historically restricted securities were viewed as illiquid since they could not be sold within seven days. Investment companies issuing redeemable securities are required to meet a shareholder's redemption request at the current net asset value within seven days of receiving the request for redemption. In order to do this, some portion of the securities in a Fund's portfolio must be "liquid" so that the securities can be sold in sufficient time to obtain the necessary cash to meet redemption requests. It is important to note that many restricted securities are, in fact, quite liquid and can be purchased without jeopardizing the liquidity of the Funds' portfolios. Certain state securities regulators previously required mutual funds to have a fundamental policy limiting investment in restricted securities. Since the enactment of NSMIA, states no longer have the jurisdiction to impose such requirements. Furthermore, rules adopted by the SEC have substantially increased the number of restricted securities that can now be considered liquid and, in addition, have given to the Trustees the ability to determine, under specific guidelines, that a security is liquid. The Trustees may delegate this duty to the investment adviser provided the investment adviser's determination of liquidity is made in accordance with the guidelines established and monitored by the Trustees. The Funds' current restricted securities policy prevents the Funds from acquiring a restricted security that may be viewed by the Funds' investment adviser as liquid. As a result, the Funds' management has suggested that the policy be eliminated. If this proposal is approved, the Funds will be able to invest to an unlimited extent in restricted securities as long as they meet the Trustees' guidelines for liquidity, which are covered under a related policy regarding liquidity of the Funds' assets. Upon the approval of Proposal #4(b), the existing fundamental restrictions on purchasing restricted securities will be eliminated. THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE PROPOSAL INFORMATION ABOUT THE TRUST Proxies, Quorum and Voting at the Meeting Only shareholders of record on the Record Date will be entitled to vote at the Meeting. Each share of the Trust is entitled to one vote. Fractional shares are entitled to proportionate shares of one vote. Under both the Investment Company Act of 1940 and the Declaration of Trust, the favorable vote of a "majority of the outstanding voting shares" of the Trust or a Fund means: (a) the holders of 67% or more of the outstanding voting securities present at the Meeting, if the holders of 50% or more of the outstanding voting securities of the Trust or Fund are present or represented by proxy; or (b) the vote of the holders of more than 50% of the outstanding voting securities, whichever is less. The favorable vote of a majority of the outstanding voting shares of each Fund is required to approve each of the Proposals for the Fund, except the election of Trustees and the ratification of the selection of the Auditors. Any person giving a proxy has the power to revoke it any time prior to its exercise by executing a superseding proxy or by submitting a written notice of revocation to the Secretary of the Trust. In addition, although mere attendance at the Meeting will not revoke a proxy, a shareholder present at the Meeting may withdraw his or her proxy and vote in person. All properly executed and unrevoked proxies received in time for the Meeting will be voted in accordance with the instructions contained in the proxies. If no instruction is given on the proxy, the persons named as proxies will vote the shares represented thereby in favor of the matters set forth in the attached Notice. In order to hold the Meeting, a "quorum" of shareholders must be present. Holders of more than 50% of the total number of outstanding shares of each of the Funds, present in person or by proxy, shall be required to constitute a quorum for the purpose of voting on the Proposals made. For purposes of determining a quorum for transacting business at the Meeting, abstentions and broker "non-votes" (that is, proxies from brokers or nominees indicating that such persons have not received instructions from the beneficial owner or other persons entitled to vote shares on a particular matter with respect to which the brokers or nominees do not have discretionary power) will be treated as shares that are present but which have not been voted. For this reason, abstentions and broker non-votes will have the effect of a "no" vote for purposes of obtaining the requisite approval of some of the proposals. If a quorum is not present, the persons named as proxies may vote those proxies which have been received to adjourn the Meeting to a later date. In the event that a quorum is present but sufficient votes in favor of one or more of the proposals have not been received, the persons named as proxies may propose one or more adjournments of the Meeting to permit further solicitations of proxies with respect to such proposal(s). All such adjournments will require the affirmative vote of a plurality of the shares present in person or by proxy at the session of the Meeting to be adjourned. The persons named as proxies will vote AGAINST any such adjournment those proxies which they are required to vote against the proposal and will vote in FAVOR of the adjournment other proxies which they are authorized to vote. A shareholder vote may be taken on other proposals in this Proxy Statement prior to any such adjournment if sufficient votes have been received for approval. As referred to in this Proxy Statement, the "Federated Fund Complex," "The Funds" or "Funds" include the following investment companies: Automated Government Money Trust; Cash Trust Series II; Cash Trust Series, Inc.; CCB Funds; DG Investor Series; Edward D. Jones & Co. Daily Passport Cash Trust; Federated Adjustable Rate U.S. Government Fund, Inc.; Federated American Leaders Fund, Inc.; Federated ARMs Fund; Federated Core Trust; Federated Equity Funds; Federated Equity Income Fund, Inc.; Federated Fund for U.S. Government Securities, Inc.; Federated GNMA Trust; Federated Government Income Securities, Inc.; Federated Government Trust; Federated High Income Bond Fund, Inc.; Federated High Yield Trust; Federated Income Securities Trust; Federated Income Trust; Federated Index Trust; Federated Institutional Trust; Federated Insurance Series; Federated Master Trust; Federated Municipal Opportunities Fund, Inc.; Federated Municipal Securities Fund, Inc.; Federated Municipal Trust; Federated Short-Term Municipal Trust; Federated Short-Term U.S. Government Trust; Federated Stock and Bond Fund, Inc.; Federated Stock Trust; Federated Tax-Free Trust; Federated Total Return Series, Inc.; Federated U.S. Government Bond Fund; Federated U.S. Government Securities Fund: 1-3 Years; Federated U.S. Government Securities Fund: 2-5 Years; Federated U.S. Government Securities Fund: 5-10 Years; Federated Utility Fund, Inc.; Fixed Income Securities, Inc.; Intermediate Municipal Trust; International Series, Inc.; Investment Series Funds, Inc.; Liberty Term Trust, Inc. - 1999; Liberty U.S. Government Money Market Trust; Liquid Cash Trust; Managed Series Trust; Money Market Management, Inc.; Money Market Obligations Trust; Money Market Obligations Trust II; Money Market Trust; Municipal Securities Income Trust; Newpoint Funds; Regions Funds; RIGGS Funds; Tax-Free Instruments Trust; The Planters Funds; Trust for Government Cash Reserves; Trust for Short-Term U.S. Government Securities; Trust for U.S. Treasury Obligations; WesMark Funds; WCT Funds; World Investment Series, Inc.; Blanchard Funds; Blanchard Precious Metals Fund, Inc.; High Yield Cash Trust; Investment Series Trust; Targeted Duration Trust; The Virtus Funds; and Trust for Financial Institutions. Share Ownership of the Trustees Officers and Trustees of the Trust own less than 1% of the Trust's outstanding shares. At the close of business on the Record Date, the following persons owned, to the knowledge of management, more than 5% of the outstanding shares of the Class R Shares of the Government Fund: Eamco - Riggs Funds, Washington, D.C., owned approximately 3,143,138.23 shares (79.69%). At the close of business on the Record Date, the following persons owned, to the knowledge of management, more than 5% of the outstanding shares of the Class R Shares of the Prime Fund: BHC Securities, Inc., Philadelphia, PA, owned approximately 4,991,377.49 shares (57.79%); Libron Group, Inc., Sarasota, FL, owned approximately 526,683.24 shares (6.10%). At the close of business on the Record Date, the following persons owned, to the knowledge of management, more than 5% of the outstanding shares of the Class Y Shares of the Prime Fund: Eamco - - Riggs Funds, Washington, D.C., owned approximately 171,578,410.40 shares (44.96%); Georgetown University General Fund, Washington, D.C., owned approximately 82,081,340.04 shares (21.51%); and Riggs Bank N.A., Washington, D.C., owned approximately 62,340,000 shares (16.34%). At the close of business on the Record Date, the following persons owned, to the knowledge of management, more than 5% of the outstanding shares of the Class B Shares of the Small Company Fund: Riggs Bank N.A., as custodian for the IRA of Roger D. Winston, Rockville, MD, owned approximately 1,982.71 shares (22.00%); Donaldson Lufkin & Jennrette Securities Corporation, Inc., Jersey City, NJ, owned approximately 2,467.071 shares (27.37%); Riggs Bank N.A., as custodian for the IRA of Jeanne C. Nash, Oakton, VA, owned approximately 908.445 shares (10.08%); and Issa J. and Marita S. Boullata, Montreal, Quebec, owned approximately 641.108 shares (7.11%). At the close of business on the Record Date, the following person owned, to the knowledge of management, more than 5% of the outstanding shares of the Class R Shares of the Small Company Fund: Eamco - - Riggs Funds, Washington, D.C., owned approximately 2,787,748.208 shares (81.07%). At the close of business on the Record Date, the following persons owned, to the knowledge of management, more than 5% of the outstanding shares of the Class B Shares of the Stock Fund: Riggs Bank N.A., as custodian for the IRA of Roger D. Winston, Rockville, MD, owned approximately 3,475.284 shares (30.00%); BHC Securities, Inc., Philadelphia, PA, owned approximately 3,901.249 shares (33.68%); and Riggs Bank N.A., Washington, D.C., as custodian for the IRA of Jeanne C. Nash, Oakton, VA, owned approximately 761.915 shares (6.58%). At the close of business on the Record Date, the following persons owned, to the knowledge of management, more than 5% of the outstanding shares of the Class R Shares of the Fund: Eamco - Riggs Funds, Washington, D.C., owned approximately 3,781,050.466 shares (58.88%); Eamco Trustee #01769201, Washington, D.C., owned approximately 440,682.666 shares (6.86%); Eamco for Nuclear Energy Institute Employees Saving Plan #02121601, Washington, D.C., owned approximately 377,425.853 shares (5.88%); and Eamco Trustee #01769101, Washington, D.C., owned approximately 337,426.4830 shares (5.25%). At the close of business on the Record Date, the following persons owned, to the knowledge of management, more than 5% of the outstanding shares of the Class R Shares of the Treasury Fund: Peter N.G. Schwartz, Washington, D.C., owned approximately 1,741,667.91 shares (36.36%); Devotional Claimants 1996 Escrow Account, Washington, D.C., owned approximately 1,611,218.71 (33.64%); and St. Alban's Episcopal Church, Washington, D.C., owned approximately 934,798.33 shares (19.52%). At the close of business on the Record Date, the following persons owned, to the knowledge of management, more than 5% of the outstanding shares of the Class Y Shares of the Fund: Eamco - Riggs Funds, Washington, D.C., owned approximately 87,441,110.10 shares (62.30%); Riggs Bank, N.A., Washington, D.C., owned approximately 14,501,000 shares (10.33%); Hare & Co., New York, NY, owned approximately 11,416,104.30 shares (8.13%); and Eamco Trustee #02138901, Washington, D.C., owned approximately 10,569,454.42 shares (7.53%).
Trustee Compensation Name, Aggregate Total Compensation Paid Position With Compensation From Fund Complex+ Trust From Trust1# - --------------------------------- -------------------------- ---------------------------------------------------------- John F. Donahue*@ $0 $0 for the Trust and Chairman and Trustee 56 other investment companies in the Fund Complex Thomas G. Bigley $1,554.43 $113,860.22 for the Trust and Trustee 56 other investment companies in the Fund Complex John T. Conroy, Jr. $1,710.07 $125,264.48 for the Trust and Trustee 56 other investment companies in the Fund Complex Nicholas P. Constantakis++ $381.52 $47,958.02 for the Trust and Trustee 36 other investment companies in the Fund complex William J. Copeland $1,710.09 $125,264.48 for the Trust and Trustee 56 other investment companies in the Fund Complex James E. Dowd $1,710.09 $125,264.48 for the Trust and Trustee 56 other investment companies in the Fund Complex Lawrence D. Ellis, M.D.* $1,554.43 $113,860.22 for the Trust and Trustees 56 other investment companies in the Fund Complex Edward L. Flaherty, Jr.@ $1,710.09 $125,264.48 for the Trust and Trustee 56 other investment companies in the Fund Complex Edward C. Gonzales* $0 $0 for the Trust and President, Treasurer and Trustee 1 other investment company in the Fund Complex Peter E. Madden $1,554.43 $113,860.22 for the Trust and Trustee 56 other investment companies in the Fund Complex John E. Murray, Jr. $1,554.43 $113,860.22 for the Trust and Trustee 56 other investment companies in the Fund Complex Wesley W. Posvar $1,554.43 $113,860.22 for the Trust and Trustee 56 other investment companies in the Fund Complex Marjorie P. Smuts $1,554.43 $113,860.22 for the Trust and Trustee 56 other investment companies in the Fund Complex John S. Walsh** $0 $0 for the Trust and Trustee 23 other investment companies in the Fund Complex
1 Information is furnished for the fiscal year ended April 30, 1998. # The aggregate compensation is provided for the Trust which is comprised of five portfolios. + The information is provided for the last calendar year. Mr. Constantakis became a member of the Board of Trustees on February 23, 1998. * The Trustee is deemed to be an "interested person" as defined in the 1940 Act. @ Member of the Executive Committee. ** Mr. Walsh became a member of the Board of Trustees on January 1, 1999. He did not receive any fees from the Fund Complex as of the last calendar year. During the fiscal year ended April 30, 1998, there were four meetings of the Board of Trustees. The interested Trustees, other than Dr. Ellis, do not receive fees from the Trust. Dr. Ellis is an interested person by reason of the employment of his son-in-law by Federated Securities Corp. All Trustees were reimbursed for expenses for attendance at Board of Trustees meetings. The Executive Committee of the Board of Trustees handles the responsibilities of the Board between meetings of the Board. Other than its Executive Committee, the Trust has one Board committee, the Audit Committee. Generally, the function of the Audit Committee is to assist the Board of Trustees in fulfilling its duties relating to the Trust's accounting and financial reporting practices and to serve as a direct line of communication between the Board of Trustees and the independent auditors. The specific functions of the Audit Committee include recommending the engagement or retention of the independent auditors, reviewing with the independent auditors the plan and the results of the auditing engagement, approving professional services provided by the independent auditors prior to the performance of such services, considering the range of audit and non-audit fees, reviewing the independence of the independent auditors, reviewing the scope and results of the Trust's procedures for internal auditing, and reviewing the Trust's system of internal accounting controls. For the most recently completed fiscal year, Messrs. Flaherty, Conroy, Copeland and Dowd served on the Audit Committee. These Trustees are not interested Trustees of the Trust. During the fiscal year ended April 30, 1998, there were four meetings of the Audit Committee. All of the members of the Audit Committee were present for each meeting. Each member of the Audit Committee receives an annual fee of $100 plus $25 for attendance at each meeting and is reimbursed for expenses of attendance. Officers of the Trust The executive officers of the Trust are elected annually by the Board of Trustees. Each officer holds the office until qualification of his successor. The names and birthdates of the executive officers of the Trust and their principal occupations during the last five years are as follows: John F. Donahue Federated Investors Tower Pittsburgh, PA Birthdate: July 28, 1924 Chairman and Trustee Chairman and Trustee, Federated Investors, Federated Advisers, Federated Management, and Federated Research; Chairman and Director, Federated Research Corp. and Federated Global Research Corp.; Chairman, Passport Research, Ltd.; Chief Executive Officer and Director or Trustee of the Funds. Mr. Donahue is the father of J. Christopher Donahue, Executive Vice President of the Trust and Nominee for Trustee. Edward C. Gonzales Federated Investors Tower Pittsburgh, PA Birthdate: October 22, 1930 President, Treasurer and Trustee Trustee or Director of some of the Funds in the Federated Fund Complex; President, Executive Vice President and Treasurer of some of the Funds in the Federated Fund Complex; Vice Chairman, Federated Investors, Inc.; Vice President, Federated Advisers, Federated Management, Federated Research, Federated Research Corp., Federated Global Research Corp. and Passport Research, Ltd.; Executive Vice President and Director, Federated Securities Corp.; Trustee, Federated Shareholder Services Company. J. Christopher Donahue Federated Investors Tower Pittsburgh, PA Birthdate: April 11, 1949 Executive Vice President President or Executive Vice President of the Federated Fund Complex; Director or Trustee of some of the Funds in the Federated Fund Complex; President and Director, Federated Investors, Inc.; President and Trustee, Federated Advisers, Federated Management, and Federated Research; President and Director, Federated Research Corp. and Federated Global Research Corp.; President, Passport Research, Ltd.; Trustee, Federated Shareholder Services Company; Director, Federated Services Company. Mr. Donahue is the son of John F. Donahue, Chairman and Trustee of the Trust. John W. McGonigle Federated Investors Tower Pittsburgh, PA Birthdate: October 26, 1938 Executive Vice President and Secretary Executive Vice President and Secretary of the Federated Fund Complex; Executive Vice President, Secretary, and Director, Federated Investors, Inc.; Trustee, Federated Advisers, Federated Management, and Federated Research; Director, Federated Research Corp. and Federated Global Research Corp.; Director, Federated Services Company; Director, Federated Securities Corp. Richard B. Fisher Federated Investors Tower Pittsburgh, PA Birthdate: May 17, 1923 Vice President President or Vice President of some of the Funds in the Federated Fund Complex; Director or Trustee of some of the Funds in the Federated Fund Complex; Executive Vice President, Federated Investors, Inc.; Chairman and Director, Federated Securities Corp. Joseph S. Machi Federated Investors Tower Pittsburgh, PA Birthdate: May 22, 1962 Vice President and Assistant Treasurer Vice President and Assistant Treasurer of some of the Funds in the Federated Fund Complex. None of the Officers of the Trust received salaries from the Trust during the fiscal year ended April 30, 1998. OTHER MATTERS AND DISCRETION OF ATTORNEYS NAMED IN THE PROXY The Trust is not required, and does not intend, to hold regular annual meetings of shareholders. Shareholders wishing to submit proposals for consideration for inclusion in a proxy statement for the next meeting of shareholders should send their written proposals to Riggs Funds, Federated Investors Funds, 5800 Corporate Drive, Pittsburgh, Pennsylvania 15237-7000, so that they are received within a reasonable time before any such meeting. No business other than the matters described above is expected to come before the Meeting, but should any other matter requiring a vote of shareholders arise, including any question as to an adjournment or postponement of the Meeting, the persons named on the enclosed proxy card will vote on such matters according to their best judgment in the interests of the Trust. SHAREHOLDERS ARE REQUESTED TO COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT IN THE ENCLOSED ENVELOPE, WHICH NEEDS NO POSTAGE IF MAILED IN THE UNITED STATES. By Order of the Board of Trustees, John W. McGonigle Secretary May 11, 1999 RIGGS FUNDS Riggs Prime Money Market Fund Riggs Small Company Stock Fund Riggs Stock Fund Riggs U.S. Government Securities Fund Riggs U.S. Treasury Money Market Fund Investment Adviser RIGGS INVESTMENT MANAGEMENT CORP. 800 17TH Street N. W. Washington, D.C. 20006 Distributor FEDERATED SECURITIES CORP. Federated Investors Tower Pittsburgh, Pennsylvania 15222-3779 Administrator FEDERATED SERVICES COMPANY Federated Investors Tower Pittsburgh, Pennsylvania 15222-3779 Cusip Cusip Cusip Cusip Cusip (_____/99) KNOW ALL PERSONS BY THESE PRESENTS that the undersigned Shareholders of Riggs Prime Money Market Fund (the "Fund"), a portfolio of Riggs Funds (the "Trust"), hereby appoint Patricia F. Conner, Gail Cagney, William Haas, Susan M. Jones and Ann M. Scanlon, or any one of them, true and lawful attorneys, with the power of substitution of each, to vote all shares of the Fund which the undersigned is entitled to vote at the Special Meeting in lieu of Annual Meeting of Shareholders (the "Meeting") to be held on June 15, 1999, at 5800 Corporate Drive, Pittsburgh, Pennsylvania, at 2:00 p.m. and at any adjournment thereof. The attorneys named will vote the shares represented by this proxy in accordance with the choices made on this ballot. If no choice is indicated as to the item, this proxy will be voted affirmatively on the matters. Discretionary authority is hereby conferred as to all other matters as may properly come before the Meeting or any adjournment thereof. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF RIGGS FUNDS. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" THE PROPOSALS. By checking the box "FOR" below, you will vote to approve each of the proposed items in this proxy, and to elect each of the nominees as Trustees of the Trust FOR [ ] Proposal 1 To elect Thomas G. Bigley, Nicholas P. Constantakis, John F. Cunningham, J. Christopher Donahue, Charles F. Mansfield, Jr., John E. Murray, Jr. and John S. Walsh as Trustees of the Trust FOR [ ] WITHHOLD AUTHORITY TO VOTE [ ] VOTE FOR ALL EXCEPT [ ] If you do not wish your shares to be voted "FOR" a particular nominee, mark the "VOTE FOR ALL EXCEPT" box and strike a line through the name of each nominee for whom you are NOT voting. Your shares will be voted for the remaining nominees. Proposal 2 To ratify the selection of Ernst & Young LLP as the Trust's independent auditors FOR [ ] AGAINST [ ] ABSTAIN [ ] Proposal 3 To make changes to the Fund's fundamental investment policies: 3 (a) To amend the Fund's fundamental investment policy regarding diversification FOR [ ] AGAINST [ ] ABSTAIN [ ] 3 (b) To amend the Fund's fundamental investment policy regarding borrowing money and issuing senior securities FOR [ ] AGAINST [ ] ABSTAIN [ ] 3 (c) To amend the Fund's fundamental investment policy regarding investments in real estate FOR [ ] AGAINST [ ] ABSTAIN [ ] 3 (d) To amend the Fund's fundamental investment policy regarding investments in commodities FOR [ ] AGAINST [ ] ABSTAIN [ ] 3 (e) To amend the Fund's fundamental investment policy regarding underwriting securities FOR [ ] AGAINST [ ] ABSTAIN [ ] 3 (f) To amend the Fund's fundamental investment policy regarding lending by the Fund FOR [ ] AGAINST [ ] ABSTAIN [ ] 3 (g) To amend the Fund's fundamental investment policy regarding concentration of the Fund's investments in the securities of companies in the same industry FOR [ ] AGAINST [ ] ABSTAIN [ ] 3 (h) To amend, and to make non-fundamental, the Fund's fundamental investment policy regarding buying securities on margin FOR [ ] AGAINST [ ] ABSTAIN [ ] 3 (i) To amend, and to make non-fundamental, the Fund's fundamental investment policy regarding pledging assets FOR [ ] AGAINST [ ] ABSTAIN [ ] Proposal 4 To eliminate certain of the Fund's fundamental investment policies: 4 (a) To remove the Fund's fundamental investment policy on selling securities short FOR [ ] AGAINST [ ] ABSTAIN [ ] 4 (b) To remove the Fund's fundamental investment policy on investments on restricted securities FOR [ ] AGAINST [ ] ABSTAIN [ ] YOUR VOTE IS IMPORTANT Please complete, sign and return this card as soon as possible. Dated Signature Signature (Joint Owners) Please sign this proxy exactly as your name appears on the books of the Trust. Joint owners should each sign personally. Directors and other fiduciaries should indicate the capacity in which they sign, and where more than one name appears, a majority must sign. If a corporation, this signature should be that of an authorized officer who should state his or her title. You may also vote your shares by touchtone phone by calling 1-800-690-6903 or through the Internet at www.proxyvote.com KNOW ALL PERSONS BY THESE PRESENTS that the undersigned Shareholders of Riggs Small Company Stock Fund (the "Fund"), a portfolio of Riggs Funds (the "Trust"), hereby appoint Patricia F. Conner, Gail Cagney, William Haas, Susan M. Jones and Ann M. Scanlon, or any one of them, true and lawful attorneys, with the power of substitution of each, to vote all shares of the Fund which the undersigned is entitled to vote at the Special Meeting in lieu of Annual Meeting of Shareholders (the "Meeting") to be held on June 15, 1999, at 5800 Corporate Drive, Pittsburgh, Pennsylvania, at 2:00 p.m. and at any adjournment thereof. The attorneys named will vote the shares represented by this proxy in accordance with the choices made on this ballot. If no choice is indicated as to the item, this proxy will be voted affirmatively on the matters. Discretionary authority is hereby conferred as to all other matters as may properly come before the Meeting or any adjournment thereof. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF REGIONS FUNDS. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" THE PROPOSALS. By checking the box "FOR" below, you will vote to approve each of the proposed items in this proxy, and to elect each of the nominees as Trustees of the Trust FOR [ ] Proposal 1 To elect Thomas G. Bigley, Nicholas P. Constantakis, John F. Cunningham, J. Christopher Donahue, Charles F. Mansfield, Jr., John E. Murray, Jr. and John S. Walsh as Trustees of the Trust FOR [ ] WITHHOLD AUTHORITY TO VOTE [ ] VOTE FOR ALL EXCEPT [ ] If you do not wish your shares to be voted "FOR" a particular nominee, mark the "VOTE FOR ALL EXCEPT" box and strike a line through the name of each nominee for whom you are NOT voting. Your shares will be voted for the remaining nominees. Proposal 2 To ratify the selection of Ernst & Young LLP as the Trust's independent auditors FOR [ ] AGAINST [ ] ABSTAIN [ ] Proposal 3 To make changes to the Fund's fundamental investment policies: 3 (a) To amend the Fund's fundamental investment policy regarding diversification FOR [ ] AGAINST [ ] ABSTAIN [ ] 3 (b) To amend the Fund's fundamental investment policy regarding borrowing money and issuing senior securities FOR [ ] AGAINST [ ] ABSTAIN [ ] 3 (c) To amend the Fund's fundamental investment policy regarding investments in real estate FOR [ ] AGAINST [ ] ABSTAIN [ ] 3 (d) To amend the Fund's fundamental investment policy regarding investments in commodities FOR [ ] AGAINST [ ] ABSTAIN [ ] 3 (e) To amend the Fund's fundamental investment policy regarding underwriting securities FOR [ ] AGAINST [ ] ABSTAIN [ ] 3 (f) To amend the Fund's fundamental investment policy regarding lending by the Fund FOR [ ] AGAINST [ ] ABSTAIN [ ] 3 (g) To amend the Fund's fundamental investment policy regarding concentration of the Fund's investments in the securities of companies in the same industry FOR [ ] AGAINST [ ] ABSTAIN [ ] 3 (h) To amend, and to make non-fundamental, the Fund's fundamental investment policy regarding buying securities on margin FOR [ ] AGAINST [ ] ABSTAIN [ ] 3 (i) To amend, and to make non-fundamental, the Fund's fundamental investment policy regarding pledging assets FOR [ ] AGAINST [ ] ABSTAIN [ ] Proposal 4 To eliminate certain of the Fund's fundamental investment policies: 4 (a) To remove the Fund's fundamental investment policy on selling securities short FOR [ ] AGAINST [ ] ABSTAIN [ ] 4 (b) To remove the Fund's fundamental investment policy on investments on restricted securities FOR [ ] AGAINST [ ] ABSTAIN [ ] YOUR VOTE IS IMPORTANT Please complete, sign and return this card as soon as possible. Dated Signature Signature (Joint Owners) Please sign this proxy exactly as your name appears on the books of the Trust. Joint owners should each sign personally. Directors and other fiduciaries should indicate the capacity in which they sign, and where more than one name appears, a majority must sign. If a corporation, this signature should be that of an authorized officer who should state his or her title. You may also vote your shares by touchtone phone by calling 1-800-690-6903 or through the Internet at www.proxyvote.com KNOW ALL PERSONS BY THESE PRESENTS that the undersigned Shareholders of Riggs Stock Fund (the "Fund"), a portfolio of Riggs Funds (the "Trust"), hereby appoint Patricia F. Conner, Gail Cagney, William Haas, Susan M. Jones and Ann M. Scanlon, or any one of them, true and lawful attorneys, with the power of substitution of each, to vote all shares of the Fund which the undersigned is entitled to vote at the Special Meeting in lieu of Annual Meeting of Shareholders (the "Meeting") to be held on June 15, 1999, at 5800 Corporate Drive, Pittsburgh, Pennsylvania, at 2:00 p.m. and at any adjournment thereof. The attorneys named will vote the shares represented by this proxy in accordance with the choices made on this ballot. If no choice is indicated as to the item, this proxy will be voted affirmatively on the matters. Discretionary authority is hereby conferred as to all other matters as may properly come before the Meeting or any adjournment thereof. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF RIGGS FUNDS. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" THE PROPOSALS. By checking the box "FOR" below, you will vote to approve each of the proposed items in this proxy, and to elect each of the nominees as Trustees of the Trust FOR [ ] Proposal 1 To elect Thomas G. Bigley, Nicholas P. Constantakis, John F. Cunningham, J. Christopher Donahue, Charles F. Mansfield, Jr., John E. Murray, Jr. and John S. Walsh as Trustees of the Trust FOR [ ] WITHHOLD AUTHORITY TO VOTE [ ] VOTE FOR ALL EXCEPT [ ] If you do not wish your shares to be voted "FOR" a particular nominee, mark the "VOTE FOR ALL EXCEPT" box and strike a line through the name of each nominee for whom you are NOT voting. Your shares will be voted for the remaining nominees. Proposal 2 To ratify the selection of Ernst & Young LLP as the Trust's independent auditors FOR [ ] AGAINST [ ] ABSTAIN [ ] Proposal 3 To make changes to the Fund's fundamental investment policies: 3 (a) To amend the Fund's fundamental investment policy regarding diversification FOR [ ] AGAINST [ ] ABSTAIN [ ] 3 (b) To amend the Fund's fundamental investment policy regarding borrowing money and issuing senior securities FOR [ ] AGAINST [ ] ABSTAIN [ ] 3 (c) To amend the Fund's fundamental investment policy regarding investments in real estate FOR [ ] AGAINST [ ] ABSTAIN [ ] 3 (d) To amend the Fund's fundamental investment policy regarding investments in commodities FOR [ ] AGAINST [ ] ABSTAIN [ ] 3 (e) To amend the Fund's fundamental investment policy regarding underwriting securities FOR [ ] AGAINST [ ] ABSTAIN [ ] 3 (f) To amend the Fund's fundamental investment policy regarding lending by the Fund FOR [ ] AGAINST [ ] ABSTAIN [ ] 3 (g) To amend the Fund's fundamental investment policy regarding concentration of the Fund's investments in the securities of companies in the same industry FOR [ ] AGAINST [ ] ABSTAIN [ ] 3 (h) To amend, and to make non-fundamental, the Fund's fundamental investment policy regarding buying securities on margin FOR [ ] AGAINST [ ] ABSTAIN [ ] 3 (i) To amend, and to make non-fundamental, the Fund's fundamental investment policy regarding pledging assets FOR [ ] AGAINST [ ] ABSTAIN [ ] Proposal 4 To eliminate certain of the Fund's fundamental investment policies: 4 (a) To remove the Fund's fundamental investment policy on selling securities short FOR [ ] AGAINST [ ] ABSTAIN [ ] 4 (b) To remove the Fund's fundamental investment policy on investments on restricted securities FOR [ ] AGAINST [ ] ABSTAIN [ ] YOUR VOTE IS IMPORTANT Please complete, sign and return this card as soon as possible. Dated Signature Signature (Joint Owners) Please sign this proxy exactly as your name appears on the books of the Trust. Joint owners should each sign personally. Directors and other fiduciaries should indicate the capacity in which they sign, and where more than one name appears, a majority must sign. If a corporation, this signature should be that of an authorized officer who should state his or her title. You may also vote your shares by touchtone phone by calling 1-800-690-6903 or through the Internet at www.proxyvote.com KNOW ALL PERSONS BY THESE PRESENTS that the undersigned Shareholders of Riggs U.S. Government Securities Fund (the "Fund"), a portfolio of Riggs Funds (the "Trust"), hereby appoint Patricia F. Conner, Gail Cagney, William Haas, Susan M. Jones and Ann M. Scanlon, or any one of them, true and lawful attorneys, with the power of substitution of each, to vote all shares of the Fund which the undersigned is entitled to vote at the Special Meeting in lieu of Annual Meeting of Shareholders (the "Meeting") to be held on June 15, 1999, at 5800 Corporate Drive, Pittsburgh, Pennsylvania, at 2:00 p.m. and at any adjournment thereof. The attorneys named will vote the shares represented by this proxy in accordance with the choices made on this ballot. If no choice is indicated as to the item, this proxy will be voted affirmatively on the matters. Discretionary authority is hereby conferred as to all other matters as may properly come before the Meeting or any adjournment thereof. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF RIGGS FUNDS. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" THE PROPOSALS. By checking the box "FOR" below, you will vote to approve each of the proposed items in this proxy, and to elect each of the nominees as Trustees of the Trust FOR [ ] Proposal 1 To elect Thomas G. Bigley, Nicholas P. Constantakis, John F. Cunningham, J. Christopher Donahue, Charles F. Mansfield, Jr., John E. Murray, Jr. and John S. Walsh as Trustees of the Trust FOR [ ] WITHHOLD AUTHORITY TO VOTE [ ] VOTE FOR ALL EXCEPT [ ] If you do not wish your shares to be voted "FOR" a particular nominee, mark the "VOTE FOR ALL EXCEPT" box and strike a line through the name of each nominee for whom you are NOT voting. Your shares will be voted for the remaining nominees. Proposal 2 To ratify the selection of Ernst & Young LLP as the Trust's independent auditors FOR [ ] AGAINST [ ] ABSTAIN [ ] Proposal 3 To make changes to the Fund's fundamental investment policies: 3 (a) To amend the Fund's fundamental investment policy regarding diversification FOR [ ] AGAINST [ ] ABSTAIN [ ] 3 (b) To amend the Fund's fundamental investment policy regarding borrowing money and issuing senior securities FOR [ ] AGAINST [ ] ABSTAIN [ ] 3 (c) To amend the Fund's fundamental investment policy regarding investments in real estate FOR [ ] AGAINST [ ] ABSTAIN [ ] 3 (d) To amend the Fund's fundamental investment policy regarding investments in commodities FOR [ ] AGAINST [ ] ABSTAIN [ ] 3 (e) To amend the Fund's fundamental investment policy regarding underwriting securities FOR [ ] AGAINST [ ] ABSTAIN [ ] 3 (f) To amend the Fund's fundamental investment policy regarding lending by the Fund FOR [ ] AGAINST [ ] ABSTAIN [ ] 3 (g) To amend the Fund's fundamental investment policy regarding concentration of the Fund's investments in the securities of companies in the same industry FOR [ ] AGAINST [ ] ABSTAIN [ ] 3 (h) To amend, and to make non-fundamental, the Fund's fundamental investment policy regarding buying securities on margin FOR [ ] AGAINST [ ] ABSTAIN [ ] 3 (i) To amend, and to make non-fundamental, the Fund's fundamental investment policy regarding pledging assets FOR [ ] AGAINST [ ] ABSTAIN [ ] Proposal 4 To eliminate certain of the Fund's fundamental investment policies: 4 (a) To remove the Fund's fundamental investment policy on selling securities short FOR [ ] AGAINST [ ] ABSTAIN [ ] 4 (b) To remove the Fund's fundamental investment policy on investments on restricted securities FOR [ ] AGAINST [ ] ABSTAIN [ ] YOUR VOTE IS IMPORTANT Please complete, sign and return this card as soon as possible. Dated Signature Signature (Joint Owners) Please sign this proxy exactly as your name appears on the books of the Trust. Joint owners should each sign personally. Directors and other fiduciaries should indicate the capacity in which they sign, and where more than one name appears, a majority must sign. If a corporation, this signature should be that of an authorized officer who should state his or her title. You may also vote your shares by touchtone phone by calling 1-800-690-6903 or through the Internet at www.proxyvote.com KNOW ALL PERSONS BY THESE PRESENTS that the undersigned Shareholders of Riggs U.S. Treasury Money Market Fund (the "Fund"), a portfolio of Riggs Funds (the "Trust"), hereby appoint Patricia F. Conner, Gail Cagney, William Haas, Susan M. Jones and Ann M. Scanlon, or any one of them, true and lawful attorneys, with the power of substitution of each, to vote all shares of the Fund which the undersigned is entitled to vote at the Special Meeting in lieu of Annual Meeting of Shareholders (the "Meeting") to be held on June 15, 1999, at 5800 Corporate Drive, Pittsburgh, Pennsylvania, at 2:00 p.m. and at any adjournment thereof. The attorneys named will vote the shares represented by this proxy in accordance with the choices made on this ballot. If no choice is indicated as to the item, this proxy will be voted affirmatively on the matters. Discretionary authority is hereby conferred as to all other matters as may properly come before the Meeting or any adjournment thereof. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF RIGGS FUNDS. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" THE PROPOSALS. By checking the box "FOR" below, you will vote to approve each of the proposed items in this proxy, and to elect each of the nominees as Trustees of the Trust FOR [ ] Proposal 1 To elect Thomas G. Bigley, Nicholas P. Constantakis, John F. Cunningham, J. Christopher Donahue, Charles F. Mansfield, Jr., John E. Murray, Jr. and John S. Walsh as Trustees of the Trust FOR [ ] WITHHOLD AUTHORITY TO VOTE [ ] VOTE FOR ALL EXCEPT [ ] If you do not wish your shares to be voted "FOR" a particular nominee, mark the "VOTE FOR ALL EXCEPT" box and strike a line through the name of each nominee for whom you are NOT voting. Your shares will be voted for the remaining nominees. Proposal 2 To ratify the selection of Ernst & Young LLP as the Trust's independent auditors FOR [ ] AGAINST [ ] ABSTAIN [ ] Proposal 3 To make changes to the Fund's fundamental investment policies: 3 (a) To amend the Fund's fundamental investment policy regarding diversification FOR [ ] AGAINST [ ] ABSTAIN [ ] 3 (b) To amend the Fund's fundamental investment policy regarding borrowing money and issuing senior securities FOR [ ] AGAINST [ ] ABSTAIN [ ] 3 (c) To amend the Fund's fundamental investment policy regarding investments in real estate FOR [ ] AGAINST [ ] ABSTAIN [ ] 3 (d) To amend the Fund's fundamental investment policy regarding investments in commodities FOR [ ] AGAINST [ ] ABSTAIN [ ] 3 (e) To amend the Fund's fundamental investment policy regarding underwriting securities FOR [ ] AGAINST [ ] ABSTAIN [ ] 3 (f) To amend the Fund's fundamental investment policy regarding lending by the Fund FOR [ ] AGAINST [ ] ABSTAIN [ ] 3 (g) To amend the Fund's fundamental investment policy regarding concentration of the Fund's investments in the securities of companies in the same industry FOR [ ] AGAINST [ ] ABSTAIN [ ] 3 (h) To amend, and to make non-fundamental, the Fund's fundamental investment policy regarding buying securities on margin FOR [ ] AGAINST [ ] ABSTAIN [ ] 3 (i) To amend, and to make non-fundamental, the Fund's fundamental investment policy regarding pledging assets FOR [ ] AGAINST [ ] ABSTAIN [ ] Proposal 4 To eliminate the Fund's fundamental investment policy on selling securities short FOR [ ] AGAINST [ ] ABSTAIN [ ] YOUR VOTE IS IMPORTANT Please complete, sign and return this card as soon as possible. Dated Signature Signature (Joint Owners) Please sign this proxy exactly as your name appears on the books of the Trust. Joint owners should each sign personally. Directors and other fiduciaries should indicate the capacity in which they sign, and where more than one name appears, a majority must sign. If a corporation, this signature should be that of an authorized officer who should state his or her title. You may also vote your shares by touchtone phone by calling 1-800-690-6903 or through the Internet at www.proxyvote.com -----END PRIVACY-ENHANCED MESSAGE-----